Sources Of Bank Funds

Course : Managerial Finance Lecture : Marc Credit Hours : 3 Credits Semester Sessions : 3 Semester, 2021/2022 Session Prepared By : Kenzo LECTURE NOTES Sources of Bank Funds One of the obstacles for every company in running activities are a matter of funding requirements. Nearly a hundred percent of companies need funds to finance activities business, both for routine costs and necessities business expansion. The importance of funds makes every company strive to find available sources of funds, including financial institutions such as banks. The sources of bank funds are internal bank businesses obtain funds to finance its operational activities. In accordance with the function of banks as financial institutions where His daily activities are in the financial sector, So the sources of funds cannot be separated from the field finance. To support bank activities as sellers of money (providing loans), the bank must first buy the money (collecting funds) so that the difference in interest is the bank's receiving benefits. Funds to finance the operations of a bank can be obtained from various sources. Obtaining these funds depends on the bank themselves, whether by loan (deposit) from the community or from other institutions. Apart from that, to finance operations, funds can also be obtained with your own capital, namely deposits capital from owners or banks to issue or sell new shares to new owners. Funding adjusted also with the purpose of using the funds. If the goal The use of funds for daily activities is clearly different the source, with banks that want to make new investments or to expand a business. So look for sources of funds It really depends on the purpose the funds are used for what and how much is needed. The bank's ability to obtain funding sources expected to greatly influence the continuation of the bank's business. In looking for sources of bank funds should be considered several factors such as ease of obtaining it, term time, sources of funds and costs that must be incurred for obtain these funds. In practice the funds are available very diverse with various requirements too. In terms of The bank must be smart in determining what the funds are for used, how much funds are needed, so no wrong choice. The funding sources that can be selected are adjusted to: use of funds. Existing sources of funds can be obtained from own capital sources or borrowed capital from the community broad or other financial institutions. As for the types of sources-Source of bank funds: 1. Funds sourced from the bank itself Obtaining funds from the bank's own sources (own capital) what this means is funds obtained from within the bank. These funds are usually used if the bank experiences problems difficulty in obtaining external funding, then this funding can also be searched according to the bank's objectives. Own funds consisting of "core capital and supplementary capital". One of a kind Funds sourced from the bank itself are paid-in capital from its shareholders. If there are shares The portfolio has not yet been sold out, while funding is needed is still needed, then the disbursement can be done by selling shares to existing shareholders. However, if The company's goal is to expand, then the company can issue new shares on the capital market. Fund function The Bank’s Own (Capital) is:  For Primary investment and Secondary Investment  To support bank operational activities  To provide protection  To fulfill Bank Indonesia regulations  Provide security for foreign capital. The source of funds comes from the bank itself source of funds from own capital. The meaning of own capital is paid-up capital from its shareholders. If shares those contained in the portfolio have not yet been sold out, meanwhile Funding needs are still needed, so the search can be carried out by selling shares to existing shareholders. Will However, if the company's goal is to expand, then the company can issue new shares and sell shares new in the capital market. Besides that, the banking sector You can also use unearned profit reserves used. In general, it can be concluded that the search for funds sourced from the bank itself consists of: a) Capital contributions from shareholders In this case, existing share owners can deposit funds additional or purchase shares issued by company. b) Bank reserves This means that there are profit reserves for last year not distributed to its shareholders. Reserve this deliberately provided to anticipate profits for the year will compan c) Undistributed bank profits This is profit that has not been distributed during the year concerned, so that it can be used as capital for a while.