Banking Ops mitigation and management md

Finance module

1. Bank Operations, Management and Marketing

2. CENTRAL BANK 2 COLLINS DEFINED CENTRAL BANK AS “THE MAIN GOVERNMENT-CONTROLLED BANK IN A COUNTRY, WHICH CONTROLS THE FINANCIAL AFFAIRS OF THE COUNTRY BY FIXING MAIN INTEREST RATES, ISSUING CURRENCY, SUPERVISING ALL OTHER BANKS WITHIN THE COUNTRY AND CONTROLLING THE FOREIGN EXCHANGE RATE” KIDWELL AND PETERSON : AN INSITUTION THAT RESPONSIBLE FOR MANAGING A NATION’S MONEY SUPPLY IN ITS BEST INTEREST ACCORDING TO HORVITZ AND WARD : THE INSTITUTION THAT A NATION ENDOWS WITH POWER TO MANAGE AND PROVIDE SERVICES TO ITS MONEY AND BANKING SYSTEM AND FOREX SYSTEM

3. CENTRAL BANKING 3 KOHN DEFINED CENTRAL BANK AS “OFFICIAL INSTITUTION WITH BROAD RESPONSIBILITIES FOR A NATION’S PAYMENT SYSTEM, ESTABLISHED TO HELP MAINTAIN THE LIQUIDITY OF PRIVATE BANKS” MISHKIN : THE GOVERNMENT AGENCY THAT OVERSEES THE BANKING SYSTEM AND ITS RESPONSIBLE FOR THE AMOUNT OF MONEY AND CREDIT SUPPLIED IN THE ECONOMY CENTRAL BANK IS A GOVERNMENT-CONTROLLED INSTITUTION THAT ENSURED THE FINANCIAL HEALTH OF THE NATION THROUGH PROPER MANAGEMENT OF MONEY AND CREDIT

4. OBJECTIVE OF CENTRAL BANK 4 TO OVERSEE THE FINANCIAL HEALTH OF PRIVATE BANKS TO MAINTAIN MONETARY AND CREDIT CONDITIONS THAT ENCOURAGE A HIGH LEVEL OF EMPLOYMENT TO ENSURE A REASONABLY STABLE LEVEL OF PRICES

5. FUNCTIONS OF CENTRAL BANK 5 As a bank of Issue As the gov’t banker, agent and adviser As the custodian of cash reserves of banks As custodian and manager of the nation’s national reserves As the lender of last resort As the clearing house between banks As the controller of credit As the agency for international monetary cooperation “the nation’s monetary authority and fiscal agent of the government”

6. COMMERCIAL BANKING 6 FINANCIAL INSTITUTION THAT ACCEPT DEMAND DEPOSITS AND MAKES COMMERCIAL LOANS AS WELL AS OFFERING WIDEST ARRAY OF SERVICES . FINANCIAL INSTITUTIONS THAT PROVIDE SERVICES SUCH AS ACCEPTING DEPOSITS, GIVING BUSINESS LOAND AND AUTO LOANS, MORTGAGE LENDING AND BASIC INVESTMENT PRODUCTS LIKE SAVINGS ACOUNTS AND CERTIFICATES OF DEPOSITS

7. FUNCTIONS OF COMMERCIAL BANKING 7 CREATING OF MONEY PAYMENT MECHANISM POOLING OF SAVINGS EXTENSION OF CREDIT FACILITATES FOR THE FINANCING OF FOREIGN TRADE TRUST SERVICES SAFEKEEPING OF VALUABLES BROKERAGE SERVICES

8. COMMERCIAL BANK DEPOSITS 8 DEPOSITS : MONEY PLACES IN BANK FOR SAFEKEEPING OR TO EARN INTEREST FINANCIAL CLAIMS HELD BY THE BUSINESS HOUSEHOLDS AND GOVERNMENT AGAINST THE BANKS

9. 9 FORM OF BANK DEPOSITS CURRENCY CHECK ISSUED BY BANKS ITEMS FOR COLLECTIONS FROM BANKS AND OTHER FINANCIAL INSTITUTIONS PROCEEDS OF LOANS AND DISCOUNTS LEFT ON DEPOSIT TRAVELER’S CHECK DRAFTS PROMISSORY NOTES MONEY ORDER

10. 10 TYPES OF BANK DEPOSITS DEPOSITS AS TO SOURCE PRIVATE PUBLIC DEPOSITS AS TO THE WAY THEY ARE CREATED DIRECT OR PRIMARY DEPOSITS DERIVATIVE OR SECONDARY DEPOSITS DEPOSITS AS TO METHOD OF WITHDRAWAL CHECKABLE DEPOSITS NONTRANSACTION DEPOSITS

11. 11 COMMERCIAL BANK LOANS REAL ESTATE LOANS FINANCIAKL INSTITUTION LOAN AGRICULTURAL LOANS COMMERCIAL AND INDUSTRIAL LOANS LOANS TO INDIVIDUALS MISCELLANEOUS LOANS

12. 12 LOANS ACCORDING TO SECURITY REQUIREMENT SHORT-TERM MEDIUM TERM LONG-TERM LOANS ACCORDING TO MATURITY SECURED UNSECURED

13. 13 LOANS ACCORDING TO METHOD OF REPAYMENT DIRECT FROM BORROWER BY PURCHASE OF NOTES FROM DEALERS OF MOTOR CARS AND APPLIANCES BY PARTICIPATING IN LOAND ORIGINATED BY BANKS BY PURCHASING NOTES FROM COMMERCIAL PAPERS DEALERS LOANS ACCORDING TO ORIGIN PAYMENT IN LUMP SUM OR STRAIGT LOAN PAYMENT IN INSTALLMENT BASIS

14. 14 ORGANIZATION AND STRUCTURE OF COMMERCIAL BANK ORGANIZED IN THE FORM OF STOCK CORPORATIONS REQUIRED TO SECURE A CERTIFICATE OF AUTHORITY FROM MONETARY BOARD REQUIRED TO REGISTER WITH SEC ATLEAST 75% OF VOTING STOCK SHALL BE OWNED BY FILIPINO CITIZENS

15. 15 POWER GRANTED OF COMMERCIAL BANKS TO ACCEPT DRAFTS ANBS ISSUE LETTER OF CREDIT TO DISCOUNT AND NEGOTIATE PROMISSORY NOTES, DRAFTS, BILLS OF EXCHANGE AND OTHER EVIDENCES OF DEBTS TO BUY AND SELL FOREIGN EXCHANGE AND GOLD OR SILVER BULLION TO LEND MONEY AGAINST PERSONAL SECURITY OR AGAINST SECURITY CONSISTING OF PERSONAL PROPERTY OR MORTGAGES ON IMPROVED REAL ESTATE AND INSURED IMPROVEMENT THEREAFTER

16. 16 POWER GRANTED OF COMMERCIAL BANKS TO ACQUIRE READILY MARKETABLE BOND AND OTHER DEBT SECURITIES TO INVEST IN EQUITIES OF ALLIED UNDERTAKINGS LIKE WAREHOUSING COMPANIES, LEASING COMPANIES, STORAGE COMPANIES, SAFE DEPOSIT BOX COMPANIES, AND THE COMPANIES ENGAGED IN THE MANAGEMENT OF MUTIAL FUNDS AND OTHERS TO EXERCISE THE POWERS OF AN INVESTMENT HOUSE WHEN AUTHORIZED BY MONETARY BOARD

17. THRIFT BANK 17 FINANCIAL INTERMEDIARIES CONSIST OF TWO TYPES : DEPOSITORY AND NON-DEPOSITORY DEPOSITORY INTERMEDIARIES – SELL SECONDARY SECURITIES IN THE FORM OF TIME AND SAVINGS DEPOSITS AND INVEST PRINCIPALLY IN RESIDENTIAL MORTGAGE AND CONSUMER LOANS THRIFT BANKS CONSIST OF THE FOLLOWING TYPES: SAVING BANK AND MORTGAGE BANK PRIVATE DEVELOPMENT BANK STOCK SAVINGS AND LOAN ASSOCIATIONS MICROFINANCE THRIFT BANK

18. SAVINGS BANKS 18 THRIFT INSTITUTIONS THAT DERIVE MOST OF THEIR FUNDS FROM SETTINGS SAVINGS DEPOSITS TO THE PUBLIC AND INVEST MOST OF THEIR INCOMING FUNDS IN MORTGAGES, CORPORATE BONDS AND CONSUMER LOANS A BANK WHERE INVESTOR CAN DEPOSIT SMALL SUMS OF MONEY AND RECEIVE INTEREST IN IT.

19. 19 SAVINGS AND MORTGAGE BANK ANY CORPORATION ORGANIZED FOR THE PURPOSE OF ACCUMULATING THE SAVINGS OF DEPOSITOS AND INVESTING THEM TOGETHER WITH ITS CAPITAL IN : 1. READILY MARKETABLE BONDS AND DEBT SECURITIES 2. COMMERCIAL PAPERS AND ACCOUNTS RECEIVABLES 3. DRAFTS, BILL OF EXCHANGE, ACCEPTANCES OR NOTES ARISING FROM COMMERCIAL TRANSACTIONS 4. OTHER INVESTMENTS AND LOAN WHICH MONETARY BOARD MAY DETERMINE AS NECESSARY

20. 20 PRIVATE DEVELOPMENT BANK DESIGN TO SUPPORT THE POLICY OF THE GOVERNMENT IN PROMOTING AND EXPANDING THE ECONOMY, EXPANDING INDUSTRIAL AND AGRICULTURAL GROWTH, SUPPLYING THE NEEDS FOR CAPITAL AND MEETING THE DEMANDS FOR ADEQUATE INVESTMENT CREDIT OR MEDIUM OR LONG-TERM LOANS FOR ENTERPRENUER

21. 21 STOCK SAVINGS AND LOAN ASSOCIATION ESTABLISHED TO PROVIDE CREDIT AND SAVINGS FACILITIES IN A FAIR MANNER TO THE CONSUMING PUBLIC, INDUSTRY, COMMERCE AND AGRICULTURE

22. 22 MICROFINANCE THRIFT BANKS DEVOTED TO EXTEND SMALL LOANS, REFERRED TO AS MICROLOANS TO INDIVIDUALS, BUSINESS, AND ORGANIZATIONS

23. RURAL BANK 23 ORGANIZED IN FORM OF STOCK CORPORATIONS ACTIVITIES ARE MONITORED BY THE MONETARY BOARD LOAN AND ADVANCES EXTENDED BY RURAL BANKS SHALL BE PRIMARILY FOR THE PURPOSE OF MEETING THE NORMAL CREDIT NEEDS OF FARMERS, FISHERMEN OR FARM FAMILIES

24. ORGANIZATION OF RURAL BANKS 24 THE REQUIREMENT FOR THE ESTABLISHMENTN OF DOMESTIC BANKS INCLUDING RURAK BANKS ARE INDICATED IN CHAPTER II OF THE GENERAL BANKNG ACT (R. A. NO. 337 AS AMENDED) THE FOLLOWING ARE THE HIGHLIGHTS OF THE SAID CHAPTER AND WHICH ARE APPLICABLE TO RURAL BANKS: RURAL BANKS SHALL BE ORGANIZED IN THE FORM OF STOCK CORPORATION RURAL BANKS ARE NOT ALLOWED TO ISSUE NO PAR VALUE STOCK OF OWNERSHIP; RURAL BANKS SHALL REGISTER WITH SEC BUT ONLY AFTER A CERTIFICATE OF AUTHORITY HAS BEEN ISSUED BY MONETARY BOARD QUALIFICATIONS OF DIRECTORS AND OFFICER SHALL BE PRESCRIBED BY THE MONETARY BOARD

25. ACTIVITY: 25 LIST OF PRIVATE DEVELOPMENT BANKS AND ITS PRODUCT AND SERVICES OFFERED LIST OF STOCK SAVINGS AND LOANS ASSOCIATION OPERATING IN THE PHILIPPINES LIST OF THRIFT BANKS ENGAGED IN MICROFINANCE

26. PRINCIPLES OF COMMERCIAL BANK 26 PRINCIPLE OF LIQUIDITY PRINCIPLE OF SOLVENCY PRINCIPLE OF PROFITABILITY PRINCIPLE OF LOAN AND INVESTMENT PRINCIPLE OF PROVIDING SERVICES PRINCIPLE OF COLLECTION OF SAVINGS PRINCIPLE OF SECRECY PRINCIPLE OF EFFICIENCY PRINCIPLE OF LOCATION

27. PRINCIPLES OF LIQUIDITY 27 The principle of liquidity is very important for the commercial bank. Liquidity refers to the ability of an asset to convert into cash without loss within a short time . Paying the deposited money on demand of customers is called liquidity in the sense of banking

28. PRINCIPLES OF LIQUIDITY 28 Typically, commercial bank offers two types of deposits: • Demand deposits which the bank has to repay on demand like a Savings Account and • Time deposits which the bank has to repay after the expiry of a certain period Further, on a daily basis, customers withdraw as well as deposit cash. therefore, all commercial banks have to keep a certain amount of cash in their custody to meet the cash demands of customers.

29. PRINCIPLES OF SOLVENCY 29 Solvency means financial capability or sufficiency in the capital . Commercial banks must be financially sound. To stay in these competitive market commercial banks must have sufficient capital. If the funds are not sufficient the bank cannot run his business. The main source of funds of the commercial bank is the deposited money by the depositors through the different types of accounts. Depositors keep cash in the bank, especially for safety. Thus, commercial banks must ensure the safety of deposited funds.

30. PRINCIPLES OF PROFITABILITY 30 Any commercial enterprise primarily tries to generate profit. A commercial bank is a commercial enterprise as well. Hence, it tries to generate profits. For earning profit commercial bank have to invest by providing short-term loans, before providing loan commercial banks have to compensate a certain amount of money as liquidity

31. PRINCIPLES OF LOAN AND INVESTMENT 31 The main source of profit of bank is granting loans to any individual or organization. Investment is a profitable and sound source of income. Commercial banks invest in the business and investment sectors. It also ensures that the investor’s money is invested in viable projects. Therefore, banks need strong loans and investment policies to earn a good profit.

32. PRINCIPLES OF COLLECTION OF SAVINGS 32 Commercial banks collect funds by creating savings facilities. Commercial banks try to collect savings from society surplus. That is to say, commercial banks seek huge amounts of idle money from their clients. The commercial bank invests these savings to generate profit. Therefore, more savings, more investment, and more profit.

33. PRINCIPLES OF PROVIDING SERVICES 33 The commercial bank ensures the best services to their customers. The success of a bank depends on the services provided by the bank. The customer chooses those banks that provide improved services. Commercial banks are usually service-focused banks. After all, good service ensures a better reputation and therefore, profits.

34. PRINCIPLES OF SECRECY 34 Customers want to keep secrets about their valuable assets and money. Thus, banks must have to keep secrets about their customer’s accounts. Also, access to the accounts is given only to legitimized persons. If a commercial bank does not maintain secrecy the customer will be dissatisfied..

35. PRINCIPLES OF EFFICIENCY 35 The commercial bank should operate their business efficiently. So that they can succeed at the objective. In this competitive market, there is no alternative way without efficiency in management. So commercial bank must train their employees to increase the efficiency in management. Also, today’s technology helps banks maintain efficiency of its services offered through online banking and applications. People does not have to line up anymore in their bank to avail its services. Few taps on your electronic device and the services offered in a face-to-face transaction is provided.

36. PRINCIPLES OF LOCATION 36 Commercial banks must have to locate their branches in the commercial area where many customers are available. Usually, commercial banks choose a location where they think they can find many customers who need to avail of its services. The location must be safe for the customers and an easy communication system must exist. We typically see banks near town and city centers where many businesses can also be found.

37. Scope of Banking Activities 37 Money deposited in a bank remains safe. Precious articles too can be kept in the safe custody of banks in lockers. Banks provide credit facilities to their customers. Customers with bank accounts also enjoy better credit in the business world Banks encourage the habit of saving and thrift among people. They mobilize savings and invest them in productive activities. Thus, they help in increasing the rate of savings and investment in the country

38. Scope of Banking Activities 38 Banks provide a convenient and safe means of transferring money from one place to another and facilitate business dealings/ transactions. Banks collect and realize bills, cheques, interest and dividend warrants etc. on behalf of their customers. Foreign trade is facilitated considerably with the help of banks which receive and make payments, provide credit and deal in foreign exchange. They protect importers from the risk of loss on account of exchange rate fluctuations. They issue letter of credit and provide information on the credit worthiness of importers. They also act as referees of their customers.

39. Scope of Banking Activities 39 Banks meet the financial needs of small-scale business units which are located in economically backward areas. Farmers and artisans in rural areas can also avail of bank credit for financing their activities. Commercial banks provide many other services to the general public which include locker facility, issue of traveler’s cheques and gift cheques, payment of insurance premium, etc.

40. The Functions of Commercial Bank 40 A. General Functions: Receiving Deposits Accommodation of loans and advances Creation of Loan Deposits Creation of Medium of Exchange Contribution in Foreign Trade Formation of Capital Creation of Investment Environment

41. The Functions of Commercial Bank 41 B. Public Utility Functions: Remittance of Money Help in Trade and Commerce Safe Custody of Valuables Act as an Adviser Collect Utility Service Bills Purchase and Sale Bonds Help People Travel Abroad

42. The Functions of Commercial Bank 42 C. Agency Functions: Collection and Payment Act as a Trustee

43. Functions and Services of Banks: Deposit Functions 43 Importance of Deposits; sources of deposits; how deposits are created Kinds and characteristics of deposit accounts; savings; demand; time; foreign currency deposits Opening New Accounts; procedure; requirements and forms used Receiving deposits-duties and responsibilities of the receiving used Paying operations-duties and responsibilities of a paying teller Steps to be undertaken before a check encashment Specific bank policies in paying and cashing checks Importance of signature control Purpose and nature of clearing house Bank Reserves

44. Importance of Deposits; sources of deposits; how deposits are created 44 Deposit is a current liability of a bank in the form of Current accounts, Notice deposits, Savings deposits, Fixed deposits etc. A deposit is a financial term that means money held at a bank. A deposit is a transaction involving a transfer of money to another party for safekeeping. In other words, money transferred into a customer account at a financial institution The deposit itself is a liability owed by the bank to the depositor . Bank deposits refer to this liability rather than to the actual funds that have been deposited. When someone opens a bank account and makes a cash deposit, he surrenders the legal title to the cash, and it becomes an asset of the bank. In turn, the account is a liability to the bank

45. 45 Deposit Mobilization Financial institutions provide the system through which savers deposit their money and borrowers can access those resources. The process by which deposits are transformed by the banking sector into real productive capital is at the core of financial intermediation. Banks ensure the efficient transformation of mobilized deposit funds into productive capital.

46. 46 Savings and Investment Methods Deposits are not only a part of the money supply; they also affect it in important ways. Governments create and spread money throughout the economy in response to key movers like investment. Investment is largely possible because people can move large sums of money by saving, transferring and withdrawing funds from bank accounts. Bank deposits are a primary tool for investment, and without them businesses would not be able to access funds from individuals at all.

47. 47 Money Creation Through Demand Deposits Banks can affect the money supply through demand deposits, or loans that the bank funds through cash deposits it receives. By using interest rates to create their own profit, banks are also creating money to increasing the money supply in the economy. Banks cannot use all their reserves for loans, however -- the government requires them to keep a certain amount to satisfy withdrawals

48. Kinds and Characteristics of Deposit Accounts; 48 Savings Deposit Demand Deposit Time Deposit Foreign Currency Deposits :

49. 49 Savings Deposit : an interest-bearing deposit account held at a bank or other financial institution. Though these accounts typically pay a modest interest rate, their safety and reliability make them a great option for parking cash you want available for short-term needs or to cover an emergency. Some savings accounts will require a minimum balance in order to avoid monthly fees or earn the highest published rate, while others will have no minimum balance requirement. So it’s important to know the rules of your particular account to ensure you avoid diluting your earnings with fees. Whenever you want to move money in or out of your savings account, you can do so at a branch or an ATM, by electronic transfer to or from another account using the bank’s app or website, or by direct deposit. Transfers can usually be arranged by phone, as well.

50. 50 Demand Deposit Account (DDA) : a bank account from which deposited funds can be withdrawn at any time, without advance notice. DDA accounts can pay interest on the deposited funds but aren’t required to. Checking accounts and savings accounts are common types of DDAs. Demand deposit accounts allow funds to be withdrawn at any time from the financial institution. Demand deposits provide the money consumers need for cash and for daily expenses and purchases. Demand deposit accounts pay little or no interest—the trade-off for the funds being so readily available. Demand deposit accounts can have joint owners: Either owner may deposit or withdraw funds and sign checks without permission from the other. Demand deposit accounts contrast to time or term deposit accounts, in which the funds are locked up for a certain period, unavailable for access without penalty, if at all.

51. 51 Time Deposit : Time or term deposits are interest-bearing deposit accounts of fixed maturity and, often, fixed interest rate. They are usually offered with a range of maturities ranging from 1 month to 5 years, with longer dated deposits attracting higher interest. This reflects a positive yield curve, which indicates the funding value to the bank of longer-term liabilities. Most time deposits pay a fixed rate of interest, payable on maturity. Accounts of longer than 1-year maturity often capitalize interest on an annual basis. Fixed term deposits are sometimes called “bonds” or “savings bonds” but are not tradable instruments, so this term is not to be confused with capital market bonds or fixed income securities. Time deposits generally pay a slightly higher rate of interest than a regular savings account. The longer the time to maturity, the higher the interest payment will be. Another name for this type of investment is term deposit .

52. 52 Foreign Currency Deposits : A foreign currency fixed deposit is a type of time deposit issued by banks to investors who would like to keep foreign currency for future use or hedge against foreign currency fluctuation. The money deposited in the FCFD account cannot be withdrawn until the agreed fixed term has expired. . An FCFD can be invested in in two ways—opening a local account that offers deposits in the foreign currency that the investor would like to gain exposure to or opening an account in the foreign country itself. Interest rates, minimum deposits, tenure periods, and available currencies vary from bank to bank.

53. Opening New Accounts, Procedure, Requirements and Forms Used 53 Face-to-face contact No new accounts shall be opened and created without face-to-face contact and personal interview between the covered institution’s duly authorized personnel and the potential customer

54. 54 Customer Identification Process A covered institution shall maintain a system of verifying the true identity of their customers and, in case of corporate and juridical entities, require a system of verifying their legal existence and organizational structure as well as the authority and identification of all persons purporting to act on their behalf

55. 55 New individual customers

56. 56 As a rule, no new account is opened in a bank except under the authority of the manager or accountant, expressed by initials on the deposit slip. In other words, the privilege of a checking account should be extended only to persons who are known to be of good character and reputation, and therefore no account should be opened with a stranger until he has been satisfactorily identified. To do otherwise is to leave an opening for fraud. Ledger-keepers are usually held equally responsible with the tellers for any deviation from the regulations laid down in connection with the opening of new accounts, especially with strangers

57. 57 When an account is opened a specimen signature of the depositor duly witnessed should be obtained and placed on file - the card system is the best - for ready reference. In the case of a firm or company a specimen signature of each partner, or of the properly constituted signing officers, respectively, should be taken. If a power of attorney is filed, a specimen of the attorney’s signature as such should be placed on file.

58. 58 Customer Information Record https://www.bdo.com.ph/sites/default/files/pdf/FORMS_SB_A4_account_opening_form_FA.pdf https://www.bdo.com.ph/personal/accounts/downloadable-forms

59. 59 Receiving Deposits: Receiving Teller The principal business of the receiving teller is to receive deposits. Responsibility of no mean order rests upon the teller, because he acts as the agent of the bank in the relation established between the depositor and the institution. He must be on his guard at all times. His first care is to assure himself that the deposit is intended for his bank.

60. 60 Paying Teller - the clerk in a bank who pays out money and the custodian of the bank’s cash; often called first teller. A Bank Teller is responsible for quickly and accurately processing routine transactions that customers conduct at banks. Routine transactions include cashing cheques and making deposits, loan payments, and withdrawal Task: Cashes cheques; Processes deposits and withdrawals from savings and cheque accounts; Receives installments on loan-purchase transactions; and Handles foreign exchange as well as traveler’s cheques.

61. 61 The paying teller is the guardian of the bank's funds. He usually has custody of the vault and reserve cash. He sees that the supply of money in various denominations is at all times sufficient for the needs of the customers and is properly arranged for quick handling. Money paid out is counted twice before leaving his hands, but in order to avoid one handling while the fine before his window waits, he will have bills crossed in piles, or under bands, containing so many one’s, two's, or five's, as the case may be. Coins are neatly piled or rolled in sealed wrappers. This work is done by assistants during the day.

62. 62 Steps to be Undertaken Before a Check Encashment: Ensure the check is valid. Check that the following items are legible and correct: name and address of the check’s issuer, date of issue, your name (depositor), and amount of money. Also confirm that the front of the check is signed. 2. Visit your bank. You must take your check, account number, and a valid form of personal identification. You can visit any branch of your bank.

63. 63 Steps to be Undertaken Before a Check Encashment: 3. Fill out a deposit slip. There should be a stack of slips along with pens at a table. Deposit slips are about the same size as a check. You can also request a deposit slip from the teller, but the process will move more quickly if you fill out the deposit slip ahead of time. Write in your account number and the amount of the check on the deposit slip. There should also be space for requesting cash back. 4. Endorse your check. You can endorse a check by signing on one of the gray lines on the back. The back of most checks say “Don’t write below this line” because the bank documents the transaction beneath this line. If two names are on the face of the check, then one or both of you might need to sign. When the names are joined by an “and,” then both will sign. If the names are joined by an “or,” only one person needs to sign.

64. 64 Specific Bank Policies in Paying and Cashing Checks You will need a government-issued photo ID when cashing a check. If the check is made payable to your business, make sure you have a business account at the bank and that the business is properly registered with the state. Banks may require advance notice to cash large checks .

65. 65 Top Reasons Banks Won't Cash Your Check You Don't Have an Account There You Don’t Have a Proper ID The Check Is Made to a Business Name Large Transactions Stale Checks

66. 66 Importance of Signature **signature can be used for personal identification. It is used for authentication or concluding document. In order to reduce frauds in banks, signature verification is very much important

67. 67 Signature verification is a technique used by banks, intelligence agencies and high-profile institutions to validate the identity of an individual. Signature verification is often used to compare signatures in bank offices and other branch capture. An image of a signature or a direct signature is fed into the signature verification software and compared to the signature image on file. Banks keep a “signature card” on file at the bank branch where you opened your account. This is so they can compare your signature on file with any check presented to them, with which they may have authenticity questions. Also Know, does it matter who a check is made out to? You can deposit a check made out to someone else in your own bank account if the payee endorses the check over to you. They will need to write “Pay to <your name>” on the back of the check and sign it. There is, however, no legal requirement that the bank accept such checks.

68. 68 Purpose and Nature of Clearing House A clearing house is an intermediary between buyers and sellers of financial instruments. It is an agency or separate corporation of a futures exchange responsible for settling trading accounts, clearing trades, collecting and maintaining margin monies, regulating delivery, and reporting trading data. The clearing house validates and finalizes the transaction, ensuring that both the buyer and the seller honor their contractual obligations. Every financial market has a designated clearing house or an internal clearing division to handle this function .

69. 69 Signature verification is a technique used by banks, intelligence agencies and high-profile institutions to validate the identity of an individual. Signature verification is often used to compare signatures in bank offices and other branch capture. An image of a signature or a direct signature is fed into the signature verification software and compared to the signature image on file. Banks keep a “signature card” on file at the bank branch where you opened your account. This is so they can compare your signature on file with any check presented to them, with which they may have authenticity questions. Also Know, does it matter who a check is made out to? You can deposit a check made out to someone else in your own bank account if the payee endorses the check over to you. They will need to write “Pay to <your name>” on the back of the check and sign it. There is, however, no legal requirement that the bank accept such checks.

70. 70 Significance of the Bank’s Statement of Condition: A statement of condition is a document that functions as summary of the overall financial condition of a business or other entity. The statement is usually divided into two sections, making it relatively easy to compare the current assets owned with the amount of any outstanding liabilities. In many ways, the statement of condition looks very much like a standard balance sheet kept in accounting records, and is sometimes considered to be nothing more than a slightly different version of a balance sheet

71. 71 Significance of the Bank’s Statement of Condition: The purpose of a statement of condition is to create a proactive document that makes it possible to quickly ascertain the net worth of the company or organization. In order to accomplish this task, the first part of the document will focus on all currently owned assets. This includes various types of real estate, including office buildings, manufacturing facilities, or even undeveloped land. Other assets such as securities and cash balances in various accounts are also listed. Essentially, any asset that can be converted into cash with relative ease is included in the inventory of productive assets

72. 72 Significance of the Bank’s Statement of Condition: A statement of condition is sometimes required when a business is seeking a loan of some type, or when there is discussion of an acquisition or merger with another company. Each line item contained within the statement is backed up by documentation found in the accounting records maintained by the organization, making it very easy to double check any figure listed among the assets or liabilities. In this sense, the statement of condition serves the same purpose as a balance sheet.

73. 73 A quarterly report is a summary or collection of unaudited financial statements, such as balance sheets, income statements, and cash flow statements, issued by companies every quarter (three months). In addition to reporting quarterly figures, these statements may also provide year-to-date and comparative (e.g., last year's quarter to this year's quarter) results.

74. 74 Requirements for Quarterly Reports: executive summary goals and objectives highlights New and ongoing challenges (strategies planned or employed to overcome them) ***If relevant, the quarterly report may discuss previous quarterly reports' data and provide a comparison between them and the current report***

75. 75 Importance of Quarterly Financial Statements : help business owners and managers use in attracting investors by showing the financial health and growth of the company not only learning about the performance of the company but also to compare it with former quarterly financial reports to draw a conclusion on the future of the company

76. 76 BSP rules and regulations governing the preparation of a bank’s statement of conditions : Submission of Bangko Sentral periodic or call reports shall be as follows: a. All banking offices shall submit the required reports in accordance with Appendix 6 to the Bangko Sentral , Manila or to the nearest Bangko Sentral Regional Offices: Provided, That the head office of a bank may submit to the SDC in electronic form the batched copy of all its banking units’ Quarterly Statement of Condition and Statement of Income and Expenses by Banking Unit in behalf of its branches and other offices;

77. 77 b. Where a particular report form calls for distribution of copies to other departments of the Bangko Sentral , the bank concerned shall furnish said copies of the report directly to the respective departments of the Bangko Sentral ; and c. As an exception to Item “a” above, the duplicate copy of the bio-data for directors/officers shall be submitted to the SDC of the Bangko Sentral .

78. 78 Purpose of capital to risk assets ratio : Capital to Risk (Weighted) Assets Ratio (CRAR ) is also known as Capital adequacy Ratio, the ratio of a bank’s capital to its risk. The banking regulator tracks a bank’s CAR to ensure that the bank can absorb a reasonable amount of loss and complies with statutory Capital requirements. The Capital to risk-weighted assets ratio is arrived at by dividing the capital of the bank with aggregated risk-weighted assets for credit risk, market risk, and operational risk Higher CRAR indicates a bank is better capitalized.

79. 79 Capital to risk assets ratio : CRAR is decided by central banks and bank regulators to prevent commercial banks from taking excess leverage and becoming insolvent in the process. The Basel III norms stipulated a capital to risk-weighted assets of 8%.

80. 80 Managing Capital Acounts : Working capital management is a business strategy designed to ensure that a company operates efficiently by monitoring and using its current assets and liabilities to the best effect Working capital management requires monitoring a company's assets and liabilities to maintain sufficient cash flow to meet its short-term operating costs and short-term debt obligations Working capital management involves tracking three ratios namely the working capital ratio, the collection ratio, and the inventory ratio.

81. 81 Managing Capital Accounts: Working capital management can improve a company's earnings and profitability through efficient use of its resources. ***The primary purpose of working capital management is to enable the company to maintain sufficient cash flow to meet its short-term operating costs and short-term debt obligations. A company's working capital is made up of its current assets minus its current liabilities***

82. 82 Uses of Bank Profits: Capital is a source of funds that the bank uses to acquire assets. This means that, if a bank were to issue an extra dollar worth of equity or retain an additional dollar of earnings, it can use this to increase its holding of cash, securities, loans, or any other asset. When the bank finances additional assets with capital, its leverage ratio rises.

83. 83 Uses of Bank Profits: Bank capital acts as self-insurance, providing a buffer against insolvency and, so long as it is sufficiently positive, giving bank management an incentive to manage risk prudently. Automobile insurance is designed to create a similar incentive: auto owners bear part of the risk of accidents through deductibles and co-pays, which also motivate them to keep their vehicles road-ready and to drive safely

84. 84 Priorities in the use of Bank Funds: Banks profit by earning more money than what they pay in expenses. The major portion of a bank's profit comes from the fees that it charges for its services and the interest that it earns on its assets . Its major expense is the interest paid on its liabilities The major assets of a bank are its loans to individuals, businesses, and other organizations and the securities that it holds, while its major liabilities are its deposits and the money that it borrows, either from other banks or by selling commercial paper in the money market.

85. 85 Use of Bank Funds: Capital expenditure: The amounts to be spent for acquiring additional fixed assets and for normal replacement and renewals are to be shown separately under the relevant periods. Moreover, the total of the figures relating to the project shone against this item should be equal to the figure of the capital cost of the project as shown in the statement of the cost of the project.

86. 86 Decrease in long-term loans: The long-term loans raised from financial institutions are repayable in installments as per the schedule of repayment agreed upon. Similarly, payment for plants and machinery purchased on a deferred payment basis is to be made in an agreed manner. The installments of these payments should be shown under the respective years .

87. 87 Increase in current assets: Estimates about the increase in the number of book debts, stock in trade, bills receivable and other current assets are to be shown under this head. The level of these assets increases with an increase in the level of working capital raise through short–term borrowings.

88. 88 Interest on long-term loans: Interest payable on term loans (including the loan for which application is being made) is to be shown against this item. The term loans are repayable in installments. Hence, the amount of interest payable on the outstanding amount of loans goes on declining, as the installments are paid in subsequent years.

89. 89 Taxation: As the concern starts earning profits, provision for taxation is to be taken into account. The concern may, however, take a few years time to earn profits. Moreover, if the Government has granted any tax holiday for the concern for a certain period, no amount is payable as tax during that period.

90. 90 Dividend: The amounts of dividends that are expected to be declared in future years out of the profits of the company are to be shown as cash outflow. Dividends are payable only when the company starts earning profits. Moreover, a portion of the net profit is usually plowed back into the business itself to consolidate the financial position of the company and to retain its funds within the business.

91. 91 Management of the money position of the bank: A cash position refers specifically to an organization's level of cash relative to its expenses and liabilities. It is a sign of financial strength and liquidity Other organizations, such as commercial and investment banks, are generally required to have a minimum cash position, which is based upon the number of funds it holds. This ensures that the bank can pay out its account holders if they demand funding. When an investment fund has a large cash position, it is often a sign that it sees few attractive investments in the market and is comfortable sitting on the sidelines.

92. 92 Management of the money position of the bank: A cash position refers specifically to an organization's level of cash relative to its expenses and liabilities. It is a sign of financial strength and liquidity Other organizations, such as commercial and investment banks, are generally required to have a minimum cash position, which is based upon the number of funds it holds. This ensures that the bank can pay out its account holders if they demand funding. When an investment fund has a large cash position, it is often a sign that it sees few attractive investments in the market and is comfortable sitting on the sidelines.

93. 93 The Nature of Branch Banking; Reason for Branching: Branch shall refer to any permanent office or place of business in the Philippines other than the head office where deposits are accepted and/or withdrawals are serviced by tellers or other authorized personnel. It maintains a complete set of books of accounts. Extension office shall refer to any permanent office or place of business in the Philippines other than the head office or a branch, where deposits are accepted and/ or withdrawals are serviced by tellers or other authorized personnel. It does not maintain a complete set of books of accounts as its transactions are taken-up directly in the books of the head office or a branch to which it is attached.

94. 94 Why are Branches Important? Customers want to interact with the bank when, where, and how they want. Yes, customer visits and transactions in the branch are declining and the use of mobile devices is increasing; yet, consumers (even millennials) still prefer face-to-face interactions in the branches, especially for complex financial transactions .

95. 95 Why are Branches Important? Face-to-Face Interaction New Account Openings Brand Engagement Convenient Access

96. 96 Top 3 Reasons why Banks Branches are still important? TRUST ADVICE, ACQUISITION and CONVENIENCE BRAND BUILDING

97. 97 Typical services offered in a branch 1. Account opening 2. Cash receipts 3. Cash payments 4. Cheque book issue 5 .Stop payment of cheques 6. Closure of fixed deposits and premature withdrawals 7. Issue of DDs (Demand Draft) and banker's cheque 8. Safe deposit lockers 9. Foreign exchange services 10. Gold retail 11. DeMat services (an account to hold financial securities (equity or debt) in electronic form) 12. Acceptance of clearing cheques 13. Deliverables, such as cheque books, debit cards, PINs and passwords 14. Acceptance of queries and complaints 15. Investment services 16. Standing instructions 17. Retain loan products

98. 98 AUDIT AND CONTROL: Audit usually refers to a financial statement audit. A financial audit is an objective examination and evaluation of the financial statements of an organization to make sure that the financial records are a fair and accurate representation of the transactions they claim to represent. The audit can be conducted internally by employees of the organization or externally by an outside Certified Public Accountant (CPA) firm.

99. 99 THREE MAJOR TYPES OF AUDIT External audits Internal audits Internal Revenue Service (IRS) audits

100. 100 Internal Audit? This is an unbiased, independent, objective assurance and a consulting activity strategically developed by the management to improve a company’s activity. It gives a disciplined and systematic approach to improve risk control, management, and governance processes and is carried out by an audit unit headed by the internal auditor who reports to the audit committee .

101. 101 An internal audit is important in: Reporting on the authenticity and accuracy of accounting records Ensuring accounting standards comply Detecting and preventing fraud Verifying business liabilities incurred Identifying gaps in the operations and recommending solutions Assisting in the development of periodical action plan

102. 102 Internal control This is a process designed by a company’s stakeholders aimed at providing reasonable assurance on the reporting, operations, and compliance of an organization. It includes the organizational structure, strategic plan, job structure, job descriptions, appraisal systems, employee guide, and reporting systems, among others

103. 103 Internal control aims at: Efficiency and effectiveness of operations Protection of assets Ensuring set laws are adhered to detection and prevention of fraud ** Both are control organizational control measures for optimal operations**

104. Thank You