Things you need to know about your bank transactions

WHAT are dormant accounts? Can you pre-terminate your bank loan without risking a subsequent penalty fee? What do you do when you receive a “notice of amendment”?

These may be some of the questions that you, as a depositor or as a borrower, may encounter throughout your relationship with your bank.

These questions are actually included in a primer published by the Bangko Sentral ng Pilipinas, in its ongoing efforts to reach out to financial consumers.

I am reprinting the contents of the primer to help those who are confused about some banking concepts and how to deal with them.

Frequently Asked Questions on Banks in General:

What information should banks disclose with regard to charges they impose on depositors?

* The imposition of bank charges or fees and the rate or amount of such charges or fees.

* The required minimum monthly average daily balance (ADB) of deposits.

* Any change in the terms and conditions for the imposition of service charges and/or maintenance fees (e.g. increase in the amount of such charges and fees).

What are considered dormant or inactive accounts?

The following are considered dormant or inactive accounts:

* Current or checking accounts showing no activity—withdrawal or deposit -- for a year.

* Savings accounts showing no activity for two years.

* What other conditions, if any, are applicable, in connection with the imposition of fees on dormant accounts?

* The deposit account balances have fallen below the required minimum monthly ADB.

* The period of dormancy is properly disclosed among the terms and conditions of the deposit.

* The depositor shall be informed by registered mail with return card through his last known address, at least 60 days prior to the imposition of the dormancy fee.

What can the depositor who receives a notice of amendment do?

* The depositor may manifest or register in writing his objection to the new fees or charges or to any change in the bank’s terms and conditions within 30 days from receipt of the written notice of amendment. Failure to do so would mean acceptance of such changes.

* Can a bank require a borrower to pay interest on loan in advance for more than one year?

* No. Section 5 of Republic Act No. 2655 (Usury Law) provides that no person or corporation shall require interest to be paid in advance for a period of more than a year.

Are banks required to furnish their borrowers information on all interest and other charges pertaining to their loans?

* Yes. Republic Act No. 3765 or the “Truth in Lending Act” requires banks and all creditors to furnish to a person to whom credit is extended, prior to the consummation of the transaction, a clear statement in writing to be acknowledged and signed by the borrower the “true and effective cost of borrowing.”

Can a borrower pre-terminate his loan without the bank imposing a penalty fee?

* If the pre-terminated loan is a loan to a consumer (i.e. loan purpose is primarily for personal, family, household, or agricultural purposes), as defined under Republic Act No. 7394 (The Consumer Act of the Philippines), the borrower may prepay in full or in part the unpaid balance of his loan at any time without penalty. This is in accordance with Article 137 of R.A. No. 7394.

* If the pre-terminated loan is a non-consumer loan (such as commercial and industrial loans), the bank may impose a penalty fee on the borrower.

Note: You may email us at totingbunye2000@gmail.com.

Past articles may be viewed at http://speakingout.ph/speakingout.php.