The interest rate of the Central Bank: features, calculation rules and interesting facts

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Many Russians turn to the Central Bank. Mortgage, the interest rate of which, unfortunately, is quite high, is quite popular today. For many young families, it is the only way to buy their own apartment or house.

Let's analyze some theoretical issues of such a financial institution as the Central Bank. Weighted average interest rates are regulated by the Federal Law "On the Central Bank of the Russian Federation" (Bank of Russia).

Features of bank interest

The borrower pays a certain amount of interest to a credit institution. The interest rate on a loan from the Central Bank today is determined by several features:

• receiving the bank profit from the client for the use of his money (loan interest);
• for the ability of a financial institution to use the client's money (deposit%);
• Central Bank rate at which loans are issued to other banks (registration);
• interest on the risks associated with the issuance of a loan(discount).

Each of them is necessary for specific functions: regulatory, savings, redistribution. The interest rate of the Central Bank of Russia is calculated taking into account many factors.

Theoretical features of calculations

Currently, the Russian Federation uses the classic formula by which the amount of payments on a deposit account is calculated. You need to understand what factors affect this value in order to correct them.

M=D(1 + r/100 t/360), where:

• M - the amount that will be received by the client after the end of the deposit period;
• D - deposit amount;
• r - financial institution's interest rate;
• t - the number of days for which the bank receives funds from the client.

In financial institutions, it is generally accepted that there are 30 days in each month.

Example of practical interest calculations

Let's analyze a specific option. The client plans to put 10,000 rubles in the bank at 3% per annum. They chose a period, namely six months. What amount can he expect when closing the deposit?

10000(1 + 3%/100180/360)=10000(1+ 0, 030, 5)=100001, 015=10150

This formula applies only when the accrual of the deposit is carried out once. What other options for bank interest are possible? Let's dwell on this issue in more detail.

About the peculiarities of interest

In order to understand the profitability of a bank deposit, you need to know not only the interest rate on this deposit, but also the option of calculating bank interest. The interest rate of the Central Bank is based on simple and compound interest.

In the first case, the accrual is carried out at a time, before the bank deposit is closed.

Note that the annual interest rate of the Central Bank for all deposits is indicated. In order to carry out calculations in other time periods, you can use a special formula. It includes the following parameters:

• annual interest rate of the Central Bank, R;
• total amount, Fv;

• deposit amount in days, Td;

• number of days in a year, Ty;
• initial deposit amount, Sv

The formula for calculations is as follows: Fv=Sv(1 + R(Td / Ty).

Important points

If we are talking about compound interest, then they are capitalized. This term is commonly understood as adding interest to the main deposit and taking it into account in subsequent calculations.

Compound interest is applied periodically, depending on the specifics of the selected bank deposit. It is difficult for an ordinary consumer to “see” a mention of a specific variety in the contract. The only thing that is available for study is the interest rate of the Central Bank on a certain deposit.

If the contract states that the accrual will be only at the end of the term,hence simple interest is used. In the case of capitalization, it is indicated that the deposit amounts are accrued annually, quarterly, monthly.

Bank risk options

It is customary to single out two types of risks inherent in financial institutions: banking and general. As part of its functioning, the structure faces numerous problems, so it is quite difficult to distinguish between risks. There is a theoretical grouping of them according to financial transactions:

• banking (applies to all options related to the activities of the bank);
• credit (appearing as a result of the debt of enterprises or individuals who are recipients of loans from a bank);
• currency (occurring during sharp "jumps" in the exchange rate);
• interest (reducing the interest rate of the Central Bank comes down to paying increased% for the use of money).

Rules for choosing a bank deposit

If the deposit involves compound interest, it will be charged in several periods. Of course, each time we will talk about a larger amount, which is more profitable for the investor. A deposit (bank deposit) is a certain amount of money that a financial institution accepts from a client for a fixed period (or for an unlimited period of time). According to the Civil Code of the Russian Federation, the bank is obliged, at the request of the client, to return the amount of money that was deposited, as well as pay interest on the deposit, establishedcontract.

If a financial institution refuses to return funds to a client, the reason must be very good. For example, finding a client under investigation due to illegal actions, providing false information by a citizen at the time of concluding an agreement with a bank.

According to the legislation in force in the Russian Federation, deposits of individuals, the amount of which does not exceed 1.4 million rubles, are subject to insurance compensation. If the bank's license is revoked, then the depositor is guaranteed to receive only this amount.

Summarize

In the Russian Federation, the Central Bank occupies a key place in the financial structure. The weighted average interest rates for different loans are determined by him. To obtain accurate information on the total cost of all loans, the concept of ATP (weighted average rate) was introduced. ATP is considered to be a reflection of the average rate on any loans taken by the organization.

Its calculation is based on the arithmetic mean. For example, if a company has taken three loans, the rates for which are 14, 12 and 16, then you can determine their average value: (14 + 12 + 16): 3=14 (%). Financiers note that the resulting number is not a characteristic of the organization's loan portfolio.

The cost of applying a loan depends on its size, therefore, for an enterprise that has loans with a lower interest for a large amount in its loan portfolio, the cost of loans will be significantly less. That is why when calculating the total cost of loans, not the average is usedrate, but the weighted average, determined for each loan separately.

Despite the various nuances regarding the processing of loans in the Russian Federation, according to the results of statistical studies, the number of loans annually increases both by individuals and firms (small and medium-sized businesses). The reason is the desire to purchase certain goods, equipment, pay for studies, medicines, travel.