Opening financial reports, you can often come across news related to the revocation of a license. Despite the reputation, rating and financial merits, the Russian regulator mercilessly "heads down" left and right. At the same time, he withdraws licenses not only from banks, but also from certain NGOs. In this case, we are talking about non-bank credit organizations. What kind of companies are these? What are they doing? And what kind of activity are they doing?
General characteristics of organizations
So, an NPO, or a non-bank credit organization, is a company that is one of the links in the huge banking system of the Russian Federation. As a rule, it carries out certain types of banking operations, strictly regulated by the Central Bank of Russia.
These organizations operate under the law and operate on the basis of a valid license. Like banks, these companies are also regularly audited by regulatory authorities. However, unlike state institutions, less stringent requirements are put forward for the work of non-bank financial organizations.
Banks and NPOs: what is the difference?
The difference between NPOs (non-bank credit organizations) and banks lies in their powers and capabilities. For example, a financial institution can not only attract deposits, but also provide settlement and cash services, as well as issue loans.
However, many of the housing loans involve impressive amounts and terms. Non-banking companies can perform only one type of these services, for example, only issue loans or attract deposits. It is noteworthy that NPOs carry out their activities on the basis of the established procedure for credit organizations from the non-banking sector.
A few words about the procedure for regulating the activities of NGOs
All credit organizations existing in the Russian Federation carry out their activities on the basis of the Federal Law “On Banks and Banking Activities” dated February 3, 1996. Later, certain changes were made to this law. In particular, they affected varieties of credit firms. According to established standards, such companies can be of only three types:
- Banking credit organizations (commercial and government institutions).
- Non-banking institutions.
- Foreign banks.
If you believe the officially established concept, then credit institutions are any legal entities engaged in banking financial transactions on the basis of a license received from the Bank of Russia. The ultimate goal of the activities of such organizations, as a rule, comes down to personal profit.
Legal status of credit organizations
Such companies operate on the basis of Article 1 and the Banking Law. According to the established rules, such organizations carry out various banking and financial transactions within the framework of the law.
Banks, on the other hand, are credit institutions with the right to attract funds from legal entities and individuals in deposits. The funds received from the population, they place on their own behalf and on their own accounts, subject to their repayment, urgency and payment. In addition, under the law, banks are committed to maintaining these bank accounts.
Non-banking companies have the right to carry out only a small list of banking operations.
What types of NPOs are there?
Non-bank credit organizations can conditionally be divided into three groups:
- Companies performing cash settlement services for the population (RNCO).
- Firms offering translation services and making various payments (PNCO).
- Non-bank organizations that attract deposits and issue microloans to the public (NDKO).
At the same time, companies specializing in settlement services offer the following types of services:
- Opening and maintaining financial accounts for legal entities.
- Performing various calculations based on instructions from legal entities (transfers to bank accounts, payment of bills of respondent banks and suppliers).
- Implementation of collection services (maintenance of settlement accounts, work with bills and other payment documents).
- Execution of cash services for legal entities.
- Acquisition and sale of foreign currency, its exchange by bank transfer.
- Performing financial transactions without opening an account (on behalf of individuals).
- Trading in the securities market.
In a word, these companies can only perform settlement and cash services. But they do not have access to services for lending to the population and attracting deposits. But the implementation of credit and deposit operations is available for financial institutions.
Which organizations belong to the RNCO?
Among the obvious representatives of non-banking financial companies specializing in settlements, there are:
- Clearing firms and homes.
- Dealing centers.
- Clearing houses with access to trading on stock markets.
- Representatives of national and international payment systems.
- Clearing houses for various monetary transactions with foreign currency.
- Mutual funds (mutual investment funds).
- Settlement centers that service payment systems.
- Depositories.
- Settlement centers with maintenance of transfer systems (they work without the need to open a settlement bank account).
General characteristics and features of NPOs
NPO - most often it is a legal entity that has the right to carry out highly specialized banking operations. Unlike state structures, such organizations have a simpler financial policy, and an individual approach to each person who applies to them is also widespread. Such firms do not provide for investing in securities and attracting deposits.
Non-bank financial institutions do not carry out operations on the exchange, purchase or sale of foreign currency (including cashless payments). They do not accept payments and are not able to open bank accounts for individuals.
Features of payment credit organizations (PNCO)
Non-bank payment companies are usually involved in sending and paying cash without having to open an account for customers. As a rule, the activities of credit institutions with a payment orientation are directly related to a narrow range of financial transactions. So, most of the services that are provided in such firms are tied to ensuring secure payment transactions. For example, it can be sending or receiving a money transfer, making various kinds of electronic payments.
Among such organizations are representatives of electronic payment systems, mobile operators and money transfer systems.
Deposit credit companies: what kind of organizations
Non-bank deposit and credit organizations of the Russian Federation are companies engaged in actively attracting deposits, issuing loans, but without performing settlement operations. However, the capabilities of such firms may be limited by the regulator. Moreover, a certain limit can be set not only on the amount and terms of deposits, but also on loans.
What operations do credit deposit companies do?
The financial operations of credit institutions engaged in depository lending activities usually come down to the following services:
- Issuance of loans to legal entities and individuals.
- Acceptance of investments and deposits from individuals and legal entities.
Some organizations prefer to work exclusively with individuals. Others lend to legal entities. And there are those who provide financial services to both. Often, such firms are quite active in the stock market and carry out a number of operations related to the provision of loans and the acceptance of deposits. However, they do not open accounts. Credit organizations of the non-banking sector can only work with bank accounts already open.
What can be credit deposit companies?
The following organizations can be referred to credit deposit companies:
- Credit unions and cooperatives.
- Various cash desks for mutual assistance.
- MFIs, or microfinance organizations.
- Leasing and insurance companies.
- All kinds of pawnshops.
As for credit unions, this is not just an organization, but a kind of association of people in groups. These companies are created primarily for the purpose of lending and attracting deposits of their own members of the union (shareholders). As a rule, representatives of this association monthly or annually contribute a certain amount of money (it is called a share or a contribution) to the general cash desk of the organization. At the first registration in such an association, a one-time entrance fee is also made.
Over time, money accumulates in the group’s account. And if necessary, each of its members can count on getting a loan, as in a bank. The credit institution and the group members themselves are entitled to dispose of accumulated savings. They can take out a loan themselves, or the organization can issue a loan to individual interested parties (but within the framework of the current rules of association).
However, the rates for such peculiar loans and deposits are usually much higher than in banks.
Shareholders Opinions on Credit Cooperatives
Many people who have become members of a credit cooperative like the opportunity to get a loan for shareholders. Some are not satisfied with the existing restrictions on the terms of the loan and high interest rates. Therefore, most borrowers try to repay the loan issued to them as soon as possible.
As for deposits in such organizations, they, although they attract a high percentage, it is unlikely that they will be able to earn a large amount.
Why were mutual assistance cash desks needed?
Such organizations are public. They are based on the association of people with the possibility of making voluntary cash contributions. As in mutual funds and credit cooperatives, mutual assistance cash desks have their own accumulated capital (with the help of organization members). Moreover, members of such a fund could take loans without any interest.
According to history, these organizations were once popular with the USSR. However, due to the widespread financial fraud and pyramids, the mutual assistance cash desks decided to ban. Therefore, at present, their activities are prohibited by law.
Features of microfinance companies
Microfinance organizations occupy a special place among financial organizations of the non-banking sector . Usually these are small companies that issue small amounts of loans and for a short period.
According to borrowers, it is much easier to apply to MFIs than to banks. Firstly, they are more loyal to potential borrowers. So, you can take a loan without official employment, in the presence of a bad credit history, an overdue loan, and even without a collateral. The minimum age limit for potential borrowers in an MFI starts at 18 years old. In banks, it is equal to 21-23 years.
Secondly, getting a loan without income certificates and only with a passport is very convenient if you need a small amount and urgently. Another thing is that due to too large credit risks, the interest on such loans is very high.
Features of insurance and leasing companies
Leasing firms are companies that perfectly combine rental services (equipment, vehicles, machinery) and bank lending. Turning to such organizations, you can get any property on a rental basis, but with the subsequent right to purchase. According to reviews, such lending to legal entities is most interesting.
Insurance companies are also non-bank financial organizations, because they can give loans from existing accumulated contributions of insured persons. According to insurers, most often business representatives and industrialists act as borrowers.
And finally about pawnshops
Pawnshops are also representatives of non-banking organizations. They issue loans, but with collateral. For example, you can get a loan if you have not only gold jewelry, but also a car. From the point of view of borrowers, it is convenient to take such a loan. Another thing is that interest on it is accrued for each day. As a result, with the accumulation of a decent amount of interest, the borrower may not be able to redeem his original item or collateral.