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money granted by a bank, in return for interest, for temporary use by a juridical person or an individual; the most common form of credit relations in the national economy. Bank loans are drawn from bank resources, which include the bank’s own means and attracted means (seeBANKING CAPITAL).
Under capitalism, the bank loan is the main form in which banks grant loan capital to the state and to capitalists. There are short-, medium-, and long-term bank loans. Short-term bank loans granted for a period of up to one year include payment loans; overdrafts, in which the bank pays claims against the client in excess of the balance in his current account, up to an agreed on limit; discounting commercial and bank notes; and loans issued against commodity paper and securities (seeSHORT-TERM CREDIT; CREDITING OF NOTES). Medium-term bank loans (maximum period, five to ten years) are granted in conformity with credit agreements stipulating their use and repayment dates. They are widely used for investment credit. The demand for long-term bank loans (minimum period of ten years), as well as medium-term loans, increased during the 1960’s and 1970’s, with increasing inflation, intensified competition, and expanding international economic cooperation (see LONG-TERM CREDIT.
Under socialism, bank loans are used for the planned redistribution of monetary resources to maintain socialist reproduction, to fulfill plan targets, to improve the efficiency of social production, and to exercise monetary control over the economic and financial activity of enterprises and production associations. Bank loans are given only for definite purposes stipulated in the national economic plan (for covering seasonal production expenditures, for the seasonal accumulation of commodity and material valuables, for the expansion of fixed capital, and for servicing accounts in the national economy).
Short-and long-term loans (more than one year) are granted. On Jan. 1, 1975, the volume of indebtedness to the Gosbank (State Bank) of the USSR for short-term loans totaled 149.3 billion rubles, and indebtedness to Gosbank and the Stroibank (Construction Investment Bank) of the USSR for long-term loans, 39.4 billion rubles. In the late 1960’s and early 1970’s the volume of indebtedness for long-term loans rose significantly, because bank loans were increasingly used as the source for capital investment. (From 1971 to 1975 indebtedness for long-term loans rose by 117.7 percent and indebtedness for short-term loans by 38 percent.)
Depending on how they are granted, short-term loans to state enterprises for investment in circulating capital are subdivided into loans against balances, which are issued against reserves of commodities and materials, and loans on turnover, which are extended for current expenditures.
Long-term bank loans are granted to kolkhozes, to state enterprises (for noncentralized and centralized capital investments—that is, for the expansion of fixed capital stock), and to cooperative enterprises, as well as to housing construction cooperatives and private individuals. Bank loans granted for noncentralized capital investments are used primarily to introduce new machinery, increase the production of consumer goods (maximum term, six years), and improve domestic services (maximum term, ten years). Bank loans for centralized capital investments are used to construct new enterprises, if outlays can be reimbursed within five years of the opening of the enterprise; to modernize and expand existing enterprises, if they lack sufficient capital for this purpose; and, to a significant degree, to pay for deliveries of equipment.
In some cases long-term loans are granted to replenish the circulating capital of state enterprises (for example, loans for a period of up to three years, to cover deferred outlays). Long-term bank loans are granted to housing construction cooperatives for ten-to 15-year periods in cities and urban-type settlements and for up to 20 years in certain regions of the country. Bank loans for a maximum of ten years are granted to private parties for the construction of private homes, capital repair of homes, and hookups with water-supply and plumbing lines.
Prosperous enterprises and production associations enjoy a privileged status for bank loans (a broader range of credit needs and longer terms). Credit sanctions, such as higher interest rates, shorter loan terms, and partial or complete credit cutoffs, are applied against enterprises that are not doing well.
REFERENCESAnikin, A. V. Kreditnaia sistema sovremennogo kapitalizma. Moscow, 1964.
Denezhnoe obrashchenie i kredit SSSR, 2nd ed. Edited by V. S. Gerashchenko. Moscow, 1970.
Sychev, N. G. Finansy promyshlennosti. Moscow, 1971.
Mozhaiskov, O. V. Finansy i kredit v sisteme gosudarstvenno-monopolisticheskogo regulirovaniia. Moscow, 1973.
Organizatsiia iplanirovanie kredita. Moscow, 1974.
V. S. PASHKOVSKII