The banking system consists of the National Bank of the Romanian Socialist Republic (referred to as the National Bank), the Investment Bank, the Romanian Foreign Trade Bank, the Bank for Agriculture and the Food Industry, and the Savings and Loan Bank. The functions of the Romanian Foreign Trade Bank and of the Bank for Agriculture and the Food Industry had been exercised to a more limited extent by the National Bank until 1968. The Economy and Consignment Fund, a department of the Savings and Loan Bank, makes credit available for the construction of privately owned housing—a function exercised by the Investment Bank until the end of 1969. Information on the interrelations between the specialized banks and the National Bank or between the banks and the Ministry of Finance was not available in early 1972.
The National Bank, as reconstituted in December 1970 with a capitalization of 1 billion lei, is the country's central bank of issue, but it also acts as a banker for the government, a bankers' banker for the specialized financial institutions, and a short-term credit and discount agency for economic organizations. The main functions of the National Bank in the field of domestic finance include: the issue of currency and control over its circulation; management of the budgetary cash resources; coordination of all short-term credit and discount activities; and participation in the formulation of annual and five-year credit and cash plans, jointly with the State Planning Committee and the Ministry of Finance.
The National Bank establishes official foreign exchange rates, engages in foreign exchange operations directly or through the Romanian Foreign Trade Bank and other authorized organizations, and participates in working out the balance of foreign payments and in following up on its execution. The National Bank also controls the production, processing, and use of precious metals and gems and, together with the State Planning Committee and the Ministry of Finance, develops plans for their acquisition and allocation at home and abroad. The bank has exclusive authority to purchase from individuals items made of precious metals or stones and items of artistic, historic, or documentary value.
The National Bank is managed by an administrative council, the members of which must be approved by the Council of Ministers upon the recommendation of the bank's governor, who is also chairman of the administrative council. In addition to the chairman, the administrative council includes several vice presidents of the bank; the directors of the bank's fourteen divisions; superintendents of some of the subordinated units; delegates of the management of the Investment Bank, the Bank for Agriculture and the Food Industry, and the Romanian Foreign Trade Bank; experienced specialists from the bank's professional staff and from the outside; and a delegate of the labor unions, designated by the General Union of Trade Unions. The council as a whole and each individual member are responsible to the Council of Ministers for the entire activity of the bank.
The Investment Bank, created in 1948 and last reorganized in September 1971 with a capitalization of 700 million lei, serves to finance, and exercise control over, investment projects of all state, collective, consumer-cooperative, and other public organizations, with the exception of collective farms and organizations subordinate to the Ministry of Agriculture, Food Industry, and Waters. The control powers of the bank extend not only to projects financed with its own resources but also to projects financed through budgetary allocations and out of enterprise profits. The bank's management is organized along the lines of the administrative council of the National Bank.
The Investment Bank must participate in the preparation of draft plans for the financing of all investment projects undertaken by central and local state organizations from the ministerial down to the enterprise level. During the formulation and implementation of these plans the bank must ensure the most economical use of available resources. The bank is also called upon to determine appropriate rates of depreciation for fixed assets and to ensure that the required amortization payments to the budget are made on time.
Two of the bank's main functions are the review of technical and economic investment criteria submitted to it for approval by ministries and other state agencies and the evaluation of the feasibility of proposed investment projects on the basis of accepted standards; the more important of these standards also require approval by the Council of Ministers. Approval may be granted by the bank only for investment projects that satisfy all legal requirements regarding need, suitability, and adherence to prescribed norms; have an adequate raw materials base and assured sales outlets; and serve to improve the economic performance of the organization that undertakes the investment. In the event of disagreement between the bank and the organization seeking investment approval, appeal may be made to higher authorities.
The Romanian Foreign Trade Bank was established in July 1968. Its principal functions are to facilitate exports and, through strict controls over exchange allocations, to encourage import substitution by domestic producers. In 1970 about 73 percent of the bank's credits were devoted to exports, and only 21 percent were granted for imports. The remaining 6 percent of the credits were used to finance internal transport.
In July 1971 the Romanian Foreign Trade Bank and a group of eight French financial institutions opened the Romanian-French Bank in Paris. This bank was organized as a private limited-liability company with a capital of 20 million French francs underwritten in equal parts by the Romanian Foreign Trade Bank and the French bankers. In the second half of 1971 the Romanian Foreign Trade Bank acquired affiliates in London and Rome.
The Bank for Agriculture and the Food Industry was created in May 1971 by expanding the functions and changing the name of the Agricultural Bank established three years earlier. This reorganization followed the consolidation of previously independent ministries into the Ministry of Agriculture, Food Industry, and Waters (referred to as the Ministry of Agriculture). The bank was capitalized at 500 million lei and was required to create a reserve out of profits equal to the amount of its capitalization. The bank's function is to provide investment and operating credits for enterprises under the jurisdiction of the Ministry of Agriculture, including collective farms, and to finance the distribution of their products within the country.