Supplemental 2 Banking.pdf

Supplemental Discussion for Chapter I Part I 1. Commercial or Universal Banks Represent the largest single group, resource-wise, of financial institutions in the country. They offer the widest variety of banking services among financial institutions. In addition to the function of...

Supplemental Discussion for Chapter I Part I 1. Commercial or Universal Banks Represent the largest single group, resource-wise, of financial institutions in the country. They offer the widest variety of banking services among financial institutions. In addition to the function of an ordinary commercial bank, universal banks are also authorized to engage in underwriting and other functions of investment houses, and to invest in equities of non-allied undertakings. Examples: 2. Thrift/Savings Banks Engaged in accumulating savings of depositors and investing them. They also provide short-term working capital and medium- and long-term financing to businesses engaged in agriculture, services, industry and housing, and diversified financial and allied services, and to their chosen markets and constituencies, especially small- and medium- enterprises and individuals. Examples: 3. Rural and Cooperative banks The most popular type of banks in the rural communities. Their role is to promote and expand the rural economy in an orderly and effective manner by providing the people in the rural communities with basic financial services. Rural and cooperative banks help farmers through the stages of production, from buying seedlings to marketing of their produce. 4. Non banks with Quasi-Banking Functions (NBQBs) This group consists of institutions engaged in the borrowing of funds from 20 or more lenders for the borrower's own account through issuances, endorsement or assignment with recourse or acceptance of deposit substitutes for purposes of relending or purchasing receivables and other obligations. Bank Accounts Classification 1. Savings Account – is where you put your money if you want to build your emergency fund or save up for something important like a car, wedding, or vacation. It requires a low initial deposit so students or anyone with an unstable income can open an account. The drawback is its annual interest rate of less than 1% and penalty fees that you’ll incur if your balance falls below the required maintaining balance. 2. Checking Account – is a type of deposit account that you mainly use for payments. It requires a higher initial deposit and maintaining balance than a savings account. A checking account allows you to issue checks which aren’t possible if you’re a savings account holder. Use this account if you have loans that require repayments through post-dated checks or for regular transactions such as. 3. Time Deposit Account – pays higher interest than a regular savings account. The money you put here is kept for a fixed period of one month to seven years, during which the bank lends and invests the money to earn you a higher interest of up to 3.50%. Only choose this account if you have money that you won’t be touching anytime soon. While it’s possible to withdraw the money prematurely, it comes with a huge penalty fee that easily beats the money you should have earned. 4. Dollar/Foreign Currency Account – ideal for those who regularly transact using foreign currencies including OFWs and their families, online business owners, and regular travelers. Money in dollar accounts also earns interest in dollars. You can also opt to withdraw your money in peso with a better exchange rate than most money changers. Aside from US dollars, you can also open an account for other foreign currencies such as the British pound, euro, Chinese yuan, Hong Kong dollar, Japanese yen, and many more. 5. Joint Account – is preferred by couples, associations, or business partners who want to keep their income under one account. A joint account can be a savings, checking, or time deposit account. The account holders may choose either a joint “AND” account or a joint “OR” account. The “AND” account requires both signatories for any withdrawal to take place while the “OR” accounts allows either one of the account holders to withdraw without the need for the other’s signature. How We Choose the Best Banks? No bank is perfect but to choose the best bank in the Philippines, we’ve put a lot of weight on the following factors/criteria: 1. Minimal bank fees. 2. Low maintaining balance. 3. Few or no limitations on the number or method of transactions. 4. Accessible location of the bank and its ATMs. 5. Secure online and mobile banking. 6. Verifiable deposit insurance. (In the Philippines, all deposit accounts are insured with the Philippine Deposit Insurance Corporation for up to Php 500,000 per depositor per bank.) 7. Competitive interest rate/s. 8. Reliable and efficient customer service.