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RFLIB > General Banking Law of 2000 > Flashcards

General Banking Law of 2000 Flashcards

1
Q

Entities engaged in the lending of funds obtained in the form of deposits.

A

Banks

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2
Q

Entities engaged in the borrowing of funds through the issuance, endorsement, or assignment with recourse to or acceptance of deposit substitutes.

A

Quasi-banks

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3
Q

What are the conditions under which the Monetary Board may authorize the organization of a bank or quasi-bank?

A
  1. Entity is a stock corporation.
  2. Funds are obtained from the public, meaning 20 or more persons
  3. Minimum capital requirements prescribed are satisfied
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4
Q

What is the nature of banking?

A

It is fiduciary in nature that requires high standard of integrity and performance.

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5
Q

What should the banks have to be able to register the Articles of Incorporation with the SEC?

A

Certificate of Authority from Monetary Board

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6
Q

The Certificate of Authority shall not be issued unless the Monetary Board is satisfied with what?

A
  1. That all requirements of existing laws and regulations have been complied with.
    2.That the public interest and economic conditions justify the authorization.
  2. That the amount of capital reasonably assures the safety of deposits and the public interest.
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7
Q

Can an entity performing banking or a quasi-banking function operate without a certificate of authority?

A

No

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8
Q

These are banks that have authority to exercise, in addition to the powers and functions of commercial banks, the powers of an investment house, and the power to invest in non-allied enterprises.

A

Universal Banks

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9
Q

These are banks that are given all the power necessary to engage in commercial banking in addition to general corporate powers.

A

Commercial Banks

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10
Q

What do commercial banking powers include?

A
  1. To accept drafts
  2. To issue letters of credits
  3. Discounting and negotiation of negotiable instruments and evidence of debt
  4. Accept and create demand deposits and the like
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11
Q

These are banks composed of savings and mortgage banks, stock savings, and loan associations, and private development banks

A

Thrift Banks

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12
Q

These are banks that are created to make needed credit available and readily accessible in rural areas.

A

Rural Banks

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13
Q

These are banks that provide services to cooperative organizations and their members

A

Cooperative Banks

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14
Q

A bank also known as the Charted of Al Amanah Islamic Investment Bank of the Philippines

A

Islamic Banks

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15
Q

Can all banks accept or create demand deposits?

A

No, only the universal or commercial bank can do that.

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16
Q

What banks are subject to the approval of the Monetary Board for accepting or creating demand deposits?

A
  1. Thrift
  2. Rural
  3. Cooperative
  4. Islamic
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17
Q

The operations and activities of banks shall be subject to supervision of what?

A

Bangko Sentral ng Pilipinas

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18
Q

Supervision of banks shall include what?

A
  1. Issuance of rules of conduct or establishment of standards
  2. Conducting examination to determine compliance per warrant of the Monetary Board
  3. Overseeing to ascertain laws and regulations are complied
  4. Regular investigation once a year and more than once if deficiencies/irregularities are not addressed
  5. Inquiry to solvency and liquidity
  6. Enforcing prompt corrective action
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19
Q

Who prescribes the minimum ratio which the net worth of a bank must bear to its total risk assets that may include contingent accounts.?

A

Monetary Board

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20
Q

It is and risk assets of a bank and its subsidiaries, financial or otherwise.

A

Minimum Ratio

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21
Q

The Monetary Board shall prescribe a minimum ratio provided that what?

A
  1. It conforms to internationally accepted standards, including those of Bank for International Settlements (BIS), relating to risk-based capital requirements.
  2. It may alter or suspend compliance for a maximum of one year.
  3. Such ratio shall be applied uniformly to banks of same category
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22
Q

What would the Monetary Board do in case a bank does not comply with the prescribed minimum ratio?

A
  1. Limit or prohibit the distribution of net profits.
  2. Restrict or prohibit the acquisition of assets and making new investments.
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23
Q

What would happen to the prescribed minimum ratio of the surviving bank, consolidated bank, or banks and corporations under rehabilitation?

A

Monetary Board may temporarily relieve them from full compliance with the required capital ratio as it may prescribe.

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24
Q

It is the current international standard for setting minimum capital adequacy requirements.

A

Basle Risk-based Capital Framework

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25
Q

What is the required minimum ratio under Philippine laws?

A

10%

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26
Q

What is the internationally recommended minimum ratio?

A

8%

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27
Q

What are the basic functions of banks?

A

Deposit Function
Loan Function

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28
Q

What are the other functions of banks?

A
  1. Receive in custody funds, documents, and valuable objects.
  2. Act as a financial agent to do things in all types of of securities.
  3. Make collections and payments for the account of others.
  4. Under prior approval, act as managing agent, adviser, consultant or administrator of investment accounts.
  5. Rent out safety deposit boxes.
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29
Q

What are the prohibited acts for banks?

A
  1. Engaging in insurance business as the insurer.
  2. Outsourcing of functions
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30
Q

It is the unpaid balance of money or its equivalent received by a bank in the usual course of business.

31
Q

It consists of money placed into banking institutions for safekeeping.

32
Q

It is the person who has the right to withdraw funds.

33
Q

What are the different kinds of deposits?

A
  1. Savings Deposit
  2. Foreign Currency Deposit
  3. Demand Deposit
  4. Negotiable Order of Withdrawal Accounts (NOW)
  5. Time Deposit
34
Q

It is the most common type of deposit and is usually evidenced through passbook.

A

Savings Deposit

35
Q

Who can deposit in Philippine banks with good standing foreign currencies?

A

Any natural or juridical person

36
Q

What can people deposit in a Foreign Currency Deposit?

A

Foreign currencies which are acceptable as part of international reserve except those required by the Central Bank to be surrendered

37
Q

General rule of a Demand Deposit

A

Only universal and commercial banks may create or accept demand deposits

38
Q

Exception to the general rule of Demand Deposit

A

Other banks may accept and create demand deposits upon approval of Monetary Board

39
Q

These are all those liabilities of banks which are denominated in PH currency and are subject to payment in legal tender upon demand

A

Demand Deposit

40
Q

These are interest-bearing deposit accounts that combine the payable-on-demand feature of checks with the investment feature of savings accounts.

A

Negotiable Order of Withdrawal Accounts (NOW)

41
Q

Who can offer NOW Accounts without prior approval from the Monetary Board?

A

Universal and Commercial Banks

42
Q

Who can accept NOW accounts upon prior approval of the Monetary Board?

A

Thrift Banks
Rural Banks
Cooperative Banks

43
Q

It is an account with fixed term and payment of which cannot be legally required within such a specified number of days.

A

Time Deposit

44
Q

Rules/Restrictions of banks on the Loan Function

A
  1. Shall grant loans and other credit in amounts and periods of time essential for the effective completion of operations to be financed
  2. The grant shall be consistent with safe and sound banking practices
  3. Must ascertain that the debtor is capable of fulfilling his commitments
45
Q

What shall be stated in the application and contract between bank and borrower?

A

the purpose of the loan

46
Q

What happens if the bank finds that the proceeds are used for other purposes without bank approval?

A

Bank shall have the right to terminate the loan and demand immediate repayment.

47
Q

It is the total amount of loans, credit accommodations, and guarantees that may be extended by a bank to any person, partnership, association, corporation, or other entity.

A

Single Borrower’s Limit

48
Q

What is the maximum limit of Single Borrower’s Limit?

A

25% of net worth of the bank

49
Q

What is the basis for determining compliance with single-borrower limit?

A

Total credit commitment of the bank to the borrower

50
Q

Unless the Monetary Board prescribes otherwise, what is the additional limit of Single Borrower’s Limit?

A

10% of net worth of the bank

51
Q

What are the requirements for grant of the additional limit of Single Borrower’s Limit?

A

Trust Receipts
Shipping Documents
Warehouse Receipts
Other similar documents transferring or securing title

52
Q

Inclusions in the computation of Single Borrower’s Limit

A
  1. Direct Liability of the maker or acceptor of paper
  2. Liability of an individual of all that he owns or controls a majority interest in a corporation, partnership, association, and others
  3. Liabilities of a corporation, parent and subsidiary in which the corporation owns or controls a majority interest
  4. Liabilities of the members of a partnership, association, or other entity
53
Q

Exclusions in the computation of Single Borrower’s Limit

A

Loans and other credit accommodations:
1. secured by BSP or PH government
2. fully guaranteed by gov’t as to the payment of principal and interest
3. covered by assignment of deposits maintained in the lending bank and held in Philippines
4. and acceptances under letters of credit
5. Others which the Monetary Board may specify as non-risk items

54
Q

What is a DOSRI account

A

Directors, Officers, Stockholders, and their Related Interests

55
Q

To what degree must the stockholdings of individuals be related to be considered family groups or related interests?

A

Fourth degree of consanguinity or affinity

56
Q

Transactions with the stockholdings of individuals with related interests in a bank must be what?

A

Fully disclosed

57
Q

Requirements for Validity of Loan granted to DOSRI

A
  1. Procedural Requirement
  2. Reportorial Requirement
  3. Arm’s Length Rule
  4. Aggregate Ceiling
  5. individual Ceiling
58
Q

No director or officer shall borrow from such a bank nor shall he become a guarantor, indorser, or surety for loans from such bank to others

A

Procedural Requirement

59
Q

What is the exception in the Procedural Requirement?

A

When the loan has written approval of the majority of the directors of the bank. Provided it is not required for loans under a fringe benefit plan

60
Q

The required approval shall be entered into records of the bank, and a copy shall be transmitted to the appropriate supervising and examining department of BSP

A

Reportorial Requirement

61
Q

Dealings of a bank with any of its directors, officers or stockholders and their related interests shall be upon terms not less favorable to the bank than those offered to others.

A

Arm’s Length Rule

62
Q

The Monetary Boad may regulate the amount that may be extended by a bank to its directors, officers, stockholders, and related officers.

A

Aggregate ceiling

63
Q

Limit of total outstanding loans to DOSRI

A

15% of the total loan portfolio or 100% of net worth, whichever is lower

64
Q

Limit for Loans against Real Estate

A

Shall not exceed 75% of the appraised value of the respective real estate security + 60% of the appraised value of the insured improvements

65
Q

Limit for Loans on Security of Chattels and Intangible Properties

A

75% of the appraised value of the security

66
Q

Ceiling on Investments in Certain Assets

A

Shall no exceed 50% of combined capital accounts

67
Q

Minimum Deposit Reserve Ratio of a Bank to BSP

A

At least 20% of its total liabilities
On Mar. 2 2018, 19% of its total liabilities

68
Q

Prohibited Transactions of a Director, Officer, Employee, or Agent of any bank

69
Q

Prohibited Transactions of a Borrower of a Bank

70
Q

What are the things that require extraordinary diligence from the bank?

A
  1. Demand Deposit
  2. Savings Deposit
  3. Time Deposit
71
Q

What are the things that require the diligence of a good father of a family from the bank?

A

Other services and contracts

72
Q

Foreign individuals and non-bank corporations may own or control up to what of domestic banks?

A

40% of the voting stock of a domestic bank

RFLIB (6 decks)

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