What is an on-balance sheet business?
What is on-balance sheet credit and off-balance sheet credit, and which type of bank ticket does it belong to? After reading the knowledge, the business in the balance sheet is mainly highlighted in a "table", which refers to: balance sheet.
What is on-balance sheet credit and off-balance sheet credit, and which type of silver bill does it belong to?
Any business that can be reflected on the balance sheet is an on-balance sheet business.
For example, taking deposits, issuing loans, bank acceptances, etc. are on-balance sheet operations.
What is off-balance sheet business?
Off-balance sheet business refers to the business carried out by the bank in a name other than its own name, such as issuing bonds as an agent, underwriting stocks, foreign exchange trading, guarantee business, etc. These businesses, while also related to banks, are not the core business of banks and are not the main source of income for banks.
For example:
When a bank accepts deposits from customers and pays interest, this is an on-balance sheet business. Another example is that a bank grants a loan to a customer and collects interest, which is also an on-balance sheet business.
When a bank conducts business such as stock trading, bond underwriting, foreign exchange trading, etc., for its customers, these businesses are usually considered off-balance sheet business.
For example, if a company wants to make an overseas purchase, but its RMB cannot be directly converted into the currency of the target country, then the company can purchase foreign currency from the bank to complete the transaction, which is the bank's off-balance sheet business. If the company applies for a loan from a bank to cover the cost of procurement, it is an on-balance sheet business of the bank.
What is on-balance sheet credit and off-balance sheet credit, and which type of silver bill does it belong to?
What is the difference between on-balance sheet and off-balance sheet transactions?
The difference between on-balance sheet business and off-balance sheet business is the business entity and the nature of the business.
On-balance sheet business refers to the business carried out by the bank in its own name, including taking deposits, issuing loans, settlement and clearing, etc., the main body of these businesses is the bank itself, and the risks involved in the business are borne by the bank itself. On-balance sheet business is the core business of the bank and the main source of income for the bank.
Off-balance sheet business refers to the business carried out by the bank in a name other than its own name, including the issuance of bonds, underwriting of stocks, foreign exchange trading, guarantee business, etc., the main body of these businesses is customers or institutions other than the bank, and the bank acts as an intermediary or service provider to help customers complete the business and obtain the corresponding handling fees or commissions. The risk of off-balance sheet business shall be borne by the customer or institution, and the bank shall only bear the corresponding service responsibility.
There are also certain differences in the nature of the business between the on-balance sheet business and the off-balance sheet business. The on-balance sheet business is the main traditional business of the bank, and its business nature is closely related to the basic function of the bank, which is mainly to obtain profits by providing loans and financing to customers. On the other hand, off-balance sheet business is more diversified and complex, and its business nature is closely related to the market and customer needs, mainly by providing customers with services such as risk management and financial derivatives to obtain profits.
What is on-balance sheet credit and off-balance sheet credit, and which type of silver bill does it belong to?
What is the business of a banker's acceptance?
Banker's acceptance bill is an on-balance sheet business of the bank. Bank acceptance draft refers to the business of the bank signing the bill of exchange issued by the customer and promising to pay, and paying according to the face value of the bill of exchange when the bill of exchange is due. Banker's acceptance bill is a credit instrument, which is a credit guarantee service provided by banks to customers, with a high degree of credit and liquidity, and can be widely circulated in the market. Banks make profits through promissory notes and provide financing and liquidity support to their customers. Therefore, the banker's acceptance bill is one of the traditional businesses of the bank, and it is also one of the bank's on-balance sheet businesses.
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