The banking system is a combination of the regulator and credit institutions that operate within a single mechanism. The key link is the Bank of Russia (CB). The activity of the entire structure is regulated by the Law on Banks and Banking Activities.
Kinds
The essence of the banking system, the goal of its creation, is to accumulate available funds and extract profit from them through capital investments. This process is carried out at several levels.
Types of systems:
- two-level;
- monobank;
- decentralized system.
In developed countries, a two-tier system operates. It is characterized by the presence of a regulator in the person of the Central Bank and commercial credit institutions subordinate to it at the second level. But there are exceptions. In France, the regulator is the Ministry of Finance. All banks, including the Central Bank, are subordinate to him. The United States has its own decentralized system, in which the main functions are performed by the Federal Reserve System. In the days of the USSR, a monobank scheme operated. Consider how the banking system of the country is arranged today.
Regulator
The Central Bank of the Russian Federation was created in the form of a legal entity, but it does not have a charter and is not regulated by tax authorities. He can issue money, withdraw it, issue new banknotes. The profit of the institution is directed to the formation of reserves, funds, transferred to the budget. Sources of income:
- dividends on shares;
- interest income on loans and deposits;
- profit from operations with precious metals, corporate rights, other securities, etc.
The objectives of the activity are:
- banking system organizations;
- ensuring the stability of the national currency (purchasing power, course);
- ensuring the effective functioning of the system.
Instruments:
- rates on operations of the Central Bank;
- reserve ratios;
- refinancing;
- currency regulation;
- benchmarks for money supply growth.
According to the legislation, the authorized capital of the regulator and its other property are federal property. The Bank of Russia only controls them. The state and the Central Bank of the Russian Federation are liable for each other's obligations.
The supreme body of the Central Bank - the Board of Directors, which determines the direction of the institution. It consists of the chairman of the Central Bank and 12 members. Banks of the republics, which are territorial branches of the regulator, cannot issue guarantees, sureties, obligations without the permission of the Council.
Banks are divided into two large groups: commercial organizations and non-bank credit institutions. This is how the country's banking system works at the first level.
Commercial establishments
The purpose of the existence of credit organizations is to make a profit. They must be licensed by the regulator to carry out activities. Such institutions can be created in various forms of ownership: state, private, municipal, etc.
Banks have the right to carry out the following operations:
- attract deposits of individuals and legal entities;
- place funds on your own behalf;
- make settlements on behalf of third parties;
- conduct collection services;
- acquiring
- open and maintain accounts;
- issue warranties, etc.
Banks can borrow funds from each other, make settlements through correspondent accounts and perform operations that do not contradict the law. Credit institutions around the world are ready to offer customers about 200 types of services. But the Law "On Banks and Banking" imposed a ban on 4 of them: trade, production, insurance, monopolistic. The latter refers to operations aimed at restricting competition.
A credit institution cannot independently change rates on loans, deposits, and the validity of contracts. Cash and valuables of clients may be seized in court. Penalties are carried out only on the basis of executive documents, and confiscation - on the basis of a court verdict that has entered into force.
Non-banking organizations
These are credit institutions that can carry out certain types of operations. These include organizations:
• issuing loans;
• storing values;
• selling mortgaged property.
Answering the question about how the country's banking system is structured today, we can say that it consists of three levels. In addition to the Central Bank and commercial institutions, insurance companies, investment and pension funds, and other financial institutions participate in the redistribution of funds. This is how the country's banking system works.
Business principles
- Work within real resources. Interest income on deposits and loans is the main, but not the only source of profit for banks. In conditions of inflation, the most profitable area is exchange trading. Bank capital contributes to the growth of speculative operations. In such conditions, planning is carried out on the basis of actually raised funds.
- Responsibility for performance. The banking system in the economy performs an important task - redistributes money between sectors. Credit institutions are free to choose clients and investment areas. But for all commitments made, banks respond with their own funds, which may be levied.
- Organization of customer relationships by market conditions. When issuing loans, the bank is guided by indicators of liquidity, profitability and risk.
- Regulation of activities is carried out exclusively by indirect methods. The state and legal acts form the basis of functioning, but cannot dictate the conditions and directions of activity.
Banking and financial systems today
In recent years, credit institutions have been striving for openness. Introduce modern technologies (bank payment systems, plastic cards, client-bank, etc.), various types of lending. But in terms of economic indicators, the level of development of the system in the Russian Federation lags behind the world.
The share of loans in the structure of enterprises' investment sources is insignificant - 8-10% (Japan - 65%, EU - 42-45%, USA - 40%,). Bank accounts are held by 25% of Russians, and only 10% use plastic cards. In Western countries, almost the entire population over 18 years old has an account and 1-2 credit cards.
The issue of saturation with regional services remains an acute one. The main banking system of the Russian Federation is concentrated in megacities. You can only get a mortgage or car loan in the northern and southern regions of the country at state-owned banks.
The reasons for the low level of development of the system are as follows:
- the state does not pay much attention to this sector;
- low level of monetization of the economy;
- undeveloped infrastructure of banking services;
- a large proportion of cash payments that are carried out outside the banking system;
- lack of adequate protection by the state.
Bankopad 2015
The national banking system as of 01.01.2016 includes 681 credit institutions. In total, 947 organizations were registered, but 266 of them revoked the license. Compared to 2015, the number of banks decreased by 102 units. Analysts predict that in 2-3 years this figure will drop to 500.
Despite the crisis, the pace of “cleaning up” the sector has not slowed down. The loudest in the past year was the revocation of the license from Transport in connection with non-compliance with federal laws. DIA payments are estimated at a record 39 billion rubles.
The number of banks in the Russian Federation exceeds the needs of the state economy. Approximately 96% of the country's acts are consolidated at the 200 largest institutions. Another 481 small organizations account for 3.5% of assets. Until the situation in the economy improves, small banks will have problems with liquidity and compliance. There are only two options for solving the problem: sell assets or go for reorganization.
Difficult to find investors
There are many banks wishing to stay in the market. As well as buyers. The problem is that the vision of value varies on both sides. After the introduction of sanctions, the number of Western investors is constantly decreasing. Partners are now sought in the markets of the Near and Far East.
The work of the banking system of the Russian Federation may well be carried out at the expense of 300 institutions. Organizations from the fourth hundred in the ranking are captive, serving only a number of enterprises. In the literal sense, they are not involved in banking activities.
Results 2015
All last year, banks tried to maintain profitability. But not everyone succeeded. Even large market players showed record losses. While the population is considering whether to carry deposits in the same Sberbank (having previously exchanged rubles for dollars), credit organizations are experiencing liquidity problems.
Due to the collapse of the ruble, the volume of the loan portfolio for the 1st quarter of 2015 decreased by 0.7%, reserves - by 7.6%, profit amounted to only 6 billion rubles. A lifebuoy threw the Central Bank, which introduced regulatory exemptions. As a result, the share of regulator's funds in banks' liabilities at the end of April reached a record high - 10.4%. Institutions accrued reserves for restructured loans under a preferential scheme.
The second measure of support is the recapitalization of banks for 830 billion rubles. according to the OFZ scheme. The program worked only in the second half of the year, so its effectiveness can really be evaluated only by the end of 2016. But the injections allowed banks to maintain capital adequacy ratios and replenish Tier 1 reserves. The payment for the support was the obligation not to increase the costs of private pension funds and to limit dividends for three years. The actions of the Central Bank allowed to increase the share of loans by 0.7%, deposits - by 10.9% and make a profit of 265 billion rubles.
The main problems of 2015
The main problem is a decrease in consumer loans by 12% compared to last year's growth of 8.9%. As a result, a group of banks dipped, which specialized only in unsecured loans. The 6 largest institutions accounted for 10% of retail loans and 20% of overdue loans. Their indicator of distressed assets (15%) is 2 times higher than the average for the system (9%). To restore positions, banks will have to reorient themselves towards providing universal services.
The collapse of Transaero, which accumulated 250 billion rubles of debt, also became an unexpected obstacle. Her problems fell on the shoulders of creditors, whose losses in the event of the bankruptcy of an air carrier would amount to billions of rubles. Defaults in the corporate sector are expected in 2016. All sectors of the economy have been hit by declining demand. There are practically no hopes for its restoration in 2016.