What is bank deposit operations?

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

The banking system in the modern economy should ideally act as an accumulator and distributor of free money. Of course, in the harsh reality, everything is not so good, but nevertheless, we will study deposit operations as one of the most important parts of this process. In the article we will pay attention to all aspects. And for this, we will consider the deposit operations of the Bank of Russia, as well as various commercial financial structures.

Terminology

What are deposit operations? This is the name given to the active actions of banks to attract funds from individuals and legal entities in deposits for a certain period (or on demand).

The objects in this case are deposits. This is the name of the amount of money that the subjects deposit into their bank account. There are no problems with this. But who can act as subjects? They are understood as individuals, as well as enterprises of any organizational and legal form.property.

Deposit operations: preparation

Initially, each credit institution faces the task of creating its own policy in this area. It should be understood as a set of certain activities of the commercial structure, which are aimed at forming, planning and regulating banking resources.

The ultimate goal of the development and subsequent implementation of the deposit policy is to increase the volume of the working resource base. At the same time, it is necessary to strive to minimize costs and maintain the necessary level of liquidity, taking into account all types of risks.

If we take into account that each bank develops its own deposit policy, then the main question will be not whether it exists, but about its quality. The organization itself depends on a large number of factors, including the size of the financial institution, and the qualifications of the employees who are responsible for processing transactions, and much more. After all, the bank's deposit operations take place with significant amounts, and to allow them to disappear means to put a stain on your reputation.

Varieties of deposit operations

Types of deposit operations depend on many factors. So, if we proceed from the category of depositors, then there are deposits of legal entities (enterprises, organizations, other financial institutions) and individuals. And according to the form of withdrawal, such deposits are distinguished:

1. On demand. This means that the client can come and demand their deposit at any time.
2. Urgent. These are valid for a limited period. If the client wants to withdraw funds before the end of the contract, he may lose a significant part of the interest (or even all of them).
3. Conditional. These funds can be withdrawn only upon the occurrence of certain, predetermined conditions. An example is this: the onset of the 18th birthday.

These are the bank's deposit operations. But they can be divided, take on a more detailed look. We will talk about him now.

Demand deposits

These include:

1. Funds on the settlement, budget and current accounts of non-state enterprises that are state-owned.
2. Money belonging to individuals.
3. Funds placed on the accounts of funds for any purpose.
4. Public demand deposits.
5. Funds of correspondent accounts of other banks.
6. Demand cash deposits of financial authorities, non-commercial institutions.
7. Funds in settlements (they mean letters of credit and checks), as well as obligations for individual operations.

Despite the fact that there is a high mobility of money on these deposits, a minimum balance can be determined that will not be used until emergencies in order to obtain a stable credit resource in case of emergency. This, by the way, carries a hidden potential. As such, we can call credit and deposit operations with an account. They allow convenient and quick access tonecessary financial resources, without the need for a loan from the bank.

Term deposits

Fixed holding time is very important to maintain the liquidity of commercial banks' balance sheets. Also, their portfolio allows you to talk about the stability of the organization. As a rule, term deposits are accepted for a fixed term:

• up to 30 days;
• 31-90 days;
• 91-180 days;
• from 181 days to a year;
• from 1 to 3 years old;
• more than 3 years.

Very often there are situations when certain time deposits are not claimed, then they become such that they have an expired circulation period. The return of your money in this case will be very problematic.

The widespread use of plastic cards and settlements with their help positively affected the popularization of this type of deposits. In such cases, special accounts are created, on which a reduced interest rate is charged, but in case of withdrawal at an arbitrary point in time, the client does not receive fines from the bank. In order to increase the interest of people, the mechanism of complex rates is widely used.

Increase the amount of resources

For this, a variety of deposit banking operations are used, which are focused on different segments of the population, depending on their social level, as well as the amounts and terms for which the deposit is opened and transferred.

At the same time, banksthe requirements of different categories of people who can open an account are also taken into account. Thus, systems of interaction with everyone are envisaged - from students and pensioners to the middle class and businessmen. To be convinced of this, just look at what these financial institutions offer.

There are different contributions: student, pension, investment and so on. On them, banks offer increased interest or other preferential terms. Important in this case is the simplicity and speed of concluding an agreement and opening an account. For the most part, pre-prepared forms are used. Although in some cases an individual contract can be drawn up (this directly depends on the category of the client).

Struggle between banks for customers

Competition between various financial institutions forces them to analyze deposit transactions in order to choose a form of interaction with people that would put them in a favorable light. This consists in providing a full range of services, and in improving the quality of service, and in the possibility of tracking your account remotely.

Various bonuses can be provided in the form of selling traveller's checks, converting currencies at a favorable rate, issuing plastic cards, speeding up the transfer of funds, paying for various goods, utility bills and much more. The creation and development of a wide range of banking services, together with deposit insurance, qualitatively increases the attractiveness of a financial institution in the eyes of current and potential depositors. Thanks to this, the resource base of the structure is rapidly expanding.

Savings and deposit certificates

They are a type of term deposits. For the first time they were allowed at the legislative level in the Russian Federation in 1992. The rules applicable to certificates are the same for all banks. Although the conditions for the issuance and circulation of each individual type are developed precisely by financial structures.

Certificates can only be issued in rubles. In addition, a significant limitation is that they cannot serve as means of payment or settlement for services rendered or goods sold. A special feature is that the rate of the certificate cannot change unilaterally over time. If the client has applied for payment after the specified period, the financial institution is obliged to pay the specified amounts on demand.

The organization of deposit operations, which was discussed above, is more related to one bank and its interaction with individuals (or enterprises that are not related to the credit sector). And now let's expand the scope of our acquaintance.

Issuing bonds

Bonds are used as additional income. They are regulated by the same documents as shares. Bank can issue bonds:

• nominal;
• to bearer.

They can be secured with or without collateral, with interest, discount,convertible, with various maturities. In order to raise funds, they can be issued in foreign currency or rubles.

It should be noted that the provision of resources by banks to other financial institutions is of particular importance (if we talk about accounting for deposit transactions). This is carried out with the help of auctions and exchanges, although it is also possible to establish direct contractual relations between organizations. But if there are not very large structures or there is no trust between them, then an auction or exchange is a more likely option. Not the last role, by the way, is played by the presence of intermediaries and the need to pass at least some kind of selection.

Now let's pay attention to our realities and talk about the deposit operations of the Bank of Russia.

CBR loans

The bulk of the money of the Central Bank until 1995 was provided in order to lend to priority sectors of the economy. In this case, it made sense. These were considered certain groups of industrial areas, agriculture and other areas that are of significant importance for the functioning of the state.

Starting from 1994, the Central Bank began to practice resource auctions. As early as 1995, they became the predominant refinancing instrument. Since then, although directed lending is not something fantastic or out of the ordinary, the Central Bank has mainly been used as a vehicle for financing private banks at a lower rate so that they can support the masses.entrepreneurs and ordinary citizens, whose demand can significantly help the domestic economy.

Work of commercial banks

Let's take a look at what Sberbank's deposit operations can be when interacting with other financial institutions. There are 4 main directions:

1. Interbank loans received from other financial institutions. They are accompanied by an agreement, which stipulates everything necessary for such transactions: amount, term, interest rates. It is very expensive to use this resource, so it is not used very much.
2. Conducting a deposit operation by replenishing a correspondent account. It consists in the fact that the transfer of money is based on the relevant agreement. In this case, no interest is paid for the use of resources. The balance on the account is given as a reward. This method is usually used by friendly or trusted banks.
3. Resources from other affiliates. This method works only within one bank. Its use is convenient because there is no need for collateral, registration and exchange of agreements before obtaining a loan. No, of course, certain documents will have to be drawn up, but this is after the transaction. The operation is carried out as needed. To carry it out, it is enough to make a phone call, and a notification sent by e-mail or fax serves as confirmation. Due to this, this tool is considered the most mobile and convenient. It allows you to attract the necessary amounts,while doing so at minimal cost.
4. Help from the main bank. This type of attraction of resources could be attributed to the first point, if not for the fact that the interest rate is usually slightly lower and is set in a directive manner.

How the world does it

Attracting funds in the form of a deposit is carried out at a significant interest rate. Loans are also issued at even higher interest rates. Is it the same everywhere or are there exceptions?

The fact is that deposits are popularized as a reliable means of protecting against inflation. Of course, it is worth saying that this is true only in individual cases - often they simply reduce the impact of negative effects. Therefore, rates directly depend on this indicator. So, for example, in Japan, USA, Denmark, Switzerland, you can observe deposits at 0-0.5% per annum.

Loans in these countries are issued at 1-3%. On the one hand, it is not profitable to place funds with them. But let's look at our financial institutions - here you can see the rates for deposits in dollars and euros at 5, 6, 7 and even 10%! Theoretically, we can conclude that it is much more profitable to make deposits in foreign currency on the territory of the Russian Federation. But there are a number of risks here, including the possibility of forced conversion of all deposits into rubles, the disappearance of the bank from the financial services market, and much more. Therefore, high interest rates are a kind of compensation for the corresponding risks that the owner of the currency bears.

Summing up

So, deposit operations of banks are certain actions through which the formation of banking resources takes place. This process is carried out through the use of a number of tools.

Thus, the primary source of obtaining resources is the attraction of funds from clients (which are individuals and legal entities). Without operations of this type, it will be impossible to form the initial deposit portfolio of the bank, and the financial institution will not have the resources to issue loans and conduct its activities. Thus, without this, the modern monetary system would have experienced significant problems.