1. The development of the financial industry
The financial sector
development plays a huge role in economic development. It promotes economic
growth through capital accumulation and technological progress by increasing
the savings rate, mobilizing and pooling savings, producing information about
investment, facilitating and encouraging the inflows of foreign capital, as
well as optimizing the allocation of capital.
Countries with better-developed
financial systems tend to grow faster over long periods of time, and a large
body of evidence suggests that this effect is causal: financial development is
not simply an outcome of economic growth; it contributes to this growth.
Additionally, it reduces
poverty and inequality by broadening access to finance to the poor and vulnerable
groups, facilitating risk management by reducing their vulnerability to shocks,
and increasing investment and productivity that result in higher income
generation.
Financial sector development
can help with the growth of small and medium sized enterprises (SMEs) by
providing them with access to finance. SMEs are typically labor intensive and
create more jobs than do large firms. They play a major role in economic
development particularly in emerging economies.
Financial sector development goes beyond just having financial intermediaries
and infrastructures in place. It entails having robust policies for regulation
and supervision of all the important entities.
2. The 5 Biggest Russian Banks
The Russian banking system is
top-heavy, largely state-controlled, and heavily regulated by the Russian
Central Bank.1 The Russian state holds majority stakes in the top two
banks, Sberbank (SBER) and VTB (VTBR), which together account for more than
half of the Russian banking industry's assets.
After these two giants, the
next three largest banks by assets are government-controlled Gazprombank;
Promsvyazbank, which was nationalized in 2018 and turned into a lender to the
Russian defense industry; and the fully state-owned Russian Agricultural Bank.
Sberbank's history stretches back to 1841, when
Russia established a network of state-owned savings banks. It remains by far
the largest Russian bank by market capitalization—₽5.5 trillion (rubles), as of
July 2023. Sberbank's 107 million retail
customers account for approximately half of Russia's deposits and credit card
accounts. The Russian government owns a stake of just over 50% in
Sberbank, which it acquired from the Russian Central Bank in 2020.
The second-largest Russian bank
and another majority state-owned one, VTB was founded as Vneshtorgbank (Foreign Trade Bank) in 1990. The Russian government
holds 92.2% of the bank's share capital, including 60.9% of its ordinary
shares.
A subsidiary of Russian natural
gas giant Gazprom (GAZP), Gazprombank
is Russia's third-largest bank by assets. It was founded in 1990 to provide
banking services to the energy industry.
Founded in 1995 by brothers
Dmitry and Alexei Ananyev, who had been telecom technology entrepreneurs, Promsvyazbank became one of the
fastest-growing Russian banks. The bank was recapitalized in
2018, with ownership assumed by the state to finance the defense sector and
military activities.
Russian Agricultural Bank is a state-owned bank
established in 2000. The bank specializes in agricultural financing, with over
5,400 agribusinesses financed in its 22-year existence.
3. Retail banking
Retail banking is banking that provides financial
services to individual consumers rather than businesses. Retail banking is a
way for individual consumers to manage their money, have access to credit, and
deposit their money in a secure manner. Services offered by retail banks
include checking and savings accounts, mortgages, personal
loans, credit cards, and certificates of
deposit (CDs)
Many financial services companies aim to be the
one-stop-shop retail banking destination to their individual consumers.
Consumers expect a range of basic services from retail banks, such as checking
accounts, savings accounts, personal loans, lines of credit, mortgages, debit
cards, credit cards, and CDs.
Most consumers utilize local branch banking
services, which provide onsite customer service for all of a retail customer's
banking needs. Through local branch locations, financial representatives
provide customer service and financial advice. Financial representatives are
also the lead contact for underwriting applications related to credit-approved
products.
Retail banks are also an important source
of credit for individuals. They offer consumers credit to
purchase large-scale items such as homes and cars. This extension of credit can
take the form of mortgages, auto loans, or credit cards. This extension of
credit is an important facet of the economy as it provides liquidity to the
everyday consumer, which helps the economy grow.
4. Types of Banks.
|
Types
of Banks
|
What
It Is
|
Key
Services
|
Suitable
for
|
|
Retail
Banks
|
Banks that offer services to individuals
|
Bank accounts, loans, debit and credit cards, and
ATMs.
|
Individuals
and small businesses
|
|
Commercial
Banks
|
Banks designed for commercial purposes
|
Loans, cash management, credit products, equipment
lending, trade finance, commercial real estate, foreign exchange
|
Small and mid-size businesses
|
|
Investment
Banks
|
Banks that manage investment portfolios
|
Stock trade, securities, and bonds management,
corporate finance, merger & acquisition assistance, and asset management
|
Large corporations, and institutional investors
|
|
Universal
Banks
|
Banks that offer a combination of retail,
commercial, and investment banking services–all in one place
|
Checking and Savings Accounts, Credit and
Loan Facilities, Brokerage Services Asset, Management and
Investment Advisory, and Financial Analysis
|
Individuals and businesses seeking comprehensive
financial services from one single bank
|
|
Credit
Unions
|
Member-owned and non-profit financial institutions
|
Similar services to retail and commercial banks, but
only to certain demographics
|
Individuals seeking affordability and local support
|
|
Private
Banks
|
Banks offering personalized banking services
|
Financial planning, investment guidance, wealth
management, credit services, lending
|
High-net-worth
individuals
|
|
Savings and Loan Associations (S&Ls)
|
Banks specializing in making mortgage loans
|
Mortgages, refinance loans, and alternative home
loans using deposited savings
|
Customers seeking a community-oriented banking
experience for homebuying
|
|
Islamic
Banks
|
Banks that operate in strict adherence to Islamic
law.
|
Profit and Loss Sharing Ventures, Cost Plus Finance, Islamic
Leasing, Islamic Bonds, and Islamic Insurance
|
Individuals and businesses seeking financial
institutions that comply with Islamic law
|
|
Green
Banks
|
Banks that focus on funding renewable energy, energy
efficiency, and other green initiatives, rather than maximizing profits.
|
Financing Renewable Energy Projects, Energy
Efficiency Financing, Funding for Low-Carbon Technologies, Climate
Resilience and Adaptation Projects, Mobilizing Private Investment, and Advisory
Services
|
People and organizations need financial support to
transition or create eco-conscious projects and technologies.
|
|
Challenger
banks
|
New banks that challenge traditional banking models
by offering innovative products and services
|
Savings accounts, investment accounts, mobile
banking
|
Individuals and businesses seeking convenience and
remote banking
|
|
Neobanks
|
Digital-only banks that operate entirely online with
no physical branches
|
Multi-currency accounts, mobile banking
|
Individuals and businesses seeking innovative 100%
banking options
|
5. How banks make business lending decisions.
A bank’s decision to give you funding will
depend on the following areas:
Your profit and cashflow
The bank will want to know that you will be able
to repay what you borrow and interest within the agreed timeframe. Therefore
you'll need to provide historical (where this is relevant) and projected
financial information that demonstrates profitability and cash generation. This
information should support your loan application.
What security is available?
You'll need to pledge something as security for
the loan, which is known as collateral.
Common forms of security include:
- Real
estate
- Vehicles
- Equipment
- Inventory,
structures and circumstances
- Accounts receivable (your trade debtors)
The bank may also ask you to provide a personal
guarantee as additional security.
What will the loan be used for?
The bank will want to understand the market
conditions that affect your business.
The bank's appetite to lend will vary from
sector to sector depending on its particular risk policies.
If your business would not match their risk
appetite you should approach other banks and alternative lenders.
Your personal credit assets
A bank can consider your personal finances using
character and your property/assets to secure the loan (collateral).
If you have a poor personal credit history, the
bank might think it’s possible your business could have similar problems.
Collateral
If the bank decides that your business doesn’t
have adequate collateral to secure the loan, it may want your personal assets
as collateral. As a minimum it may ask for a personal guarantee.
It's worth bearing in mind that if you fall
short on only one criteria, your application may still be rejected. Therefore,
it's important that you submit a clear and strong proposal to a bank or
alternative lender who will likely look for the same information.
6. Types of Accounting
Accounting is
the process of recording and measuring data which provides the financial as
well as non-financial information about the enterprises.
Financial
Accounting involves the process of aggregation, compiling,
and production of the financial information of the company in the form of
financial statements used by the stakeholders of the company.
Project Accounting is the accounting that is used by the company to track the progress of the
different projects undergoing from the financial perspectives. It plays an
integral part in project management.
Managerial Accounting mainly focuses on accumulating the information to be used for internal
operational reporting, i.e., it is primarily for the internal working of the
company. It is more detailed than the information given to the external users
of the company.
Government Accounting mainly focuses on the financial administration of the Government’s
activities for promoting welfare to the maximum level in the form of the
various services given by the Government.
Tax Accounting involves compliance with various tax-related statutes along with the tax planning with the aim of preparation of tax returns.
Cost Accounting is the accounting method that is used for capturing the various cost of
production of the company by assessing these costs like input cost, fixed cost.
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