Financial Institutions in India
4
FINANCIAL INSTITUTIONS Financial institutions are the major part of the Indian nancial system. It is more important than other component of the Financial System because all the components of Indian Financial System are directly or indirectly related with the nancial institutions. F inancial institutions are providing various services to the economic development with the help of issuing of the nancial instruments. F inancial institutions can be classied into banking and no n-banking institutions. Banking Institutions Banking institutions are the key part of the economic development of the nation. Banking institutions play a major role in the eld of savings and investments of money from public and lending loans to the business concern. Indian Banking institutions may be classied into two board categories !"# $ommercial Banks !%# $ooperative Banks Commercial Banks $ommercial Banks are the most important deposits mobili&ation and disbursers of nance. 'he main function of the commercial banks are accepting deposits and rendering loans to the public.
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Transcript of Financial Institutions in India
7/25/2019 Financial Institutions in India
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FINANCIAL INSTITUTIONSFinancial institutions are the major part of the Indian nancial
system. It is more important than other component of the Financial
System because all the components of Indian Financial System aredirectly or indirectly related with the nancial institutions.
Financial institutions are providing various services to the economic
development with the help of issuing of the nancial instruments.
Financial institutions can be classied into banking and non-banking
institutions.
Banking Institutions
Banking institutions are the key part of the economic development of the nation. Banking institutions play a major role in the eld of
savings and investments of money from public and lending loans to
the business concern.
Indian Banking institutions may be classied into two board
categories
!"# $ommercial Banks !%# $ooperative Banks
Commercial Banks$ommercial Banks are the most important deposits mobili&ation and
disbursers of nance.
'he main function of the commercial banks are accepting deposits
and rendering loans to the public.
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Indian commercial banks can be classied into the following
categories
Scheduled Commercial Banks
Scheduled banks are those which are included in the secondscheduled of Banking (egulation )ct "*+, and others are nonscheduled banks. 'o be included in the second scheduled of theBanking regulation act the bank full ll the following conditions ust have paid up capital and reserves of not less than (s. velakh. It must also satisfy the (BI that its a/airs are conducted in amanner. It is re0uired to maintain a certain amount of reserves with the (BI.
Non-Scheduled bank
1on-scheduled banks are those which have not been included in the
second schedule of the )ct.
1on-scheduled banks are subject to the statutory cash reserve
re0uirement. But they are not re0uired to keep them with the (BI2
they may keep these balances with themselves. 'hey are not entitled
to borrow from the (BI for normal banking purposes3 though they
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may approach the (BI for accommodation under abnormal
circumstances.
Non-banking Institutions
1on-banking institutions are also performing their function to
improve the Indian nancial system. 1on-banking Institutions can be
classied
into the following two major categories
". 1on-banking Financial Institutions.
%. 1on-banking 1on-nancial Institutions.
NBFI
) 1on Banking Financial Institution is a company registered under
the $ompanies )ct3 "*45 of India3 engaged in the business of loans
and advances3 ac0uisition of shares3 stock3 bonds hire-purchase3
insurance business or chit business but does not include any
institution whose principal business is that includes agriculture or
industrial activity or the sale3 purchase or construction of immovable
property.
'he working and operations of 1BF$s are regulated by the (eserve
Bank of India !(BI# within the framework of the (eserve Bank of India
)ct3 "*+, !$hapter III B# and the directions issued by it.
STATE FINANCE CORPORATION (SFC)
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$entral government decided to promote the Small Scale Industries
and edium Scale Industries at the state level by establishment of
State Finance $orporation under a special )ct. It is called as State
Finance $orporation )ct "*4". )ccording to this act3 state
government has been empowered to set up State Finance
$orporation. )t present these are "6 State Finance $orporation in
India.
UNIT TRUST OF INIA
7nit trust was set up in "*5, by a special act passed in the
parliament under the name of 7nit 'rust of India )ct "*5+3 for the
purpose to promote and regulate the mutual fund activities in India.
LIC
89nsure and enhance the 0uality of life of people through nancial
security by providing products and services of aspired attributes with
competitive returns3 and by rendering resources for economic
development.8
NON-BANKING NON-FINANCIAL INSTITUTIONS
1on-banking non:nancial institutions are providing fee based
services to the public3 such as merchant banking3 underwriting3
counseling3 etc. 'hese institutions will not lending any nancial
assistance to public but they will provide nancial services.
