Financial Institutions and Bank Funds

Banks as a financial institution, funds are the blood in the body and the most important issue. Bank funds (loanable funds) is the amount of money owned or current assets controlled by a bank in its operational activities and can be cashed at any time. Cash owned by banks not only comes from the capital of the bank itself, but also comes from other parties that are entrusted or entrusted to the bank which at any time will be taken back either at once or gradually. 

               He function of banks as intermediary institutions especially in lending has an important role for the movement of the economy as a whole and facilitates economic growth. Where at the macroeconomic level the bank is a tool in setting monetary policy while at the microeconomic level the bank is the main source of financing for entrepreneurs and individuals.

            Based on the Law of the Republic of Indonesia Number 10 Year 1998 dated November 10, 1998 concerning banking, what is meant by banks is a business entity that collects funds from the public in the form of deposits and distributes them to the public in the form of loans and / or other forms to improve the quality of sleep for many people. 

Banks are the most important financial institutions in the economy. When consumers and producers have to make payments for the purchase of goods and services, they will use banks to provide checks or credit cards. When someone has excess money, they can save money in a bank and then the bank shares the money with people who need it. When they need financial information and financial planning, banks can be their advisors and consultants.The
function of bank financial institutions in the modern economy, namely:

1) Money Creation is like a demand deposit, which is a means of payment through a clearing mechanism.

2) Supports Smooth Payment Mechanisms, The smooth functioning of the payment mechanism is clearing, transferring money, receiving deposits, providing cash, credit, payment facilities and electronic payment systems.

3) Collecting Community Savings Funds; Funds consist of demand deposits, time deposits, certificates of deposit, savings, and / or other similar forms.

4) Storage of Valuables, people can store their valuables such as jewelry, money and others.

5) Provision of Other Services, at this time the bank can serve electricity bill payments, telephone buying mobile phone pulses, sending money through ATMs, paying employee salaries. These services are very easy and provide a sense of security and comfort for those who use them.Types of financial institutions such as: a. Central Bank b. commercial banks c. Rural Credit Bank (BPR) Benefits of this Financial Institution such as; a. Liquidity benefits b. Transfer of assets c. Reallocation of income According to Law No. 10 of 1998, the sources of these funds are:

a. Funds sourced from the bank itself (1st Party Funds)

b. Funds originating from the community (2nd Party Funds)

c. Funds originating from the community (2nd Party Funds)

               In Indonesia, Bank Financial Institutions consist of; Central Bank, Commercial Bank and Rural Credit Bank. In carrying out its operations, banks need capital which will be used in carrying out their duties. Therefore it is important for us to know where the sources of bank funds. Source of bank funds is an effort carried out by the bank to find or collect funds to be used as operational and management costs of the bank. Funds collected can come from within the company or other institutions outside the company and can also be obtained from the community. The choice of source of funds will determine the size of the costs incurred, therefore the selection of sources of funds must be done appropriately.

            Recommendations from this paper, that at the moment in 2020, financial institutions further improve their performance in developing the community's economy because the community's economy is currently very declining, community activities in the presence of the co-19 pandemic are very uncertain, many workers in both the private and government sectors at home, even those working in the hotel and restaurant tourism sector often cut off work relationships, especially in Indonesia. The new normal implemented by the current government, hopefully provides future stimulus with better economic improvement and a more prosperous and prosperous future for the Indonesian people.