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2-22. BA-FM 24P(2018)-A (LEC) Banking and Financial Institution > Chapter 3 > Flashcards

Chapter 3 Flashcards

1
Q

An institution authorized by a a government to accept deposits, pay interest, clear checks, make loans, act as an intermediary in financial transactions and provide other financial services to its customers

A

bank

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2
Q

business activity of accepting and safeguarding money owned by individuals or instituions and lending them out to earn profit

A

banking

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3
Q

Essential elements of Banking

A
  • Accept Deposit
  • Pay interest
  • Clear checks - PCHC
  • Make loans
  • Act as intermediary in financial transactions
  • Provide other financial services
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4
Q

Classification of Banks

A
  1. Universal bank
  2. Commercial Bank
  3. Thrift Bank
  4. Rural nd Cooperative Bank
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5
Q

expanded commercial banks and has the same powers as a commercial bank

A

Universal Bank

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6
Q

Required Capitalization of Universal Bank

A

Php 4.95 B

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7
Q

Having the powers of a thrift bank such as accept drafts letters of credit, promissory notes, discount, bills of exchange & other evidences of debt, accept or create demand deposits, receive types of deposits & deposit substitutes, buy and sell forex, gold, silver bullion.

A

Commercial Banks

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8
Q

Acquire marketable bond, and other debt securities, extend credit.

A

Commercial Banks

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9
Q

Required capitalization of commercial banks

A

Php 2.4 Billion

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10
Q

Power to accept savings & time deposits such as correspondent with other financial insititutions and as a collection agent for government(issue mortgages, engages in real estate transactions and extend credit).

A

Thrift Bank

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11
Q

May also maintain checking accounts such as depository for government entities and LGU’s

A

Thrift Bank

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12
Q

Required Capitalization of thrift bank

A

Php 325M

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13
Q

Their role is to promote and expand the rural economy in an orderly and effective manner by providing people in the rural communities with basic financial services.

A

Rural and Cooperative bank

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14
Q

help farmers through the stages of production, from buying seedlings to marketing of their produce

A

Rural Bank

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15
Q

are privately owned and managed

A

Rural Banks

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16
Q

Are organized owned by cooperatives or federation if cooperative

A

Cooperative banks

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17
Q

Required capitalization of rural banks

A

Php 100M

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18
Q

Required capitalization of cooperative banks

A

Php 10M

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19
Q

Provide policy directions in the areas of money, banking, and credit

A

BSP

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20
Q

It shall have supervision over the banks and exercise such regulatory powers as provided in this act and other pertinent laws over the operations of finance and non-finance companies performing quasi-banking functions, hereafter referred to as quasi-banks and institutions and institutions performing similar functions.

A

BSP

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21
Q

Primary objective is to maintain price stability conducive to a balanced and sustainable economic growth. I

A

BSP

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22
Q

It shall also promote and maintain monetary stability and convertibility of the peso.

A

BSP

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23
Q

Functions of BSP

A
  1. Liquidity Management
  2. Currency Issue
  3. Lender of Last Resort
  4. Financial Supervision
  5. Management of Foreign Currency Resources
  6. Determination of FOREX Rate Policy
  7. Banker, finanical advisor, and official depository of the Philippine Governmen and GOCC
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24
Q

Implemented through ____________________ as the central monitoring and implementing council for money laundering as prescribed by the act as a criminal offense, prescribed penalties for such crimes committed.

A

Anti Money Laundering Council

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25
Is the process of concealing the existence, illegal source or application of income derived from criminal activities and subsequently disgusing the source of income to make it appear legitimate or changing the form or moving the funds to a place where they are not likely to attract attention.
Money Laundering
26
Was assigned to Sept 29, 2001 and effect on Oct. 17, 2001.
RA 9160 (The Anti-Money Laundering Act of 2001)
27
Was signed into law and effect on March 23, 2003
RA 9194 (An Act Amending RA no. 9160)
28
Salient Features
- criminalizes Money Laundering - Creates a finanical intelligence unit - imposes requirements on customer identification record keeping and reporting of covered and suspecious transactions - Relaxes strict bank deposits secrecy laws - Provides for bank inquiry and freezes paste petition / seizure / forfeiture / recovery of duty money / property - provides for international cooperation
29
Unlawful activities inculdes
- Kidnap for ransom - Drug related offenses inculding trafficking - Graft and corruption - plunder - Robbery - Illegal Gambling - Piracy in high seas - qualified Theft - Swindling - Smuggling - Hijacking arson and murder - Violation of the securities and regulations act - Felonies
30
Purposes in the prevention on Money Laundering
- Customer identification and due diligence - Record -keeping - Reporting of covered and suspicious transaction
31
A government agency responsible for the registration licensing, regulations and supervision of corporation and partnerships organized in the PH, including foreign corporations licensed to engage in business or to establish branch offices in the PH
SEC
32
Four Functions of SEC
1. Capital market development & regulations 2. Company registration and monitoring 3. Enforcement 4. Support services
33
It is a government agency task to protect depositors through the insurance on deposit which will be paid in the event of bank closure. It also helps in the promotion of a sound and stable banking system and foster public confidence in the banking system.
PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC)
34
Promote the growth and finanical stability of insurance companies
Insurance Commission (IC)
35
Professionalize insurance services and develop insurance consciousness among the general populize
Insurance Commission
36
Establish sound national insurance market; Safeguard the rights and interest of the insuring people.
Insurance Commisiion
37
Oranizational hierarchy & structure
- Board of Directors - President - Controller - Treasury - marketing
38
Guardians of the bank policies
Internal: - Internal Audit - Risk Mgt. Unit - Compliance Officer External: - External Auditor - Regulatory Bodies - BIP circular members -
39
Conducts operations and financial audit
Internal Audit
40
Measures, monitors, and control risk exposure
Risk Management Unit
41
Oversees, coordinates compliance with gov't regulations
Compliance Officer
42
Other departments of the banks
1. Accounting Department 2. Human Resource Department 3. Treeasury 4. Systems and Procedure 5. Information Technology 6. International Remittance Department 7. Corporate Security 8. Retail Banking Group 9. Institutional Banking Group
43
Traditional Products of Bank
1. Savings Account 2. Current Account/ Checking Account / Demand Deposit 3. Time Deposit
44
A deposit account held at a bank or other finanical institution that provides principal security and a modest interest rate.
Savings Account
45
are considered one of the most liauid investments outside of demand accounts and cash
Savings account
46
Evidenced by a passbook or automated card
Savings Account
47
It is a low cost account like a savings account also a very liquid account
Current Account
48
Withdrawal can be drawn through an issuance of a check
Current Account
49
Usually used by businessmen because of the conscience that come along with the account
Current Account
50
Problems associated with checks
1. Drawn against insufficient funds (DAIF) 2. Drawn against uncleared Deposit (DAUD) 3. Words and figures differs 4. Post dated 5. Stale dated 6. Signature differs 7. Cross checks 8. Second endorsed checks
51
The movement of a check from the depository institution at which it was deposited back to the institution on which it was written; the movement of funds in the opposite direction and the correspondence credit and debit to the involved accounts.
Check Clearing process
52
The process in which a bank collects the funds on a check deposit from the issuing institution.
Check Clearing process
53
involves the bank in which the check was deposited mailing the check to the issuing bank, the issuing bank then credits the deposit bank the funds on the check, assuming the check writer had the funds in his/her account.
Check Clearing Process
54
Is an interest-bearing bank deposit that has a specified date of maturity
Time Deposit
55
Usually evidenced through a certificate of time deposit
Time Deposit
56
Interest computed
Interest = principal x rate x time/360 subject to 20% withholding tax
57
Non-traditional products
1. Government Securities - Treasury Bill - Fixed rate treasury notes (FXTN) - Retail Treasury Bonds (RTB) - Zero Coupon Notes 2. Bond Issued by GOCC 3. Philippine Corporate Issues 4. Euro Bonds
58
Short-term debts, issued at a discount
T-Bills
59
Longer term, semi-annual coupon payment
Fixed Rate Treasury Notes
60
Similar to FXTN except they are designed for small investors , quarterly coupon payments
Retail Treasury Bonds
61
Similar to T-bill longer than one year, discount
Zero coupon notes
62
Dominated in a currency different from the issuer's country and issued in ternational market
EURO bonds
63
A fiduciary relationship or argument whereby a person or financial institutions (TRUSTEE) is appointed by a second party (TRUSTOR) to handle, administer and manage funds and/or properties with an equal obligation for the benefit of another (beneficiary)
Trust
64
Trustor; Trustee
debtor; Creditor
65
To get the best deal for the client with the due consideration of the capital
Trust
66
To return the depositors money with agreed interest on agreed maturity dates
Bank
67
The interest is fixed or guaranteed income
Trust
68
In investment, Investee has knowledge
TRUST
69
In investment, depositors are not aware where funds will be used
bank
70
What documentation is supported in Trust companies
Trust agreement
71
What documentation is supported in Bank
Passbook, CTD
72
What are trust ransactions
1. BSP 2. Unit Trust Investment Fund 3. ESCROW 4. Retirement Plans 5. Investment Mgt. Account 6. Directed Investment Mgt. Account 7. Mutual Funds
73
A written instrument whereby a bank as ________ agent acts as mediator to two parties involved in business transactions
ESCROW
74
A plan getting aside money to be spent after retirment
retirement plans
75
Under this arrangement, you can create a portfolio by choosing from among several available investment outlets that banks offer daily.
Investment Managment Account
76
These investment outlets may be in the form of government securities, investment grade Corporate bonds and promissory notes or time deposits
Investment management Account
77
Is an arrangement wherein the bank (investment mgr) invest funds in varies Peso and USD denominated securities through direct matching of an investor's investment preference with available securities.
Directed Investment Management Account
78
An investment vehicle that is made up of a prol of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.
Mutual Funds
79
Are operated by _______________, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors.
Mutual Funds; Money Managers
80
A ________________ portfolio is structured and maintained to match the invest. objectives stated in this prospectus.
Mutual Funds
81
Other bank products
1. Credit cards 2. Cash Mgt. Solutions 3. Debit Card 4. Loans 5. Guarantees 6. Consumer Loan
82
Bank Services
1. Manager's Checks 2. Demand Draft 3. Gift Checks 4. Cashiers Checks 5.Night Depository 6. Safety Deposit Box (SDB) 7. Deposit Pick Up (DPU) 8. Telegraphic Transfer (TT)

2-22. BA-FM 24P(2018)-A (LEC) Banking and Financial Institution (9 decks)

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