Commercial banks (CB) - organizations that serve various enterprises, legal and physical persons. Being independent economic entities, they are considered a significant part of the overall banking system, in fact, its main link. The functions and operations of commercial banks are reduced to maximizing profits. And these organizations build relationships with customers on a commercial basis.
Commercial Bank. Features
CB acts as a credit institution, which has the right to perform certain banking operations. Each commercial bank, whose functions are very diverse, is engaged in comprehensive customer service. This is its main difference from other credit organizations that are not endowed with such great powers.
CB, attracting funds of customers, have the right to place this capital on its own behalf. But at the same time on conditions of payment, urgency, repayment. Also, the responsibilities of organizations include conducting settlement transactions on the basis of instructions from customers.
The financial resources of these banks are determined by three components:
- authorized capital;
- attracted funds;
- retained earnings.
A commercial bank has a strictly defined management structure, where the main role is given to the meeting of shareholders. It is customary to convene it once a year, not counting extraordinary meetings. All shareholders may attend the meeting, but only the holders of ordinary shares have the
right to vote . The board of directors is the operational governing body of the CB, and its members are elected by the board of shareholders.
Commercial Bank. Functions
In accordance with banking legislation, the CB is assigned certain obligations for comprehensive customer service. The functions of a commercial bank include:
- Accumulation and mobilization of borrowed funds. This is the most important function in which the bank acts as a borrower, since the CB has a leading role in attracting capital and exaggerating it.
- Investing and placing borrowed funds in order to increase profits.
- Credit intermediation is also included in the list of powers exercised by a commercial bank. Functions of this kind play an important role in expanding production and consumer demand.
- Settlement and cash services for bank customers.
Basic KB operations
A commercial bank, the functions of which were listed above, must perform certain operations. These include:
- Deposit operations - raising funds owned by individuals and legal entities for the purpose of deposits for an indefinite period or on demand.
- The provision of loans at certain interest rates due to borrowed funds on the terms of repayment.
- Opening and maintenance of customer accounts.
- Collection of means of payment.
- Issue of securities.
- Purchase and sale of foreign currency.
- Operations with precious metals.
- Financial advice and bank guarantee.
In general, all operations of commercial banks are a manifestation of their functions. Russian design bureaus are required to conduct all transactions in Russian rubles. Transactions in foreign currency are allowed only if there is an appropriate license. In addition, banks are strictly forbidden to engage in insurance, trading and manufacturing activities (based on federal law).