Active operations of commercial banks and their significance in the existence of the entire financial industry
Active operations of commercial banks. Definition
Commercial banks are one of the main instruments of a market economy. They, realizing their own activities, accumulate the funds of the population, direct them to the necessary course and ensure the implementation of calculations between subjectsmarket relations. The processes of resource mobilization and their implementation are called passive and active operations. Consequently, active operations of commercial banks are a system of banking measures ensuring the allocation of the resources at their disposal in order to extract profits.
Capital raising operations
The funds are available to banks due to passive operations. They are deposits, loans from other financial institutions, the issuance of securities and other means of raising capital.Thus, passive operations are a process of mobilizing funds, the further implementation of which with a view to profit is ensured by active operations of a commercial bank.
Methods of cash deposit
Today, the circulation of capital is one of the main conditionsthe existence of modern reality. Active operations of commercial banks solve the problem of using capital with the help of loans and investments. They take responsibility for determining how to invest. This requires bank staff to show restraint, caution and a high level of professionalism.
Asset Management Commercial Bank
The main condition for the existence of the banking industry today in countries with market economies is profit. It motivates the founders of a commercial bank, shareholders, managers and all the staff to do painstaking hard work. The profitability of these financial organizations is ensured by exceptionally active operations of commercial banks, the value of which is hard to underestimate. Since the availability of funds in inept hands not only annuls the possibility of their multiplication, but also increases the likelihood of a complete loss of capital.In this regard, for a clearer coordination of actions for the development of resources attracted by banks, the investment process is divided into two types:
• credit operations;
Credit operations are financial relations between the borrower and the lender, due to which the funds are transferred to the borrower under certain conditions specified in the agreement with their subsequent return to the lender. The management of the lending process is carried out according to the stages:
1. Definition of the bank’s credit policy by analyzing the current situation in the country, the stability of the authorities and the regional situation.
2. The provision of funds in accordance with the credit policy of the bank, a signed contract and an assessment of the economic condition of the borrower.
3. Control to ensure compliance with the terms of the contract.
4. Repayment of the loan by the borrower according to the previously signed agreement.