Financial Services Institutions Banking, Definition Bank, Functions of the Bank, Distributors, Giving Credit,

Financial Services Institutions Banking

1. Definition Bank

The term comes from the Italian bank, which is banco, which means a table or bench. In everyday life, known as the bank financial institution whose main activities receive deposits from the public in the form of savings deposits, time deposits, and current accounts. Furthermore, the funds are distributed to the people who need it in the form of loans (credit) or in terms of Islamic banks are known to financing.

According to Law No. 10 of 1998, banks are business entities that raise funds from the public in the form of savings and channel them in the form of credit and other forms of in-bentuk rangka improve people's lives.

2. Functions of the Bank

In general, the bank serves as intermediary institutions, which collect funds from the public in the form of savings, deposits and current accounts, as well as distribute the funds to the community in the form of loans (credits). Thus, it can be said that the bank's function is as an intermediary between pihak yang have excess funds to those who need funds.

The Bank has a very important role in the economy, ie as one cog in inenunjang national economic development. Bank can encourage efforts to increase equity, economic growth, and national stabihtas towards improving people's welfare. Howard D. Crosse and George H. Hempel in his book entitled Management Policies for Commercial Banks revealed that there are seven basic functions of banks, as follows.

a. Credit creation.

b. The function of demand deposits.

c. Planting and billing.

d. The accumulation of savings and investment.

e. Trust services and other services.

f. The profit for the benefit of the shareholders.

For more details see the following description.

a. Grouper Fund

To perform its function as a collector of funds, the bank has several sources of funding, including the following.

• Own funds in the form of a capital injection of establishment and sale of shares on the stock exchange if the banks go public.
• Public funds collected through the banking business, such as savings, current accounts and deposits.
• Funds in the form of loans from financial institutions such as credit liquidity and Call Money (funds can be withdrawn at any time by bank borrowing).

b. Distributors / Giving Credit

Bank channel back the funds raised in the form credit to the people who need funds for business activities (investment, working capital) or for consumption activities. With this functionality is expected the bank will get a source of income in the form of profit sharing or lending. In channeling funds to the community, the bank holds the principle of caution and pay attention to the principle. which is as follows.

• Character, the character and progress applicant to fulfill obligations.
• Capacity, the ability, intelligence, and skill to use the credits earned to make progress, profit and able liming liabilities or debts.
• Capital, capital of a person or business entity credit recipients. Not all of the capital should be sourced from loans.
• Collateral, which is certainty in the form of guarantees that can be provided by the loan recipients.
• Condition of economies, namely the disengagement plan credit should be able to look to the future, namely how the state of the future economy.

In granting the loan, usually contained various elements. Here are the elements contained in the credit facility.

• Confidence, a confidence to the lender that loans (either in the form of money, goods or services) actually received back in the future following the term of the credit.
• Agreement, usually written in the form in which the agreement signed each side respective rights and obligations. Then poured also in the credit agreement and signed by both parties before the credit is disbursed.
• Period, any loans usually have a period of time. This time period is a time of return kredit agreed upon by both parties, the lender and the loan recipients.
• Risk, credit risk occurs because of the grace period. This grace period allows the return of credit to be jammed, known as bad credit. The longer the credit period, the greater the risk.
• Reply Services, an advantage or income on lending. In conventional banks, such remuneration as is known with interest. As for banks based on sharia principles, retorted his services is determined by the margin of profit sharing. Besides flowers, banks also benefit because the administration charge of credit to customers.

c. waiter Services

The Bank also serves as a "servant of traffic payment" in the form of funds transfer, collection, check, credit card, e-money, and other services.

3. Type Bank

Banks can be classified into several types, including the following.

a. based Institutional

Based on the institutional aspects, there are two types of banks are commercial banks and rural banks (BPR). It is described in Law No. 10 of 1998. For more details see the following explanation.

1) Banks

Law No. 10 of 1998 Article 1 Paragraph 3 explains that the commercial banks are banks that carry out business activities either conventional or based on sharia principles in its activities providing services in payment traffic. In conducting its business, the bank uirnim collect funds from the public in the form of savings deposits, time deposits, and current accounts, as well as distribute the funds to the community in the form of loans (kiedit), as productive credit which usually consists of kiedit working capital and investment loans and consumer credit, for example Kepemililcan Credit (KPR) and the Motor Vehicle Ownership Loan (KKKB).

Based raang its scope of business, commercial banks can be classified into two types as follows.

• Foreign exchange bank, the commercial banks are authorized to perform payment transactions in foreign currencies. Examples of BNI, BRI, Bank Mandiri, BCA bank, and the bank BII.
• Nondevisa commercial banks, namely banks that do not have the permission to conduct foreign exchange transactions. For example, the Bank, Bank Jasa Jakarta, and bank Welfare.

2) Bank Perkreditan Rakyat (BPR)

Law No. 10 of 1998 Article 1, paragraph 4 explaining that BPR is a bank conducting business in a conventional or based on sharia principles in their actions do not provide services in payment traffic. BPR effort is to raise funds in the form of savings and deposits, as well as distribute it in the form of loans (credits). Special to conduct foreign exchange transactions, not all RBs can do, except RB already has an operating license from Bank Indonesia money changer. BPR example, among Karyajatnika Sadaya BPR, BPR Eka Bumi Artha, and Artha Sri BPR Lestari.

Commercial Banks

1. Providing services in payment traffic.
2. Collecting funds from the public in the form of savings deposits, time deposits, and current accounts.
3. For example, Bank Mandiri, Bank BNI, BRI, BCA bank, and the bank BII.

BPR

1. Not provide services in payment traffic.
2. Generally not allowed to raise funds in current accounts, run the insurance business, and follow the clearing. Special for performing foreign exchange transactions, not all RBs can do, except that they have been licensed Moneychanger from Bank Indonesia.
3. Examples Karyajatnika Sadaya BPR, BPR Eka Bumi Artha, and Artha Sri BPR Lestari.

b. Based Ownership

Based on its ownership, banks can (divided into five kinds of which is as follows.

1. Government banks, namely banks whose shares (capital) wholly or majority-owned by the government. For example, Bank Mandiri, BRI, BNI and BTN.
2. National Private Bank, the bank whose shares (capital) wholly or majority owned.

Law No. 10 of 1998 Article 1, paragraph 4 explaining that BPR is a bank conducting business in a conventional or based on sharia principles in their actions do not provide services in payment traffic. BPR effort is to raise funds in the form of savings and deposits, as well as distribute it in the form of loans (credits). Special to conduct foreign exchange transactions, not all RBs can do, except RB already has an operating license from Bank Indonesia money changer. BPR example, among Karyajatnika Sadaya BPR, BPR Eka Bumi Artha, and Artha Sri BPR Lestari.

Based on its ownership, banks can (divided into five kinds of which is as follows.

1. Government banks, namely banks whose shares (capital) wholly or majority-owned by the government. For example, Bank Mandiri, BRI, BNI and BTN.
2. National Private Bank, the bank whose shares (capital) wholly or majority-owned by national private sector. Examples of Mega and Bank Bukopin bank.
3. Regional Development Bank, the bank whose shares (capital) wholly or largely owned by local governments. Example bank Jabar Banten, DKI bank, Bank of East Kalimantan and East Java banks.
4. Mixed Bank, the bank whose shares (capital) is owned or controlled by the government and private sectors, or by private and foreign. Examples N1SP bank, Bank Permata, Bank CIMB Niaga, Bank OCBC, or bank Danamon.
5. Foreign banks, namely banks whose shares (capital) wholly owned by foreigners. For example, BCA, AMRO Bank, Bank Of America (BOA), Bank Of Tokyo (BOT), City Bank, and HSBC Bank.