What comes to mind when you hear the word financial institutions? Most of us would think of banks. But did you know that there are more institutions like this in the Philippines that are actually monitored by the Bangko Sentral ng Pilipinas (BSP)? We discuss each of them below, including how they work and the services they offer.
- Universal and commercial banks – banks, which make up the largest number of financial institutions in the Philippines, offer the most diverse kinds of services. Commercial banks are privately owned and offer basic services like business, personal, and mortgage loans. They also accept deposits and allow the opening of savings and checking accounts. Universal banks, on the other hand, offer the same types of services commercial banks do, on top of being allowed to do other transactions like investing in equities and underwriting.
- Thrift banking systems – this type of financial institution is where private development banks, stock savings, mortgage banks, loan savings, and microfinance thrift banks belong to. They work by collecting deposits from their members and investing them to grow. Thrift bank systems are a good option if you’re looking to borrow money for short-term working capital or medium- and long-term financing to your business. They usually offer this service to agricultural and housing businesses and to people running small to medium enterprises.
- Rural and cooperative banks – found in rural communities, these banks provide people in these areas basic access to financial services. They also provide assistance to certain groups like farmers in supporting their business. Unlike cooperative banks that are managed and owned by federations of cooperatives, rural banks are privately-owned institutions.
- Consumer Finance companies – these are alternative institutions that consumers can reach out to for products like cash loans and product loans. Unlike banks and other banking systems, companies like this ask for fewer requirements from their applicants, making them a great option for those who are not traditionally entertained by banks because of a lack of banking history. Similar to the other institutions on this list, authorized consumer finance companies are also regulated by the BSP.
Knowing the basics about financial institutions is one of the first steps towards a financially-literate society. Now that you’re more familiar with how they work, you are more equipped to use your financial power by tapping these providers.
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