Banks are the most important link in the world of money. This is because, first of all, banks nowadays perform the main part of the work of transferring money from a customer to a seller, by operating the system of payments in the economy. Almost everyone in the world uses or has used banking services. Families keep their savings there, and banks pay them interest rates on their deposits and give them loans to buy expensive goods. Companies conduct payments through them. Commercial organizations, which work at the market and in production, take loans for their needs and conduct all payments with buyers and sellers through them. Landowners and owners of real estate take loans from the banks to buy an estate or to make use of it and pay back loaned money.
As we 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 sound and stable economy of any country depends on healthy banking services.
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.
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.
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.
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 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.
Additional operations can be placed between traditional and non-traditional 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 some 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.
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 services.
In fact banker’s services cover an enormous range of activities today. A full list would include:
Current account services. They are extended to anyone whom banks regard as reliable. A new depositor should be recommended by his employer or should present a reference. If this proves satisfactory the bank will accept a deposit from him which will be entered in his current account. A cheque book will then be issued free of charge. Once the customer has received his cheque book he may use the cheques to order the banker to pay out sums of money from his current account. Money is being paid into and paid out of the account as often as the customer finds convenient.
Deposit account services. Companies and individuals can deposit cash resources that are not needed at present. They can withdraw the money either any day they need it or after a certain period in case of time deposits.
Savings account services. It enables small savers to put money away for particular purposes, for example for holidays.
Other services: foreign exchange; foreign exchange transactions; services in foreign trade payments; discounting bills of exchange; granting loans; investment management services; cash dispensers and automated teller machines; safe custody; economic information; banker’s credit cards and many others.
Assignments
I. Answer the questions.
1. Why are banks the most important link in the world of money?
2. What can all banking services be divided into?
3. What are the types of bank operations commonly called traditional bank operations?
4. What is included in non-traditional services?
5. Who can decide which services will be paid for and which not?
II. Translate the following sentences into Ukrainian. Put questions to any two of them.
1. Commercial organizations, which work at the market and in production, take loans for their needs and conduct all payments with buyers and sellers through banking services.
2. Landowners and owners of real estate take loans from the banks to buy an estate or to make use of it and pay back loaned money.
3. All banking services can be divided into specific and nonspecific services.
4. While keeping money for its clients, the bank pays them interest.
5. Additional operations can be placed between traditional and non-traditional operations.
III. Translate the following sentences into English.
1. Майже кожен у світі користується чи користувався банківськими послугами.
2. Банк не лише накопичує гроші – він перетворює грошові ресурси, які не працюють і не використовуються, на працюючі активи.
3. Депозитні операції – це операції з внесення грошей клієнтів у банк на депозит.
4. Кредитні операції – це операції з надання позик клієнтам банку та отримання в обмін відсотків за цими позиками.
5. Банківські платіжні операції можуть здійснюватися готівкою чи переказним платежем.
IV. Name the following definitions.
1. The operations of placing clients’ money into the bank on deposit.
2. The operations of giving loans to bank clients and receiving in exchange interest rates on those loans.
3. The operations of giving out cash money to the clients from their accounts and exchanging cash currency.
4. Operations, which include currency operations and operations with securities – with gold, precious metals and ingots.
V. Make a scheme to various banking services.
VI. Say which services of banks seem most important to you, and why.
VII. Work in chain. Ask your neighbour a question based on the text. He or she has to report your question, answer and ask his one to the next student to continue chain-work.
VIII. Sum up what the text says about banking services.
Text 5
