BANK OPERATION FRAMEWORK

A Bank is formed as a corporate entity. Hence, the stockholders who are part-owners of the business have to delegate their power of management to a board of directors.

BANK MANAGEMENT

The board of directors will be composed of a number agreed upon as contained in the by-laws, but in no case should it exceed the number allowed by law.

In small banks, the chairman of the board and the president may only be one person in order to achieve harmony, efficiency, and economy.

BOARD OF DIRECTORS

Every director shall own at least one (1) share of the capital stock of the corporation of which he is director; the share stand in his name in the book books of the corporation. a. Educational attainment, b. Adequate competency and understanding of business, c. Age requirement, d. Integrity/probity, and e. Assiduousness.

2. At least two-thirds of the members of the board of directors of any commercial bank shall be Filipino citizens; and all members of the board of directors a rural bank shall be Filipino citizens.

3.The proposed directors of a bank shall be subject to qualifications and other requirements of existing laws, rules, and regulations of the Bangko Sentral.

BOARD MEMBERS QUALIFICATIONS

The Responsibilities of the board of directors are threefold. Firstly, they are duty-bound to adopt measures that shall safeguard the depositor’s interest. Secondly they must be sure to compensate the stockholders fairly enough in exchange for the risk they undertake and the capital they invest. Thirdly, the directors are responsible to the regulatory and supervisory agencies who keep surveillance over the management of the bank’s affairs to allow maximum safety to depositors and also to give widest and best kind of service to the public.

Responsibilities

The Executive Committee- This committee deals with administration matters.

The Loans and Discount Committee- All matters pertaining to loans and discounts , to lines of credits, and others related to the loaning function of a bank are deliberated on by this committee.

The Investment Committee- This committee concerns itself with the bank’s investment portfolio.

The Trust Committee- The fiduciary function of a bank will be the main concern of this committee.

The Examination Committee- In order that the bank will always be in shipshape condition regarding its operations, the internal examination and audit of its accounts is an essential feature of good management.

Committee’s Function’s

The liabilities of directors shall arise from their incompetence and negligence in the discharge of their duties.

Liabilities

Directors may be prohibited from doing some acts, which will either impair or jeopardize the bank’s good relations with the public. A director might be required to inhibit himself from deliberating on a loan where he is directly or indirectly interested.

Limitations

55.1. No director, officer, employee, or agent of any bank shall:

a.) Make false entries in any bank report or statement or participate in any fraudulent transaction, thereby affecting the financial interest of, or causing damage to, the bank or any person; b.) Without order of a court of competent jurisdiction, disclose to any unauthorized person any information relative to the funds or properties in the custody of the bank belonging to private individuals. c.) Accept gifts, fees, commissions, or any other form of remuneration in connection with the approval of a loan or other credit accommodation from said bank’; d.) Overvalue or aid in overvaluing any security for the purpose of influencing in any way the action s of the bank or any bank; or e.) Outsource inherent banking functions.

Sec.55. Prohibited Transactions.

The officers of a bank consist of a president, one or more vice president, a cashier, and some other officers as provided for in the by-laws.

BANK OFFICERS

President are held by one person. Held by separate person, however ,the chairman presides at the board meeting while the president becomes the chief executive or the general manager of the bank.

THE PRESIDENT

The vice- president assists the president when the latter is present. However, when president is absent or incapacitated, the vice- president takes over his duties and responsibilities.

VICE PRESIDENT

The cashier often doubles up as the chief clerk, the secretary, and the treasurer of the bank.

THE CASHIER

Other officers of the bank may be the comptroller and the auditor. And are also responsible for the efficient and harmonious administration of their duties.

OTHER OFFICERS

BANK OPERATION

Executive – faced with policy-making, with establishing harmonious relations with customers in order to get business, with gathering facts and figures about the depositors and debtors, with recruiting personnel to do the minor operations , and with similar duties involving the caliber of an executive.

THE EXECUTIVE FUNCTION

He accepts deposits, he changes checks for cash, he changes big bills with denominations, he releases the checks or cash representing loan receives payments for loans, and such other tellers functions.

THE TELLER FUNCTION

He keep faithful record of the events and accounts passing though his hand, the banker must record the figures and sometimes facts.

THE BOOKKEEPING FUNCTION

He should be patient, understanding, cordial, and respectful. He should be well-versed in banking principles and practices.

PERSONAL AND EDUCATIONAL QUALITIES OF A BANKER