In short, Cajas or savings banks are non-profit entities, Cajas Rurales or rural savings banks should have their main objective in the provision of financial services in rural areas and Bancos or banks are for-profit entities that share their profits among their shareholders or invest in what they decide.
In addition to the rural savings banks, there are also general savings banks. What is the main difference between the two? That rural banks have their main objective limited by their name, since they must legally be linked to the provision of financial services in rural areas. Not so the general savings banks.
These credit institutions emerged in the 19th century to help introduce savings into the lower classes that did not have access to banks and could not afford risk operations. They were not, nor are they, profit-oriented societies. In fact, they are obliged by law to allocate their annual benefits to strengthen their solvency and economic future and to meet social needs.
As to what amounts must be contributed for these purposes, the law establishes that a minimum of 50% of its surplus must be allocated mandatory reserves to ensure its current and future liquidity; the rest, without exception, is dedicated to social work, which covers fields as varied as the conservation of heritage, aid to disadvantaged social groups, culture, sports, etc.
And this is precisely the biggest difference between banks and banks since the latter are profit-making entities and have the right to distribute their profits among their shareholders or to invest them in what they consider at the end of the fiscal year.
What does this mean for the clients?
Although it seems that all work with the same rules and objectives, the truth is that it is not like that. There are differences, above all, if you are a customer who is worried about knowing for what purpose you are contributing with your money.
The savings banks usually have a greater link with the territory. That is, they are entities with strong local roots that are legally obligated to invest part of their profits in social projects. An investment that, in the long term, helps to grow the territory of which they are part.
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