Commercial Banks

Commercial Banks 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 This definition is no longer valid since other types of banks are now permitted to exercise the power to accept demand deposit under certain terms and condition.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