Operations of commercial banks - an indispensable aspect of economic development
A commercial bank is a credit institution withuniversal functions, which is created for the implementation of attraction with subsequent placement of funds. In addition, banks in their activities carry out other operations.
After obtaining a license for a certainactivity from the head bank, a commercial bank can start working as a credit institution, as well as perform certain types of operations, the right to which the obtained license grants. Banks are prohibited from carrying out industrial, commercial and insurance activities.
The activity of banks is characterized by ambiguouscharacter. In addition to a commercial institution, banks are important social institutions. Based on the commercial component, banks are primarily interested in maximizing their income from their activities, and as social institutions, they serve as an important component of the financial infrastructure and should provide the conditions for the development of the state's economy and for raising the level of the people's well-being. The state of the economy largely depends on the activities of banks. Without a strong banking sector operating on a commercial basis, there is no way to create an effective market mechanism.
The operations of commercial banks are divided into passive and active. And they are interdependent.
The basis for the fact that bank operations are divided intopassive and active is the principle of the formation and deployment of banking resources. Liabilities are free resources of the bank that are available and serve to carry out active operations. Granting loans and buying securities, that is, carrying out active operations, banks perform constant control over the amount of liabilities, analyzing the terms of regular payments on deposit liabilities.
As part of the resources of banks, equity capital, as a rule, takes an insignificant share. The main part of it is formed with the help of borrowed funds.
As borrowed liabilities, commercial banks use:
- deposits on various terms;
- funds attracted through the issue and distribution of issued securities, which include a bond, a bill, a certificate;
- funds received on the basis of interbank agreements, including credit facilities of central and foreign banks.
Deposit operations of commercial banks are one of the traditional banking services that constitute the main part of the bank's liabilities and serve as the main source of active banking operations.
Active bank operations - placement actionspassive means of the bank for profit. Active operations are carried out on a commercial basis at a predetermined percentage and / or commission. In the course of active operations by a commercial bank, an important role is played by the analysis of the financial condition of the borrower in order to identify the ability to repay borrowed funds and interest on time. The profitability and financial reliability of the bank depend on the quality of active operations.
Intermediary transactions have long been closely intertwined with credit operations and formed a comprehensive form of banking services, which include factoring and leasing.
At the heart of factoring transactions is the resale of the right to recover debts associated with the implementation of production or trading activities.
Leasing operations of commercial banks arespecific form of a long-term lease agreement for vehicles, equipment, equipment, in which ownership of the leased entity remains with the lessor.
As you can see, the operations of commercial banks are quite diverse and are designed to provide not only the demands of interested parties, but also contribute to the development of a market economy as a whole.
