The credit sphere of monetary relations has distinctive features in terms of the nature of its functioning. The subject of transactions is the right to use the funds. In simple terms, the owner of the money changes for a certain period of time. Therefore, the organization of finance of credit organizations has its own characteristics.
Duality
The finances of credit organizations, on the one hand, are used to make a profit, and on the other, they have macroeconomic significance. The activities of such institutions are associated with the circulation of funds in the economy, ensuring the stability of business entities. This duality gives rise to some features of the finances of credit organizations.
Legal basis
The finances of credit organizations of the Russian Federation are formed on the basis of the Federal Law "On Banks and Banking". A credit institution is a legal entity that, for profit, carries out a number of operations under a license from the Central Bank. The form of ownership of the organization may be any.
The law provides for the creation of two types of organizations: banks and non-banking institutions. The Bank has the exclusive right to attract deposits of the population and legal entities, place funds on a paid and repayable basis, maintain accounts, perform transactions on the purchase and sale of securities, etc. A non-bank organization has the right to carry out only part of the operations listed.
State regulation
The law prescribes the minimum amount of the bank’s charter capital on the day of filing the application for registration. It is 300 million rubles. The Bank of Russia also regulates the limit on non-cash deposits and the list of property that can be contributed to the authorized capital. In particular, the bank’s capital can not be formed at the expense of loans of other institutions. The composition of shareholders should remain unchanged during the first three years of activity. Also, the Central Bank has developed a number of standards that are binding on all market participants. They govern the minimum amount of equity, the level of solvency and liquidity.
Reallocation of resources
Finance financially credit organizations are involved in the redistribution of resources at the macro and micro levels. Banks attract funds from individuals and business entities, and then use them to carry out transactions in the financial market.
Formation of reserves
Banks keep funds of legal entities and the state. In times of crisis, even the financial system can suffer. Therefore, banks form reserves for loans, against collateral in operations with the Central Bank, transferred to the accounts of the regulator.
Signs of finance of credit organizations
- Free disposal of funds within the legal framework.
- Urgency and repayment - funds are provided for temporary use for a certain period of time.
- Paid - interest must be paid for the use of capital.
- Riskiness - operations with a minimum level of risk are preferred, which can bring results in the long term.
- Mandatory compliance with the developed standards governing the sustainability of credit organizations.
Given the distinguishing features of the finances of credit organizations, monetary relations can be divided into two groups. The first is related to the conduct of business by commercial organizations (the provision of banking services), and the second is related to the specifics of the system as a whole. Banks store money, they act as intermediaries between the state and the population, and also participate in the activities of the securities market.
System organization
In Russia, there is a two-tier banking system. Finance of credit organizations are decentralized. This is due to the nature of market relations. Free enterprise provides for the distribution of resources through credit organizations. And this process should be controlled, because banks use not only their own, but also borrowed funds, including from government. Central banks of all countries of the world can be considered as intermediaries between the state and the economy. They combine the features of credit organizations and government departments.
The principles of the Bank of Russia
The legal status of the Central Bank is prescribed in the Constitution and the federal law of the same name. At the constitutional level, the main task of the regulator is to ensure the stability of the national currency. The federal law stipulates that the activities of the regulator are non-profit, since profit is not the ultimate goal.
The powers of the regulator are also divided into two groups. The first is related to the performance of state functions (regulation of monetary policy), and the second is related to the implementation of banking operations. The first are free of charge, and the second - at established rates.
The capital and all property of the Bank of Russia are part of federal property, however, the organization itself is considered legally and financially independent. The first condition is necessary to manage monetary policy. Financial independence lies in the fact that the Bank of Russia is not responsible for the obligations of the state and finances all its operations independently.
After approval of the annual accounts, half of the bank’s profit is transferred to the federal budget. The remainder goes to the formation of reserves and funds. Taxation of operations is carried out in accordance with the Tax Code, with the exception of those related to state regulation.
Organization of finance of credit organizations
The transition to a market economy has changed the capital structure of financial institutions. Today, the main source of generating funds is equity raised from the financial market. In the administrative-command economy, the capital of banks was formed at the expense of state resources. Over time, the range of products offered has expanded. Banks began to receive income also from the RZB, from operations with metals, currency, leasing, factoring, forfaiting transactions.
The organization of finance of credit organizations is to attract temporarily free funds and at the same time meet the resource requirements of the population and business entities. Therefore, in the structure of bank resources, we can distinguish:
- equity: authorized capital, reserves, special funds and profits;
- Obligations are funds raised from passive operations (customer deposits) to carry out active operations (granting loans).
Bank profit
The amount of organization resources affects the volume of operations. With the transition to a market economy, the quality of capital has changed. The organization of finance of credit organizations is such that profit is now not only the ultimate goal, but also an important social indicator. Its availability and size are related to the interests of different consumer groups:
- for shareholders, profit is the main indicator of profitability;
- for employees of the organization - the opportunity to receive a reward for the quality work done;
- for borrowers, profit growth means expanding the resource base and the possibility of obtaining a loan on more favorable terms.
Bank profit is calculated as the difference between the income from operations and the costs of their implementation, the content of the management apparatus. Income, in particular, includes interest on loans, payments for cash settlement services, income from transactions with the Central Bank, currency, precious metals, guarantee operations, trust management, leasing, consulting services, etc.
Expenses include expenses on paying taxes to the budget, interest on attracted deposits, commission on interbank loans, payment for correspondent services, costs of transactions with the Central Bank, currency, precious metals, formation of reserves, maintenance of the management apparatus.
Management
In financial institutions, there are two forms of resource use. Targeted financing (funding) allows shareholders to exercise control over the movement of funds. Due to non-fund resources, banks can expand the network of branches, acquire fixed assets, stimulate employees, and engage in charity work.
An increase in the resources of any commercial organization is achieved by increasing sales revenue and reducing costs. This principle does not apply to banks whose main activity is the issuance and repayment of loans. The amount of his profit depends on the size of the funds provided and the interest rate on them. Therefore, the main work in the management of financial resources is to increase the amount of equity.
The easiest way to this goal is to increase the authorized capital. The expansion of capital will increase the marginal volume of loans per borrower and focus on long-term investments.