Non-bank credit organizations (NPOs). Non-bank credit organization (NPO) Non-commercial banks
A non-bank credit organization (NPO) is a legal entity that carries out a limited list of financial transactions. The list is determined by the Central Bank of the Russian Federation and depends on the type of non-profit organization, there are only three of them: deposit-credit, payment and settlement.
Deposit and credit non-banking organization
Performs the following functions:- attracts deposits from legal entities;
- uses depositors' funds to make a profit;
- buys and sells currency;
- issues guarantees to banks.
Payment non-bank credit organization
Payment NPO is engaged in:- opening and maintaining accounts of organizations;
- collection of money and securities;
- transfer of funds between individuals and legal entities.
Settlement non-bank credit organization
Functions of settlement non-profit organizations:- opening and maintaining accounts of organizations;
- collection;
- transfers without opening an account;
- purchase/sale of currency;
- transactions with securities.
Types of non-bank credit institutions by field of activity
Clearing institutions
Clearing is a type of barter, a method of non-cash payments between banks, enterprises, and states without the use of money. These types of transactions are difficult to reflect in financial documents, so many people resort to the services of clearing institutions.Collection companies
Collect and transport funds between organizations and their divisions. Main clients: banks and large stores. Large companies have their own collection services. It is more profitable for organizations with medium turnover to use the services of non-profit organizations.Money transfer companies
With the help of these companies, people send money to any city or country. To do this, they do not need to open a bank account, use cards or terminals. There are NPO branches in many banks and post offices. Companies charge a small percentage for their services. Examples of such organizations are Western Union and Zolotaya Korona.Electronic money
They provide almost all types of banking services, except deposits. All operations are carried out online: through the company’s website or application.Electronic money is used to pay for services and goods. They interact with regular banks. You can withdraw money to a card or top up your e-wallet from it. Some organizations provide the opportunity to exchange currency.
Conclusion
Non-bank credit organizations are very important for the financial market. They compete with banks, make services more accessible and stimulate the development of the banking sector. For example, due to the popularity of electronic money, banks had to create their own platforms for paying bills and transfers on the Internet.Non-bank credit organization(NPO) – one that has the right to carry out certain banking operations. The definition of NPOs is given by the federal law of December 2, 1990 No. 395-1 “On banks and banking activities”. Acceptable combinations of banking operations for non-profit organizations are established by the Bank of Russia. Legislative requirements for non-bank credit institutions are lower than for banks, which is associated with a lower degree of risk in transactions.
In general, non-bank credit organizations can be divided into three main types: settlement non-bank credit organizations (RNCOs), payment non-bank credit organizations (PNCOs) and non-bank depository credit organizations (NDCOs).
Carrying out settlements on behalf of legal entities, including correspondent banks, on their bank accounts;
Collection of funds, bills, payment and settlement documents and cash services for legal entities;
Purchase and sale of foreign currency in non-cash form;
Making money transfers on behalf of individuals without opening bank accounts (except for postal transfers);
In other words, RNKO does not have the right to attract deposits and issue loans; it provides a system of payments and transfers.
Currently, the following groups of RNCOs can be distinguished on the market:
Clearing organizations: CJSC Clearing House, CJSC Interregional Clearing Center, OJSC Moscow Clearing Center, etc.;
Settlement centers on the securities market, for example, the NPO RTS Clearing House;
Clearing houses that provide services to legal entities, including correspondent banks in foreign exchange markets, such as the National Settlement Depository, which serves the Moscow Interbank Currency Exchange;
Settlement organizations operating in the interbank market, for example, NPO Payment Center, which services the Golden Crown payment system and has agreements with more than 130 banks;
Settlement organizations specializing in the transfer of funds from individuals without opening bank accounts, such as Western Union DP Vostok, NPO Rapida.
A payment non-bank credit organization has the right to carry out money transfers without opening bank accounts and other banking operations related to them. This type of NPO appeared with the release of the law “On the National Payment System”. Compared to a settlement payment non-bank credit organization, a narrower range of operations is permitted. It should provide a risk-free transfer system within the framework of organizing instant, electronic, and mobile payments.
According to the regulation of the Central Bank of the Russian Federation dated September 21, 2001 No. 153-P “On the peculiarities of prudential regulation of the activities of non-bank credit institutions carrying out deposit and credit operations,” NDCOs can carry out the following banking operations:
Attracting funds from legal entities into deposits (for a certain period);
Placement of funds attracted from legal entities as deposits on their own behalf and at their own expense;
Purchase and sale of foreign currency in non-cash form (exclusively on your own behalf and at your own expense);
Issuance of bank guarantees;
Carrying out activities on the securities market.
NDCO has no right:
Attract funds from individuals into deposits (on demand and for a certain period) and legal entities into deposits on demand;
Open and maintain bank accounts of individuals and legal entities, as well as make payments on them;
Engage in collection of funds, bills, payment and settlement documents and cash services;
Buy and sell cash foreign currency;
Attract deposits and place precious metals;
Make money transfers on behalf of individuals without opening bank accounts.
In other words, NDCOs do not have the right to conduct settlement operations, but they can carry out certain credit and deposit operations.
The only example of such an organization is the CJSC “Non-Bank Deposit and Credit Organization “Women’s Microfinance Network” created in 2005. However, in 2011, his license was revoked due to the decision of this organization to cease operations through liquidation. Currently there is not a single NDCO on the market.
The procedure for opening all NPOs is prescribed in the instruction of the Central Bank of the Russian Federation dated April 2, 2010 No. 135-I “On the procedure for the Bank of Russia to make decisions on state registration of credit organizations and issuing licenses for banking operations.”
Mandatory standards for payment non-bank credit organizations are covered by Bank of Russia Instruction No. 137-I dated September 15, 2011 “On mandatory standards for non-bank credit organizations that have the right to carry out money transfers without opening bank accounts and related other banking operations, and the specifics of carrying out Bank of Russia supervision over their compliance."
Non-bank credit organization - a credit institution that has the right to carry out certain banking operations provided for by law. Acceptable combinations of banking operations for them must be established by the Central Bank of the Russian Federation. In practice, they have developed three types of non-bank credit institutions : settlement, deposit-credit and collection.
Non-profit credit organization – This is a legal entity created not to make a profit, but to meet the needs of its participants, achieve social, charitable, cultural, educational and other socially beneficial goals, carry out managerial, socio-cultural or other functions of a non-commercial nature. It should be noted that the legislation allows a non-profit credit organization to carry out business activities if it is aimed at achieving the goals for which the non-profit organization was created.
The most important non-banking financial institutions are:
clearing houses (centers);
clearing organizations;
investment companies;
savings and loan associations;
credit unions;
financial companies;
Insurance companies;
private pension funds;
charitable foundations;
credit cooperation.
These organizations play a significant role in the accumulation of household savings and are important suppliers of loan capital. At the same time, investment, financial, and insurance companies are classified as non-bank credit organizations commercial type, and savings and loan associations, credit unions, private pension and charitable funds, and credit cooperatives are classified as type of non-profit credit organizations.
Investment companies – by issuing their own shares, they raise funds, which are then invested in securities of industrial and other corporations. Investment companies are divided into closed investment companies(issue of shares at a time, in a certain quantity; but the buyer can only purchase them on the secondary market) and open-end investment companies (mutual funds)- issue their shares multiple times, in certain batches, mainly for new buyers. There is a certain industry specialization: investment companies purchase securities of companies with a certain industry specialization:
Sources of funds:
proceeds from the sale of own securities;
share capital;
reserve fund;
leasing of company real estate;
cash received from dividends and resale of shares of various corporations.
Savings and loan associations (building societies) - credit partnerships created to finance social activities. Activity savings and loan associations is providing mortgage loans for housing construction in cities and rural areas.
Sources of funds:
cooperative shares;
savings and time deposits;
issuance of mortgage loans and credits;
investments in government securities.
Credit unions – service to individuals united on professional or religious grounds. Organized on a cooperative basis.
Sources of funds:
share contributions in the form of purchasing special shares (interest is paid on them);
providing short-term loans for the purchase of durable goods, home repairs.
Financial company – a special type of financial institutions that operate in the field of consumer credit (may be a joint stock or cooperative form). Financial companies exist in two types:
to finance installment sales – selling durable goods on credit, providing loans to small entrepreneurs, financing retailers;
for personal financing – loans to consumers, financing sales of only one entrepreneur.
Sources of funds:
issue of own securities;
short-term loans from commercial banks;
issuance of consumer loans;
investments in securities.
Insurance companies exist in four main forms:
joint stock companies (traditional form) - life, property, accident insurance companies;
companies “on a mutual basis” - each policy holder is a co-owner on the basis of an insurance policy (life insurance companies in the USA, Canada);
mutual exchange companies - formed on a cooperative basis, acting on behalf of individual individuals or organizations. Through the central office of the company, its participants exchange insurance risks, insuring themselves, and do not sell insurance to the outside;
Lloyd's system, consisting of syndicates that include insurance companies and insurance brokerage firms. Responsibility for the insurance risk is distributed among the members of the syndicate or among all Lloyd's participants. Brokers accept cases and receive brokerage commissions for intermediation. The Lloyd's system is headed by a special committee.
Sources of funds:
receipt of insurance premiums from legal entities and individuals, the amount of which is calculated on the basis of insurance tariffs or rates;
income from investments in government securities;
income from investments in bonds and shares of private corporations;
real estate investments;
loans against policies.
Private pension funds – corporations and enterprises play a major role in their development, striving to attract the most qualified workforce and provide conditions for social partnership. Pension funds are like uninsured(transfer to trust management in the trust departments of commercial banks and insurance companies), and insured(an agreement is concluded with the insurance company, according to which the latter receives pension contributions and ensures the payment of pensions).
Sources of funds:
contributions from entrepreneurs and employees, accumulated as in long-term life insurance.
Charitable foundations – focused on solving humanitarian problems and supporting socially significant initiatives.
Sources of funds:
charitable receipts in the form of cash and securities;
investments in various securities, including government securities;
investments in real estate.
Credit cooperation - an association of small commodity producers to meet the credit needs of its members. Its funds are formed from shares and member deposits, interest on loans, bank loans and government subsidies. In addition to lending operations, cooperatives are engaged in intermediation in purchase and sale.
Commercial banks are not the only financial intermediaries, i.e. institutions that accept deposits and provide loans. In many countries, services for placing time deposits, including savings accounts, the withdrawal of which (which happens quite rarely) can formally be made with a 30-day delay, are also offered by other institutions. However, the minimum balance limits on their deposit accounts are often lower than those of commercial banks. Institutions offering such services are called “savings” and include: savings banks, savings and loan associations, building societies, various savings banks (fr. - caisses d "eparghe, German. - sparkasse) etc. Such institutions have traditionally specialized in housing finance, a very long-term form of lending made possible by the fact that the deposit base of such a lending institution is less liquid compared to a commercial bank. Thrifts also offer checking accounts, which can compete with private checking accounts at commercial banks.
In addition, there are depository institutions such as credit unions, which are cooperative associations of people belonging to some group of society, for example, employees of a large company or government agency, members of a professional association. Credit unions accept deposits and issue loans only to their members; profits are distributed among the members of the union, who are its shareholders. Some financial intermediaries are organized as mutual associations in which savers and borrowers are treated more as owners in terms of profit sharing (and even sometimes elect a board of directors) rather than as mere customers receiving services. The third category of financial intermediaries are considered “Islamic banks”, which in Islamic countries can service the payment system and perform the functions of financial intermediaries. Since Sharia law prohibits the charging of interest, users of funds from Islamic banks essentially share the profits from the use of funds with depositors.
Nowadays, in developed countries, thrift institutions and commercial banks have changed so much that it has become difficult to distinguish them from each other. Banks, like savings institutions, offer a range of services in the field of long-term deposits and mortgage loans. In addition, neither banks nor thrifts need to hold mortgages on their own balance sheets, especially in the pioneering US securitization(guarantees) mortgages In this case, a special government-backed guarantee agency places bonds on the financial market, and with the proceeds from their sale purchases a certain number of mortgages, then using interest from the mortgages to pay interest on the bonds. In this way, long-term loans can be taken off the balance sheets of banks and thrifts and increase their liquidity, while at the same time providing long-term financial instruments in the form of bonds to the financial markets. Indeed, banks can borrow funds outside the deposit system by turning to other banks or even issuing certain types of debt instruments such as unsecured debt obligations.