Order writing a unique work

MINISTRY OF EDUCATION AND SCIENCE OF THE RUSSIAN FEDERATION

Zelenodolsk Institute of Mechanical Engineering and Information Technology (branch) of KSTU named after A.N. Tupolev

Institute of Engineering and Economics
UDC 330
TEST

discipline: Economic theory

Topic: ADVANTAGES, DISADVANTAGES OF CREDIT AND MONETARY POLICY

Zelenodolsk 2011

1. Credit policy: its goals and principles.. 4

2. Credit Policy Instruments. 7

3. Problems of credit policy implementation. 10

Conclusion . 12

List of sources used. 14
INTRODUCTION

"Monetary and credit policy" monetary policy ) is a set of interrelated measures taken by the Central Bank in order to regulate aggregate demand through a planned impact on the state of credit and money circulation.

The Central Bank plays a key role and occupies a monopoly position not only in the field of issuing banknotes, but also in the field of the state's monetary policy, which is designed for short periods and is carried out by indirect methods. The objectives of the monetary policy are: regulation of economic growth rates; mitigation of cyclical fluctuations in the market of goods, capital and labor; containment of inflation; achieving a balanced balance of payments.

By issuing and lending to the economy, banks play a useful and necessary role for the development of the country. Monetary instruments serve the economic turnover, and they can be compared with vehicles. The latter make it possible to deliver goods, industrial and agricultural products to the place of their processing or consumption; similarly, monetary instruments ensure the circulation of various goods, their transfer from one owner to another, facilitating their processing or consumption. However, the excessive or uncontrolled issue of money can lead to dangerous and even destructive consequences. When bank lending exceeds a certain limit, it no longer stimulates production, but generates excess purchasing power, the consequence of which is a rise in prices.

When money circulation was carried out in accordance with the metallic concept, the available volume of gold reserves limited the issue of means of payment. The evolution of money in the spirit of the nominalist concept has led to the need for deliberate and coordinated actions in the field of not only bank lending, but also public finance and foreign trade in order to maintain monetary balance. As for the credit sphere, state bodies are called upon to control and regulate the issue of money in accordance with the objectives of monetary policy; to do this, they entrust various institutions with the control and regulation of credit operations, facilitating the application of appropriate measures of influence. In this sense, credit policy is an integral part of monetary policy; its other two components are budgetary policy and the policy of international financial relations.

In this paper, the principles and objectives of credit policy, its tools and problems of its implementation will be considered, as well as examples from Russia and other countries will be given.

1. LENDING POLICY: ITS GOALS AND PRINCIPLES

“By its content, credit policy is a set of measures of the central bank in the field of money circulation and credit in terms of their impact on the macroeconomic process.” The purpose of these measures is "a partial refraction of the general state line towards ensuring an equilibrium and sustainable development of the economy."

The following goals are identified:

1. economic goals.

After a long period of economic growth and full employment, the goals of the state in the field of the economy are more protective in nature and aimed at maintaining economic activity and reducing unemployment.

The desire to maintain and, if possible, increase production, as well as to maintain the achieved standard of living, corresponds to modern tasks. This "implies large investments in the re-equipment of industrial and agricultural enterprises and the creation of production structures in order to reduce the country's dependence on energy, increase labor productivity in enterprises, meet the needs of the population as a whole, as well as provide training for specialists (engineers, technicians) and develop scientifically -technical research.” This also requires significant working capital, for example, for the payment of wages, for the purchase of raw materials and energy.

The need to subordinate the issue of means of payment to economic goals raises the problem of the consistency of all measures taken by state bodies. Therefore, credit policy should be an integral part of the overall economic policy. In this regard, two phenomena that are currently observed in developed countries are of particular importance: firstly, this is a significant state intervention in economic activity, and secondly, the implementation of the nominalistic concept of money, which made it possible to remove the restrictions on the issue of means of payment inherent in the gold standard. .

Credits should be directed primarily to those sectors of the economy, the dynamism of which seems most necessary for the harmonious development of the economy as a whole.

The policy of full employment corresponds primarily to the interests of man, but its object is also industrial equipment, technical resources, potential economic opportunities.

Full employment of the population means the absence of mass unemployment: it is a situation in which able-bodied members of society can find, without much difficulty and in a fairly short period of time, work corresponding to their abilities. Nevertheless, the absence of permanent unemployment does not exclude the possibility of temporary unemployment, since the development of the economy implies a certain minimum turnover of personnel. A change of position, a transition from one sector of the economy to another or from one enterprise to another can be accompanied by a temporary loss of work, which is tolerable if it does not last long. Bank lending should facilitate such mobility.

2. Monetary objectives of credit control.

The goal of government agencies in the field of monetary policy can be formulated briefly: economic growth without inflation. It is important that the resources used to develop the economy are insured against losses; in particular, lending to increase wealth should not lead to higher prices or depletion of foreign exchange resources. Here, the restraining role of the internal and external aspects of credit policy is manifested.

The stability of domestic prices is necessary for the normal functioning of the economy. A general fall in prices would entail a slowdown in the rate of production and thus hinder economic development; however, this possibility should not be considered as it cannot currently be realized. A general increase in prices is fraught with certain social and economic dangers, it not only undermines or weakens the desire to accumulate money and makes the efforts made ineffective, leading to the unjustified enrichment of certain sections of the population, it also worsens the conditions for investment and reduces their profitability.

Nevertheless, stabilization cannot be absolute and does not exclude changes in the price ratio. In certain cases, changes can and should be allowed in order, for example, to create favorable conditions for the adaptation of production to the demand of consumers or to technical innovations. This flexible policy, however desirable, may lead to lower prices and even wages; therefore, it is capable of causing fierce resistance, which makes it difficult for the state authorities to carry out their tasks in this area.

The normal functioning of the economy also requires the stability of international financial relations, which allows maintaining foreign exchange reserves at a satisfactory level. Such stability makes it possible to fight unemployment and maintain a high standard of living for the population, since the regularity of imports of raw materials and energy carriers necessary for the national economy depends on it. This problem is related to the problem of prices; credit policy should contribute to the resolution of both problems.

3. Coordination of the goals of economic and monetary policy.

If we trace the evolution of the monetary system over the past forty years, we will be forced to state that the energetic measures that some governments took to stabilize the monetary system were not always effective. Sometimes such a monetary policy caused a slowdown in economic development, in particular in Great Britain after two world wars, repeatedly in Belgium in 1948-1959, in France in 1930-1936, and in recent years sometimes for a short time. In other cases, economic growth was accompanied by a depreciation of money; in Great Britain and France this phenomenon was repeatedly observed after the Second World War.

Nevertheless, significant progress has been made in this area in recent years, and most Western countries have demonstrated, to one degree or another, a solution to the problem of economic growth without excessive inflationary pressures. The difficulties are due to the fact that the factors that cause inflation are more powerful than the factors that stabilize money. The danger of inflation seems abstract and distant; the need to prevent it is hardly recognized due to people's attachment to nominal incomes and their desire to avoid immediate sacrifices. The global and almost natural tendency of economic agents to cause inflationary tensions forces state and financial authorities to resort to coercive measures in the interests of the whole society.

When evaluating the effectiveness of measures taken in the credit sector, it must be remembered that they only complement the economic, financial and social policies of the government. Although credit policy, even if well thought out and effectively implemented, does not always allow inflationary tensions to be foreseen and completely avoided, it should at least mitigate the effects of inflation, prevent the abuse of foreign exchange accumulation, stockpiling for speculative purposes, and generally prevent the danger of excessive excess of money.

However, although credit policy plays an important role in the implementation of such a dual task as ensuring economic growth and the stability of the monetary system, its essence can only be correctly understood with a proper analysis of the role of banks in the modern economy, primarily their function of simulating means of payment. In this case, the provision of loans should be carried out in the interests of the whole society; therefore, there is a need for legal strict regulation of the activities of banks.

The subject of credit policy is the Central Bank (CB). According to the law, it fulfills the goals of the government, but at the same time it is not a government institution. The Central Bank has a certain degree of independence. Such rights are given to him on the basis of the principle of separation of powers. As the experience of Western countries shows, this institution, which has relative independence, is not a simple executor of the will of the state. In a difficult economic situation, the government cannot demand that the credit center solve its financial problems by issuing additional money supply.

The implementation of the set of tasks facing the central bank in the implementation of economic policy takes place in two directions. The first is to provide the national economy with a full-fledged monetary system. A stable currency is an essential element of the market infrastructure. The second direction is related to the fact that the central bank is assigned the function of influencing the lending activities of private business (commercial) banks in the interests of macroeconomic policy.

In the sphere of monetary circulation, the state pursues its policy, using cooperation with this accomplice of regulation. A kind of partnership is being formed: "the state - the central bank." Practice shows the high efficiency of this cooperation.

It should be noted that in the production sector the state does not have such a powerful lever of influence. The manufacturing sector should enjoy the highest degree of freedom and independence required by the very nature of the market. Within the framework of the production sphere, the state focuses on indirect ways of influencing - through the system of monetary circulation, which is a kind of circulatory system of the economy.

This indirect version of the regulatory influence on the manufacturing sector is built on compromises. There is no direct intrusion into the plans of entrepreneurs. At the same time, indirect methods create the prerequisites for the entrepreneur himself to strive to act in accordance with the goals of economic policy. However, outwardly the state plan will be realized through the adoption of independent decisions by the business community. Thus, "indirect methods of regulation are manifested in a combination of the elements of freedom necessary for the market with soft, but finely calculated and persistent actions of the state." All this is possible only thanks to the use by the government of such a powerful regulatory lever as the Central Bank.

2. CREDIT POLICY INSTRUMENTS

Restrictions on lending dynamics.

This option of measures consists in the fact that in some countries (England, France, Switzerland, the Netherlands) the Central Bank has the right to limit the degree of growth in credit investments of business banks in the non-banking sector. For this purpose, a percentage rate for the expansion of credit operations for a certain period of time is introduced. If the conditions are not met, the Central Bank applies sanctions: banks may be required to pay penalty interest or "(as is customary in Switzerland) transfer to an interest-free account of the Central Bank an amount equal to the amount of the excess loan.

These methods of regulation have "minuses": they weaken the role of competition. The dynamics of banks gaining momentum and striving for significant expansion is limited. The capabilities of individual banks obtained in the course of competition do not give them advantages. The Central Bank conducts its operation as if "one size fits all". In addition, this tool is not very flexible. The level of interest rates regulated by the Central Bank does not always keep pace with the rapid increase in demand for loans.

In general, direct methods, which are inconsistent with the nature of the market economy, are used, as a rule, only when indirect methods are no longer able to play their role. But at the same time, it should be recognized that the result of direct impact can be quite high.

Accounting (discount) policy .

This type of operation belongs to the long-used methods of regulation. The Central Bank acts as a creditor in relation to business banks. Funds are provided subject to the rediscount of bills of banks and secured by their securities. Such funds received in the central credit link are called rediscount or pawn loans. The Central Bank has the right to manipulate the interest rate at which it issues loans to banks. The possibility of establishing the "price" of the loan acts as a method of influencing the credit system.

The level of the "credit price" determined by the central bank has received in economic science and practice the designation of the official "discount rate" (which is otherwise also called discount or pawn).

The loans taken from the Central Bank are provided by banks to other economic entities, but at a higher interest rate. Naturally, the interest rate policy of business banks reflects the changes that the Central Bank makes in the course of its policy. With the help of the interest rate, the Central Bank thus has an indirect effect on the ratio of supply and demand in the capital market.

An increase in the interest rate, i.e. "Rise" in the cost of credit, limits the amount of demand for borrowed resources and reduces the intention of firms to increase investment. A decrease in the rate "cheapens" credit, as a result of which the private sector (households, firms) has an increased desire for investment. This incentive is realized in the form of buying shares, production equipment or building new production buildings. This is the scheme of this mechanism. In real life, the interaction of parameters is, of course, not always so simple.

Of great importance is the function of accounting policy, as the manipulation of the interest rate, which enhances the effect of the use of other regulatory measures of the Central Bank, namely open market operations and the establishment of required reserves. If the effect of one leverage influencing the behavior of an independent commercial bank turns out to be insufficient, then the set of measures taken by the central bank gives it the opportunity to achieve its intention.

With regard to Russia, it should be noted that, within the framework of the accounting policy, the Central Bank began to practice in 1995 also a pawnshop loan secured by securities (mainly government treasury bonds).

Operations on the open market.

By resorting to this type of regulation, the Central Bank buys and sells securities on the open market (for example, on the stock exchange). Due to their sale, the bank, in fact, withdraws the excess balance reserves of commercial banks. In macroeconomic terms, this means the withdrawal of a certain amount of money from circulation. The purchase of securities by the central bank contributes to the formation of additional balance reserves from commercial banks. The money supply in circulation increases. As a result, the opportunities for credit operations of business banks are expanding.

These measures make the Central Bank an active participant in the money and credit markets. In the process of carrying out the accounting policy, the position of the Central Bank remains in a certain sense passive (decisions about whether to register their bills, whether to receive a loan secured by their securities from the Central Bank, are made by the commercial banks themselves). In addition, open market operations are quite consistent with market rules. Speaking on the securities market, the Central Bank plays the role of the same counterparty as other participants. Therefore, this method of regulation is considered to be an ideal credit instrument.

Minimum reserve policy.

According to the rules that have developed in the world, the minimum reserves are kept in the Central Bank in the form of termless deposits. There is no upper limit for them. These funds are not frozen. They can be used by different banks for a long time, but at the same time, a certain amount of the so-called minimum reserve must remain at the disposal of the Central Bank, which is necessary for the operation of a business bank for a certain period (usually one month). If the bank does not comply with this requirement, it pays penalty interest.

The required reserve ratio is calculated as the ratio of its amount to the term liabilities of a business bank. For example: the reserve ratio is 20%. This means that a business bank that has $1 million in fixed-term liabilities must have a $200,000 reserve in the Central Bank. If next month term liabilities rise to $2 million, then the commercial bank must increase its reserve with the central bank to $400,000. (The reserve ratio in Russia was raised in 1992 and amounted to 15-20% in 1997, depending on the type of deposit.)

Reserve policy is a relatively "rough" method and, when used in isolation from other means, creates a certain rigidity in economic regulation. By comparison, open market operations and accounting policies are considered to be methods of fine regulation. In order to soften the effect of the reserve policy, the Central Bank tries to complement these measures and relatively rarely change the reserve ratio.

Voluntary agreements .

The set of regulatory measures of the central bank is complemented by a system of so-called voluntary agreements concluded between the Central Bank and business banks. Such agreements are especially convenient when the Central Bank must make prompt decisions, act quickly and without much bureaucracy.

On the basis of agreements, banks show voluntary readiness to limit their activities. For example, they undertake to expand credit operations only up to a certain limit. The Central Bank, on the other hand, undertakes to inform the business sector about trends in the monetary and foreign exchange sphere. It equips with knowledge and understanding of possible unfavorable Processes in the monetary area. It is a kind of gentlemen's cooperation. Its success depends to a certain extent on the ability of the Central Bank to "soft pressure" business banks to induce them to comply with the terms of the voluntary agreement.

3. PROBLEMS OF THE IMPLEMENTATION OF THE CREDIT POLICY

Conducting credit regulation is objectively complicated by two circumstances.

First, the very assessment of the state of economic development (which is necessary for the central bank to take the most rational measures) is a difficult problem.

Secondly, regulation within the framework of the national economy becomes more complicated due to the influence of external economic processes. The result is that the target orientation of the measures taken can be distorted.

For example, by pursuing a restrictive (restrictive, restraining) policy with the help of a high interest rate, the Central Bank can thereby attract the flow of foreign capital into the country. If the original goal was to limit investment activity, then due to the influx of foreign capital, the degree of this activity may not decrease, but increase.

When regulating, the Central Bank must take into account not only the interconnections within the world economy, but also the interdependence of the links of the national economy. We note the following problematic cases.

1. Accounting policies have an impact not only on banks, but also on other sectors of the economy. The negative impact of interest fluctuations is manifested in relation to those areas of the national economy that are burdened with debts. These include: the public sector, capital-intensive industries (nuclear power plants, hydroelectric power plants), rail transport, households, and farming.

2. The interest rate policy leads to a growing price effect. The subjects of the economy tend to get out of the influence of the growing discount rate by shifting their costs onto the shoulders of customers (increasing the price of their benefits accordingly). As a result, an additional difficulty is created for the state policy in the field of curbing inflation.

In the context of the Russian economy, which is currently experiencing significant problems with inflation, this side effect is especially painful. The private sector seeks to transfer to the buyer all the additional burden that falls on him as a result of regulatory measures. The possibility of such financial resourcefulness in Russia is higher, since the degree of market saturation and competition is weaker than it is in the developed countries of the West.

3. The administrative prescription of the level of interest "from above" is not a market-oriented action. The weakening of the market mechanism leads to undesirable consequences. For example, the result may be the strengthening of elements of the shadow economy.

In the conditions of Russia, the system of restrictions and regulations is large not only in relation to the interest rate, but also in the field of issuing licenses for conducting credit operations. There are quite a lot of commercial banks operating in the country at present. However, the system of private, non-bank lending, which is outside the direct control of the state, has become noticeably widespread. This is an element of the shadow economy. Small businessmen use, for example, this (non-institutionalized) type of credit for organizing foreign business trips and conducting purchasing and marketing operations. The rates of this loan are extremely high, but obtaining such funds does not require the formalities that entrepreneurs face when relying on the resources of commercial banks.

· The influence of the central bank on the economy through interest policy has its limitations, since business banks and large firms very often move their operations abroad in order to take advantage of the interest rate advantages there.
CONCLUSION

Monetary policy plays an important role in government policy. One of the most important ministries of the state is the Ministry of Finance, which conducts monetary policy in accordance with the tasks and goals of the development of the state and society. It is not surprising that quite a lot of different structures are subject to the Ministry of Finance, for example, such as the Central Bank. A lot of bodies (ministries, departments, committees, departments) carry out state policy in various areas directly or indirectly related to the economy.

From the point of view of economics and monetary circulation, control over credit is designed to orient the issue of money towards the achievement of the economic and financial objectives of the government; in general, state bodies are called upon to ensure the distribution of loans in favor of individuals, enterprises and, if necessary, the state in such an amount, at such a percentage and for such periods as are most consistent with the interests of society.

In a market system, the state is not a magical source of funds, but only a mechanism designed to ensure that some citizens (with a higher income) pay - through taxes - to others (having a lower income). In the new conditions, the main factors for the well-being of the individual are his initiative, the desire for personal activity, the readiness to choose options for economic decisions.

LIST OF USED SOURCES

1. State and municipal management: a reference book. - M .: "Publishing house Master", 1997.

2. Sokolinsky V.M. State and economy. - M.: Finance and statistics, 1997.

3. Berger P. Money mechanism. – M.: Progress, 1993.

Bank loans - not only a popular, but sometimes an indispensable resource for supporting the financial activities of both ordinary citizens and entire organizations. Loans have their advantages and disadvantages, which you need to familiarize yourself with before proceeding with the loan. And if the option of lending for a number of reasons did not fit, then it is worth considering alternative types of obtaining funds, we will also talk about them. So what are the advantages and what are the disadvantages?

The main positive aspects of bank loans:

• a small list of documentation required for presentation (especially when it comes to consumer loans);
• the possibility of receiving money for any purpose and at any time (when applying for a non-purpose loan);
• receiving money for the purpose of investing or promoting business operations;
• different loan terms depending on the terms and types of loans;
• accessibility to the general population;
• when choosing non-cash lending, payments can be made online or by electronic transfers;
• by prior arrangement, the loan can be repaid ahead of schedule;
• the cost of the loan is included in the production costs of the organization, which makes it possible to reduce taxable profits;
• you can receive funds in cash, to an account or a card, and you can also repay a loan using different options;
• loan conditions create the prerequisites for competent planning of your own budget (this is true for both individuals and organizations).

Of course, the main advantage of loans is the widely advertised ability to immediately get what you can not buy for cash. And when planning large purchases, such as the purchase of real estate or a car, loans are really indispensable. In this case, they replace the long-term accumulation of funds (which, for a number of reasons, is not always successful).

Surprisingly, but loans are not highly dependent on inflation. This factor affects more the ability of citizens to save money, and the repayment of an already taken loan becomes easier. Indirectly, the growth of inflation should have a positive effect on the decision of a private person to take out a loan.

Is there an alternative to loans?

An alternative to a bank loan are private loans and leasing G. Private loans - is the provision of funds by one individual to another. There are fewer paperwork here, but there is a high risk of facing gray schemes and higher interest rates.

The essence of such a concept as leasing - in a finance lease of an item that continues to be owned by the owner. And as a result of lending and acquiring an object, an organization or a citizen becomes its full owner, and not a tenant. However, the loan is accompanied by an encumbrance in the form of payment of the debt established under the loan agreement. In addition, bank loans have some other disadvantages, which should be discussed in more detail.

Disadvantages of loans

The following are considered negative aspects when applying for and using a bank loan:

• high interest rates;
• when applying for a target loan, the possibility of spending funds only for specific purposes;
• a system of pledges and guarantees that burdens not only the borrower, but also his relatives;
• in case of early repayment, the borrower is forced to pay commission to the bank(in most organizations);
• an abundance of bureaucratic delays, both when applying for a loan by individuals, and in commercial lending to legal entities;
• strict refund schedule and penalties for delay;
• a number of stringent requirements for borrowers in reputable banks, which check in detail the solvency of customers;
• additional paid services, about which bank employees may not warn the borrower;
• increased risk of being deceived when receiving funds (especially if the loan is issued for a long time).

All types of bank loans are combined top three disadvantages:

1. Urgency. The debt must be repaid first.
2. Service fee. The bank charges interest for the loan.
3. Recurrence. The need to repay funds with interest imposes a certain burden on the borrower.

Those wishing to take a loan in foreign currency and at the same time save money, it is better to find out all the nuances of the exchange rate in advance. Such loans are rarely profitable, rather, on the contrary: with frequent fluctuations in exchange rates, it may turn out that the amount of debt will increase many times over, and with it interest will also increase.

What is the risk of collateral?

Particularly uncomfortable, according to borrowers, is the need for collateral when applying for a loan. For the bank, the pledge becomes a security for the payment of debt obligations in full. However, for the borrower, collateral is fraught with a whole list of potential risks. The fact is that:

1. The owner cannot fully dispose of the pledged property without the approval of the bank.
2. At the request of a financial institution, the property pledged must be insured, in addition, the borrower himself is also subject to insurance. This leads to an increase in additional costs.
3. If the borrower is insolvent, the mortgaged property can be sold by the bank through the courts.

When paying off a loan, the borrower overpays significantly compared to the amount taken from the bank. Of course, this is beneficial to the bank, but not to the person being credited.

Overpayment on loans issued by banks may exceed the amount of the principal debt so carefully consider the need for a loan.

Features of investment lending to enterprises

For organizations, credit has undeniable benefits:

• selection of a profitable and convenient loan scheme and its subsequent repayment;
• fast attraction of the required funds;
• maximum secrecy and minimum risk of disclosure of the terms of the transaction;
• flexible conditions for legal entities;
• borrowed funds are not taxed.

For permanent borrowers, banks provide preferential terms for re-lending. Raising a loan usually takes 14 to 60 days, which is much faster than raising funds through shares or finding investors.

Among shortcomings bank loans for a legal entity can be noted:

• possible violation of the financial stability of the organization due to the attraction of borrowed funds and their subsequent payment;
• obligatory provision of property as collateral;
• low loan approval rate;
• the difficulty of obtaining funds for a long time due to the tough policy of the Central Bank;
• high interest rates.

It is more profitable for legal entities to build their business on their own funds, because credit finance must not only be repaid, but also repaid serious interest. However, it is borrowed money that is the basis for the functioning of most organizations and individual entrepreneurs.

Conclusion

Credit funds in the modern world range from 10 to 50% of all borrowed money. With some negative aspects of the lending market, only this option is able to provide a quick solution to financial problems for both citizens and organizations. And if you plan the payment schedule correctly, then there will be no problems with the return of funds.

In contact with

Bank credit policy- the program and direction of the credit institution in the field of loans to legal entities and individuals. The credit policy is based on an acceptable risk-return ratio for the operations carried out by a financial institution.

Factors affecting credit policy

The credit policy of the bank is determined on the basis of macroeconomic external and microeconomic internal factors.

Its macroeconomic components are the general economic situation in the country; political stability; the stage of the economic cycle that the state goes through; the level of inflation and interest rates; state of the national currency; competition in the banking sector. In general, these are factors that a credit institution cannot influence on its own.

A special place is occupied by legal issues. Thus, regulators can have a significant impact on the credit policy of the banking system by issuing directives, changing interest rates, the amount of required reserves, etc.

The microeconomic factors influencing the credit policy include, first of all, the resource base, the cost of attracting financial resources, the client base; bank specialization; liquidity of the credit institution. Not the last role is played by the qualifications of the staff, their readiness to work with various categories of borrowers.

Goals and objectives of credit policy

The main goal of the bank's credit policy is to obtain maximum profit with a minimum level of risk. Based on the possible ratio of these components, as well as available resources, the credit institution determines the current tasks:

• directions of lending;
• technology of credit operations;
• control over the lending process.

Credit policy in work with legal entities

As a rule, the credit policy of banks when working with legal entities is aimed at developing long-term relationships with borrowers. At the same time, determined criteria for selecting clients for cooperation are the basis. Typically, the following requirements are presented: transparency of the company's income generation schemes, stability and profitability of the business, successful experience in various economic conditions, the availability of equity capital, the ability to provide security.

When interacting with small businesses and individual entrepreneurs, the personality of the manager, his reputation and credit history play an important role.

Credit policy for individuals

Based on the credit policy, bank employees build their work with retail clients, choose one or another scoring model, and develop loan products.

At the same time, based on the credit policy, the bank can focus on such segments as retail lending in retail chains (POS lending), car loans when interacting with dealers, providing mortgage loans, etc.

The credit policy determines the requirements for borrowers: age, minimum work experience, income level and other indicators.

In addition, it affects the offered banking products: secured or unsecured, targeted or non-dedicated loans, loan terms, etc.

Based on the credit policy, the bank determines interest rates that correspond to the risk of a particular borrower. At the same time, the credit policy of different banks can vary greatly. Thus, some financial institutions focus primarily on providing loans at points of sale - for example, Home Credit Bank, Russian Standard, etc. Alfa-Bank is also noticeable in this market. A number of credit organizations are actively involved in express lending: OTP Bank, National Bank "Trust", etc.

The interest on these types of loans is higher, but the banks take on higher risks.

Other credit institutions, on the contrary, focus mainly on customers with large account balances. So, for example, subsidiaries of foreign credit organizations often act - Citibank, Raiffeisenbank, etc.

Implementation of the bank's credit policy

The developed credit policy of the bank is the general main directions of activity. Its further implementation is to draw up appropriate instructions and other documents regulating the conduct of certain operations, defining the criteria for assessing customers and the stages of interaction with them.

Credit policy is not something once and for all determined in the bank. It should be revised depending on changing economic conditions.

Read about the advantages and disadvantages of a bank loan. Despite the variety of sources for raising capital, credit is the leader in terms of frequency of use. However, its popularity is a consequence of marketing and conservatism of borrowers.

What is this article about:

In a competitive market, one of the success factors of a company is the ability to finance a business: the sources of resources and the terms of attraction determine the results of the organization in the long term. A task of any level of complexity can be solved by various instruments for attracting borrowed capital: bank loans, leasing, commercial loans, factoring, and others. However, despite all the variety of choices, the undisputed leader in terms of frequency of use is a bank loan. At the same time, the popularity of the product is more likely a consequence of marketing and the conservatism of borrowers than the unique conditions and advantages of a loan as an instrument.

Classification of bank loans

Bank lending instruments represent an extensive classification of products according to the main parameters:

• presentation format,
• repayment technique,
• economic destination,
• term of use,
• loan amount,
• way to ensure
• other additional features.

Given these criteria, banks provide the opportunity to attract financing in the following main formats:

1. Classic (one-time) loan: provides for a one-time transfer to the borrower of the full amount of the loan for a period, as a rule, more than 12 months to replenish working capital or investment (with a repayment schedule and a pledge of current and / or acquired property). The source of return is profit.
2. Overdraft: short-term loan (up to 12 months) , the sole purpose of which is to finance cash gaps in the course of operating activities. It is provided without collateral, but has a volume limiter - usually as a percentage of the company's turnover. The source of return is revenue.
3. Credit line: a derivative of a classic loan in terms of the borrower's additional opportunities to change the format of provision / repayment. The main parameters of the transaction are the validity period and the credit limit. Depending on the selected conditions, the borrower has the right to partially repay the debt by increasing the limit (revolving credit line) or receive the entire loan amount in installments in several tranches (non-revolving credit line).

Other types of bank debt financing can be classified as special purpose loans, including settlements on bills , bank guarantees and other instruments.

Benefits of bank lending for a company

Before analyzing bank loans, let's single out one of the key factors, which, depending on the actual data, can act as both an advantage and a disadvantage of a bank loan. We are talking about the credit history of the borrower, which occupies a central place in the banking system for assessing solvency. A positive assessment can be a good argument in negotiations to reduce the rate or increase the amount of debt, a negative story can significantly increase the cost of the instrument and the timing of its attraction.

An indisputable argument in favor of bank lending is wide range of offered products: terms, rates, format of issuance and repayment, levels of security - almost any borrower can solve the problem of financing with the help of bank lending tools.

Another advantage of the bank is high level of trust on the part of borrowers, transparency and clarity of conditions for company management. Often, management decides in favor of a bank loan, even though its terms are less favorable compared to other options. In making this decision, the directors rely on their experience with banking products, the general reputation of the lending institutions and, as a rule, the existence of an ongoing business relationship with a particular bank (for example, an RKO). So, for example, when it is necessary to solve the problem of cash gaps due to a permanently high level of receivables, in most cases a decision will be made to open an overdraft facility without considering alternative options, including factoring.

If the company has problems with the timely repayment of the debt, you can run loan restructuring process . Although this step will have a negative impact on the borrower's credit history, the bank's well-established mechanisms in terms of revising the terms of debt financing are conditional insurance for the enterprise against significant business losses due to a default.

The main disadvantages of a bank loan for business

Similar to the specifics of the credit history factor, some systematic advantages of banks can turn into disadvantages in some situations. Flexibility in terms of bank loans does not always make it possible to agree on the required format of financing. For example, the amount of an overdraft, as a rule, does not exceed half the amount of the average monthly revenue for a certain period. In this case, the bank is guided by an extremely tight credit policy. And if the business needs more funds, then most likely it will be rejected, even in the case of a positive credit history, good relations with bank employees or the presence of cash settlement agreements with the same bank.

Another important point is the need for collateral almost all types of bank loans. Usually, only an overdraft does not require collateral. Financing on more substantial terms will be implemented through collateral: non-current (land, real estate, buildings, equipment, transport) and current (goods, materials, products) assets. Usually banks allow the provision of partially unsecured loans to borrowers in the amount of up to 30% of the total debt. This condition is an opportunity for the company to compare the collateral conditions of various banks and find the best solution for a particular case. The requirements for collateral transfers to the risk zone (in terms of failures) small businesses, start-ups, and individual entrepreneurs.

The terms of debt financing in the strategic horizon also has a significant drawback. In an unstable economy banks are less willing to consider long-term loans, since a high proportion of funds issued for a long period reduces the liquidity of the bank itself, which, of course, affects the cost of such a loan. In addition, long-term loans are usually issued for the purchase of a specific object. Thus, attraction of resources in project financing scenarios extremely difficult in most banks.

Alternatives to a bank loan

Refusal to attract a bank loan opens up opportunities for the enterprise to apply for alternative sources of debt financing: factoring, leasing, commercial credit. Each of the instruments occupies its own niche and is quite capable of competing with banking products similar in purpose.

Leasing

Leasing is a tool that replaces long-term targeted bank loans. The fundamental difference between leasing and credit is the object of use. If a bank loan involves the issuance of funds, in the case of leasing is a certain property (transport, equipment, real estate). To choose the best option according to the criterion of economic feasibility, it is necessary to calculate not only interest expenses, but also determine the influence of the depreciation factor in tax accounting, as well as the residual value of the object. Leasing has the following main advantages over a bank loan:

1. Central Bank regulations do not apply to leasing, which means that the requirements are more loyal;
2. The term for consideration of an application for leasing, as a rule, is lower than for a bank loan due to a simpler procedure for processing an application;
3. Unlike a loan, leasing is focused on a long-term period. Thus, there will be no additional "banking" interest burden in the form of long-term interest for offsetting liquidity risks. The standard term is 2-3 years, while the contract can be concluded for 10 years;
4. There is no collateral in standard leasing agreements, since the lessor transfers the rights to the object to the lessee only after paying the last payment;
5. The leasing company solves part of the organizational issues for the facility: verification of the supplier and delivery conditions, customs clearance (in case of import), insurance, commissioning and maintenance (by agreement).

The key disadvantages of leasing include the lack of ownership of the object by the lessee until the moment of full redemption. This is an important circumstance, since in the event of a property dispute, the leasing company will act as the owner of the property. In addition, the lessee has additional risks in the form of dependence on the stability of the lessor's business.

Leasing payments are subject to VAT. Therefore, if an enterprise is exempt from paying VAT (for example, it operates under a simplified taxation system), then the amount of VAT will be included in the cost in full.

Commercial loan and factoring

When solving the problems of cash gaps, the company has three standard solutions: to issue an overdraft in a bank, to conclude an agreement with a factoring company and to optimize the credit policy in terms of the conditions of a commercial loan. The results of using a commercial loan tool depend largely on the specific actions of the company's management, and the credit policy should be optimized regardless of the presence of liquidity problems. In a situation of imminent threat of insolvency, the company is faced with the task of finding a fast and reliable solution, factoring may be the best choice.

At the core factoring operations - assignment of the right to claim receivables . Thus, with the help of factoring, the entire proceeds of the enterprise can be converted into cash in a timely manner. Bank overdraft limits usually allow you to cover only half of the turnover. At the same time, factoring, like overdraft, does not require collateral. The main criterion for concluding a transaction and affecting its conditions is high-quality receivables.

Other advantages of factoring over an overdraft are that the company does not need to switch to cash settlement with a creditor, as well as freer documentation of the transaction. By connecting factoring, the borrowing company also provides itself with a high-quality independent verification of key business partners.

The essence of a bank loan

Definition 1

Bank loan- this is the amount of money provided by the bank to companies and individuals under certain conditions and for a certain period.

On the other hand, a bank loan is a certain technology to meet the borrower's need for financial resources.

Thus, Bank loan can also be considered as a complex of interrelated financial, organizational, informational, technological, legal and other procedures. All of them, taken together, form a holistic regulation of the interaction of a banking institution represented by its divisions and employees with bank customers regarding the provision of monetary resources to the latter on terms of payment, urgency and repayment. A bank loan can be carried out both in the form of loans, in the form of bills of exchange, and also in other forms.

Bank credit is active And passive. Active means that the bank is acting as a creditor. In the second case, he is a borrower. Thus, the bank can receive loans from other financial institutions (including the central bank of the country) or issue loans to other commercial banks (interbank lending).

Benefits of debt financing through bank loans

Among the main ones are:

• Wide range of options for choosing a lending scheme (there are quite a few different options and programs for lending to firms and individuals)
• Flexible conditions for the provision of borrowed funds (for example, specific requirements for the borrower may be specified in the contract; preferential terms for granting loans may be provided to regular customers; if necessary, the conditions for granting and repaying loans can be revised, etc.)
• Relatively low costs of funds and time for attracting a bank loan (in the post-Soviet countries, attracting a large bank loan takes about 2 weeks to 2 months; this procedure is much faster than, for example, issuing shares or bonds; borrowed funds are not taxed, etc. )
• Confidentiality and the absence of strict requirements for the disclosure of information about the company and its activities, etc. (in accordance with the Federal Law "On Banks and Banking", as well as with the concept of "bank secrecy"; bank loans, in contrast to raising funds through the issue securities does not require disclosure of information about the company).

Disadvantages of a bank loan

The main ones include:

• The risk of a decrease in financial stability and, as a result, the solvency of the company (borrowed funds create the risk of inability to service interest payments (default) and, as a result, the risk of bankruptcy of the company).
• Difficulties in obtaining large amounts for a long period (in today's difficult conditions, the loan term of most companies often does not exceed 3 years).
• Excessively high price of borrowed resources (the interest rate for business is very high; it is somewhat easier to get a bank loan for large, financially stable enterprises, moreover, the larger the loan size, the lower the interest rate can be; high interest rates are due to significant systematic and non-systematic risks).
• Requirements for collateral (loans for firms are often issued on the security of property and, at the same time, its value must be no less than the value of the loan itself)
• The probability of refusal by the bank (due to the economic crisis, many enterprises have significantly worsened the indicators that financial and credit institutions pay attention to when they decide to issue a loan; low profitability, financial stability and liquidity serve as an obstacle to obtaining debt financing).