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Chapter 2 -Banking and other Financial Institution (BOFI), Lecture notes of Banking and Finance

Pamantasan ng Lungsod ng Maynila (PLM)Banking and Finance

BOFI- Chapter 2 Lecture Notes.

Typology: Lecture notes

2021/2022

Available from 09/23/2024

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WHY ADOPT TARGETING ?
Simple framework
Allows greater focus on price stability
Forward-looking
Enables comprehensive approach to
monetary policy Increases accountability of
BSP and helps build credibility
Promotes transparency in monetary policy
Under inflation targeting, monetary policy
decisions as well as outlook for inflation of the BSP
are communicated to the public regularly through
various means. If the BSP maintains its credibility,
then inflation expectations will remain well
anchored.
PRIVILEGES AND PROHIBITIONS
Tax Exemption
Exemption from Customs Duties
Prohibitions Phase-out of Fiscal Agency
Functions Phase-out of Regulatory Powers
Over the Operations of Finance
Corporations and Other Institutions
1. CONSERVATORSHIP
The conservator shall report and be responsible to
the Monetary Board Appointment of a Conservator
and shall have the power to overrule or Revoke the
actions of the previous management and Board of
Directors of the bank or quasi bank
Whenever a bank or quasi-bank is in:
• A state of continuing inability
• Unwillingness to maintain a condition of liquidity
The Monetary Board may: He must be competent
and knowledgeable in the bank operations and
management
THE MONETARY BOARD MAY:
Appoint a conservator to take charge of
assets and liabilities
Reorganize the management
Collext all moneys and debts
Exercises powers neccesary to res to
viability
HOW LONG DOES CONSERVATOSHIP LAST?
= SHALL NOT EXCESS 1 YR
When can the Monetary Board terminate the cons
-Institution can operate on its own
-Institution would involve probable loss to its
depositors and creditors
2. RECEIVERSHIIP
Whenever a bank or quasi bank is:
Unable to pay its liabilities
Has insufficient realizable assets to meet iits
liab
Cannot continue business without involving
probable losses to its depositors and
creditors
Has willfully violated a cease and desist
order
Philippine Deposit Insurance Corporation
(PDIC)
Functions and Obligations:
•Gather and take charge of all assets and liabilities
of the institution
•Exercise the general powers
•Determine in not later than ninety (90) days from
take over whether the institution should be
rehabilitated or may resume business with safety
Otherwise, proceed to liquidation
3.LIQUIDATION
• Institution CANNOT be rehabilitated or
permitted to resume business
Receiver/Liquidator shall:
• File ex-parte with Regional Trial Court and a
petition for assistance in the liquidation of th
institution
ufalement
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Download Chapter 2 -Banking and other Financial Institution (BOFI) and more Lecture notes Banking and Finance in PDF only on Docsity!

WHY ADOPT TARGETING?

 Simple framework  Allows greater focus on price stability  Forward-looking  Enables comprehensive approach to monetary policy Increases accountability of BSP and helps build credibility  Promotes transparency in monetary policy Under inflation targeting, monetary policy decisions as well as outlook for inflation of the BSP are communicated to the public regularly through various means. If the BSP maintains its credibility, then inflation expectations will remain well anchored. PRIVILEGES AND PROHIBITIONS  Tax Exemption  Exemption from Customs Duties  Prohibitions Phase-out of Fiscal Agency Functions Phase-out of Regulatory Powers Over the Operations of Finance Corporations and Other Institutions

1. CONSERVATORSHIP

The conservator shall report and be responsible to the Monetary Board Appointment of a Conservator and shall have the power to overrule or Revoke the actions of the previous management and Board of Directors of the bank or quasi bank

Whenever a bank or quasi-bank is in:

  • A state of continuing inability
  • Unwillingness to maintain a condition of liquidity The Monetary Board may: He must be competent and knowledgeable in the bank operations and management

THE MONETARY BOARD MAY:

 Appoint a conservator to take charge of assets and liabilities  Reorganize the management  Collext all moneys and debts  Exercises powers neccesary to res to viability HOW LONG DOES CONSERVATOSHIP LAST? = SHALL NOT EXCESS 1 YR When can the Monetary Board terminate the cons -Institution can operate on its own -Institution would involve probable loss to its depositors and creditors

2. RECEIVERSHIIP

Whenever a bank or quasi bank is:  Unable to pay its liabilities  Has insufficient realizable assets to meet iits liab  Cannot continue business without involving probable losses to its depositors and creditors  Has willfully violated a cease and desist order

Philippine Deposit Insurance Corporation

(PDIC)

Functions and Obligations: •Gather and take charge of all assets and liabilities of the institution •Exercise the general powers •Determine in not later than ninety (90) days from take over whether the institution should be rehabilitated or may resume business with safety Otherwise, proceed to liquidation

3.LIQUIDATION

  • Institution CANNOT be rehabilitated or permitted to resume business Receiver/Liquidator shall:
    • File ex-parte with Regional Trial Court and a petition for assistance in the liquidation of th institution ufalement
  • Assist the enforcement of individual liabilitie of stockholders, directors & officers =Convert the assets of the institutions to money and dispose to creditors and other parties =Institute actions to collect and recover accounts and assets of the institution which shall be deemed in custodia legis in the hands of the receiver

2. FINANCIAL STABILITY

SAFETY AND SOUNDNESS OF FINANCIAL

INSITUTIONS – COMPLIANCE WITH CONSUMER

PROTECTOR LAWS

  1. SURVEILLANCE - conduct of on and off site super visipoon and examination
  2. EXAMINATION-
  3. KNOWLEDGE NETWORK- financial reporting requirements 4.LICENSING- Grant licences and special authorities 5.ADVOCACY- = Anti money laundering = Financial Educ and Concsumer Protection = Overseas Fil Workers 6. REDRES AND LITERACY –  Financial inclusion  Fin Educ  Conmsumer assitance mechanism 7. POLICY FRAMEWORK- issuing of prudentiual rules and upholding standards The BSP enables the development of an inclusive financial system by looking at a holistic approach based on four key are

1. Policy, Regulation and Supervision

The BSP ensures that an enabling policy and regulatory environment is in place through the issuance of various regulations conducive to financial inclusion. The general approach is characterized by openness to innovations and market-based solutions which can have a transformative role in expanding the scale and reach of financial services

2. Financial Education and Consumer

Protection

The BSP conducts activities aimed at increasing the financial literacy of various targeted audiences and ensuring that financial consumers are protected by issuing standards on disclosure and transparency, fair treatment, effective recourse and privacy of client information. The BSP believes that promoting financial education and consumer protection is a shared responsibility among financial Institutions, the BSP and the financial consumers.

3. Advocacy

Advocacy efforts to promote financial inclusion help increase awareness, understanding and appreciation of financial inclusion The BSP is highly involved in various projects and activities in partnership with other public and private sector stakeholders through local and international linkages

4. Data and Measurement

There is a need to collect inclusion-relevant information to benchmark, monitor and assess progress. The BSP is stepping up efforts in developing a comprehensive financial inclusion data framework to identify existing gaps and opportunities, and inform evidence-based policy making

REGULATIONS:

1. BANKING LAWS:

 Republic Act RAs and Implementing Rules

and Regulations (iRR) and RAS

 Presidential Decree (Pds)

=BSP ISSUANCES

experiencing unexpected or higher than usual volume of inward check transactions. The governing policies and procedures are provided under BSP Circular 681 in order to provide additional liquidity for banks encountering liquidity problems due to check clearing losses as well as protect the BSP against settlement exposures.

3. Overseer of the payments and settlements system The BSP, through its Core Information Technology Sub-Group of the Supervision and Examination Sector conducts information technology (IT) supervision and examination of banks and non-bank financial institutions (Fls) and the payments systems. Its assessments of systems focus on determining the adequacy of IT management and operational controls over data integrity and confidentiality, and attendantrisk exposures 4. User of its own RTGS system The BSP, through its different departments, also make use of the payments and settlements system for the settlement of its own transactions with its stakeholders, such as 1. The automated collection and settlement of Supervision and Examination Sector annual supervisory fees: 2. Online processing of eRediscounting loan proceeds and collection of banks' maturing loans withDepartment of Loans and credit 3. Processing posting of banks cast deposit and withdrawal transactions with Cash Department 4. Investment maturities of funds placed by the Provident Fund Office, and 5. Trading transactions as well as payments of maturing RRPISDA placements with Treasury Department 5) Initiate changes reforms for the payments system The BSP, through its Payments and Settlements Steering Committee (PSSCOM), initiate the conduct of studies/research relating to payments system to ensure that it grows and matures in accordance with the global standards

Key points

To preserve purchasing power, the BSP's main objective is to maintain price stability. It uses inflation targeting as a framework for conducting monetary policy. Consumers directly benefit.  To help promote financial stability, the BSP supervises and regulates banks and other financial institutions. Depositors and borrowers directly benefit.eleo  To ensure safe and efficient payments and settlements of financial transactions, the BSP owns and operates the PhilPass. Transacting parties directly benefit. THE ECONOMY AS A WHOLE BENEFITS.

FUNCTIONS OF BANGKO SENTRAL

6.BANK OF CLEARNACE AND SETTELMENT

=For checks issued and cashed in Metro Manila,

the clearing of checks is conducted y the

Philippine Clearing House Corporation (PCHC).

=Trusted as a neutral service bureau of the banks, PCHC extended its operating outfit by implementing several electronic based payment system services for the banking community such as

the Electronic Peso Clearing System (EPCS).

=Philippine Domestic Dollar Transfer System (PDDTS), and Project Abstract Secure (PAS) System.The sorting processing and clearing of checks are done by computers. =Clearing of checks for provincial checks and Metro Manila checks is done manually at the Manila Clearing/Regional Clearing Units of BSP. Cebu, Davao, and Bacolod have their own clearing units