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WAYS TO INCREASE INCOME FROM BANK DEPOSITS
Abduvakhobov Inomjon Idris ugli
Tashkent International Kimyo University,
Samarkand branch 1st year master's magistr
https://doi.org/10.5281/zenodo.16924707
Abstract:
The article discusses bank loans and their role in the economy. It is analyzed
that bank loans play a leading role in the economy, as they play a primary role in the formation
and development of the production process of individuals and legal entities in various
industries, serve as the basis for improving the processes of the bank's own development and
capital.
Key words:
bank, credit, economy, production, development.
In recent years, serious research has been carried out to ensure the financial stability of
the banking system. Significant growth of the credit system in this process has also formed a
tradition of a serious attitude to the problem. A significant increase in the share of loans has
also led to an increase in demand for liquid loans. The bank also needs radical reforms in this
direction. This process is observed all over the world and in Uzbekistan in particular, where the
low quality of credit collateral assessment, non-compliance with uniform assessment criteria,
and non-compliance with the requirements of modern lending practices are particularly
noticeable.
Responding to such opinions, D. Karimova writes: “If we turn to international practice, the
issue of assessing collateral for bank loans is one of the important aspects of increasing the
efficiency of commercial activities, both in developed and developing countries. Therefore, it is
necessary to prohibit the practice of assessing collateral for bank loans [1, p.9].
Today, the banking sector has become an integral part of the economic system and is of
crucial importance for the financial stability and development of the country. Banks contribute
to the development of the economy by providing not only savings, but also lending, payment
processing, currency exchange and many other services. Therefore, it is important to effectively
organize banking services. This article will discuss the main methods of effectively organizing
banking services, their importance and key elements necessary for the effective provision of
services.
In general, given that the economy of Uzbekistan is at the stage of development, this
situation indicates the effective use of bank loans by economic entities in most cases for the
subordination of projects, and foreign scientists emphasize the relevance of their use in the
processes of assessing the local banking system and collateral.
World civilization allows for serious reforms in all areas. In this regard, "The development
of modern and effective financial and credit services largely depends on the modernization of
public life." Along with material production, the service sector is becoming increasingly
important in social development and raising the standard of living of the population" [2,p.51].
Considering the history and development of banks, we see that the standard of living of a person
is inextricably linked not only with the processes of material production, but also with the
development of the credit system.
Indeed, banks are an important part of the economic system, and one of their main
activities is to earn income from customer deposits. Banks provide many financial services
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through deposits received from their clients, thereby increasing their income. Investment
return strategies are important for banks because they help ensure their financial stability,
manage resources effectively and support economic growth. In this regard, it should be noted
that the credit system of banks also has its own specific functions in the modern process of
economic development. Since the unique role of tax revenues in the global economy is
emphasized, it is important not to forget that this process has its own tasks [3, p.48].
Banks' income from deposits is mainly made up of interest earned on deposits. Banks offer
their customers a variety of deposit products. However, in order to earn income from these
products, banks need to set interest rates effectively. Raising interest rates helps attract
customers and raise more funds. At the same time, interest rates on deposits should be
consistent with market conditions, because excessively high interest rates can expose the bank
to high risks. However, in this process, it is necessary to take into account the economic
situation, the social life and activities of the people. Because the goal is to increase the bank's
income, it is necessary to set tasks taking into account both the lives of people and their
conditions, that is, in an integral unit, taking everything into account. In this process, it is
necessary to focus on the following, and to formulate. Offer a wide range of deposit products.
To meet the various needs of customers, banks need to develop a wide range of deposit
products. Such products may include short-term, long-term, as well as deposits with interest
rates and special contracts. For example, products such as deposits that are easily convertible
for customers, long-term deposits with high annual interest rates, or deposits for specific
purposes (for example, for a vacation or for buying a house) can increase the bank's income.
This approach encourages customers to cooperate with the bank for the long term.
Increasing interest income on loans. Banks also earn income from deposits by providing
loans to customers. Interest income on loans is a large source of revenue for banks. Banks
should be careful when setting interest rates on loans. If the interest rate is too high, customers'
repayment options are limited. Therefore, banks can benefit by diversifying their loan portfolio
and managing risks effectively. For example, by offering microloans or specialized loans in
various sectors (for example, loans for living expenses, business loans), it is possible to increase
the return on investments.
Diversification of investments. In order to generate income from investments, banks
should include not only deposit and loan operations, but also diversification of the investment
portfolio. In accordance with changing market conditions, banks can invest in securities, stocks,
bonds, investment funds and other financial instruments. In this case, diversification of the
investment portfolio minimizes risks and increases income. However, this method can also be
risky, so banks need to develop the right investment strategy.
Implementation of an effective customer service system. Providing high-quality customer
service directly affects the income of banks. Customers want to receive complete information
about banking services before making their deposits with the bank. Therefore, banks should
provide the best service to their customers. This includes services such as managing deposits,
advising on interest rates and conditions, and offering online and mobile banking services. A
personal approach to customers and providing a high level of service will make them continue
to work with the bank, and as a result, increase returns on deposits.
Introduction of short-term and long-term investments. Banks can also increase their
income by offering short-term and long-term investment products. For example, short-term
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investment instruments allow customers to get quick profits, while long-term investments can
bring stable income to banks. Banks can offer their customers special deposit agreements or
investment products for storing long-term funds. This approach allows banks to manage
income and ensure continuous financial flows.
Effective methods for increasing the income from deposits in a bank include the methods
listed above. Each method has its own advantages and risks, and banks should choose these
methods based on their financial strategies and market conditions. Banks can increase their
income by effectively setting interest rates, diversifying deposits, increasing income on loans,
diversifying investments, providing high-quality services to customers, and introducing short-
and long-term investment products. At the same time, banks must maintain a balance between
risk and profit, because along with high income, minimizing risks is also very important.
References:
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