Methods of pricing of bank loans

Banks operate in a market in fierce competition, and therefore a prerequisite for their normal activity is to determine the fees for banking services, in particular, the credit market. The principle of payment for the loan means that the entity or individual borrower - owes to the bank a fee for the receipt (borrowed) from him for their own needs money. The implementation of this principle into practice by means of a mechanism, which is the bank interest. Bank interest rate - is a kind of "price" of credit. Pay credit bank provides coverage for costs and expenses associated with the payment of interest for the borrowed resources and expenditures for the maintenance of your machine as well as to increase the income of resource funds for lending and use for other purposes. The interest rate should be - enough to generate income on the loan and reimbursement of all risks, competitive with other lenders, completely cover the cost of borrowed funds, to take into account all relationships with clients. The main factors to be considered when setting fees for the loan are: NBU discount rate, the average interest rate on interbank loans, that is, funds that are bought from other banks to carry out active operations by the bank, with an average interest rate paid by banks to attract deposit funds, the risk that saddled the bank, depending on the period for which credit is extended, the type and the type of loan, security, the structure of bank credit (the higher the proportion of borrowed funds, the more credit should be), the demand for credit ( less than demand, the cheaper it will be a loan), monetary stability in the country (the higher the rate of inflation, the higher the fee for the loan, ie, in the bank increases the risk of losing their resources to the depreciation of money). Pricing policy in the provision of credit services provides validity to establish the level of interest rates, fees, commissions, bonuses, discounts. Category: Management Operations Commercial Bank | Tags: pricing