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8. Bank Services

Banks may be defined as firms producing and selling financial services. Their success or failure depends on their ability to identify the financial services which the public demands, produce those services efficiently, and sell them at acompetitive price. The service menu of banks does not remain unchanged as new services are constantly developed by banks. Many of them offer a combination of wholesale and retail banking.

The aim of commercial banks is to earn profit and they are reaching it by providing different services to customers for the price which is calledinterest.

So, a full range of banking services is offered to customers of the bank:

  • it is a safe place for your money. You can open savings (deposit) account and earn interest. There are many different term-deposit accounts. Since these certificates of deposit offer very high interest rates they attract depositors to banks. To receive this high interest you needn't withdraw money till the term is due, otherwise you will lose it;

  • banks open checking (current) accounts, which pay no interest to a customer but provide him with a checking book to write checks and pay any purchase or transaction. Recently new NOW and Super NOW accounts which pay customers interest have appeared in most banks;

  • banks offer credit services to customers: personal loans and different credit cards. They finance industries, commerce and direct services by commercialloans;

  • banks provide their customers with such classes of credit as overdraft, mortgages and home improvement loans;

  • banks provide their customers travelling abroad with foreign currencies, traveller's checks (cheques), eurocheques, eurocards;

  • investment advise: banks open ways to find and invest large amounts of money; banks provide brokerage services;

  • banks provide a wide range of trust services for individuals and businesses in the form of estate settlement, trust administration of a customer's securities,running property and agency services.

9. Bank Loans

Loan is money that one party gives to another to use for a definite period of time. Loans are given based on creditworthiness of customers (borrowers).

According to the term of repayment loans can be short-term (must be paid within one year) andlong-term (must be paid in a period that is more than one year, usually 2-3 years, even up to 20-25 for mortgages).

There are commercial, personal, auto loans, mortgages and overdrafts. Most loans require collateral by law. A secured loan is a loan backed by something valuable such as property. If a loan is not backed by collateral it is called unsecured loan. Only highly regarded customers of the bank can receive unsecured loan. If a borrower fails to repay the loan, the lender takes possession of the collateral. Banks can receive collateral in the form ofproperty, accounts receivable, inventory, buildings, equipment of the plant, bonds and stocks. If you develop a good relationship with a bank, it will open aline of credit for you. A line of credit means the bank will lend the business a given amount of unsecured short-term funds, provided the bank has the funds available.

To receive a loan you will go to your bank to the lending department and have an interview with a loan manager, discuss terms of repayment and interest rate to pay.

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