Lending arose long before the formation of the modern economy. Almost any citizen of the Russian Federation can get money on loan under certain conditions. However, loans may vary in different ways. Depending on the form and type of loan, there are various interpretations of the same term. The essence and functions of the loan are to resolve issues that are performed at the state level. What is the need for credit and how much does it affect the modern economy, we will consider below.
Loan concept
Lending is an integral source of economic development. The services of banks are used both at the civil and at the interstate level.
A loan is a transaction between several partners (lender and borrower). Relations of partners are formed on the basis of a redistribution of funds, on the basis of repayment, urgency and payment. The subject of the loan is cash or property.
Funds transferred for temporary use for payment in the form of accrued interest are called loan capital. In turn, loan capital is cash that is provided to the owner on agreed terms. The movement of loan capital in economic literature is treated as credit.
Essence of credit
The main essence of the loan is the redistribution of available funds. It allows you to replace cash with cashless, that is, replace real banknotes with virtual money.
At the moment, all loans are issued in cash, so loans are an integral part of monetary relations. Loans are repayable - this is the main difference between this operation and other types of monetary relations. The essence and functions of the loan are to redistribute cash capital.
Production relations also depend on credit, since a bank or other legal entity offers funds to a borrower under repayment conditions. Without such relations, the formation of a state economy is impossible. Any enterprise at various stages of development may need financing in the form of a loan. In the process of reproduction, the company makes a profit and returns to the creditor borrowed funds with interest.
Loan principles
There are such principles, without which it is impossible to obtain a loan:
- Repayment - the need to repay the loan to the creditor's account within the term established by the contract. If this condition is not observed, the creditor has the right to apply penalties. The obligation to repay funds is due to the fact that at the end of the contract, the borrower must pay off the debt and thereby replenish the resources of the bank (lender).
- Urgency - a requirement to repay a loan within a specific period established by agreement.
- Paid - consists in paying not only the loan amount, but also the interest on the use of credit funds. Profit in the form of interest or additionally received funds through the use of available funds.
The essence and principles of credit are based on these three conditions.
Types of credit
Credits, depending on parameters and conditions, have several differences.
Distinguish these types of loans:
- Depending on the term: short-term, medium-term and long-term.
- Depending on the form of security: unsecured and secured (on bail).
- Depending on the method of provision: one-time accrual, credit line, overdraft and other options.
- Depending on the method of repayment: according to the schedule of payments or a one-time payment.
- Depending on the type of interest rates: floating or fixed.
- Depending on the type of interest accrual: every month or at the end of the loan term.
- Depending on the method of lending: loan or overdraft.
- Depending on the credited currency: national or foreign.
- Depending on the number of lenders: one or more partner banks.
- Depending on the type of borrowers: individuals or legal entities.
The nature and types of loans directly depend on the financial policy of the state.
Loan forms
Loans are classified according to several criteria, the main of which is the legal status of the lender and the borrower.
There are such forms of traditionally used loans:
- Bank.
- Commercial.
- Consumer.
- International.
- Usurious.
- State.
Essence and loan forms also differ depending on its type.
Bank loan
Cash loans are provided only by financial institutions licensed to conduct such activities. A loan provided by a bank is one of the most common financial transactions at the state level. A creditor can only be a legal entity. In the form of an instrument that regulates such relations, the concluded contract is used. The interest rate is determined in accordance with the credit policy of the bank. The procedure for calculating interest and the permissible limits are established and regulated by the Central Bank of the Russian Federation. The relevance of obtaining funds on credit, the essence of the function and form also depends on the Central Bank.
Commercial loan
A commercial loan is a bill of exchange of funds used to optimize financial and economic relations. As a rule, legal entities play the role of lending entities, which take sales of their products as their main goal.
As a financial instrument acts a bill. The lender and borrower can be both legal entities and individuals. When selling a bill, the creditor company obliges the borrower to repay the cost of purchased products on time, on a repayable date. The essence of the loan, which is issued in the MFI, consists in obtaining loans for the poor.
Consumer loan
Consumer loans are targeted. Funds are provided for a specific purpose. A loan can be issued in cash or in commodity form. The lender may be banks and legal entities licensed to provide this type of service.
Consumer loans most common among the Russian population. These are cash loans, credit cards, buying goods on credit, registering real estate on bail, etc.
International loan
The concept of "international credit" means a certain form of financial relations at the interstate level. The subjects are: international financial and credit institutions, legal entities and the government.
Interstate financial relations of this kind have a special status, since the economic nature of credit depends on them in many respects. The financial stability of the state may depend on the success of such financial transactions.
Usury loan
This type of financing is gradually disappearing from the loan market. The essence of usurious services is the provision of cash loans by organizations that do not have licenses to provide this type of financial transaction. In most countries of the world, such loans are considered illegal. However, due to certain financial difficulties, such services have a place in the Russian economy.
As a rule, microfinance organizations are involved in providing such loans.Russia has adopted a law that regulates the procedure for issuing licenses and the activities of these organizations.
State loan
State loan represents a specific form of relationship in which one side is the state and the other is legal or natural persons. The state can be both in the role of creditor and borrower.
Repayment of loans or fulfillment of any obligations by the state, while the latter were taken by individuals or legal entities, is called a grant.
In this situation, the creditor is the state. The regulatory and executive function is performed by the Central Bank of the Russian Federation. The nature and forms of credit depend on the industry.
The state provides loans to the following industries:
- certain industries and regions that need funding for further profit in favor of the state;
- commercial organizations and banks;
As a borrower, the state has the right to place securities, bills and other documents.
The essence of state credit
The solvency of the state directly depends on the property in its ownership.
The essence and functions of state credit:
- Distribution - government loans take second place after tax revenues in the budget expenditures. The distribution function forms the centralized funds of the state budget.
- Regulatory - by providing targeted loans, individual branches of enterprises are developed and formed. The monetary circulation created upon receipt of a state loan, through the accounting policy, controls and mobilizes financial receipts. State credit is able to regulate the rate of economic growth and stabilize fluctuations in financial flows.
When the state acts as a borrower, it stimulates the demand for borrowed funds, thereby increasing interest rates.
- Control - the essence is to control the optimal and correct distribution of funds.
Management is the main task that determines the nature of state credit.
The economic goals pursued by the state include stabilization of the economy, increase in production volumes and state competitiveness. Achieving economic and social goals is impossible without regulation of credit relations.
The objectives of state lending are the effective management, distribution and use of borrowed and borrowed funds. The main direction is the correct identification of priorities for the conduct of credit policy and the timely repayment of borrowed funds.
The need and essence of the loan is to ensure continuous production and, due to this, accelerate cash flow. By providing loans, the costs of the promise are reduced. Due to the loan, expenses for the issue, distribution and storage of monetary currency are reduced.
The nature and role of credit at different stages of economic development is not the same. During an economic recovery, a loan helps to stabilize the situation in a positive direction. In an economic downturn or inflation, loans generate an excess of money, which destroys the already unstable financial picture.
