Banking services in Russia: theory and fact — страница 2

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can see, everything in the economy is controlled by money, and banks are a tool-kit for the economy - controlling the money circulation between firms, depositors and loaners, and offering services to make that circulation easier for them. Banking services also have a productive nature. Even such a simple operation as the admission of money on deposits from people and companies involves a huge productive force. A bank does not just collect money - it converts non-working, unused money resources, to working assets. This is also true of credits given to companies and firms for the development of their productive and financial activity. A healthy and stable economy of any country depends on healthy banking services. Now we will see if the banking system in Russia and, in particular,

in my home city of Chelyabinsk gives any chances for our economy to develop. All banking services can be divided into specific and nonspecific services. Specific services include: 1) deposit operations; 2) credit operations; 3) payment operations. Deposit operations are the operations of placing clients’ money into the bank on deposit. While keeping money for its clients, the bank pays them interest.i Credit operations are the operations of giving loans to bank clients and receiving, in exchange interest rates on those loans. Credit operations are the main operations of a bank. Banks are the biggest center of credit. Credit operations form the main specific weight of any bank’s assets because they give the biggest profit to the banks.ii Payment operations by banks can be

fulfilled in cash or in transfer payments. Banks can open different account numbers for their clients and can fulfill their payment orders related to buying or selling goods, paying wages, transferring tax payments and making all other important payments. In issuing payments the bank is acting as an intermediary between sellers and buyers, companies, tax agencies, citizens, and the budget. These three types of bank operations are commonly called traditional bank operations. The term ‘traditional’ is applied because all of these operations together establish what we call a bank.iii Cash operations can also be regarded as traditional operations. They are the operations of giving out cash money to the clients from their accounts and cash exchanging cash currency. According to

the law, these operations have not been included in the basic operations that form up a bank, but in their meaning they reflect the essence of the bank system. It is difficult to imagine a bank that has deposits, gives loans and conducts payments, but does not have cash operations.iv Additional operations can be placed between traditional and nontraditional operations. They include currency operations, and operations with securities - with gold, precious metals and ingots. A bank does not have to include these operations in its activities. In 1994 the majority of banks did not have a currency license, and even nowadays in our city banks are not allowed to make operations with gold, precious metals and ingots, yet they have not lost the right to be called banks. All other services

are included in non-traditional services. There are many of them, such as: intermediary services; services directed to the companies’ development (inculcation of the stock exchange, placing shares, juridical help, information services etc.); giving guaranties and collateral; trusting operations (including consultations and help in the management of the clients’ property); providing accounting help to the companies; presenting the clients’ interests in the court; tourists services etc.v All banking services are also subdivided into paid and free services. A bank can decide which services will be paid for and which not, but until now every single activity of the bank has been paid for by clients and all services have been divided into very expensive and inexpensive I think that this is due to the fact that in the new Russia it was easy to make money and everyone wanted to do it as quickly as possible. Companies, therefore, had nowhere else to go and they had to pay extremely high interest rates and charges for services. Nowadays everything is changing because of increased competition between banks and some of them are trying to attract new clients by lowering the charges for their services.vii Now, for every service, we will compare how it should work according to the law and how it really works. All further information will be presented in facts taken from the activity of the ‘’Incombank’’ branch in Chelyabinsk for the 1997 year. In order to illustrate the problem of deposit operations I have to dwell upon some facts of