Financial Institutions

FINANCIAL
INSTITUTIONS
PRESENTED BY- SHASHI PRATAP SINGH
B.A- ECONOMICS (HONORS)

 In finance and economics, a financial institution is an institution
that provides financial services for its clients or members such as
investments, loans and deposits.

 Depository institutions:- deposit-taking institutions that accept and manage
deposits and make loans, including banks, building societies, credit unions, trust
companies, and mortgage loan companies;
 Contractual institutions:- insurance companies and pension funds
 Investment institutions:- investment banks, underwriters, brokerage firms.

Commercial
banks
Investment
banks
Insurance
companies
Brokerages
Investment
companies
Credit
unions
Provident
funds
Mutual
funds
Saving and
loan
associations
Trust
companies

 They accept deposits and provide security and convenience to their customers.
 Commercial banks also make loans that individuals and businesses use to buy
goods or expand business operations.
 The commercial bank also deals in basic investment products such as saving
accounts and certificates of deposit.
 Banks also serve often under-appreciated roles as payment agents within a
country and between nations.

 It is a financial intermediary that performs a variety of services for businesses
and some governments.
 These services include underwriting debt and equity offerings, acting as an
intermediary between an issuer of securities and the investing public, making
markets, facilitating mergers and other corporate reorganizations, and acting as a
broker for institutional clients.
 They may also provide research and financial advisory services to companies.
 As a general rule, investment banks focus on initial public offerings (IPOs) and
large public and private share offerings

 The insurance company is one which signs a contract, which is represented by a
policy, and provides an entity or individual with financial protection or
reimbursement against any losses that may occur.
 The insurance company is instrumental as a means of protection of financial
losses, both major as well as small, resulted from damage to the insurer or his or
her property.
 There are a number of insurance polices; however, the most important ones are
health insurance, life insurance, home insurance and vehicle insurance.
 Services offered include: Insurance services, Securities, Buying or selling service
of the real estates, Mortgages, Loans, Credit cards and Check writing.

 They act as an intermediary between buyers and sellers to facilitate securities
transactions.
 They are compensated via commission after successful transaction.
 A brokerage firm serves a clientele of investors and employs a number of stockbrokers
through whom they trade public stocks and other securities.
 They also provides investment advice, portfolio management and trade execution.
 Full service brokerages offer estate planning services, tax advice and consultations.
 A discount brokerage charges less money than the traditional brokerage and here
clients conduct trades via computerized trading systems.
 Services offered include: Insurance, Securities, Mortgages, Loans, Credit cards, Money
market and Check writing.

 It is a corporation or a trust through which individual invest in diversified,
professionally managed portfolios of securities by pooling their funds with those of
other investors.
 Investment companies are business entities, both privately and publicly owned,
that manage, sell, and market funds to the public.
 They typically offer investors a variety of funds and investment services, which
include portfolio management, recordkeeping, custodial, legal, accounting and tax
management services.

 These are not-for-profit financial cooperative associations where large numbers of
people are voluntary associated for saving and borrowing purposes.
 These are established and operated by the members.
 In a credit union the members pool their saving so that they can provide loan
money to each others.
 Further, the profits that are achieved are employed to fund projects and services
for the overall benefit of the community.
 Some of the services offered by the credit unions are online banking, savings
accounts, checking accounts, credit cards and certificates of deposit).

 They accept saving to provide pension and other kind of retirement benefits to the
employee of government units and other corporations.
 They are basically funded by corporation and government units for their
employees, which make a periodic deposit to the pension fund.

 A mutual fund is a professionally managed investment fund that pools money from
many investors to purchase securities.
 It is most commonly applied to open-end investment companies, which are collective
investment vehicles that are regulated and sold to the general public on a daily basis.
 Mutual funds are operated by money managers, who invest the fund's capital and
attempt to produce capital gains and income for the fund's investors.
 One of the main advantages of mutual funds is they give small investors access to
professionally managed, diversified portfolios of equities, bonds and other securities.
 Each shareholder, therefore, participates proportionally in the gain or loss of the fund.
 Mutual funds invest in a wide amount of securities, and performance is usually
tracked as the change in the total market cap of the fund, derived by aggregating
performance of the underlying investments.

 A savings and loan association (S&L) is a financial institution that specializes
in savings deposits and mortgage loans, and has become one of the
primary sources of mortgage loans for homebuyers today.
 It offers mortgage services to people from the savings and deposits received
from private investors.
 Privately or locally managed financial institutions
 Uses individuals’ deposits to make long-term amortized loans to home buyers.
 Disperses loans for home repairs, construction, and refinancing

 A trust company is a legal entity that acts as a agent or trustee on behalf of a person
or business entity for the purpose of administration, management and the eventual
transfer of assets to a beneficial party.
 A trust company does not own the assets its customers assign to its management, but
it may assume some legal obligation to take care of assets on behalf of other parties.
 A trust company or trust department is usually a division or an associated company of
a commercial bank.
 Trust companies offer a variety of services, with the most common being wealth
management in the mode of becoming a fiduciary or agent.
 Trust companies offer asset management services such as bill pay, check writing and
other features.
 Trust companies also offer brokerage services. Depending on the level of service
needed, some companies can build financial plans for its clients for additional fees.
Trust companies also offer a variety of estate-oriented services, such as guardianship,
estate settlement and non-financial asset management.

Financial Institutions

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