Banking
Banking operations represent operations associated with activities of banks. They are associated with movement of the specific commodity – the money (currency), securities and currency valuables and consequently differ from operations of other economic entities.
The link between active and passive operations of banks is obvious. The size and structure of active operations depend on attraction of funds. Income of the active operations increases such resources. Commercial banks are able, to certain degree, to "create deposits" by paying the amounts of loans to the borrower accounts. Thus the money supply in the form of the current account balances used for settlements, extends. Possibility of such expansion is limited to necessity to support liquidity of banks.
Agency operations are the operations promoting financial turnover and the banking activities. They include settlement operations including collection and transfer; broker services of purchase and sale of securities and other items of the financial turnover; dealing operations; trust operations, transfers, etc. Those are operations carried out on the instructions by the clients and on commission basis.
Other banking operations include operations accompanying activities of banks. Those operations are aimed to improve client services, to expand the client base, to increase the bank's profitability and liquidity. Their development is associated with full service banks. There is a close connection of the other operations of a commercial bank with the core ones - credit and accounting, deposit, investment. The complex of additional, financial, information and intermediary services provided by the bank, expands its client base and makes conditions of their credit and accounting services more attractive. The other operations carried out by banks may include: storage of valuables; realization of scientific and technical developments; legal consulting, analytical and information services; maintenance services; numismatic operations; joint operations of banks and other legal entities; charity and financial assistance, etc.
It should be noted that operations of the central bank and commercial banks differ depending on status of those credit institutions defined by the banking legislation, and the rights vested with them to carry out various operations.
Related practices
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30.07.2010
