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Financial Intermediaries
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` Financial Intermediaries are firms that provide service &
products to customer more efficiently.
` Benefits of FI:
1. Diversification
2. Lower transaction cost
3. Confidentiality
4. Signaling
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Regulatory
Body
Commercialbanks
Public Private
Insurancecompanies
Private Public
Mutualfund
NBFCDevelopme
ntalinstitution
Other publicsector
institution
POSB NHB NABARD
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` Public sector banks
` Private sector banks
` Foreign banks
` Development in banking structure results in
1. Wide geographical spread & deeper penetration in
rural area
2. Higher mobilization of deposits
3. Reallocation of bank credit to priority activities
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` Insurance is a form of risk management primarily used to
protect against the risk of a contingent, uncertain loss.
` Its define as the equitable shift of a loss from one entity
to another entity in exchange for payment.
` Insurance company classified in two category:
1. Life insurance
2. Non life insurance
LIC, GIC, I Pru, TATA Aig, United india assurance, Oriental
insurance.
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` In governance of AMFI mutual fund represent a vehicle
foe collective investment.
` MF is a pool of money collected from investors to
achieve their some common goal.
` In India MF is established as a trust.
` Constitution of MF is Trust, AMC & sponcor.
` Also R&T, custodians are part of their constitution.
` Regulated by SEBI & RBI.
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` NBFC representing companies engaged in transferring
the funds from lender to borrower.
` As perRBI 1997, a NBFC means:
1. A financial institution which registerd as a company
2. a companys principle business is receiving of
deposits.
3. Require previous approva of central govt
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` Post Independence many developmental institutions
have been established to cater to the long term financing
needs of the industrial sector.
` IDBI, ICICI, IFCI established for industial growth.
` Also focused on small sector industry so started SIDBI.
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` POSB:
Saving account, recurring, MIS, term deposits, PPF,
KVP.
` NABARD :
RRB, State Cooperative Banks
` NHB:
HUDCO
Bank sponsored institution
LIC housing finance Ltd.
Private Housing institution
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` Merchant Banks
` Venture Capital firms
` Information or service Firms
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` Reserve bank of India:
Apex bank of India acts as a monetary authority of the
country
Government bank
Bankers bank
Central bank & key institute in bringing development &
growth in economy.
Regulate forex market
Regulate all financial institutions viz banks, MF, NBFC by
formulating policies & regulations.
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` Security Exchange Board of India:
SEBI established by GOI in 1988 to regulate Indian
capital market as a apex regulatory Body, in 1992 SEBI
upgraded with SEBI Act has been passed.
Main objective is to protect interest of investor
To promote the development of securities market
Te regulate security market
Two major tasks are regulatory & development.
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` Insurance Regulatory And Development Authority:
IRDA Act 1999 passed to regulate, promote & assure
growth of insurance business re insurance business.
Protect interest of investors in terms of policy
information, nomination, premium, term, settlement of
claim, surrender.
Mandatory qualification & training for intermediaries
Code of conduct for insurer, surveyors, loss evalutors
Conduct Audit,supervision, dispute handling.
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` Financial intermediaries structure in India
` Commercial banks
` Insurance company
`
Mutual funds` NBFC
` Developmental institution
` Other public sector institution
`
Other institution` Regulatory body