General Banking Law FIN 100 1st Sem AY 2024-2025
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Questions and Answers

What is the primary purpose of conservatorship for a bank?

  • To restore effective management and liquidity. (correct)
  • To permanently close the bank's operations.
  • To initiate bankruptcy proceedings.
  • To manage customer deposits.

    • Which authority is responsible for appointing a conservator for a problem bank?

  • The Department of Finance.
  • The Monetary Board. (correct)
  • The Securities and Exchange Commission.
  • The bank's board of directors.

    • What is the maximum duration that a conservatorship can last?

  • Six months.
  • One year. (correct)
  • Two years.
  • Indefinitely.

    • Which of the following conditions would result in a bank being placed under receivership?

    <p>The bank has insufficient realizable assets to meet its liabilities.</p> Signup and view all the answers

    What is one of the grounds under which a bank may be declared insolvent?

    <p>It is unable to pay liabilities as they become due.</p> Signup and view all the answers

    Which of the following actions is prohibited for borrowers in relation to securing a loan?

    <p>Overvaluing property to secure a loan</p> Signup and view all the answers

    What is the consequence of offering compensation to bank officials to influence loan approval?

    <p>It constitutes a prohibited transaction</p> Signup and view all the answers

    According to the regulations, who is allowed to act as a trustee or administer trust operations?

    <p>Only stock corporations or authorized persons</p> Signup and view all the answers

    What is one of the responsibilities of a trust entity in managing funds or property?

    <p>To exercise diligence akin to a prudent individual</p> Signup and view all the answers

    Which of the following is NOT a power of a trust entity?

    <p>Offering loans directly to the public</p> Signup and view all the answers

    What is the implication of employing casual or non-regular personnel in banking operations?

    <p>It violates the provisions of the Banks Secrecy Law</p> Signup and view all the answers

    In a legal context, who can be appointed as guardian or trustee for an incompetent person?

    <p>Only a court-appointed entity</p> Signup and view all the answers

    What is one outcome of attempting to defraud the bank during legal proceedings?

    <p>It can lead to legal penalties</p> Signup and view all the answers

    What is the minimum number of hours that banks must transact business on working days?

    <p>Six hours</p> Signup and view all the answers

    Which of the following is NOT a prohibited transaction for bank directors, officers, employees, or agents?

    <p>Use personal discretion for customer account management</p> Signup and view all the answers

    How many hours must banks that choose to operate on non-working days conduct business?

    <p>Three hours</p> Signup and view all the answers

    Which of the following services is a bank authorized to provide?

    <p>Rent out safety deposit boxes</p> Signup and view all the answers

    What must banks do if they decide to open on days other than working days?

    <p>Report to the Bangko Sentral</p> Signup and view all the answers

    Which activity is banks explicitly prohibited from engaging in?

    <p>Engage directly in insurance business</p> Signup and view all the answers

    Which of the following is allowed for banks with prior approval of the Monetary Board?

    <p>Act as managing agent or adviser</p> Signup and view all the answers

    What defines 'working days' for banks?

    <p>Mondays to Fridays, excluding holidays</p> Signup and view all the answers

    What is the maximum percentage of voting stock in a domestic bank that foreign individuals and non-bank corporations can own or control?

    <p>40%</p> Signup and view all the answers

    How should the citizenship of a corporation that is a stockholder be determined?

    <p>By the controlling stockholders' citizenship.</p> Signup and view all the answers

    Which of the following relationships is classified as a family group under the General Banking Law?

    <p>Individuals related within the fourth degree of consanguinity or affinity.</p> Signup and view all the answers

    Which of the following statements about public officials serving as officers of private banks is true?

    <p>Public officials may serve only if related to financial assistance by the government.</p> Signup and view all the answers

    What is required for a universal or commercial bank to open a branch outside the Philippines?

    <p>Approval from the Bangko Sentral.</p> Signup and view all the answers

    When considering corporate stockholdings, how are two or more corporations owned by the same family group treated?

    <p>They are considered as related interests.</p> Signup and view all the answers

    What responsibility does a bank have regarding its branches and offices?

    <p>They are responsible for all business conducted as if it were in the head office.</p> Signup and view all the answers

    Which type of bank is subject to a different prohibition regarding public officials serving as officers?

    <p>Rural banks.</p> Signup and view all the answers

    Study Notes

    Foreign Stockholdings

    • Foreign individuals and non-bank corporations are limited to owning up to 40% of the voting stock in a domestic bank.
    • Ownership percentage is determined by the citizenship of individual stockholders; for corporate stockholders, it follows the citizenship of controlling individuals, regardless of incorporation location.

    Stockholdings of Family Groups

    • Individuals related within the fourth degree of consanguinity or affinity are regarded as family groups, necessitating disclosure in transactions with the bank.

    Corporate Stockholdings

    • Corporations held by the same family group must disclose their related interests in all dealings with the bank.

    Prohibition on Public Officials

    • Public officials, whether elected or appointed, cannot serve as officers of private banks unless specified by the Rural Banks Act or other existing laws.

    Bank Branches

    • Universal and commercial banks can open branches domestically and internationally with Bangko Sentral's approval.
    • Other banks must adhere to relevant laws governing their branching.
    • Banks can use branches for selling products from associated companies with prior Monetary Board approval.

    Banking Days and Hours

    • Banks must operate for at least six hours on working days; additional hours on weekends or holidays are permitted with Bangko Sentral notification.
    • Working days are typically Monday through Friday, barring holidays.

    Other Banking Services

    • Responsibilities include custodial services, acting as financial agents, collections and payments, managing investment accounts, and renting safety deposit boxes.

    Prohibition to Act as Insurer

    • Banks are prohibited from directly engaging in insurance business as insurers.

    Prohibited Transactions for Bank Personnel

    • Engagement in fraudulent transactions, false reporting, unauthorized information disclosure, acceptance of undue remuneration for approvals, and outsourcing essential banking functions is strictly forbidden.

    Prohibited Transactions for Borrowers

    • Fraudulent property valuation, misrepresentation for loans, defrauding banks during recovery processes, and offering inducements for approval of loans are prohibited.

    Employment Restrictions

    • Casual or non-regular personnel cannot be employed in areas involving bank deposits, as per Republic Act No. 1405 (Banks Secrecy Law).

    Trust Operations

    • Only authorized entities can act as trustees or manage trust properties, required to exercise diligence similar to that expected in similar enterprises.

    Trust Operations Powers

    • Powers include acting as a trustee, executors of estates, guardians, managing trusts, and establishing common trust funds as regulated by the Monetary Board.

    Conservatorship

    • Conservatorship serves as temporary management for problem banks, with appointments by Bangko Sentral; the term cannot exceed one year.

    Receivership

    • Defined as a state where a bank is declared insolvent and forbidden from conducting business, with specific conditions outlined for this determination including inability to pay liabilities and asset insufficiency.

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    Description

    Explore the key points of the General Banking Law as it pertains to foreign stockholdings. This quiz covers regulations that allow foreign individuals and non-bank corporations to invest in domestic banks, including ownership percentages and citizenship criteria. Test your understanding of these vital concepts in banking law.

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