Banking operations today are a concrete manifestation of their functions in practice. What is the difference active and passive banking operations? What are the criteria for classifying them? What are the differences in the banking system of the Russian Federation? You can find answers to these and other equally interesting questions in the process of reading this article.
The concept and main features of banking operations
Today, banking operations should be understood as operations directly aimed at solving certain problems and implementing the functionality of the bank (increase in bank funds considered one of the most important functions in relation to commercial structures). In other words, banking operations fully reflect banking activities. The Bank, as a commercial organization, is an intermediary between entities that have funds and need them.
Based on these provisions, in modern times the main classification of banking operations and services on passive, active, intermediary and other operations. All of them are examined in detail in subsequent chapters of the article.
Legislation classification
As it turned out, the operations of a commercial banking structure are a concrete manifestation of their functionality in practice. So, in accordance with Russian law, the following classification of banking operations:
- Operations on attracting funds of individuals and legal entities in deposits for a specified period or on demand.
- The provision of loans from attracted and own funds on its own behalf.
- This classification of banking operations It also involves the opening and further maintenance of accounts of legal entities and individuals.
- Settlement directly on behalf of clients. This also includes instructions from correspondent banks.
- Basic Banking also include collection of cash, settlement and payment documents, bills. In addition, it is necessary to include cash services for the clientele of the bank.
- Money management in accordance with a joint agreement with the manager or owner.
- Considered classification of banking operations also includes the purchase from legal entities and individuals, as well as the sale of foreign currency both in cash and in non-cash form.
- Carrying out operations directly with precious metals under applicable law.
- Issuance of bank guarantees.
Classification of banking operations, their types and characteristics
In addition to the above classification, under Russian banking legislation, commercial banking institutions are entitled to carry out the following transactions:
- Leasing operations.
- The issuance of guarantees directly for third parties, which, one way or another, provides for the fulfillment of obligations in monetary terms.
- This classification of banking operations It also involves the acquisition by third parties of the right to demand the fulfillment of obligations in monetary terms.
- Providing information and consulting services.
- Leasing to legal entities and individuals specialized premises or safes located in them for storing documentation and valuables.
It is important to add that it is thanks to the implementation of these operations bank assets endowed with the property of gradual increase.
Additional Information
It must be added that, in addition to the above, a credit institution has the right to carry out other transactions that are inherent in it as a legal entity under the laws of the Russian Federation. It is important that absolutely all banking operations are performed in rubles. Foreign currency is appropriate if the structure has a corresponding license of the Bank of Russia. By the way bank assets can be replenished through the implementation of operations on an ongoing basis (in other words, regularly) or through the execution of episodic transactions.
In addition, one should distinguish between balance sheet and off-balance sheet operations of banking institutions. So, the latter, in any case, are not reflected in the bank balances, which are published officially. They can be carried out both to raise funds and to place them under certain conditions, that is, in the case of specific, pre-agreed circumstances.
Passive operations
The concept of banking operations passive nature implies some of their combination, ensuring the creation of the resource potential of a commercial bank. It is important to note that passive operations play a fundamental role. Why? The fact is that an extremely stable and high-quality resource base allows structures to carry out credit and other operations in terms of allocating funds that will subsequently bring profit. Obtaining the latter is the main goal of the activity not only of banks, but of all commercial institutions. So, the following points should be attributed to passive operations:
- Raising funds for current and settlement accounts of individuals and legal entities.
- Opening accounts for term deposits of organizations and enterprises.
- Opening deposits of citizens.
- Issuance of own debt obligations, which include bills of exchange, certificates and bonds.
- Attraction of loans and credits from other persons.
- Operations on the creation and subsequent build-up of equity capital by the banking structure.
It must be added that in the implementation of passive operations, a commercial bank acts directly as a debtor.
Active operations
Active operations should be understood as operations due to which the banking structures mix the resources at their disposal to maintain their own liquidity (and, therefore, ensure financial stability) and, of course, make a profit. This includes leasing, loan, factoring, and also forfaiting operations. In addition, the number of active includes operations with securities, foreign currency, as well as operations related to ensuring the equity participation of a banking institution with its own funds in the activities of organizations and enterprises. In carrying out the above operations, the banking structure is one way or another a creditor.
Classification of active operations
In accordance with the economic content, the assets of a commercial banking structure are classified into the following subgroups:
- Free reserves are cash at the cash desk, as well as balances in the RCC on the correspondent account and on the same account in other organizations.
- Provided cash and loans that are placed as deposits with other lending institutions (this also includes the Bank of Russia).
- Investments are understood as investments of monetary resources of a banking structure in securities and other financial assets (precious metals, foreign currency). In addition, equity is also considered an equity participation in economic activities of a joint orientation.
- Intangible and tangible assets directly of a banking institution, which are called internal investments.This should include the cost of the building, equipment, as well as other property necessary to ensure the normal functioning of the bank.
Asset liquidity
In accordance with the degree of liquidity (ability to turn into cash) in banking practice, there are the following types of assets:
- Highly liquid (cash on hand; cash balances of a banking institution in correspondent accounts; government and other securities that are easy to sell).
- Short-term liquid (long-term loans; securities that have a secondary market).
- Hard to realize (long-term loans; securities that do not have a sufficiently developed secondary market; equity participation directly in the capital of other banks, organizations, enterprises).
- Low liquid (investments in fixed assets of a banking institution).
Assets and their level of return
In accordance with the level of profitability, banks are actively classified into those that are capable of generating income (investments, loans), and those that, in one way or another, do not generate income (tangible assets, free reserves). So, the assets of commercial banking structures are divided into the following subgroups:
- Riskless - zero percent.
- Low-risk - ten percent.
- The average risk level is twenty percent.
- High risk - seventy percent.
- High-risk - one hundred percent.
Mediation operations
Commission-intermediary operations should be understood as operations carried out by the banking structure on behalf of the clientele, provided that no attracted or own funds are diverted directly to their implementation. In this case, remuneration in the form of a certain commission is appropriate. The number of fundamental operations of the commission-intermediary nature of the banking structure must include:
- Settlement and cash operations (they occupy the main place among all operations of a commission-intermediary nature).
- Securities brokerage.
- Warranty Operations.
- Trust operations.
- Underwriting operations.
- Operations are information and consulting.
- Depository transactions.