PRESENTED BY:
Rahul shrma
Topic
FINANCIAL INSTITUTION
A financial institution is an institution which
collects funds from the public, and places them in
financial assets, such as deposits, loans and
bonds rather than tangible property.
FINANCIAL INSTITUTION
• Banking institution
• Non banking institution
NON BANKING FINANCIAL INSTITUTION
A non-bank financial institution (NBFI)
is a financial institution that does not
have a full banking license or is not
supervised by a national or
international banking regulatory
agency.
IMPORTANCE
Non banking financial institutions have the following importance in
economy.
Greater reach.
Flexibility in tapping resources.
Retail services to small and medium business.
Important component of financial market.
Role of NBFIs
Development of sectors like Transport &
Infrastructure
Substantial employment generation
Help & increase wealth creation
Broad base economic development
To finance economically weaker sections
FUNCTIONS
Financial Intermediation
Economic basic of financial
intermediation
Inducement to Save
Mobilisation of savings.
investment of Funds
REGULATIONS
NBFIs are not supervised by a national or international
banking regulatory agency. An NBFI will facilitate bank-
related financial services, without holding the status of a
'bank'.
TYPES
• Risk-pooling institutions
• Contractual savings
institutions
• Market makers
• Specialized sectoral
financiers
• Financial service providers
Cont,
Risk-pooling institutions
Insurance companies underwrite economic risks associated with
illness, death, damage and other risks of loss.
There are two main types of insurance companies: (a)general
insurance (b)life insurance.
Contractual savings institutions:
Contractual savings institutions (also called institutional investors)
give individuals the opportunity to invest in collective investment
vehicles (CIV).
Cont,
Market makers
Market makers are broker-dealer institutions that
quote a buy and sell price and facilitate
transactions for financial assets.
Specialized sectoral financiers:
They provide a limited range of financial services to
a targeted sector.
For example
real estate financiers channel capital to prospective
homeowners.
Cont,
Financial service providers
Financial service providers include
brokers management consultants,
and financial advisors, and they
operate on a fee-for-service basis.
COMPANY’S UNDER NBFc
They are also categorized in a different
format categories.
LOAN COMPANY HIRE PURCHASE COMPANY
INVESTMENT COMPANY MUTUAL BENEFIT
COMPANY HOUSING FINANCE COMPANY
EQUIPMENT LEASING COMPANY
Current status
NBFI have improved their operations and
strategies. Industry experts that they are
much more mature today than they were
during the last decade.
In fact, aggressive strategies helped LIC
housing finance to grab new customers and
increase its market share in national
mortgage market.
CONCLUSION
Strengthening the professionalism of NBFIs
sector through education and training, making
them more organised.
RBI needs to educate people about NBFIs.
The credit delivery mechanism needs to be
more transparent and hassle free.
There should be more stringent norms for the
defaulters.
