Understanding Banks and Financial Institutions
The bank cited below are not essentially different from each other. Even if there are differences only appear on the task or business bank. There are defining a bank as an entity whose primary job raising money from third parties. While other definitions say, a bank is an entity whose primary job as an intermediary to distribute the supply and demand for credit at the specified time. Other authors define the bank is an entity whose primary business creates credit. Prof. G.M. Verryn Stuart in his book Politics Bank said, "The bank is an agency that aims to satisfy the credit needs, either by their own means or with the payment of the money she got from other people, and with the passing of new tools in the form of demand deposits changers."
A. Abdurrachman the Encyclopedia of Finance and Trade Economics explains that, "The bank is a type of financial institution that performs a variety of services, such as lending, circulating currency, control over the currency, to act as a repository for precious objects, venture finance companies , and others. "
The definition of a bank according to Law no. 14/1967 Article 1 of the Principles of Banking is, "financial institutions and businesses primarily provide credit services in payment traffic and circulation of money". Meanwhile, financial institutions under the law is, "all the agencies through its activities in the financial sector, to withdraw money from and distribute it to the public". Judging from its function well, various definitions of the bank can be grouped into three.
First, the bank is seen as receiving credit. In terms of this first bank to receive money and other funds from the public in the form of:
- Savings or regular savings that can be requested / taken back at any time;
- Time deposits, which is a savings or deposits may only be withdrawn again after a specified period of time runs out;
- Deposit in a checking account / current account in the name of the storage account, which may only be withdrawn by check, bank draft, or written order to the bank.
The first sense reflects that the bank's credit operations perform passively by raising money from third parties.
Second, banks are seen as the lender, this means that the bank's credit operations perform actively. According to Mac Leod, the bank is a shop for the sale of credit. The same formulation given by R.G. Hawtrey, who said that banking are merely dealers in credit. Thus, the function of banks is mainly seen as a creditor, regardless of whether the loan is from a savings deposit ° or received or originated there pcnciptaan loan made by the bank itself.
Third, the bank is seen as giving credit to the community through Cumber from their own capital, deposits / savings or through bank money creation. The third function is consistent with the opinions expressed by GM Verryn Stuart cited in section 1.1. "Understanding Banks and Financial Institutions".
Reed, Cotter, Gill, Commercial Banking Smitli in the book, saying that the bank-especially commercial banks (commercial banks)-has several functions, among which is the provision of services more widely, including service in the payment mechanism (transfer of funds ), accepts savings, extend credit, service in foreign trade financing facility, ¬ deposit valuables, and trust services (services provided in the form of property securing ¬ supervision). The function of the latter is carried out with membenruk a trust department that generally works as follows:
1) Acting as an executor (executor) in the regulation and supervision of property / tclah proprietor dies, all the tersebur making wills and follow / entrusted its execution to the bank;
2) Trust department, providing a wide range of services to firms, such as the implementation of the pension plans and pcmbagian profits growing by leaps and bounds lately;
3) To act as trustee in relation to pencrbitan bonds, and as transfer agents and registrars for the companies;
4) Take care / manage the funds collected by the government, companies from the source (sinking funds) and other activities in connection with the issuance and redemption of shares and bonds.