Passive Operations of Commercial Banks

Commercial banks are business enterprises that perform the functions of financial intermediaries. So, they attract the savings of the population, the capital, other free funds that are released during the course of business, to provide them for use to other economic entities temporarily in need of additional funds.

To solve these problems, banks carry out banking operations. The main operations of this direction are operations, called active and passive.

Passive operations of commercial banks are necessary to attract and concentrate capital as working capital. Active operations are aimed at placing the attracted resources for profit. Passive operations of commercial banks are called operations for the accumulation of own resources, which are necessary for conducting active operations (including credit).

The formation of the bank's resources takes place through the attraction of the population's funds to deposits, issuance of bank securities, obtaining loans from third-party banks and other transactions that lead to an increase in the funds appearing at the disposal of the banking institution.

Passive operations of commercial banks include the acceptance of deposits; Issue of bank securities (bills of exchange, bonds, savings, deposit certificates); Keeping accounts of various clients, including correspondent banks; Repo transactions; Obtaining interbank loans, including centralized credit resources; Euro-currency loans.

Commercial banks are specific institutions that, on the one hand, accumulate temporarily free cash resources, and on the other hand, they provide available funds available to enterprises and people in need for resources for temporary use for a certain remuneration.

Passive operations of commercial banks determine the size of banking resources and, accordingly, determine the possible scope of their activities. With passive operations, funds are concentrated on passive or active-passive bank accounts . Passive operations help banks acquire credit resources in the free market.

There are four main forms of passive operations: deductions from own profit for the increase or formation of funds; Primary issue of bank securities (contributions to the authorized capital); Obtaining loans from other legal entities; Operations on deposits (attraction of clients' funds).

Passive operations of a commercial bank mediate the attraction of money that is already in circulation. First of all, passive operations include deposit operations to attract funds from legal entities and citizens to deposits either urgent or on demand. It is deposit operations that make up the bulk of the bank's liabilities.

Term deposits are determined by the terms prescribed in the contract. For such deposits, a higher percentage of remuneration is paid than for demand deposits. The latter are funds in the accounts, which are associated with the implementation of settlements and demand deposits.

Actively passive operations of commercial banks are called commission, intermediary transactions, which banks perform on commission of customers for a fee - a commission. These operations are called services. Allocate settlement services for domestic and international settlements; Trust services that involve the purchase and sale by the bank of foreign currency, securities, precious metals on behalf of customers; Mediation in the placement of bonds and shares; Consulting and accounting services for clients , etc.