TYPES OF FINANCIAL INSTITUTIONS

TYPES OF FINANCIAL

INSTITUTIONS

TYPES OF FINANCIAL INSTITUTIONS

Banking Institutions

Organized sector

Un-organized sector

NON-BANKING

INSTITUTIONS

Organized institutions

Unorganized institutions

Banking Institutions

Organized sector

Commercial banks

Co-operative

banks

Foreign Banks

Un-organized sector

Indigenous bankers

Money lenders

Commercial banks

Commercial Banks

Private sector banks

wherein 51% of the ownership lies in private

hands E.g. ICICI

Public sector banks

wherein 51% of the ownership lies in government

hands. E.g. SBI

Co-operative banksThese are represented by group of societies registered under the

act of the states relating to co-operative societies

CO-OPERATIVE CREDIT

SOCIETIES

Rural credit societies which are primarily agricultural

Urban credit societies which

are primarily non-agricultural

Foreign Banks

• Set up in India since British days.

• These are the banks which are registered outside India but have their operations and branches in India.

• Example : Barclays bank, CITI bank etc.

UNORGANIZED SECTOR

Indigenous bankers

Money lenders

Indigenous bankers

• Forefathers of modern commercial banks. • Local bankers. • Raise the funds from the public and lend it also. • E.g.Gujrati Shroffs or Marwari, in South India they may

be called Chettiars, In North India they may be called Sahukars etc.

• Provide finance for productive purposes to trade, industries and agriculturalists.

Money lenders

• Depend entirely on their own funds for the working capital. • May be rural or urban, professional or non-professionals.

The main characteristics of money lenders are:

They use their own fundsTheir clients are mainly the weaker sections of the society.Their loans are highly exploitative because they charge high rate of

interest. Their operations are highly regulated.The credit is prompt and flexible.

NON- BANKING INSTITUTIONS

Organized financial

institutions

Development Finance

Institutions

Investment Institutions

Unorganized financial

institutions

NBFCs

Development Finance Institutions

• Financial institutions set up for the development of the economy.

• Provide medium to long term funds so as to meet long term growth of the nation.

• E.g. IDBI, SIDBI etc.

Investment Institutions

• Includes those financial institutions which mobilize savings of the public at large and invest in corporate and government securities.

• These include: LIC, GIC, etc.

UNORGANIZED FINANCIAL INSTITUTIONS

• These include NBFCs providing whole range of financial services.

• The principal business is receiving of deposits under any scheme or arrangement in any manner or lending in any manner.

• E.g. hire purchase companies, investment companies etc.