Credit organization: concept and types, activities and licenses

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

An economic company that is authorized to carry out a certain list of banking operations, this is a credit institution. There are several types of companies of this kind. They are endowed with the range of powers that the license allows. Many of us, one way or another, became clients of a credit institution. At the same time, it is not necessary to act as a borrower, the range of services involves participation as a contributor, investor, shareholder. In this article, you can find all the information regarding what types of credit organizations exist, what role they play, and what needs to be done to open this kind of company.

How the creation process begins

The concept and types of credit institutions are interrelated. The purpose of the company implies the provision of banking services by a legal entity on the basis of a license and permission to carry out its activities in the form of joint-stock companies, as well as with limited and additionalresponsibility. The main purpose of opening such an organization is to generate income (profit). A prerequisite for creating a credit institution is the presence of:

• Original logo and name.
• Specific location.
• Stamp of the organization.
• Charter and share capital.
• Names in a foreign language.

The content of the name should not include words such as a credit institution and a bank, it is not allowed to use the names of government institutions, countries (in abbreviated form).

What kinds of such organizations exist

The concept of a credit organization is clearly fixed at the legislative level. There are only three types and forms of organization:

1. Non-bank credit institution. It has the right to carry out only a number of functions inherent in the bank, and to perform a limited number of banking operations. It is customary to distinguish three forms - payment, settlement and deposit-credit. Work with legal entities.
2. Bank. Endowed with the greatest powers, provides a full range of banking services. These include: work with accounts of legal entities and individuals (opening, maintenance), attracting funds to deposits.
3. Foreign bank. Has registration on the territory of a foreign state.

Banking operations are commonly understood as the attraction and placement of funds for the purpose of making a profit. This becomes attractive not only due to theinterest, but also the provision of guarantees for the safety and repayment of funds by a credit institution.

One of the forms of credit organizations is microcredit or microfinance (MFI loans) companies. They differ in the ability to carry out a smaller range of banking operations. As a rule, this is lending for small amounts, receiving funds from the population for placement in a deposit. At the moment, there is a certain restriction on the presence of the abbreviation MFO in the name. Loans issued by the company usually do not exceed 1 million rubles. It is allowed to abbreviate names to MCC - microcredit organization or microfinance.

How to organize

To open such a structure, it is not enough to know only what is meant by the concept and types of a credit institution. The main question: how and where to start? The following points are taken as a basis:

• Preliminary process at which the name of the organization is agreed with the Central Bank of the Russian Federation, the signing of constituent documents.
• The process of signing the memorandum of association. Carried out in strict accordance with the law "On Banking".
• Registration with government agencies. The state institution authorized to carry out such a function makes an entry in the unified state register of legal entities. This procedure is subject to payment of state duty.
• Registration and obtaining a license that gives the right to carry out banking operations. It contains information regardingthe currency in which the credit institution will conduct settlements, as well as a list of operations performed. This license has no time limits.

List of documents and reasons for refusal of registration

Having decided on the types of credit institutions, the concept of the need to collect the appropriate package of documents becomes one of the important activities. To make the registration process go quickly, you should prepare for it:

• Draw up a business plan and fill out an application, which will later be submitted to the Central Bank.
• Pay the state fee.
• Prepare and certify the charter with the head of the organization, information about the chief accountant and decide on the person who will hold the position of executive director.
• Persons acting as founders must submit income information for the last year in the form of a declaration.

After paying the authorized capital in full, it is necessary to obtain a license, on the basis of which the activities of the credit institution will be carried out. The period set for the implementation of these actions cannot exceed one month from the date of receipt of a positive decision of the Central Bank.

If a negative decision is received, the credit institution may appeal it to the Arbitration Court. The reasons that serve as a denial may be as follows:

• Conviction under articles for economic crimes held by the founder or managerorganizations.
• Lack of education or relevant qualifications for the chief accountant or candidate for the position of head.
• The submitted documents contain information that is not true.
• Unsatisfactory financial situation, the presence of overdue payments on loan obligations from the head.

Combined shapes

For the purpose of cooperation and development, financial and credit organizations can be combined into the following organizational and legal forms:

• Groups. On the basis of the concluded agreement, they can jointly carry out activities by providing banking services.
• Associations and unions do not have the right to form for the purpose of generating income. Their main task is to protect interests, fulfill common tasks to improve joint activities.
• Holding - an association in which leaders directly or indirectly influence the work of members of the society and its policies.

Guidelines

The activity of credit institutions is based on a number of principles that determine its further development:

• Performing its functions in strict accordance with Russian law.
• Unhindered financial transactions, which is meant by a single economic space throughout the Russian Federation.
• Economic freedom.
• Conscientious fulfillment by employees of a credit institution of their duties.
• Unfair, unfair competition, the presence ofcollusion between several similar organizations.
• Organization of a system that protects information and confidential information.
• Regardless of the organizational and legal form, the state must ensure a uniform degree of protection of the rights and interests of a credit institution.

Qualified advice regarding the banking services provided is a priority in terms of transactions.

Rights and functions

The main right and functions vested in banking credit organizations is the implementation of financial transactions, which is possible with the appropriate license. In order to achieve the fulfillment by borrowers of their loan obligations, the organization has the right to take appropriate measures within the powers given by law.

One of the main rights that affects the profitability of an organization is the ability to sell its securities on financial markets. This allows you to increase the reserve fund, which in turn has a positive effect on profits. It is also worth noting separately that credit organizations are subject to several branches of law: constitutional, civil, banking.

Undoubtedly, for a non-bank credit organization, designed as a microcredit company, the available sources for making a profit are high interest rates on the loans and loans they provide. Unlike a bank, the amount and terms of a loan are much lower, but it should be understood that an overpayment can be several times higher than the amount provided. Sincethis type of organization is not able to provide guarantees for the safety of funds (deposits are not insured), the depositor assumes responsibility for the risks of non-return of the deposit.

It is also worth noting that since microcredit organizations often provide amounts as a loan, a loan of no more than 50 thousand rubles, the package of documents can be reduced only to the need for the borrower to provide a passport. This right is enshrined at the legislative level.

Licensing procedure

The main document that gives the right to carry out its activities to a commercial credit organization is a license. Without its presence, the Central Bank of Russia has the right to apply to the Arbitration Court of the Russian Federation with a claim for the liquidation of this legal entity. Within the framework of the issued license, operations with precious metals and foreign currency are carried out. In order for the activity to be carried out to be legal, it is necessary to collect a package of documents in order to obtain the appropriate license:

• Charter of the organization and, if necessary, the memorandum of association.
• Application containing a request for a license that allows banking operations and state registration.
• Minutes of the meeting of the founders, which contains information regarding the selected candidate for the position of chief accountant and executive director.
• Document confirming the payment of the state duty.

The package of documents also includes profiles of the chief accountant andthe executive body of the executive body, reflecting in it information about the availability of appropriate education, the absence or existing criminal record. Mandatory submission of income tax returns and copies of documents on state registration of legal entities-founders.

The maximum period during which a decision is made to issue a banking license cannot be more than six months. After receiving a positive decision on issuing a license and registering a credit institution with state bodies, it is necessary to pay 100% of the declared authorized capital within three days. If this does not happen, the decision will be annulled.

Procedure and causes of bankruptcy and liquidation proceedings

Any crisis phenomena can lead to bankruptcy of a financial and credit organization. This phenomenon is often found among small structures that do not have a strong position in the financial sector. Bankruptcy is commonly understood as the inability of a legal entity to bear responsibility for payments and debt obligations. The organization itself or the Arbitration Court can announce this financial condition.

At the legislative level, it is stipulated that the rights of a credit institution do not include independent disclosure of its status as a bankrupt. They are required to submit an appropriate application to the judicial authority, which makes a decision.

A credit organization can be liquidated in case of full fulfillment of its obligations and absence of debt. This fact is confirmed during the accounting tax audit. Only then can the documents be submitted to the court for an appropriate decision. If it is positive, and the credit institution is recognized as subject to liquidation, the enterprise ceases to fully perform its functions. It will be impossible to transfer powers to third parties.

Reasons for liquidation:

• Expiration of the license or its absence, the organization's activities that are contrary to the content of the charter.
• The expiration of the period for which the enterprise was created, in connection with which the legal entity decides to liquidate the organization, and also in the case when it has fully completed its tasks, and there is no point in its functioning in the future.
• Violation by the activities of the body of the rights of third parties, for the restoration of which they had to apply to the judicial authorities.

What are signs of bankruptcy

It is possible to determine that a credit institution in Russia is subject to bankruptcy proceedings by the following criteria:

• Revocation of a license that gives the right to engage in certain activities.
• The total value of property at the disposal of a credit institution is less than the amount of obligations for which it is responsible.
• Inability to pay taxes and debt obligations.
• Downtime in terms of performance of assigned functions exceeds the period of more thanone month.
• Total debt is a thousand times (at least) higher than the minimum wage established in the region.

In order to prevent bankruptcy, preventive measures are taken to identify the factors that contribute to it. These include monitoring and analysis of financial and economic activities. A regular assessment of the economic situation in the organization is also carried out. In a number of cases, it is possible to save the situation from bankruptcy and loss of a credit institution's license by reorganizing or using anti-crisis management strategies.