Commercial Bank. Functions and basic operations

Commercial banks (CB) are organizations that serve various businesses, legal entities and individuals. Being independent economic entities, they are considered an important part of the overall banking system, in fact, its main link. The functions and operations of commercial banks are reduced to obtaining maximum profit. And relations with customers are built on a commercial basis.

Commercial Bank. Features

The CB acts as a credit institution that has the right to perform certain banking operations. Each commercial bank, whose functions are very diverse, is engaged in comprehensive customer service. This is its main difference from other credit institutions that do not have such great powers.

KB, attracting funds from customers, have the right to place this capital on its own behalf. But at the same time on terms of pay, urgency, repayment. Also, it is the responsibility of organizations to conduct settlement operations on the basis of customer orders.

The financial resources of these banks are determined by three components:

• Authorized capital;
• Attracted funds;
• Retained earnings.

The commercial bank has a strictly defined management structure, where the main role is assigned to the shareholders' meeting. It is customary to convene it once a year, not counting extraordinary meetings. All shareholders can attend the meeting, but only owners of ordinary shares have the right to vote . The Board of Directors is the operational management body of the Design Bureau, and its members are elected at the shareholders' council.

Commercial Bank. Functions

In accordance with the banking legislation, the design bureau has certain obligations for comprehensive customer service. The functions of a commercial bank include:

1. Accumulation and mobilization of attracted funds. This is the most important function, in the implementation of which the bank acts as a borrower, as the CB has a leading role in attracting capital and exaggerating it.
2. Investing and placing of borrowed funds with the purpose of profit growth.
3. Intermediation in the loan is also included in the list of powers that the commercial bank exercises. Functions of this kind play an important role in expanding production and consumer demand.
4. Settlement and cash services for bank customers.

Basic operations of the KB

The commercial bank, whose functions were listed above, must also perform certain operations. These include:

1. Deposit operations - attraction of funds belonging to individuals and legal entities, with the purpose of deposits for an indefinite period or on demand.
2. Granting loans at certain interest rates at the expense of borrowed funds on a return basis.
3. Opening and support of client accounts.
4. Encashment of payment means.
5. Issue of securities.
6. Purchase and sale of foreign currency.
7. Operations with precious metals.
8. Financial advice and bank guarantee.

In general, all operations of commercial banks are a manifestation of their functions. Russian CBs are required to conduct all transactions in Russian rubles. Transactions in foreign currency are allowed only if there is an appropriate license. In addition, banks are strictly prohibited from engaging in insurance, trade and production activities (on the basis of federal law).