Interbank credit: its features and main principles

Interbank credit is considered a region of borrowing funds, which is reliable. After all, any credit institution meets the temporary need for the money of another bank only if there is stable financial stability. In addition, another physical or legal person is too dependent on changes in external financial factors, especially inflationary fluctuations in the market.

Interbank lending is a common tool for supporting the activities of the entire banking system and its individual elements. Credit institutions resort to such loans in the event of a sharp drop in liquidity, in addition, they allow you to maintain the required level of profitability. Under liquidity it is accepted to understand the ability of a bank to fulfill its obligations on time, without forcing customers to wait. It is for this indicator that conclusions are drawn about the prestige of the institution.

However, interbank loans, in addition to indisputable advantages, have certain drawbacks. First of all, this is the fact that the borrowing of funds is carried out only for a short period. Long-term lending to banks by banks would not be beneficial to either side. In addition, credit institutions resort to such a tool to meet the temporary shortage of financial resources quite rarely, only in the absence of other methods. And this is not surprising, because the cost of such a loan is quite high and is not always beneficial to the borrower. To eliminate existing shortcomings and improve the operation of the banking system, it is necessary to develop such a direction as interbank credit. First of all, you should direct maximum efforts to create a complete information base and to automatically obtain all the necessary information.

Relations between banks are reflected in the loan agreement, in particular, with the agreement of the parties, a specific period, cost, method of paying the loan, etc. is established. Recently, an interbank loan with the term "overnight" began to develop, that is, it is necessary to return the amount of debt after 24 hours. For a long time its cost was quite low, therefore many organizations use this service to this day.

If we talk about the role of MBC (interbank credit), then its use for the development of the entire banking system is not questioned. After all, it allows credit institutions to remain solvent even in times of financial difficulties. The conditions for issuing such a loan are influenced by external economic factors. For example, the situation on the financial market determines the level of the interest rate. Naturally, its reduction leads to a decrease in the cost of the loan itself, which means that we can expect an increase in demand. In general, short-term loans are developing , as long as a long-term interbank loan requires a combination of several factors. First, the positive dynamics of the interest rate. Secondly, stable prices for government securities. And, finally, the reliability of the borrowing organization, its sustainable solvency. In practice, such a "harmony" is extremely rare, which is why long-term loans have not received adequate distribution.

It's not a secret for anyone that to obtain a loan of any kind a borrower must provide a certain package of documents. Interbank credit is granted on the basis of an application, constituent documents of the organization borrowing funds, copies of state registration, articles of association, seal imprint and signatures of responsible persons and other standard documents. Prior to making a final decision, the lender conducts a thorough analysis of the borrower's financial statements in order to determine the development prospects and the level of solvency.