Commercial Banks grant mainly short-term loans.In the beginning,commercial Banks extended loans to traders and merchants for the transport of their goods in both domestic an international trade as well as to finance the holding of an inventories during the brief period required for their sales.
To day,commercial banks are the biggest lenders in commercial and industrial loans. They supply loan funds to business firms as well as to consumers , government agencies, universities, among others. Commercial banks possess a unique character among the financial intermediares.The debts of commercial banks circulate as money, and they have the power to create and destroy money through their savings and loan operation.
Commercial bank was applied to an institution that accepted demand deposits(also known as current or checking account) subject to withdrawal by check. This definition is no longer valid since other types of banks are now permitted to exercise the power to accept demand deposit under certain terms and condition.
The classification of banks and recognition of other organize financial institutions introduced by the financial reforms in 1972 are basically the same. With the financial reform of 1980, there are 12 universal banks in the country which perfom expanded commercial banking function . Commercial Banks:1. Ordinary commercial bank 2.expanded commercial banks ORDINARY COMMERCIAL BANKS
Commercial Banking is now available not only to existing commercial banks, including government-owned banks and phil. Branches of foreign banks, but also to other types of bank hencefort so authorized by the Monetary Board of the BSP after they have met the terms and condition laid down by law and administrative regulations. PRESENT POWERS OF COMMERCIAL BANKS
Batas pambansa Blg.61 , the powers necessary to carr y on the business of commercial banking are the ff. 1.accepting of drafts
2. issuing letters of credits
3. discounting and negotiating promissory notes, drafts, bills of exchange, and other evidence of debts. 4. receiving deposits
5. buying and selling foreign exchange.
6.lending money against personal securities
Add. Power available in commercial Banks:
1.Investing the equity
2.Purchasing , holding and conveying real estate
4.Acquiring readily marketable bonds
5.Receiving in custody funds, documents, valuable objects, and renting safety deposit boxes safeguarding such effects. 6.Acting as financial agent in buying and selling
7.Making collection or payment for acct. Of others.
8.Performing such other services for their customers.
ORGANIZATION AND CAPITALIZATION
A commercial bank, like any other corporation, is organize by at least 5 but not more than 15 person who are known as incorporators. the other owners of the bank are known as comparator or stock holder sometimes called subscribes when they initially negotiate to own certain shares of stacks in the banks. ff. information : 1.The name of the bank
2.The purpose for which the bank is organized
3.The location of the head office of the banks
4.The term of existence of the banks which is usually 50 years and renewable for a series of 50 years. 5.The names, residence and citizenship of the incorporators 6.The names, residence , and citizenship of the directors, the no. Of which shall be not less than 5 nor more than 15. 7.The capital stock of the bank which may consist of preferred and common stock. 8.The amount of preferred and common stock subscribes and paid. 9.The name of the treasurer elected by the incorporators.
The incorporators shall also adopt a code of By-laws which shall contain among other things ,the key officers who will manage the affairs of the bank, the diff. Working and standing committees and the members thereof; the time, date, and the place of the regular and special meetings of the board...