Banking Operations: Accounts, Deposits, and Loans
Banking Operations
Banking operations are contracts between a financial entity and a client, involving the deposit or delivery of money. There are three types of operations:
- Activities aimed at winning customers.
- Liabilities towards the provision of funds to customers.
- Bank service delivery in exchange for commissions.
Opening of Account
The process begins with an opening request. The bank provides a form to collect all necessary data.
Registration of Signatures
A bank submission form where data is collected, including signatures.
Initial Income Account
A deposit of an amount of money in the account.
Application and Release of Checkbook or Pay Stub
For current accounts, the bank will offer the option to withdraw with a check or pay stub.
Delivery of Documentation
After the above steps, the entity provides a copy of the account opening contract.
Account
An account is a deposit of money from a financial entity and a customer. The customer deposits money in a banking entity, and the entity pays interest while being able to provide the customer with money.
Savings Account
A savings account allows customers to deposit money and earn interest, often at a higher rate than a checking account.
Special Types of Savings Accounts
- Savings Account Young: An account where the owner must be a minor. It generates higher interest than a normal savings account and is exempt from fees.
- Savings of Property: An account where the owner makes contributions for the purchase or rehabilitation of a home. Its most important feature is the tax advantage, and the interest rate is higher than a normal savings account.
Time Deposits
Time deposits are agreements between a bank and a customer who deposits an amount of money until a determined date. The entity pays interest that is higher than current accounts and savings accounts.
Types of Time Deposits
- Fixed Rate Time Deposits: Capital is deposited, and interest is liquidated monthly, quarterly, annually, or at maturity.
- Fixed Deferred Payment in Kind: Capital is deposited for a specified time, and an item is delivered in advance instead of cash generated by the interest rate.
- Fixed-Term Interest with Growing: This is a capital deposit in which the interest rate grows little by little each year.
- Structured Deposits: Capital is deposited for a given term, and the return is tied to a stock market index.
- Insured Deposits: The client deposits an amount of money, and the entity provides two types of profitability: a fixed interest and another related to a stock index.
Personal Loan
In the event of default, the borrower or a guarantor is responsible with all present and future assets.
Secured Loans
In case of default by the borrower, the response is with the property or securities.
Mortgage Loans
A loan granted by a bank with the guarantee of a mortgage on a property, usually the one being financed.
Difference Between Personal and Mortgage Loans
- Personal Loan: Formalized in a policy, with higher interest. In the case of mortgage loans, this includes life insurance.
- Mortgage Loan: Formalized in public writing, at a higher cost. Interest is lower than in personal loans because of the mortgage warranty, and the cost includes home and life insurance.
Credit Account
A contract where a bank undertakes to make available to a customer a limited amount of money for a particular period. The borrower may use all or part of the amount provided, paying interest only on the amount drawn.
CIRBE
The Risk Information Center of the Bank of Spain informs institutions of the debts applicants have with other banks.
IRPF
The set of revenues or profits a person has obtained during a fiscal year.
Promissory Note
A document whereby a drawer orders another person to pay a certain amount on a given date and expiration to a third party.
Discounting
A contract for which the banking entity anticipates the amount reflected in a bill of exchange, charging interest and fees. The customer receives the amount in advance, and the bank recovers it at maturity.