Credit operations of the bank - Monetary economy. Theory of money and credit

Bank Credit Operations

The Bank issues loans based on the principles of repayment, payability and urgency. Loans can be provided both for commercial purposes - to finance the current needs of firms in the capital, and for consumer purposes - loans for the purchase of durable goods, payment for training or treatment, and for the purchase of housing. With the help of credit, banks finance the activities of industrial and trading companies, financial institutions, the functioning of state authorities and contribute to improving the life of the population.

All bank loans can be classified as follows:

Secured loans. The security of a loan can be the pledge of a product, property or security. If the loan is not returned, the pledge becomes the property of the bank. The sale of collateral provides the bank with compensation for the resources expended. A mortgage loan is called a mortgage. As a rule, specialized banks are engaged in mortgages. Securing the loan should be sufficient to pay the principal debt on the loan to the bank, all interest payments and costs associated with the sale of collateral. The guarantee and guarantee can also be a guarantee of a loan - a unilateral written commitment by the guarantor or guarantor to the bank to repay the debt in the event of its non-payment by the borrower. The guarantor can be an insurance company or a firm that is a business partner of the bank, as well as a state.

Insufficiently secured loans. If collateral is less than the amount of debt and interest, then such a loan is considered insufficiently secured. In case of non-return of the debt, the bank will be able to compensate only for part of its expenses.

Unsecured loans. In this case, the bank's loan has no security. The loan is considered unsecured (blank). This type of loan is the most risky. The bank can provide blank loans for very short periods and borrowers with a good reputation.

On the level of credit risk, loans can be divided into four categories. Standard loans are practically risk-free, they are given to first-class borrowers, firms with a very good reputation, under sufficient collateral. Non-standard loans are characterized by a moderate risk of non-return. Doubtful loans carry a high level of risk. A bad loans are loans that do not have a repayment probability, so the loan is a real loss of the bank.

According to maturity, loans are divided into on-call loans (or demand loans) and term loans. A bank loan can be requested at any time. And the borrower is obliged to return this loan within 30 days after the bank's application. The repayment term for urgent loans is stipulated in the loan agreement. These can be short-term loans (up to one year), medium-term loans (from one to three to five years) and long-term loans (over five years). Before the expiration of the established period, the bank has no right to demand the return of the invested funds.

Repayment of the loan and payment of interest on it occurs in two ways. The Bank may set a time limit for the payment of all principal and interest as a one-time contribution. Either loan repayment occurs in installments when the amount of debt and interest payments are written off in installments throughout the duration of the loan agreement, for example, once a month, once a quarter or yearly. The shares of debt cancellation can be either uniform or uneven. In the latter case, most of the debt, as a rule, falls on the last payments, and the smaller part - on the first payments.

The procedure for granting a loan may be different.

Non-cash loans are issued through transfers of money from the bank account to the borrower's account. Non-cash loans are usually provided to firms or other financial intermediaries.

Loans in cash are issued to the population and small businesses. Here, if such a decision is made, the bank issues cash directly to the individual who applied to it.

The bank can also open a credit line for the borrower. The credit line implies the conclusion of a contract under which the borrowing firm is eligible for a loan within a certain period of time. The total amount of the loan should not exceed the maximum limit established by agreement. Under the terms of the contract, loans can be issued several times. Credit lines are usually opened for not more than one year, for lending to regular customers of the bank. The advantage of the credit line for the borrower is that during the period of the loan agreement, no additional agreement with the bank's management is required to obtain a loan.

For individual accounts and for the most significant and trusted customers, the bank can provide the overdraft service . Normally when using cashless payments or withdrawing money from an account using a plastic card the amount of write-off exceeds the resources available on the client's account, the bank blocks the transaction. Overdraft provides for the possibility of exceeding (up to a certain amount) the amount of withdrawing the size of the current financial resources of a firm or an individual. In this case, the bank temporarily lends the customer an excess amount.

Syndicated loan is provided by two or more banks to one borrower. Banks unite their financial resources, forming a financial syndicate. Each bank assumes the obligation to provide a certain share of the total loan. Collective credit allows banks to reduce the financial risks of non-repayment of loans and increase the total amount of the loan.

Question for reflection

Do you think that the prevailing form (form) of credit in the country depends on the state of affairs in the economy? How?

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