Non-banking credit organizations

Non-banking credit organizations

Opening financial reports, very often you can find news about the cancellation of the license. Regardless of reputation, ratings and financial merit, the Russian regulator mercilessly “head chops” left and right.

It will also withdraw licenses not only from banks but also from some NGOs. In this case, we are talking about non-bank credit organizations. What are these companies? What do they do? And what is their activity?

General characteristics of organizations

General characteristics of organizations

So, NPO or non-bank credit organization is a company that is one of the links in the huge banking system of the Russian Federation. It regularly carries out certain types of banking operations, strictly regulated by the Central Bank of Russia.

These organizations operate in accordance with the law and operate under a valid license. Like banks, these companies are also subject to regular review by regulators. However, unlike government agencies, less stringent requirements are put forward for the work of non-banking financial institutions.

Banks and non-profit organizations: what is the difference?

The difference between NCOs (non-bank credit) of their powers and capabilities. For example, a financial institution can not only attract deposits but also provide cash management services as well as lending.

However, many of the housing loans suggest impressive amounts and deadlines. And non-banking companies can only perform one type of such service, for example, just lending or attracting deposits. It is noteworthy that NPOs operate under the established procedure for credit institutions from the non-banking sector.

A few words on the procedure for regulating NGO activities

A few words on the procedure for regulating NGO activities

All credit institutions existing in the Russian Federation operate under the Federal Law on Banks and Banking Activities of 3 February 1996. Some changes were later made to this Act. In particular, they touched on varieties of credit firms. According to established standards, these companies can only have three types:

  • Banking credit organizations (commercial and general government).
  • Non-banking institutions.
  • Foreign banks.

If you think of an officially established concept, then credit institutions are all legal entities that conduct banking financial transactions under a license obtained from the Bank of Russia. The ultimate goal of these organizations is usually personal gain.

The legal status of credit organizations

Such companies operate under Article 1 and the Banking Act. According to established rules, these organizations carry out various banking and financial transactions under the law.

Banks are credit institutions and have the right to attract funds of legal and natural persons to deposits. The funds received from the population which they deposit in their own name and on their own account are subject to repayment, urgency, and payment. In addition, banks have legally committed to maintaining these bank accounts.

Non-banking companies are entitled to carry out only a small list of banking operations.

What types of NPOs exist?

What types of NPOs exist?

Non-banking credit organizations can be conditionally divided into three groups:

  • Companies providing cash settlement services to the population (RNKO).
  • Companies offering translation services and payment services (PNCO).
  • Non-banking organizations that attract deposits and issue micro-credits to the public (NDKO).

At the same time, companies specializing in clearing services offer the following types of services:

  1. Opening and maintenance of financial accounts for legal entities.
  2. Performing various calculations based on instructions from legal entities (transfers to bank accounts, payments by respondent bank accounts and suppliers).
  3. Execution of collection services (keeping clearing accounts, working with accounts and other payment documents).
  4. Provision of cash services for legal entities.
  5. Acquisition and sale of foreign currency, its exchange by bank transfer.
  6. Conduct financial transactions without opening an account (on behalf of individuals).
  7. Trading on the securities market.

In a word, these companies can only fulfill the arrangement and cash services. However, they do not have access to lending services to the population and attracting deposits. However, the implementation of credit and deposit operations is available to financial institutions.

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