Banking. Regulation of commercial banks (most important)

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Banking. Regulation of commercial banks (most important)

Lecture notes, cheat sheets

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Topic 69. Regulation of commercial banks

Regulation of credit and banking institutions - this is a system of measures by which the state, through the Central Bank, ensures the stable and safe functioning of banks, prevents destabilizing processes in the banking sector (Money Credit Banks lecture notes).

Functions of the general regulation of the activities of banks assigned to the Central Bank. This regulation is intended to ensure: 1. - stability of work and strengthening of the financial position of the bank; 2. - orientation and stimulation of the bank's activities in the field of lending to fulfill the priority tasks of the economy and improve the welfare of society; 3. - the scientific organization of money circulation in the national economy. At the same time, the Central Bank uses primarily economic methods of management and then administrative ones. Taking into account the current situation in the economy, the Central Bank regulates the activities of banks through the use of such a set of economic measures as: - changing the norms of required reserves placed by banks with the Central Bank; - change in the volume of loans issued by the Central Bank to banks, as well as interest rates on loans; - carrying out transactions with securities and currency. For these purposes, the Central Bank issued instruction No. 1. In accordance with these regulatory documents, the Central Bank forms reserve fund of the credit system of the Russian Federation. The following funds are donated to this fund: - temporarily available funds in settlement and current accounts, as well as those contributed to deposits by enterprises, organizations and citizens. Loans from other banks are not included in these funds. The fund was created in order to timely fulfill its obligations to clients to return previously raised funds. The Central Bank changes the norms of required reserves. The reserved part is for demand deposits - 16%, for time deposits - 10-14%.

The economic impact of the Central Bank on banks can be carried out by providing them with centralized credit resources for the purposes of subsequent granting of loans to business entities. If the credit resources of individual banks are insufficient, and loans from other banks have been exhausted, the Central Bank may provide loans to such banks on the terms of a loan agreement. At the same time, the Central Bank influences by economic methods the credit and interest policies pursued by banks in relation to their borrowers. To regulate the activities of banks, the Central Bank can also use administrative methods.

In case of violation credit institution regulations, instructions of the Central Bank right:

1. Collect from the credit institution a fine of up to 1% of the amount of the paid AC 2. Demand from the credit institution activities on the financial rehabilitation of a credit institution, including: changes in the structure of assets, replacement of managers, reorganization of a credit institution (appoint a temporary administration to manage a credit institution for up to 18 months, revoke a banking license).

Banking supervision has 2 goals: 1. - protection of bank depositors from possible losses; 2. - maintaining stability in the financial market by preventing systemic risks. When the Central Bank exercises the function of supervision and control over the activities of banks, its tasks include:

▪ issuance of licenses for banking activities;

▪ checking reports provided by banks;

▪ on-site audits;

▪ control over compliance with banking operations standards.

Authors: Shevchuk D.A., Shevchuk V.A.

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