2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
Recent changes in the world economy show the increasing dependence of states on the functioning of the financial and credit sphere. Every year, the volume of financing for the interests of business, the state and consumers is growing significantly, and the banking system exists to serve these needs.
What is a bank
Banks are an essential element of any economy, whether global, national or regional. Individuals, business, the state and other financial participants are interconnected by the banking sector.
The Bank is a financial and credit institution that deals with cash, securities, metals and contractual obligations, the subject of which is cash or other financial instruments, such as an assignment agreement.
There are, in the broadest sense, 2 types of banks:
- The Central Bank is a state institution that is separate from other authorities, is in charge of financial and monetary policy, oversees financial institutions, issues money and government securities, lends to commercialbanks. The banking sector is under the supervision of the Central Bank.
- Commercial bank - a private or public institution established for the purpose of making profit through banking operations.
Requirements for banks
The legal basis for establishing a bank is the law "On Banking", which provides for the necessary requirements for obtaining a license:
- share capital - 18,000,000;
- list of documents;
- "clean" business and tax history of the founders;
- availability of a risk and capital management system and an internal audit system.
It should be noted that failure to comply with the requirements of the law entails a reasoned refusal of the Central Bank to issue a license. Also, if a legal entity carries out banking operations without an appropriate license, it may be deprived of all profits received as a result of such activities, and forced to pay a fine in double the amount of its amount in favor of the Federal budget.
The banking sector is also under the supervision of reputable rating agencies such as Fitch Rating, S&P, Moody's, etc. Their assessment determines the reliability and stability of a credit institution for several years to come, high ratings increase the attractiveness of the bank over other financial institutions among depositors.
Banking services
The totality of banking operations is very extensive,most banks give priority to only a part of them, so the classification by type of activity is fair:
- Universal banks. They are engaged in almost all types of banking activities, for example, Sberbank, VTB24.
- Investment banks. They are engaged in investments and speculation in financial markets, for example, BCS, FINNAM.
- Industry banks. They are mainly engaged in lending and business services, for example, Rosselkhozbank, Promstroybank.
- Specialized banks. They fulfill a narrow list of banking obligations or have a non-standard service system, for example, Gazprombank, Tinkoff.
The banking sector includes the following types of banking operations:
- Lending.
- Depository storage.
- Transaction service.
- Broker services.
- Investments.
- Currency exchange.
- Placement of precious metals.
- Leasing transactions.
- Trust management of financial assets.
Legislative regulation of banking: opportunities and limitations
The financial and banking sector is under legislative and financial regulation. From the point of view of the law, banks are subject to a set of legislative acts regulating banking activities. In Russia, the main one is the Federal Law "On Banking", and, for example, the relationship between the borrower and the bank is regulatedprovisions of the Civil Code.
As for financial regulation, it consists in the supervision of commercial banks by the Central Bank. It issues and revokes licenses, checks the financial position of the bank, in particular monitors the sufficiency of liquidity, transparency of transactions, the level of reserve funds on the balance sheet, sets accounting standards, etc.
Russian legislation provides for insurance of deposits of individuals in case the bank's license is revoked, the amount is up to 1,400,000 rubles, while the percentage of the deposit accumulated at the time of revocation of the license also falls under insurance. For legal entities, this provision of the law is invalid.
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