Types of banks and their features

The banking system is an extensive network of credit institutions. At present, different types of banks are distinguished depending on their functions, the operations they perform, the service sector, the scope of work and the availability of branches. Almost every person faces the need for cooperation with various banks. Therefore, let us dwell on their classification in more detail.

At the first stage of the appearance of a credit institution, it is referred to a closed or open society or to a limited liability company. It depends on the legal form of the bank.

Depending on the operations performed and the services provided, banks are divided into universal and specialized.

There are state, private, joint-stock and mixed credit organizations. It depends on the type of owner. The central banks of the country mainly refer to state organizations.

Foreign banks can also be present in the market for the provision of services, and this is discussed separately in the legislative framework.

According to the functions performed, commercial, investment, mortgage, savings, issuing and deposit banks are distinguished.

Commercial banks are engaged in the provision and sale of banking products. These are settlement and commission-commissions transactions; On factoring, leasing. There are the following types of commercial banks: savings, insurance and mortgage. They operate in virtually all sectors of loan capital.

Banks of a larger size provide a full range of services. Types of specialized banks have more limited opportunities. Commercial banks are a stable basic component of the entire credit system. They can carry out their activities not only within the country, but also beyond its borders, opening their branches there.

The next kind is the investment banks, which are engaged in the issue of securities and founding activities. Usually, at the request of the state, they determine the size of the issue, determine the type of securities that will be issued, and also help with their placement and circulation. These types of banks become guarantors of securing securities. They acquire them and provide loans and credits to other buyers.

Savings banks, which are not commercial, are controlled by the state. These are medium-sized credit institutions. They usually accept deposits from individuals and provide loans to the public. In addition, they are engaged in the purchase of securities and the issuance of credit cards.

Mortgage banks are engaged in providing loans secured by real estate. They also issue mortgage-backed bonds .

The status that banks have, their types and functions depend on many factors. This is primarily a list of services provided. But banks distinguish and depending on the branching of their network. If a bank has many branches, then it is customary to call it multi-branch. Small lending institutions that do not have branches are called branchless.

Depending on the industry served and their number, the bank can be diversified or have a certain specialization.

Basically, existing banks are diversified. In this case, the risk of non-repayment of loans is significantly reduced. Some banks mainly work with a certain group of companies that are their founders. Here the risk of non-repayment of loans is very high.

There are different types of banks. But the most common ones are those that provide a wide range of services and are multidisciplinary. In this case, they are considered more reliable and stable.