1) Why do you think that set of functions of banks should be based on their capitalization as required by Bangko Sentral ng Pilipinas? 2

Answer:

BSP is the Philippines ' central bank that categorized the banks by required capitalization.

Step-by-step explanation

1. The BSP sets the functions as per capitalization because the bifurcation of banks shall be based on the capitalization by BSP and some of the critical functions of banks should be set as per capitalization are given below: -

(i) Liquidity management

(ii) Financial supervision

(iii) Management of foreign currency reserve  

2.     The classification of banks as per capitalization by BSP like commercial banks, universal banks, rural and corporation banks, thrift banks, etc. is the fair technique to segregate and recognize the bank's category. It simplifies the operations of the banking system. BSP complies with the regulatory requirements continuously and updates the domestic regulatory standard to mitigate the risk seen by the banking industry. Introducing additional capital for domestic banks shall improve the condition of the Philippines. Yes, it is favorable as per my point of view.

3. Yes, it is fair because the debt of banks shall increase if any restriction shall not be put on bank lending. BSP complies with the regulatory procedures that include the prohibition of lending to banks if loans exceed 30%.

Reference link: -

http://www.bsp.gov.ph/publications/media.asp?id=3561