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IMPORTANT OF OFF-BALANCE SHEET TRANSACTIONS IN COMMERCIAL
BANKS
O.O. Khudoyorov, senior lecturer Tashkent institute of finance (Uzbekistan, Tashkent)
DOI: 10.24411/2411-0450-2019-10743
Abstract. In this article, we have analyzed and studied some types of off-balance sheet operations of commercial banks of world and domestic banking practices. In addition, the article presents to reflection questions of the management of commercial banks and other studies in the development of policies for the development and promotion of off-balance sheet operations in commercial banks of the Republic of Uzbekistan.
Keywords: bank, accounts, bank operations, off-balance sheet operations, transactions, banking services.
Taking into account the course of market reforms for the last year in our country, in particular, the Decree No. 4947 dated February 7, 2017 "On the strategy for further development of the Republic of Uzbekistan" [1], approved by the President of the Republic of Uzbekistan, and Resolution No. 3270 dated September 12, 2017 "On measures for further development and improving the sustainability of the banking system of the republic"[2] will help attract foreign investment and increase both external and domestic investors, which, in turn, predetermines the requirement for banks to improve the quality of service and increase banking products (banking services), through the application of international experience.
At the present stage of development of the banking system of the republic, we wanted to review and analyze the off-balance sheet operations of commercial banks and their accounting. Off-balance sheet operations are not a new phenomenon in global and domestic banking. Commercial banks of the republic previously conducted their separate types, for example, forward foreign exchange transactions, operations with documentary and reserve letters of credit, safekeeping of valuables, etc. In the world banking practice, the volume of off-balance sheet operations in the seventies of the last century was relatively insignificant and did not determine the faces of the banking system. The situation changed dramatically in the early 80s. XX century. Off-balance sheet operations have become
one of the leading areas of banking. Revenues from them play an increasing role in the formation of bank profits. The greatest development of off-balance sheet activities received from US banks. There are more than thirty varieties of off-balance sheet operations that allow banks to solve the following main tasks:
- insurance and redistribution of risks between market participants, especially credit and market;
- expanding access to credit and reducing borrowing costs;
- obtaining additional profit and increasing return on assets;
- maintaining the ratio between capital and assets required by banking supervisors, while increasing the volume of transactions;
- asset and liability management.
The term "off-balance sheet operations" refers to a wide range of operations that, as a rule, are not reflected in officially published bank balance sheets or are given below the line in the "counter-accounts" section ("offbalance" accounts). Off-balance sheet operations can be carried out by banks with the aim of raising funds (passive operations) and their placement (active). In addition, if banks conduct off-balance operations for a certain remuneration (commission) on behalf of a client, they are referred to as active-passive operations or banking services. The peculiarity of off-balance sheet operations is that a significant part of them is the bank's obligation to perform an active (less often - passive) op-
eration upon the occurrence (occurrence) of certain, predetermined conditions. Thus, the peculiarity of the majority of off-balance sheet operations is their conditional nature, therefore they are often called contingent liabilities.
Off-balance sheet operations - transactions that are not displayed in the balance sheet of the financial institution that performed them. An example would be the purchase and sale of financial assets in futures markets.
Off-balance sheet operations of a bank are operations on off-balance sheet accounts that are not reflected in the balance sheet of a bank. Such operations include collection of securities, storage of bank statements and securities, operations for the storage of money and valuables[3].
Off-balance sheet operations can be carried out by banks with the aim of raising funds (passive operations) and their placement (active). In addition, if banks conduct offbalance operations for a certain remuneration (commission) on behalf of a client, they are referred to as active-passive operations or banking services.
The peculiarity of off-balance sheet operations is that a significant part of them is the bank's obligation to perform an active (less often - passive) operation upon the occurrence (occurrence) of certain, predetermined
conditions. Thus, a feature of most offbalance sheet operations is their conditional nature, therefore they are often called contingent liabilities.
The most popular active off-balance sheet operations of banks are: provision of guarantees, counter-guarantees, avalization of bills of exchange, acceptances and confirmed letters of credit.
Accounting for off-balance sheet operations is conducted on off-balance sheet accounts using the double entry method. According to this method, the corresponding account is debited, the corresponding counter-account is credited or the corresponding account is credited, the corresponding counter-account is debited.
Off-balance banking operations include operations on guarantees issued by the bank, guarantees, letters of credit issued in the name of bank customers, trust openings, sums of leasing, factoring operations, i.e., on acceptance and issuance of valuables and documents stored in the cash office and in accounting. All these operations are processed by receipt and expenditure off-balance sheet orders. Off-balance accounts reflect the movement of valuables and documents received by the bank as collateral, guarantee, deposit, collection or commission.
Growth in Balance sheet Growth Figure 1. Growth in balance sheet and Off-balance sheet transactions[4]
Off-balance sheet transactions play a significant role in hedging the risks associated with long-term financial assets on banks' balance sheets and in improving profitability, especially in the context of tepid credit growth. During 2016-17, off-balance sheet activities expanded across all bank groups. Forward exchange contracts (including interest rate swaps) occupied more than 85 per cent share in banks' total off-balance sheet operations.
References
1. The President of the Republic of Uzbekistan Decree No. 4947 of February 7, 2017, "On the strategy for action for the further development of the Republic of Uzbekistan". www.lex.uz
2. The President of the Republic of Uzbekistan Resolution No. 3270 dated September 12, 2017 "On measures for the further development and improving the sustainability of the banking system of the Republic". www.lex.uz
3. Electronic-online dictionary. http://discovered.com.ua/
4. Report on trend and progress of banking in India 2016-17. https://rbi.org.in/
ВАЖНОСТЬ ВНЕБАЛАНСОВЫХ ОПЕРАЦИЙ В КОММЕРЧЕСКИХ БАНКАХ
О.О. Худоёров, старший преподаватель Ташкентский финансовый институт (Узбекистан, г. Ташкент)
Аннотация. В данной статье нами были анализированы и изучены некоторые виды внебалансовых операций коммерческих банков мировой и отечественной практики банковской деятельности. Кроме этого, в статье преподносятся к размышлению вопросы менеджмента коммерческих банков и другим исследованиям в разработке политик по развитию и продвижению внебалансовых операций в коммерческих банках Республики Узбекистан.
Ключевые слова: банк, счета, банковские операции, внебалансовые операции, транзакции, банковские услуги.
From the above, it can be seen that the legal basis for accounting for off-balance sheet operations has not been studied sufficiently today, which requires a systematic approach to the study of these operations, as well as their accounting, which in future will contribute to improving the quality of customer service, as well as the development and promotion of new banking services.
