Banking and Financial Institutions in the Philippines Today (part 3)

Yes, you’ve read the title right! Even I, myself, cannot believe that there will be a part 3 of this. I guess you know that I am not joking when I said that I have literally A LOT, haha! I’m not even complaining ^o^

This will be the last part of this trilogy, don’t worry. Please bear with me hihihi! So, here it goes!

Question #16: What is bouncing check, and does it occur?

Bouncing check is when the amount you want to withdraw is not enough for the amount you have in your bank account. It is a type of check that can't be processed. For example, you have a balance amount of P500, 000 in your bank account today. The next day, you promised to pay your friend of the debt you have months ago, amounted to P250, 000, and issued a check valid for the next day. On the same day, you withdraw P300, 000 to pay all your monthly expenses in total. By the time that your friend withdraws the money, the fund you have in your account is insufficient, and that is called the bouncing check.

Question #17: According to International Financial Group, the most trusted industry in the Philippines is banking industry. Do you agree to this statement?

Yes, I agree to this statement of International Financial Group. When employed in a banking firm, suspicion and integrity are the key requirements. It is necessary to build the trust needed to succeed in any banking system. Bank employees are aiming to gain people's trust to attract more clients and to make them feel more secured when they are handling their money. For example, if you want to hand your money in a bank, you will choose a bank that has a good reputation in terms of banking. You wouldn't want to hand your money in bank that has an issue and is connected to any scandals.

Question #18: All banking and financial institution in the country are highly supervised by the Bangko Sentral ng Pilipinas. Explain.

The government needs to ensure that banks exercise their obligations in the best interests of their clients. Banks in the Philippines are being supervised by Bangko Sentral ng Pilipinas to oversee if they are following the rules and regulations. If a bank does something wrong that is not acceptable in terms of banking, there is a possibility that it will result to a banking failure. For example, if people's money is entrusted to a bank, their mishandling will lead in a bank failure. People's trust will be lost, and this will have a negative effect on the community, which is why it should not destroy people's trust in banks.

Question #19: Based on bank regulations, banking business are prohibited to bank holiday. What is bank holiday?

Bank holiday is a business day on which financial services are closed. According to bank regulations it is prohibited, the following are the possible reasons why:

• Promoting and sustaining a stable and successful banking system that is internationally competitive, diverse, and sensitive to the demands of a developing economy is the policy of the government.

• Banks are increasingly responsible for handling wire transfers, such as direct payroll withdrawals, internet bill payments, insurance payments, and numerous other transactions.

• Employees in various companies rely more heavily on holidays to transfer, withdraw, and spend money, because that is their only free time.

Banks are needed mostly during holidays for our demands and for emergency purposes. For example, during holiday you go for a vacation and you forgot to pay the parcel you ordered a week ago. You can pay it by using bank transfer. A bank transfer is when money is transferred to another from one bank account. It is faster and easier to move money from your bank account than to withdraw and pay in cash.

Question #20: Discuss the four (4) requisites in disclosing information of bank deposits or known as Secrecy of Bank Deposits or R.A. 1405.

Written approval or written consent of the depositor. The waiver must be issued voluntarily, consciously and with adequate knowledge of critical circumstances and consequences.

• It can be disclosed if the information is under the cases of impeachment.

• If the court also makes an order that information on bank deposits is subject to bribery and dereliction cases.

• On a judicial order in cases where the money earned or spent is the topic of litigation.

Question #21: Discuss the importance or objectives of R.A. 3765 to creditor and debtor.

The Truth in Lending Act, or R.A. 3765, is designed to protect everyone from a lack of knowledge of the true cost of credit to the user by maintaining full transparency of such costs with a view to avoiding uninformed use of credit to the disadvantage of the national economy.

Question #22: Discuss the objectives of PDIC in relation to bank operations in the country today.

One of the primary objectives of the Philippine Deposit Insurance Corporation (PDIC) is to promote and secure the interests of the public by providing permanent and continuous insurance coverage of all insured deposits. The goal of the PDIC is also to enhance the mandatory deposit insurance coverage program to create, sustain and retain confidence and trust in the banking system of the country and to protect it from illegal schemes and manipulations.

Question #23: Enumerate and discuss the three (3) good characteristics of negotiable instruments and their importance to individuals, business owners, and government.

Property. It is assumed that the rightful owner of the negotiable instrument is the owner of the property found therein. A negotiable instrument does not merely give the instrument ownership, but also the right to property. The property may be exchanged without any formality in the negotiable instrument. In the case of a bearer instrument, the property was transferred to the transferee by mere transmission. In the case of an order instrument, the transfer of the properties involves endorsement and delivery.

Title. In due time, the ownership of the property of a negotiable instrument is known as the holder. A legitimate value transferee is not impaired by any title defect on the part of the transferor or any of the instrument's previous holders. This is the main difference between a negotiable instrument and other ordinary transfer subjects.

Rights. In the case of dishonor, the transferee of the negotiable instrument may sue on his own behalf. It is possible to transfer a negotiable instrument any number of times until it is at maturity. The holder of the instrument must not provide a notice of transition to the entity responsible for the paying of the instrument.

Question #24: Enumerate and discuss the 5C’s of credit.

Character. Although it is called character, it specifically means credit history or the credibility of a creditor or track record for repaying debts. This information exists on credit reports for the creditor. Credit reports issued by the three major credit bureaus provide detailed information about how much a borrower has lent in the past and whether debts have been repaid on time.

Capacity. Capacity tests the willingness of the borrower to pay back a loan by comparing earnings against recurring loans and measuring the debt-to-income ratio of the borrower. Lenders measure debt-to-income by combining the total monthly debt contributions of a borrower and dividing them by the gross monthly income of the borrower; the lower the debt-to-income of a borrower, the higher the chance of qualifying for a new loan.

Capital. Lenders often consider any capital that the creditor brings in the path of a possible investment. The chance of default is minimized by a large contribution by the creditor.

Collateral. A creditor can help protect loans via collateral. It gives the lender the assurance that the lender will get everything back by repossessing the collateral if the borrower fails to pay. Sometimes the collateral is the item on which one borrows the money. Collateral-backed loans are often referred to as secured loans or secured debt for this reason.

Conditions. The terms of the loan, such as its interest rate and principal amount, affect the willingness of the lender to support the borrower. Conditions may refer to how the money is supposed to be used by a creditor.

Question #25: Explain why BSP conducted annual bank examination or audit to all banking institutions in the Philippines.

The explanation why Bangko Sentral in Pilipinas (BSP) is conducting an examination or audit of all banking institutions in the Philippines is to determine if banks are doing business in line with the laws of the banking sector and the laws of the central bank and other government agencies. Any misconduct by the banks will lead to their imminent closure or at least, to the reprimand of the supervisory agencies. Another goal is to assess the financial existence of the bank. The examiners should assess that the bank has tested its own assets, that the properties are good; that the properties are precisely priced on the accounts and that they are of acceptable quality. Examination and supervision shall be carried out to ensure that the banks are safe and effective for the public. Infringements will lead to the closing of the bank. Also, to assess how well the bank is financially stable. To know if the bank's funds are very well valued and properly valued in books. Examination is mostly for the detection of inappropriate and unsafe practices and the provision of alternatives or solutions for those practices, to be carried out to preserve discipline on the part of the banks. However, such an examination would not require a thorough audit and thus the examiners cannot be held liable for the accuracy of the books and records or the claims issued by the banks. To include solutions or reasons for those practices, the examination is all about identifying risky and harmful procedures. The examination thus achieves the aim of maintaining discipline on the part of the banks. It does not, however, include the more serious problems of fraud and embezzlement.

Since this part of the trilogy is the compilation of both of our midterm exams and final exams, our teacher instructed us to provide a plagiarism check to know if our answers are totally copy pasted or not, that the answers we provided is based only on what we learned during the whole semester. Percentage of its uniqueness that is lower than 75 percent will not be accepted.

I guess this will be the last part of this series hihihi! Thank you for reading! :)

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The link of the lead image that I used: https://unsplash.com/photos/eYZpTMc7hno?utm_source=unsplash&utm_medium=referral&utm_content=creditShareLink