Evaluate the importance of banks to the economy of a community
Study and Learn the words:
| English | English equivalents | Romanian | Russian |
| array (n) | mulţime | множество | |
| payroll (n) | a list of people employed by a company showing the amount of money to be paid to each of them | stat de plată | платёжная ведомость |
| balance (n) | sold | сальдо, остаток | |
| savings passbook | carnet de depuneri | сберегательная книжка | |
| to shop for a loan | to compete for a loan | ||
| collateral (n) | pledge | cauţiune, garanţie, gaj | залоговое обеспечение |
| credit card | a small plastic card that you can use to buy goods and services and pay for them later | cartea de credit | кредитная карта |
| debit card | a plastic card that can be used to take money directly from your bank account when you pay for sth | cartea de debit | дебитовая карта |
| cash card | ATM card | ||
| teller (n) | cashier | casier de bancă | кассир (в банке) |
| spread (n) | the difference between the rates of interest |
If it seems to you that banks and other financial institutions are competing for your business, you're right. That is exactly what is happening. Never before have so many different financial institutions offered such a tempting array of services to attract customers. The financial services provided by the banking industry are the following:
1. Demand deposits
2. Time deposits
3. Loans
4. Electronic transfer of funds
5. Financial advice
6. Trust services
7. Certified checks
8. Safe-deposit boxes
The three most important banking services are accepting deposits, making loans, and providing electronic fundstransfers.
The Deposit Side of Banking Firms and individuals deposit money in checking accounts (demand deposits) so that they can write checks to pay for purchases. A checkis a written order for a bank or other financial institution to pay a stated dollar amount to the business or person indicated on the face of the check. Today, most goods and services are paid for by check. Most financial institutions charge an activity fee (or service charge) for checking accounts. It is generally somewhere between $5 and $10 per month for individuals. For businesses, monthly charges are based on the average daily balance in the checking account and on the number of checks written.
Savings accounts (time deposits) provide a safe place to store money and a very conservative means of investing. The usual passbook savings account earns about 5.5 percent in commercial banks and S&Ls, and slightly more in credit unions. Depositors can usually withdraw money from passbook accounts whenever they wish to.
A depositor who is willing to leave money with a bank for a set period of time can earn a higher rate of interest. To do so, the depositor buys a certificate of deposit (CD). A certificate of depositis a document stating that the bank will pay the depositor a guaranteed interest rate for money left on deposit for a specified period of time. The interest rate paid on CD depends on how much is invested and for how long. Depositors are penalized for early withdrawal of funds invested in CDs.
The Lending Side of Banking Commercial banks, savings and loan associations, credit unions, and other financial institutions provide short- and long-term loans to both individuals and businesses. Short-term loans are those that are to be repaid within one year. For businesses, short-term loans are generally used to provide working capital that will be repaid with sales revenues.
Long-term business loans have a longer repayment period—generally three to seven years but sometimes as long as fifteen years. They are most often used to finance the growth of a firm or its product mix.
Most lenders prefer some type of collateral for both business and personal long-term loans. Collateralis real or personal property (stocks, bonds, land, equipment, or any other asset of value) that the firm or individual owns and that is pledged as security for a loan. For example, when an individual obtains a loan to pay for a new automobile, the automobile is the collateral for the loan. If the borrower fails to repay the loan according to the terms specified in the loan agreement, the lender can repossess the collateral pledged as security for that loan.
Repayment terms and interest rates for both short- and long-term loans are arranged between the lender and the borrower. For businesses, repayment terms may include monthly, quarterly, semiannual, or annual payments. Repayment terms (and interest rates) for personal loans vary, depending on how the money will be used and what type of collateral, if any, is pledged. Borrowers should always "shop" for a loan, comparing the repayment terms and interest rates offered by competing financial institutions.
Electronic Transfer of Funds The newest service provided by financial institutions is electronic banking. An electronic funds transfer (EFT) systemis a means for performing financial transactions through a computer terminal. Present EFT systems can be used in several ways:
1. Automated teller machines (ATMs): An ATM is an electronic bank teller—a machine that provides almost any service a human teller can provide. Once the customer is properly identified, the machine can dispense cash from the customer's checking or savings account or can make a cash advance charged to a credit card. Most ATMs can also accept deposits and provide information about current account balances. ATMs are located in bank parking lots, supermarkets, drugstores, and even filling stations. Customers have access to them at all times of the day or night.
2. Point-of-sale (POS) terminals: A POS terminal is a computerized cash register that is located in a retail store and connected to a bank's computer. Here's how it works. You select your merchandise. At the cash register, you pull your debit card through a magnetic card reader and enter your four-to-seven-digit personal identification number (“PIN code”). A central processing center notifies a computer at your bank that you want to make a purchase. Next, the bank's computer immediately deducts the amount of the purchase from your checking account. Then, the amount of the purchase is added to the store's account. Finally, the store is notified that the transaction is complete, and the cash register prints out your receipt. Notice the difference between a debit card and a credit card. With a debit card, money is deducted immediately from your account. A credit card transaction, on the other hand, involves a short-term loan made to you by the bank or credit card company. The use of POS terminals has two advantages. First, you don't have to write a check to pay for your merchandise. Second, the retailer doesn't have to worry about nonpayment because the money is withdrawn from your account immediately.
Our Moldavian banks offer such cards as Maestro and Visa card. The usage of cards is one of the most modern and convenient non-cash payment means. All our payment cards are designed to be convenient for us. The Maestro card is a valid payment card issued to private customers only. One can use it for the non-cash settlement of services or goods. It is also used for withdrawing cash at bank counters and at ATMs. The Visa card can be used worldwide for transactions at electronic devices only.
I. VOCABULARY PRACTICE
A) Find the English equivalents for the following:
1. safeurile bancare/банковские ячейки;
2. pe suprafaţa cecului/на лицевой стороне чека;
3. proprietate mobilă/движимое имущество;
4. a lăsa în gaj/отдавать в залог;
5. locul parcării/место стоянки автотранспорта;
6. staţiune de alimentare a maşinilor/заправка;
7. registru de casă imprimă cecul/кассовый аппарат выбивает чек.
8. achitarea serviciilor sau mărfurilor prin virament/оплата услуг или товаров по безналичному расчёту.
B) Match the verbs with their definitions:
| 1. to repossess | a) to make sth valid for a further period of time |
| 2. to penalize | b) to give out sth to people |
| 3. to renew | c) to provide money for a project |
| 4. to lure | d) to introduce a system |
| 5. to institute | e) to give information about sth |
| 6. to withdraw | f) to take back property or goods from sb who cannot pay for them. |
| 7. to repay | g) to make sb pay a fine for breaking a rule |
| 8. to finance | h) to make sb be interested in sth |
| 9. to dispense | i) to take money out of a bank account |
| 10. to notify | j) to pay back the money you have borrowed from sb |
II. COMPREHENSION
A) Give answers to the following questions:
1. What are the 3 most important banking services?
2. What is a check? Do we have something like this in our country?
3. What is a cerificate of deposit? What does the interest rate paid on CD depend on?
4. What kinds of loans are provided by the financial institutions? What is the difference between these loans?
5. What is a collateral?
6. How are the repayment terms and interest rates for loans arranged?
7. What is an EFT and how it can be used?
8. Have you ever used an ATM and a POS terminal? Did you have any problems or not? What do you think about EFT system?
9. What is the difference between a debit card and a credit card?
10. What are the types of plastic cards that our citizens can use?
B) Mark the statements with TRUE or FALSE:
1. In order to be able to write a check one must deposit his/her money in a checking account.
2. Banks don’t charge fees for their services.
3. Depositors can freely withdraw funds invested in CDs whenever they wish to.
4. If you want to take a long-term loan you must present a collateral to the bank.
5. You can use the services of the POS terminal with a credit card.
6. ATMs work round the clock.
III. Match the column A with the column B:
| A Banking services | B Definitions |
| 1. trust services | a) a company pays salaries to its employees through the bank that transfers people’s money on their ATM cards. |
| 2. safe-deposit boxes | b) the bank gives you money to use for different purposes, on which you pay interest. |
| 3. financial advice | c) an arrangement by which a bank has legal control of money or property that has been given to a person until he/she reaches a particular age. |
| 4. demand deposit | d) the bank keeps your valuables, securities or important documents in its vault. |
| 5. loans | e) the bank keeps your money, pays you a little interest on it, and you can withdraw this money whenever you need it. |
| 6. payroll service | f) bank managers consult you about different issues connected with investing money, concluding financial transactions and others. |
IV. Match each statement of potencial customers to the financial service needed:
ATM card, insurance policy, personal loan, overdraft facilities, standing order, mortgage, high-interest deposit accounts, foreign currency, business loan, SWIFT transfer.
1. „I want my bills to be paid monthly” ________________________________
2. „How can I get money when the bank is closed?” _______________________
3. „I need some cash when I arrive in Cairo” _____________________________
4. „I’d like to buy a new house” ____________________________________
5. „I may be in debt next month” _________________________________
6. „I want to save and get a good return on my money” __________________
7. „I want to guard my house against damage” _________________________
8. „I want to send $5000 to my son in Tokyo as quickly as possible” _________
9. „I want to renovate my house” ________________________________
10. „I am going to buy equipment for our new office” _________________
V. With a partner think of different ways of completing the following sentences:
1. If I want to save up my money, I can ..................................................................
2. The best way to invest money ...........................................................................
3. I can borrow money from.....................................................................................
4. I can’t afford to...............................................................................................
5. I like to spend my money on ..............................................................................
VI. Join correctly the words in column A with the words in column B:
| A | B | |
| 1. commercial | a) firm | |
| 2. certificate | b) deposit | |
| 3. demand | c) advice | |
| 4. cash | d) bank | |
| 5. credit | e) card | |
| 6. brokerage | f) rate | |
| 7. financial | g) of deposit | |
| 8. bank | h) register | |
| 9. interest | i) union | |
| 10.debit | j) loan |
VII. INDIVIDUAL WORK
Use the additional sources on banking system in the Republic of Moldova to answer the following questions:
1. What do you know about the National Bank of Moldova?
2. What commercial banks are there in our country? What services do they offer to their clients?
3. Is banking a profitable activity in our country? What proves it?
4. Are banks important to the economy of a country or people can do without them?
VIII. FOCUS ON LANGUAGE
Make and do collocations
Make is used for constructive and creative actions.
Do is used with unspecified actions and to talk about work.
A) Group the following words under the headings do or make:
Business, suggestions, progress, a job, mistakes, the accounts, a duty, the typing, an appointment, efforts, damage, a service, a complaint, trade, an apology, a trip, a profit, research, a loss, a decision, favour, shopping, a speech, a choice, a test, money, a report, friends/enemies, an investment, harm, good, right/wrong, one’s best, exercises, a promise, a good impression, an experiment, a will.
B) Complete the sentences using one of the expressions in Exercise A in the correct form:
1. He __________________________ by introducing the new rules to see how employees are going to follow them.
2. She decided to ____________________________ in cherity projects.
3. The customer ___________________________ to the hotel manager about the bad service.
4. Some women are forced to ____________________________ between family and career.
5. Could you ___________________________ , please? Could you give me a lift to the airport?
6. My uncle died without __________________________ and it was very difficult for our family to sort out his money.
7. I like to keep fit, so I __________________________ every day.
8. An accountant is a person who ________________________________ .
9. He ____________________________ on economic situation in our country and presented it at the conference.
10. A research scientist is a person who _____________________________ .
IX. DISCUSSION
Discuss in groups the following questions:
1. Do you often go to the bank? What banking services do you use?
2. If you had a pretty sum of money, would you deposit it in a bank? If yes, then in what currency (in the national or in the foreign one) and in what bank (in the savings bank or in a commercial one)? Give your reasons.
3. For instance, you would like to buy a house or anything else which is also a big investment, but you don’t have the money for it, would you apply to a bank for a loan? Substantiate your answer.
4. Is it easy or difficult to obtain a bank loan in our Republic? Is it possible to get a bank loan without a collateral?
X. Complete the dialogue:
A bank manager and his client are talking about opening an account with the bank. Complete the client’s part in the following dialogue. The first remark has been done for you:
Client: Good afternoon!
Bank Manager: Good afternoon! What can I do for you?
C.: .............................................................................................................................................
BM.:What kind of account would you like to open – a checking or a savings one?
C.: .............................................................................................................................................
BM.: Well, you know that time deposits are not immediately available to their owners. For what period would you like to deposit your money?
C.: .............................................................................................................................................
BM.: For this period the interest rate is lower than for one-year term.
C.: .............................................................................................................................................
BM.: It depends on how much you are going to deposit and in what currency.
C.:. ..............................................................................................................................
BM.: For this we give an annual interest rate of 8%. If it suits you, you have to buy the certificate of deposit.
C.: ................................................................................................................................
XI. ROLEPLAY
Work in pairs. Imagine that your partner is a bank manager and you are a client who wants to take a personal long-term loan. Make up a dialogue using the studied vocabulary.
XII. Match the words with their definitions:
| 1. deposit | a) a written order for a bank to pay out the money |
| 2. credit union | b) a computerized cash register that is located in a store and connected to a bank’s computer |
| 3. S&L | c) an amount paid for the use of money |
| 4. NOW account | d) money that is placed in a bank account by a customer |
| 5. certificate of deposit | e) a guarantee for a loan |
| 6. check | f) a financial institution that mainly handles savings accounts and makes loans to home buyers |
| 7. interest | g) difference between interest rate paid by a bank to its depositors and the rate it charges from its borrowers |
| 8. POS terminal | h) a document which insures that the depositor will be paid a guaranteed interest rate for the deposited money |
| 9. collateral | i) a financial institution formed by workers in the same organization that serves only its members |
| 10. spread | j) a checking account that earns interest |
XIII. Fill in the gaps with the words given at the end of the text:
Banks fall mainly into two categories: ... (1) and wholesale banks. Retail banking refers to banks which offer services to ... (2) customers, while wholesale banks deal mainly with corporations.
The most obvious type of retail bank is the commercial bank. Commercial banks receive money on deposit, pay money according to customers’ ... (3), negotiate loans, buy and sell foreign exchange. They make a ... (4) from the ... (5), i.e. the difference between the interest rate paid to account holders and the interest rate charged to borrowers.
There are different types of accounts opened with comercial banks. ... (6) accounts have no restrictions as concerns the withdrawal of funds. However, the rate of interest is rather ... (7). On the other hand ... (8) accounts offer a higher rate of interest, but withdrawals are restricted by the fact that the ... (9) has to keep the funds for a specified period in the bank account or must ... (10) his withdrawal decision some time in advance.
... (11) are offered to customers in need of funds and are conditional upon the supplying of ... (12) by borrowers. Besides loans banks offer ... (13) to their customers, which means that people who have an account with the bank are allowed to draw more money from their account than there actually is in it.
The customers can use certain banking products. Thus banks can pay regular bills for their clients, according to the instructions of the latter, this instrument being called ... (14) order. Irregular payments can be made by ... (15) from cheque books the banks make available to their customers. When a customer needs cash he can withdraw it from an automatic cash ... (16) by means of a cash ... (17).
In Britain a merchant bank is a wholesale bank. It offers services to ... (18) such as the raising of ... (19) on various financial markets, the financing of international trade, the issuing of ... (20), investment advice. In the USA similar services are made available by investment banks, which, however, do not offer loans.
Companies, standing, low, spread, overdrafts, retail, depositor, securities, cheque, collateral, individual, funds, time, dispenser, notify, card, checking, profit, instructions, loans.
XIV. TRANSLATION
Translate into English:
Certificatul bancar de depozit.
Certificatul bancar de depozit este un document, care atestă că D-ră aţi depus o anumită sumă de bani pe depozit, şi pe care o puteţi schimba pe bani după expirarea unei perioade anumite de timp. Puteţi sa dispuneţi de certificatul bancar de depozit la dorinţa D-ră. De exemplu, să-l dăruiţi cuiva la ziua lui de naştere. Acesta va fi întradevăr un cadou reuşit. Cu siguranţă, des vă aflaţi în situaţia, cînd trebuie să felicitaţi pe cineva din rude sau prieteni, dar aveţi o problemă cu alegerea cadoului. Certificatul bancar de depozit în această situaţie este indispensabil.
Pe lîngă aceasta, certificatul bancar de depozit poate fi vîndut şi în schimb puteţi să primiţi banii înainte de termen fără pierderea dobînzii.
Deci, certificatul bancar de depozit este o hîrtie de valoare emisă de către bancă şi se prezintă în calitate de o alternativă a depozitului bancar. Certificatul bancar de depozit poate fi transferat de la o persoană la alta spre deosebire de contul bancar obişnuit.
Депозитный сертификат.
Депозитный сертификат – это документ, который свидетельствует о том, что вы положили определённую сумму денег на депозит, и которую по истечении определённого срока можно обменять на деньги. Банковским сертификатом вы можете распоряжаться по своему усмотрению. Например, подарить на день рождения. Это будет действительно удачный подарок. Наверняка, вы нередко сталкиваетесь с ситуацией, когда нужно поздравить кого-нибудь из родных или друзей, а с выбором подарка у вас проблема. Банковский сертификат в этой ситуации незаменим.
Кроме того, банковский сертификат можно продать и получить вложенные деньги досрочно, без потери процентов.
Таким образом, банковский сертификат – это ценная бумага, которая выпускается банком и выступает в качестве альтернативы банковскому депозиту. Банковский сертификат может передаваться от одного человека другому, в отличие от привычного нам счёта в банке.
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