Recent changes in the global economy show an increasing dependence of states on the functioning of the financial and credit sector. Every year, the volumes of financing the interests of business, the state and consumers grow significantly, and a banking system exists to serve these needs.
What is a bank?
Banks are an integral element of any economy, whether global, state or regional. Individuals, business, government and other financial participants are connected by banking.
The Bank is a financial and credit institution that carries out operations with cash, securities, metals and contractual obligations, the subject of which is cash or other financial instruments, for example, an assignment agreement.
There are, in the broadest sense, 2 types of banks :
- The Central Bank is a state institution that is separated from other authorities, is in charge of financial and monetary policy issues, supervises financial institutions, ensures the issue of money and government securities, and lends to commercial banks. The banking sector is under the supervision of the Central Bank.
- A commercial bank is a private or public institution established with the aim of making a profit through banking operations.
Bank Requirements
The legal basis for the establishment of the bank is the law "On Banking", which provides the necessary requirements for obtaining a license:
- amount of equity capital - 18 million;
- list of documents;
- "clean" business and tax history of the founders;
- Availability of a risk and capital management system and an internal audit system.
It should be noted that failure to comply with the requirements of the law entails a motivated refusal by the Central Bank to issue a license. Also, if a legal entity carries out banking operations without an appropriate license, it may be deprived of all profits made as a result of such activities and forced to pay a fine of double the size of it in favor of the Federal budget.
The banking sector is also under the supervision of reputable rating agencies such as Fitch Rating, S&P, Moody's, etc. Their assessment determines the reliability and sustainability of a credit institution for several years ahead, high ratings increase the bank's attractiveness to other financial institutions among depositors.
Banking Services
The set of banking operations is very extensive, most banks make priority only on a part of them, therefore the classification by type of activity is fair:
- Universal banks. They are engaged in almost all types of banking activities, for example, Sberbank, VTB24.
- Investment banks. They are engaged in investments and speculation in financial markets, for example, BCS, FINNAM.
- Industry banks. They are mainly engaged in lending and servicing businesses, for example, Russian Agricultural Bank, Promstroybank.
- Specialized banks. They fulfill a narrow list of bank obligations or have a non-standard service system, for example, Gazprombank, Tinkoff.
The banking sector includes the following types of banking operations :
- Lending.
- Custody.
- Transaction service.
- Brokerage services.
- Investments.
- Currency exchange.
- Placement of precious metals.
- Leasing operations.
- Trust management of financial assets.
Legal regulation of banking: opportunities and limitations
The financial and banking sector is under legislative and financial regulation. From the point of view of the law, banks are subject to a set of legislative acts regulating banking activities. In Russia, the main one is the Federal Law "On Banking", and, for example, the relationship between the borrower and the bank is governed by the provisions of the Civil Code.
As for financial regulation, it consists in the supervision of commercial banks by the Central Bank. He issues and revokes licenses, checks the financial position of the bank, in particular, monitors the adequacy of the liquidity level, transparency of transactions, the level of reserve funds on the balance sheet, sets standards for accounting reporting, etc.
Russian legislation provides for insurance of deposits of individuals in case the license is revoked from the bank, the amount is up to 1,400,000 rubles, while the percentage of the deposit accumulated at the time of revocation of the license also falls under insurance. For legal entities, this provision of the law is invalid.