Commercial banks and their classification
Bank is a credit institution that has the exclusive right to conduct in aggregate three basic banking transactions.
1) attraction of deposits of funds of individuals and legal entities on terms of repayment, payment, urgency;
2) the placement of these funds on its own behalf and at its own expense on terms of recoverability, payment, urgency;
3) maintenance of bank accounts (non-cash transactions and cash transactions).Credit organization is a legal entity that has the right to conduct separate banking operations to extract profits as the main objective of its activity.
Banking is understood as the entire monetary activity of banks and non-bank credit organizations.
Banking activities in relation to the client can be disclosed through the following concepts:
banking operation - the practical actions of bank employees in the process of customer service related to cash flow;
banking service is the result of satisfying a client's request in an area not related to cash flow (for example: legal, accounting, transport services, bank guarantees, etc.) .
Qualitative banking operations and services received on time and on acceptable terms are the main result of the bike's activity from the point of view of the client. From the point of view of the bank itself, the main result of the activity is the receipt of profit sufficient for one hundred further functioning and development.
From a macroeconomic point of view, banking remains an extremely important element of the economy, performing in it a unique function related to the movement of funds. The bank accumulates (acquires for its payment in its temporary order) free funds of legal entities and individuals and the funds collected in this way provide loans to all those in need. Thus, a commercial bank is an intermediary organization that provides the following fundamental operations to clients:
• Credit, under which one group of clients itself lends to the bank, trusting its own funds (passive bank operations), and the other - is credited to the bank, borrowing funds from it (active bank operations);
• billing and payment , not infrequently combined with cash.
The banking sector - is the social and economic branch of the economy and public life in general, which reacts very acutely and flexibly to any changes in the economic and socio-political life of the country.
It should be borne in mind that due to the involvement in the sphere of banking activities and the interests of an extremely large number of actors and significant sums of money, the processes taking place in it have a global (in the scale of the country) nature and the degree of impact on the society is often comparable with the influence of the state.
The banking sector as a specific sphere of entrepreneurship has the following features:
- the prevalence of attracted funds in the resources of banks, entailing a high responsibility for their efficient use;
- the extreme variability of the parameters of the functioning of money markets, caused not only by economic, but also by political, social and other reasons, which require that bank employees have the highest efficiency in conducting operations without compromising their quality;
- the need to constantly and simultaneously work with a wide variety of clients, conflicting interests and goals that need to be coordinated in a wide variety of markets, with different financial instruments, with a variety of currencies.
Commercial banks can be classified according to different criteria (criteria). The purpose of the classification is to find out as much as possible the individual characteristics of each bank in question. Banks are classified according to several criteria (Table 7.1).
Classification of banks by feature
Organizational and legal form
Sphere (territory) of the action
Degree of Independence
Nature of activity
Public Private Cooperative Mixed (representing different forms of ownership)
Joint Stock Companies (JSC and CJSC) LLC (unit trusts)
United States Foreign Joint
Regional (including municipal) Interregional Foreign (United States banks abroad)
Large Medium Small
Head (separate) Subsidiaries
Universal Specialized, including those with industry specialization (savings, mortgage, land
All banks by definition are universal credit organizations. However, any bank currently specializes in a limited number of transactions, using most of its resources to conduct them. Therefore, the specialization of a bank means only that, while remaining universal, i.e. having the ability to carry out any operations necessary for the client, the bank nevertheless concentrates its main forces and resources on a small number of operations. A set of such operations, each bank, as a rule, periodically reviews and clarifies.
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