Management of Financial Institutions in India

INTRODUCTION
•A financial institutions is an intermediary
between consumers and the capital or the
debt markets providing banking And
invetment services

DEFINITION:-
Financial institutions is responsible for the
supply of money to the market through the
transfer of funds from investors to the
companies in the form of loans ,deposits and
invetments.

In financial economics, a financial institution
acts as an agent that provides financial
services for its clients. Financial institutions
generally fall under financial regulation from
a government authority.

Types of Financial Institutions
•Common types of financial institutions
include banks, Insurance Co, Leasing Co,
Investment Co, Mutual Funds

Life insurance corporation of
india(LIC)
 It is founded in 1956
 Largest insurance company in india
ownes by governament
 8 zonal offices
 100 divisional offices
 2048 branch offices
 100,21,449 agents

Specilized financial institutions:
Export and import bank (EXIM bank)
Export credit guarantee
corporation(ECGC)
Industrial reconstruction bank of
india(IRBI)

All india financial institutions
Industrial financial corporation of india
First all india term-lending institutions
Set up in 1948
Provide institutional credit services to large and
medium industries
Head quarters-new delhi

Banks
•A bank is a commercial or state institution
that provides financial services, including
issuing money in various forms, receiving
deposits of money, lending money and
processing transactions and the creating of
credit.

1. Central Bank
•A central bank, reserve bank or monetary
authority, is an entity responsible for the
monetary policy of its country or of a group
of member states, such as the European
Central Bank (ECB) in the European Union,
the Federal Reserve System in the United
States of America, State Bank in Pakistan.

2. Commercial Banks
•A commercial bank accepts deposits from
customers and in turn makes loans, even in
excess of the deposits; a process known as
fractional-reserve banking. Some banks
(called Banks of issue) issue banknotes as
legal tender.

3. Investment Banks
•Investment banks help companies and
governments and their agencies to raise
money by issuing and selling securities in
the primary market. They assist public and
private corporations in raising funds in the
capital markets (both equity and debt), as
well as in providing strategic advisory
services for mergers, acquisitions and other
types of financial transactions.

4. Saving Banks
•A savings bank is a financial institution
whose primary purpose is accepting savings
deposits. It may also perform some other
functions.

5. Micro Finance Banks
•For the purpose of poverty reduction
program, such kind of banks are working in
the different countries with the contribution
of UNO or World Bank.
•In Pakistan 7 Micro Finance Banks are
providing services under the SBP prudential
regulation.

6. Islamic Banks
•Islamic banking refers to a system of
banking or banking activity that is
consistent with Islamic law (Sharia)
principles and guided by Islamic economics.
In particular, Islamic law prohibits usury,
the collection and payment of interest, also
commonly called riba in Islamic discourse.

7. Specialized Banks
1. ZTBL
 The Zarai Taraqiati Bank Limited It is
also known as Agricultural
Development Bank of Pakistan
(ADBP).
 It is the premier financial institution
geared towards the development of the
agricultural sector through the
provision of financial services and
technical know-how.

2. IDBP
Industrial Development Bank of Pakistan is
one of Pakistan's oldest development
financing institution created with the
primary objective of extending term finance
for investment in the manufacturing sector
and SME Sector of the economy.

3. SME Bank
•Promote the business.
•Positive impact on Financial environment.
•Financing of projects.
•Tell revenue generation schemes to
entrepreneurs.

8. Non-banking financial
company
•Non-bank financial companies (NBFCs) also
known as a non-bank or a non-bank bank, are
financial institutions that provide banking
services without meeting the legal definition of
a bank, i.e. one that does not hold a banking
license.

company
•Operations are, regardless of this, still exercised
under bank regulation. However this depends
on the jurisdiction, as in some jurisdictions,
such as New Zealand, any company can do the
business of banking, and there are no banking
licenses issued.

company
•Non-bank institutions frequently acts as
suppliers of loans and credit facilities,
supporting investments in property, providing
services relating to events within peoples lives
such as funding private education, wealth
management and retirement planning

company
•however they are typically not allowed to take
deposits from the general public and have to
find other means of funding their operations
such as issuing debt instruments. In India, most
NBFCs raise capital through Chit Funds.

9. Investment company
•Generally, an "investment company" is a
company (corporation, business trust,
partnership, or limited liability company)
that issues securities and is primarily
engaged in the business of investing in
securities.

9. Investment company
• An investment company invests the money it receives from
investors on a collective basis, and each investor shares in
the profits and losses in proportion to the investor’s interest in
the investment company.

11. Leasing Companies
•A lease or tenancy is the right to use or
occupy personal property or real property
given by a lessor to another person (usually
called the lessee or tenant) for a fixed or
indefinite period of time, whereby the lessee
obtains exclusive possession of the property
in return for paying the lessor a fixed or
determinable consideration (payment).

12. Insurances Companies
• Insurance companies may be classified as
1. Life insurance companies, which sell life insurance,
annuities and pensions products.
2. Non-life or general insurance companies, which sell
other types of insurance.

Mutual Fund
An investment which is comprised of a pool of funds collected
from many investors for the purpose of investing in securities such
as stocks, bonds, money market securities and similar assets.

Mutual funds are operated by money mangers, who invest the
fund's capital and attempt to produce capital gains and income for
the fund's investors. A mutual fund's portfolio is structured and
maintained to match the investment objectives stated in its
prospectus.

10. Brokerage Houses
• Stock brokers assist people in investing, online only
companies are called 'discount brokerages', companies with
a branch presence are called 'full service brokerages' or
'private client services.

Financial Institution
Functions
• Financial institutions provide a service as intermediaries of
the capital and debt markets. They are responsible for
transferring funds from investors to companies, in need of
those funds. The presence of financial institutions facilitate
the flow of cash through the economy.

Functions
• To do so, savings accounts are pooled to mitigate the risk
brought by individual account holders in order to provide
funds for loans. Such is the primary means for depository
institutions to develop revenue.

Functions
• Should the yield curve become inverse, firms in this arena
will offer additional fee-generating services including
securities underwriting, sales & trading, and prime brokerage.

Misleading financial analysis
•Financial analysis of an organization is
misleading when it is used to misrepresent
the organisation, its situation or its
prospects.

•This type of deceit is sometimes used to obtain
money by misdirecting people to invest in a
stock market bubble, profiting from the increase
in value, then removing funds before the bubble
collapses, for instance in a stock market crash.

Conclusion
To review, we have looked at the
relationship between institutions and
Financial Markets. This growing field of
research may offer us a new insight into the
dynamics of economic growth within and
among various economies.

Management of Financial Institutions in India

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