The functioning of the financial system in the world is impossible without such an important mechanism as lending. A loan is an economic relationship arising between the subjects of a financial transaction, consisting in the provision of a loaned (borrowed) cost to achieve certain goals, subject to its repayment, payment and urgency.
Credit system
The purpose of the credit system is to mobilize available funds for their urgent use for a fee. The basis of the system is a commercial banking structure. Its main activity lies in the plane of loans and registration of deposits and deposits. In addition to commercial banks, important participants in the credit system are: the Central Bank, specialized credit and financial institutions. Most countries have three- or four-tier credit systems: at the first level - the Central Bank, at the second - various forms of banks (savings, investment, mortgage, commercial). At the third level are non-bank financial institutions. Particularly distinguished is the fourth level, which includes insurance and pension funds, credit unions and others. The functioning of the system is ensured by the interaction between participants in credit relations.
Subjects of credit relations
The subjects of this relationship are the lender and the borrower. The relationship between them is determined by the need for money supply from the borrower and its availability, and most importantly, the possibility of extradition from the lender. Thus, the lender is the party that provides the loan (loan / loan). A borrower is a party that receives a loan (loan / loan) and assumes obligations to repay borrowed funds on time.
One and the same person within the framework of financial and credit relations can simultaneously act both as a creditor and as a borrower. Its definition in this case is such that, for example, a private person, when issuing a loan at a bank, acts as a borrower, the bank in this case - as a lender. At the same time, the presence of a deposit in the bank changes the participants in the relationship. And already a private person is a creditor, and the bank is a borrower.
Object of credit relations
The main component of the relationship between the borrower and the lender is the transfer object. The object of transfer of credit relations is the loaned, or the so-called unrealized, value. In other words, the lender has free funds that have settled on him and stopped in his movement. Thanks to the loan, it becomes possible to start a new cycle to continue the turnover and direct funds into circulation. To do this, it is enough to give a loan to the borrower on certain conditions. From this point of view, the borrower is a person who, through receipt and circulation of the advanced amount, allows not to interrupt the circulation of finance. And this ultimately speeds up the reproduction process. It is the advance nature of the loan is an important feature of credit and financial relations.
Another important condition for the functioning of the credit mechanism is the repayment and preservation of the creditor’s ownership of the funds that are provided for use by the borrower. One of the guarantees of repayment is the creditworthiness of the borrower.
The fundamental principle of credit is the preservation of its value.
When providing your funds to the lender, it is important to keep them at least and increase them as much as possible. Fulfillment of these conditions is a fundamental quality of lending.
In reality, it is not always possible to fully realize it. The main danger that awaits participants in credit and financial relations is inflationary processes. Overflow of money circulation channels results in surplus money supply and, as a result, a decrease in its purchasing power. A borrower is a person who undertakes to repay a loan. But in a situation of inflation, the returned funds, while maintaining the nominal size, actually have a discounted form. However, there are a host of other risks upon occurrence of which the borrower is not able to repay it in accordance with the terms of the loan. And not always the fault lies only with the debtor. Often, it is a violation of his legal rights that leads to such sad results.
Protecting the legal interests of borrowers
Initially, a borrower in a credit relationship is a weaker party from a legal point of view. Financial institutions minimize the impact of the client on the content of the loan agreement, thereby limiting his ability to influence the conditions for the provision and payment of loans. This forces you to sign agreements that are most beneficial to the lender, but at the same time infringe on the rights of the borrower. The most common violations of the rights of the borrower:
- calculation of the interest rate for using a loan for the whole body of the loan (and not for the rest of the debt);
- calculation of a commission for granting a loan;
- accrual of a penalty that does not correspond to the size of the principal debt;
- jurisdiction of the dispute over the territoriality of the creditor bank;
- borrower insurance as a prerequisite for obtaining a loan;
- inclusion in the loan agreement of the conditions for charging a commission for maintaining a loan account and issuing a loan.
Federal Law of the Russian Federation "On Consumer Credit (Loan)"
On July 1, 2014, Law No. 353-FZ entered into force in the Russian Federation. Its purpose is the settlement of relations that arise in the process of providing a consumer loan (loan) to an individual if the loan is not issued for entrepreneurial activity.
The main goal of the Law is to restore order in the consumer lending market and protect borrowers. Unfortunately, until recently, even stable banks with a high reputation allowed themselves to use the legal illiteracy of customers. The law aimed at providing legal protection to borrowers clearly regulates the following points:
- standardization of the loan agreement form;
- restrictive nature of the amount of penalties charged in case of delay in payment of a loan;
- restriction of the retail lending rate;
- clarification of the mechanism for calculating the effective interest rate;
- strengthening control over the work of microfinance structures;
- regulation of the work of collection services.
