PROJECT REPORT ON

Awareness of Financial Institutions

IN PARTIAL FULFILLMENT OF

THE DEGREE AWARDED AT

B.COM (ACCOUNTING AND FINANCE)

SEMESTER VI

SUBMITTED TO

UNIVERSITY OF MUMBAI

FOR ACADEMIC YEAR 2019 – 2020

SUBMITTED BY

NAME : DHANASHREE SURESH SAWANT

ROLL NO :219

VIVA COLLEGE OF ARTS, COMMERCE AND SCIENCE

VIRAR (WEST)

401303
DECLARATION

I Hereby Declare that the Project Titled “ Awareness of Financial Institutions” is an original work
prepared by me and is being submitted to University of Mumbai in partial fulfillment of “B. Com.
(ACCOUNTING AND FINANCE)” degree for the academic year 2020-2021. To the best of my
knowledge this report has not been submitted earlier to the University of Mumbai or any other affiliated
college for the fulfillment of “B.Com (ACCOUNTING AND FINANCE)” degree.

Date: Place :

Name : Signature:

ACKNOWLEDGEMENT

I DHANASHREE SURESH SAWANT the student of VIVA College pursuing my “B.COM

(ACCOUNTING AND FINANCE)”, would like to pay the credits, for all those who helped in the making
of this project. The first in accomplishment of this project is our Principal Dr. A. P. Pandey, Vice-Principal
Prof. Prajakta Paranjape, Course Co-ordinator Dr. Audrin Colaco and Guide Dr./Prof. AUDRIN COLACO
and teaching & non teaching staff of VIVA college. I would also like to thank all my college friends those
who influenced my project in order to achieve the desired result correctly.
 Index

SR.NO TOPIC PAGE NO

1 INTRODUCTION 1
2 REVIEW OF 17
LITERATURE
3 RESEARCH 33
METHODOLOGY
4 DATA ANALYSIS 36
5 FINDINGS AND 42
SUGGESTION
6 CONCLUSION 45
7 BIBLIOGRAPHY 46
8 APPENDIX 47
Awareness of Financial Institutions

Introduction

A financial institution (FI) is a company engaged in the business of dealing with financial and
monetary transactions such as deposits, loans, investments, and currency exchange. Financial
institutions encompass a broad range of business operations within the financial services sector
including banks, trust companies, insurance companies, brokerage firms, and investment dealers.
Virtually everyone living in a developed economy has an ongoing or at least periodic need for the
services of financial institutions Financial institutions can operate at several scales from local
community credit unions to international investment banks. Volume 75%

They act as intermediaries between savers and borrowers and they direct the flow of funds
between them. With funds deposited by savers in checking, savings, and money market accounts,
they make loans to individual and commercial borrowers. In the next section, we will discuss the
most common types of depository institutions (banks that accept deposits), including commercial
banks, savings banks, and credit unions. We’ll also discuss several non depository institutions
(which provide financial services but don’t accept deposits), including finance companies,
insurance companies, brokerage firms, and pension funds.

Financial Institutions are referred to as a company that deals in all types of finance-related
businesses. They are different from banks and play a very important part in broadening the
financial services in the country. They provide a very attractive rate of returns to the customers in
comparison to any government-centric banks. It deals in loans and advances and also specializes
in some specified sectors like hire purchases and leasing etc.

financial institution 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 investments. Large
financial institutions such as JP Morgan Chase, HSBC, Goldman Sachs or Morgan Stanley can
even control the flow of money in an economy.

The most common types of financial institutions include commercial banks, investment banks,
brokerage firms, insurance companies, and asset management funds. Other types include credit
unions and finance firms. Financial institutions are regulated to control the supply of money in
the market and protect consumers.

Financial Institutions are referred to as a company that deals in all types of finance-related
businesses. They are different from banks and play a very important part in broadening the
financial services in the country. They provide a very attractive rate of returns to the customers in
comparison to any government-centric banks. It deals in loans and advances and also specializes
in some specified sectors like hire purchases and leasing etc.

The financial institution deals with finance-related services. These are gaining popularity day by
day nowadays. The attractive rate of returns on the customer’s investment is very demanding. It
also provides specialized services like hire purchase and leasing, etc. The simple and organized
procedure of the institutions is becoming very complementary. It provide a broad range of
business opportunities. There are different types of financial institutions. The goal of all the
institutions is different and they provide different services and have different levels of risk
associated with it. All the financial institutions have unique features and it works in a specialized
way. The financial institution is gaining immense popularity in broadening the finance-related
services in the country.

Financial System: It is a set of all financial institution which facilitates financial transactions in
financial markets. It brings under its fold the financial markets and the financial institution which
support the system

Financial institutions are companies in the financial sector that provide a broad range of business
and services, including banking, insurance, and investment management. Governments of the
country consider it essential to oversee and to regulate these institutions as they play an integral
part in the economy of the country.

An organization, which may be either for-profit or non-profit, that takes money from clients and 
places it in any of a variety of investment
vehicles for the benefit of both the client and the organization. Common examples of financial ins
titutions are retail
banks, which take deposits into safekeeping and use them to make loans to other customers, and i
nsurance
companies, which do not take deposits, but provide guarantees of payment if a certain situation o
ccurs in exchange for a premium. See also: Depository institution, Non-depository institution.

The goal of Financial Institutions is to provide access to financial markets, a.k.a. financial

intermediaries (they serve as middlemen) and indirect finance. Most financial institutions are
regulated by the government. 

Finance is defined as the management of money and includes activities such as investing,
borrowing, lending, budgeting, saving, and forecasting. There are three main types of finance:
(1) personal, (2) corporate, and (3) public/government
Financial institutions serve various purposes. Depository institutions (banks, savings and loans
[S&Ls], and credit unions) transform liquid liabilities (checking accounts, savings accounts, and
certificates of deposit that can be cashed in prior to maturity) into relatively illiquid assets, such
as home mortgages, car loans, loans to finance business inventories and accounts receivable, and
credit card balances. Depository institutions also operate the payments system where bank
balances are shifted between parties through checks, wire transfers, and credit and debit card
transactions. Insurance companies fall into two broad categories–life and health insurers, whose
policies provide financial protection against death, disability, and medical bills; and property and
casualty insurers, whose policies protect policyholders against losses arising from fire, natural
disasters, accidents, fraud, and other calamities. Stockbrokers and related investment banking
firms are central players in the capital markets where businesses raise capital and where
individuals and institutional investors buy and sell shares of stock in business enterprises….

In financial economics, a financial institution is an institution that provides financial services for
its clients or members. Probably the most important financial service provided by financial
institutions is acting as financial intermediaries. Most financial institutions are regulated by the
government. Broadly speaking, there are three major types of financial institutions:

⁕Depositary 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; and

⁕Investment Institutes : Investment Banks, underwriters, brokerage firms. Some experts see a
tendency of global homogenisation of financial institutions, which means that institutions tend to
invest in similar areas and have similar investment strategies.

A financial system plays an important role in the economic development of a country. In finance,
a financial system is the system which allows the transfer of money between savers and
borrowers. It consists of closely interconnected financial institutions, markets, services,
instruments, transactions and practices.

financial institution 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 investments.

The most common types of financial institutions include commercial banks, investment banks,
brokerage firms, insurance companies, and asset management funds. Other types include credit
unions and finance firms. Financial institutions are regulated to control the supply of money in
the market and protect consumers.

They are responsible for transferring funds from investors to companies in need of those funds.
Financial institutions facilitate the flow of money through the economy. To do so, savings a risk
brought to provide funds for loans. Such is the primary means for depository institutions to
develop revenue. services including securities underwriting.

Financial institutions are a type of business organisations. They are intermediaries that mobilise
savings and facilitate allocation of funds in an efficient manner. Financial institutions can be
classified as banking and non-banking financial institutions. They can also be classified as term-
finance institutions such as Industrial Development Bank of India (IDBI), Industrial Credit and
Investment Corporation of India (ICICI), Industrial Finance Corporation of India (IFCI), Small
Industries Development Bank of India (SIDBI) and Industrial Investment Bank of India (IIBI).
However, ICICI and IDBI are now converted into universal banks and are no longer treated as
term lending institutions alone. They are also classified as financial institutions. There are state-
level financial institutions such as the State Financial Corporations (SFCs) and State Industrial
Development Corporations (SIDCs) which are owned and managed by state governments.

Review of Literature

Aryan Ghazi (2019) , Financial institutions are one of the most important components of any
country's financial system. They play a vital role in determining the effectiveness and efficiency
of the financial system , And comes in the importance of financial institutions in that they provide
the economy services for richer than them, They represent the vital infrastructure through which
money flows from savings to investors in various economic fields. Interest in medium and small
enterprises is one of the factors of economic growth. Small and medium enterprises sector is an
important sector of the national economy, Through its contribution to economic development,
increasing domestic output ... etc. Small individual projects are of interest to different countries of
the developed and developing world alike, Starting from the vital role of these projects in
economic growth and job creation, And activating local and regional development.

Adriano A., S. Vishnu , Guillaume , (2016), We study risk management in financial institutions
using data on hedging of interest rate risk by banks and bank holding companies. We find strong
evidence that better capitalized institutions hedge more both in the cross-section and within
institutions over time. For identification, we exploit net worth shocks resulting from loan losses
due to drops in house prices. Institutions that sustain such losses reduce hedging substantially
relative to otherwise similar institutions. The evidence is consistent with the theory that financial
constraints impede both financing and hedging. We find no evidence that risk shifting,
adjustments of interest rate risk exposures, or regulatory capital explain hedging behaviour .

Mani Kaur, Financial sector plays an indispensable role in the overall development of a country.
The most important constituent of this sector is the financial institutions, which act as a conduit
for the transfer of resources from net savers to net borrowers, that is, from those who spend less
than their earnings to those who spend more than their earnings. The financial institutions have
traditionally been the major source of long-term funds for the economy. These institutions
provide a variety of financial products and services to fulfil the varied needs of the commercial
sector. Besides, they provide assistance to new enterprises, small and medium firms as well as to
the industries established in backward areas.

Thorsten Becker,(2016) ¸This paper takes stock of and provides a critical review of several
literatures, notably the theoretical and empirical work on finance and growth and studies on the
determinants of financial development. These two literatures are linked as the sustainable
expansion of the financial sector is constrained by the institutional framework it operates in.
Important interactions between financial sector and institutional development are discussed as
well as policy implications and a research agenda going forward.

Rina Gupta ,(2012), The emerging economies in post colonial era faced a difficult choice of
appropriate mechanism of channelizing the resources into development effort. Many of them had
inherited capital starved primitive financial systems. Such systems could not be relied upon to
allocate resources among competing demands in the economy. The task of institution building
was too important to be left at the mercy of the market forces at the budding stage of
development. In such a situation, several governments in Continental Europe and East Asian
economies decided to take the matter into their hands and established institutions specifically to
cater to the needs of financial resources for developmental effort. Such institutions were called
Development Financial Institutions.

Development financing is a risky business. It involves financing of infrastructure and industrial

projects which usually have long gestation period. The long tenure of such loans has associated
with its uncertainty as to performance of the loan asset. The repayment of the long term project
loans is dependent on the performance of the project and cash flows arising from it rather than
ability of the collaterals. The project could go wrong for a variety of reasons, such as,
technological obsolescence, market competition, change of government policies, natural
calamities, poor management skills, poor infrastructure etc. The markets and banking institutions
were highly averse to such uncertain outcome, besides without possessing enough information
and skills to predict with any certainty the outcome. There were also cost considerations
associated with such risky ventures. The long term loan comes with a high price tag due to the
long term premium loaded into the pricing.

Lev Ratnovski and Aditya Narain ,(2007), financial institutions (such as public development
banks) are commonly associated with developing countries, in fact they are prevalent in the
developed world as well. We study a sample of public financial institutions in industrialized
countries and identify dominant trends in their organization and oversight. While practices in
developed countries may be a useful reference point, a more nuanced approach, accounting for
the disparity of institutional environment, regulatory capacity, and government accountability and
effectiveness, may be required in developing countries. Further investment in the accumulation of
evidence and formulation of best practices in the organization and oversight of public financial
institutions seems warranted and necessary.

Shasha Singh, The economic scene in the post independence period has seen a sea change; the
end result being that the economy has made enormous progress in diverse fields. There has been a
quantitative expansion as well as diversification of economic activities. The experiences of the
1980s have led to the conclusion that to obtain all the benefits of greater reliance on voluntary,
market-based decision-making, India needs efficient financial systems. The financial system is
possibly the most important institutional and functional vehicle for economic transformation.
Finance is a bridge between the present and the future and whether it be the mobilisation of
savings or their efficient, effective and equitable allocation for investment, it is the success with
which the financial system performs its functions that sets the pace for the achievement of
broader national objectives.

Isabel Argimona , Clemens Bonner (2018), Global financial institutions play an important role in
channeling funds across countries and, therefore, transmitting monetary policy from one country
to another. In this paper, we study whether such international transmission depends on financial
institutions’ business models. We find marked heterogeneity in the transmission of monetary
policy across the three types of institutions, across the three banking systems, and across banks
within each banking system. While insurance companies and pension funds do not transmit
home-country monetary policy internationally, banks do, with the direction and strength of the
transmission determined by their business models and balance sheet characteristics

Laveesh Bhandari,(2003),,In many countries, Development Financial Institutions (DFIs) have

been major conduits for channelling funds to particular firms, industries and sectors during the
latter's process of development. In India, DFIs have been a more important source of long-term
funds (mainly debt) for industry than bank loans or other sources of debt. Using data from the
Indian corporate sector, we evaluate the role of DFIs in India for the period 1989-97 by
examining how firms' investment decisions are affected by their ability to access DFIs. We find
that firms that had prior access to DFIs continue to receive funds from these sources only if they
can be classified as a priori more financially constrained. Access to DFIs for funds spurs
investment. These results suggest that DFI lending is not governed by considerations of lobbying,
precedence or even to sponsor particular types of projects that might be socially desirable but not
privately profitable. Rather, the primary role of DFIs has been to reduce financial constraints
faced by firms. We also find that the drastic contraction of long-term bank lending to industry in
India in the early nineties had adverse consequences for firms that were particularly bank-
dependent, but only if these firms could be classified as a priori more financially constrained.
Together, these results support the view that in contrast to firms in well-developed capital
markets, in emerging markets, firms with growth potential are likely to rely significantly on debt
financing, especially debt that is channelled through financial inter mediaries.

Karthikeyan Kothandaraman Madurai ,(2011),Financial Inclusion is delivery of banking services

at an affordable cost to the vast sections of disadvantaged and low income groups. The main
focus of financial inclusion in India is to promote sustainable development and generating
employment in rural areas for the rural population. Out of 19.9 crore households in India, only
6.82 crore households have access to banking services. As far as rural areas are concerned, out of
13.83 crore rural households in India, only 4.16 crore rural households have access to basic
banking services. In respect of urban areas, only 49.52% of urban households have access to
banking services. Over 41% of adult population in India does not have bank account. There are
many factors affecting access to financial services by weaker section of society in India. Several
steps have been taken by the Reserve Bank of India and the Government to bring the financially
excluded people to the fold of the formal banking services. The 100 per cent financial inclusion
drive is progressing all over the country. The State Level Bankers Committee (SLBC) has been
advised to identity one or more districts for 100 per cent financial inclusion. So, far, the SLBC
has identified 431 districts for 100 per cent financial inclusion. As on 31st March 2009, 204
districts in 18 States and 5 Union Territories have reported having achieved the target. Keeping in
view the enormity of the task involved, the Committee on Financial Inclusion recommended the
setting up of a mission mode National Rural Financial Inclusion Plan (NRFIP) with a target of
providing access to comprehensive financial services to at least 50 per cent (55.77 million) of the
excluded rural households by 2012 and the remaining by 2015.
CHAITANYA, Krishna ,(2005), Ever since the financial sector reforms were introduced in early
90’s the banking sector saw the emergence of new generation of private sector banks. These
banks gained at most popularity as they have technology edge and better business models when
compared to public sector banks and the most important thing is they are able to attract more
volumes simply because they meet their customers requirements under one roof. If the newer
players can do that then why can’t the bigger players like the Financial Institutions (FIs) try their
hands on it? Here comes the concept of universal banking, its emergence, merits and related
issues. The present paper focuses on understanding the concept of universal banking in India and
attempts to explain the regulatory role, regulatory requirements, key duration and maturity
distinction and lastly the optimal transition path. The paper also gives an overview of the
international experience and argues in favor of developing a strong domestic financial system in
order to compete in the global market.

Shrutikeerti Kaushal, Amlan Ghosh (2016), Development of insurance and banking institutions is
one of the fundamental constituents that plays an important role in stimulating financial
development and thereby the growth of the economy in any country. However the causal effect of
these financial institutions can’t be generalized as the development of financial institution is quite
different in nature and scale in different countries. This paper attempts to examine the
relationship between financial institutions and economic growth in the Indian economy. We find
that there exists a long run relationship and insurance institutions do promote the economic
growth and vice-versa. It is also found that it is growth in the economy that causes development
of banking institutions.

Pooja Rakhecha & Dr. Manish Tanwar , Banking sector plays considerable role in bringing
financially excluded people in to formal financial sector as policies of the government and
Reserve Bank towards financial inclusion are implemented through banking sector. In order to
expand the credit and financial services to the wider sections of the population, a wide network of
financial institutions has been established over the years in India. The organized financial system
comprising Commercial Banks, Regional Rural Banks (RRBs), Urban Co-operative Banks
(UCBs), Primary Agricultural Credit Societies (PACS) and post offices caters to the needs of
financial services of the people. The initiatives taken by the Reserve Bank and the Government of
India towards promoting financial inclusion since the late 1960s have considerably improved the
access to the formal financial institutions. However, the banking industry's penetration to un-
banked areas is still found sluggish. “The role of the Indian banker is challenging. At one end of
his spectrum lies the demand to achieve financial inclusion as nearly 50 per cent of the population
is yet to be covered under the formal system of banking and at the other end lies the task to fulfil
the needs of the existing customer,” said RBI Deputy Governor K. C. Chakrabarty while
speaking on ‘Connecting the dots' at the CII conference. This article makes an attempt to assess
the role of banking sector in financial inclusion process in India.
Dr. Shuchi Loomba (2013), In India, the emergence of liberalization and globalization in early
1990’s aggravated the problem of women workers in unorganized sectors from bad to worse as
most of the women who were engaged in various self employment activities have lost their
livelihood. Despite in substantial contribution of women to both household and national
economy, their work is considered just an extension of household domain and remains non-
monetized. In India, Microfinance scene is dominated by Self Help Group (SHGs) as an effective
mechanism for providing financial services to the “Unreached Poor”, and also in strengthening
their collective self help capacities leading to their empowerment. Rapid progress in SHG
formation has now turned into an empowerment movement among women across the country.
Micro finance is necessary to overcome exploitation, create confidence for economic self
reliance of the rural poor, particularly among rural women. Although no ‘magic bullet’, they are
potentially a very significant contribution to gender equality and women's empowerment.
Through their contribution to women’s ability to earn an income, these programmes have
potential to initiate a series of ‘virtuous spirals’ of economic empowerment, and wider social and
political empowerment. The results from these self-help groups (SHGs) are promising and have
become a focus of intense examination as it is proving to be an effective method of poverty
reduction and economic empowerment. Mainly on the basis of secondary data analysis, this paper
attempts to highlight the role of Microfinance and SHGs in the empowerment of women in India.
Amol Gajdhane , (2012), Banking is today an integral part of our everyday life: At home, at
school, at office, at business, on travel everywhere we counter some aspect of banking. The
significance of banking in our day to day life is being felt increasingly. What are the institutions,
so inevitable in the present day set up? How do they transact? How did the concept emerge?
These are some of the simple queries that do not surface in our minds but are lurking deep down.
Money plays a dominant role in today’s life. Forms of money have evolved from coin to paper
currency notes to credit cards. Commercial transactions have increased in content and quantity
from simple banker to speculative international trading. Hence the need arose for a third party
who will assist smooth banding of transaction, mediate between the seller and buyer, hold
custody of money and goods, remit funds and also to collect proceeds. He was the “banker”. As
the number of such mediators grew there is need to control. Such mediating agencies gave birth
to the concept of “banks” and “banking”. With the exception of the extremely wealthy, very few
people buy their homes in all-cash transactions. Most of us need a credit in form of loans, to
make such a large purchase. In fact, many people need financial support from Bank to fulfil the
financial requirement. The world as we know it wouldn't run smoothly without credit and banks
to issue it. In this article we'll, explore the birth of this flourishing industry.
Dr Ritu Paliwal, (2017), This study investigates the determinants of profitability of 10 Indian
commercial banks 5 of public and 5 of private sector banks, from the period of 2010 to 2014. The
banks growth is depending on its profitability and other variables of size, types of assets, financial
structure, revenue diversification and other independent variables. These variables may need to
exercise greater control in order to maximize profits and/or minimize costs. A wellcapitalised
bank is perceived to be of lower risk and such an advantage will be translated into higher
profitability. On the other hand, the asset quality, as measured by the loan-loss provisions, affects
the performance of banks adversely. In addition, banks with a large retail deposit-taking network
do not achieve a level of profitability higher than those with a smaller network. This study
examines the impact of these characteristics as well as macroeconomic and financial structure
variables on the performance and importance of profitability of the Indian banking industry. This
paper presents the reviews the literature on bank performance studies and classifies the bank
profitability determinants. The second part of the paper quantifies how internal determinants and
external factors contribute to the performance of selected Indian Banks. Finally, Size and Assets
Structure are the two variables which exhibit a significant relationship with banks’ Profitability.
Key.
ROHIT SAINI, (2013), In order to visualize the implications of potential consolidation on
competition in Indian banking industry, the current study makes an attempt to study the impact of
size of banks on their conduct in the Indian banking industry in order to see. Using conjectural
variation model the study finds that the biggest banks charge the lowest mark-up, indicating the
increase in bank size through consolidation may not have negative implications in terms of abuse
of market power by big banks.
P. Muralidhara and Dr. Chokka Lingam ,(2017), The banks play a major role in the development
of the country, the strategic capital formation is possible only through mobilization of funds, such
capital formation arises when the habit of savings is inculcated among the public. Banks are one
of the financial institutions which promote the savings and accumulation of profits. The present
study analyses the performance of selected nationalized banks in India. Profitability is definitely a
key measure of performance, but in the present study several other alternative measures are used
which is vital in analyzing Banks performance. With the study period from 2011-2012 to 2015-
2016 the performance of five nationalized banks Canara Bank, Allahabad Bank, Bank Of India,
Central Bank Of India, Bank Of Maharashtra are analyzed based on efficiency, strength and
soundness, profitability and growth of banks using various profitability ratios.
Jyoti Gupta , Suman Jain (2012) ,Banking business has done wonders for the world economy.
The simple looking method of accepting money deposits from savers and then lending the same
money to borrowers, banking activity encourages the flow of money to productive use and
investments. This in turn allows the economy to grow. In the absence of banking business,
savings would sit idle in our homes, the entrepreneurs would not be in a position to raise the
money, ordinary people dreaming for a new car or house would not be able to purchase cars or
houses. The government of India started the cooperative movement of India in 1904. Then the
government therefore decided to develop the cooperatives as the institutional agency to tackle the
problem of usury and rural indebtedness, which has become a curse for population. In such a
situation cooperative banks operate as a balancing centre. At present there are several cooperative
banks which are performing multipurpose functions of financial, administrative, supervisory and
development in nature of expansion and development of cooperative credit system. In brief, the
cooperative banks have to act as a friend, philosopher and guide to entire cooperative structure.
The study is based on some successful co-op banks in Delhi (India). The study of the bank‟s
performance along with the lending practices provided to the customers is herewith undertaken.
The customer has taken more than one type of loan from the banks. Moreover they suggested that
the bank should adopt the latest technology of the banking like ATMs, internet / online banking,
credit cards etc. so as to bring the bank at par with the private sector banks.
I Shashank Vikram Pratap Singh , (2012), Financial system of any country comprises of financial
markets, financial instruments and financial intermediaries. Financial system basically connects
seekers of funds with suppliers of funds. Financial markets may consist of money market, capital
market, forex market and credit market. On the other hand, financial instruments include money
market instruments and capital market instruments. Stock exchanges, investment banks,
underwriters, forex dealers etc. represent financial intermediaries. Indian financial system is
dominated by banks and its capital markets. The major focus of the research paper is on the
banking and the capital markets. It is important to note that banks act as a participant in the
capital markets and vice versa. Banking sector has undergone a tremendous change since banking
reforms were introduced in 1990s.Since then, measures like deregulation of interest rates,
reduction in Statutory Liquidity ratio and Cash reserve ratio; norms in line with the international
standards have been implemented. An important observation about Indian banking is that it is
dominated by public sector banks. But with the passage of time, a lot of challenges have emerged
in the banking sector, major ones being Nonperforming assets, less financial inclusion and capital
adequacy norms. Reforms like privatization, merger of SBI and its associate banks, establishment
of bad banks, financial inclusion, micro financing and restructuring of stressed assets have been
recommended but success lies in the implementation and controlling of results. Considering the
capital market, it is another major contributor in the Indian financial system. With emerging
times, due to its LPG policy, India has emerged as a key foreign investment base. Foreign direct
investments and foreign portfolio investments are at an all-time high. Stock market has been
soaring and stock exchanges are improving day by day. New instruments like Sovereign Wealth
Funds and derivatives are becoming very important in the Indian context. But the question is –
does all that glitters is gold? The paper studies the financial system of India.
ShikhaTayal (2014) ,A financial system is the system that covers financial transactions and the
exchange of money between investors, lender and borrowers. A financial system can be defined
at the global, regional or firm specific level. Financial systems are made of intricate and complex
models that portray financial services, institutions and markets that link depositors with
investors1 .It consists of financial markets, financial instruments and financial intermediaries2
Financial markets can be classified into money market and capital market3 . Money market is a
short term market, a reservoir of short term funds. Generally said, it includes instruments with a
maturity period of less than a year. T-bills, Commercial papers, commercial deposits, etc.
constitute money market instruments. They provide very good liquidity to the investors. Now
coming to capital/securities markets, they serve the medium term and long term needs of the
market participants. It generally includes securities with a maturity period of more than a year.
Equity shares, preference shares and debentures constitute capital market instruments. The
liquidity of such instruments is lower as compared to money market instruments. Financial
Instruments can be of three types: Primary/Direct, Indirect and Derivative Instruments. Primary
securities are issued by the companies, government entities and public institutions. These are
created for the first time. It includes equity shares, preference shares, debentures and innovative
debt instruments (convertible debentures, warrants etc).Indirect instruments are the ones which
are derived from the underlying primary security and are not created for the first time. They are
generally issued by the financial intermediaries. It includes mutual fund units, security receipts
and pass through certificates. They are better suited to the requirements of small investors
particularly an individual investor and provide more diversification benefits.
Rashi Gaur ,(2017),Financial intermediaries are known to be the liquidity manufacturers in the
market. They collect savings from the deficit units and issue in return claims against themselves
by using those funds outside to purchase ownership or debt claims. They play a very important
role in transfer of choice of investment from an individual saver to an institutional agent. They
can be banks, NBFCs (Non-banking financial companies), mutual funds, insurance organizations,
underwriters.
Neeta rane (2006), financial institutions which act as intermediary between surplus and deficit
units. They provide funds for Investment to take place through mobilization of savings which in
turn leads to economic growth. It basically proves that both GDP and financial system are drivers
for each other. What process starts what still has divided opinions by various researchers. So
there is interlinking between the two. Now since growth is taking place, savings also comes in the
hands of various units, household sector being the major surplus unit. This saving is either
deposited inbanks or invested in capital markets in various kinds of securities. It explains the
involvement of another important unit of financial system which is the capital market, a type of
financial market. Since there are a lot of institutions that work in the whole economy, they have
to work in synchronization with each other fulfilling their individual objectives with the objective
of economy growth as a whole. For that to happen, regulators are required to take charge of
controlling the system.
Gayatri sathe (2018), The existing structure in India evolved over several decades, is elaborate
and has been serving the credit and banking services needs of the economy. There are multiple
layers in today’s banking structure to cater to the specific and varied requirements of different
customers and borrowers. The structure of banking in India played a major role in the
mobilization of savings and promoting economic development. In the post-financial sector
reforms (1991) phase, the performance and strength of the banking structure improved
perceptibly. Financial soundness of the Indian commercial banking system compares favorably
with most of the advanced and emerging countries.
Shaalu khan (2015) ,This paper describes the development of Indian financial system in terms of
a number of segments such as banking, capital market, debt market . Indian financial market has
seen many developments. In this light the paper looks at various performance indicators of
different segment of the Indian financial sector. In general, it is found that there has been an
improvement in efficiency, competitiveness and health of all the segment of the Indian financial
sector. However there is still a wider scope of improvements in various areas of concern for the
financial system.
Neha rathod (2016), systems have been improved but pension funds in India are still in their
infancy. Similarly, despite the introduction of new private sector insurance companies’ coverage
of insurance can expand much further, which would also provide greater depth to the financial
markets. The extent of development along all the segments of the financial market has not been
uniform. While the equity market is quite developed, activities in the private debt market are
predominantly confined to private placement form and continued to be limited to the bluechip
companies. Going forward, the future areas for development in the Indian financial sector would
include further reduction of public ownership in banks and insurance companies, expansion of the
contractual savings system through more rapid expansion of the insurance and pension systems,
greater spread of mutual funds, and development of institutional investors. It is only then that the
both the equity and debt markets will display greater breadth as well as depth, along with greater
domestic liquidity. At the same time, while reforming the financial sector, Indian authorities had
to constantly keep the issues of equity and efficiency in mind.
Riddhi chhada (2002), The financial system enables lenders and borrowers to exchange funds.
India has a financial system that is controlled by independent regulators in the sectors of
insurance, banking, capital markets and various services sectors. Thus, a financial system can be
said to play a significant role in the economic growth of a country by mobilizing the surplus
funds and utilizing them effectively for productive purposes.
Radha rai (2014) ,Financial institutions are the intermediaries who facilitate smooth functioning
of the financial system by making investors and borrowers meet. They mobilize savings of the
surplus units and allocate them in productive activities promising a better rate of return. Financial
institutions also provide services to entities (individual, business, government) seeking advice on
various issue ranging from restructuring to diversification plans. They provide whole range of
services to the entities who want to raise funds from the markets or elsewhere. Financial
institutions are also termed as financial intermediaries because they act as middle between savers
by accumulating Funds them and borrowers by lending these fund. It is also act as intermediaries
because they accept deposits from a set of customers (savers lend these funds to another set of
customers (borrowers). Like - wise investing institutions such ICCIC, mutual funds also
accumulate savings and lend these to borrowers, thus perform the role of financial intermediaries.
Geeta rawal (2019), In its simple meaning the term ‘finance’ refers to monetary resources & the
term ‘financing’ refers to the activity of providing required monetary resources to the needy
persons and institutions. The term ‘financial system’ refers to a system that is concerned with the
mobilization of the savings of the public and providing of necessary funds to the needy persons
and institutions for enabling the production of goods and/or for provision of services. Thus, a
financial system can be understood as a system that allows the exchange of funds between
lenders, investors, and borrowers. In other words, the system that facilitates the movement of
finance from the persons who have surplus funds to the persons who need it is called as financial
system.

Research Methodology

Sample Area : Research is carried out in Virar City which is part of palghar district of
Maharashtra state. Virar is a northern suburban city of Mumbai India, part of the Mumbai
Metropolitan Region. Virar is also a part of Vasai-Virar city in Palghar district, Maharashtra state
of India.
Virar railway station is one of the prominent railway station on the Western Line of Mumbai
Suburban Railway. Real Estate has been booming in Virar because of its tourism and because of
big construction players like Rustomjee, HDIL, Rishabh Group that have already constructed
several sprawling complexes in the city.

Sample Size : Researcher has selected 20 respondents for carryout research from Sample Area.
Research used random sampling method to select sample unit.

Objectives :

1.To study funding and lending process of financial institutes.

2.To examine investment patterns in financial institutions.

3.To analyse difference between banking financial institutions and Non banking financial
institutions.

Hypothesis :

H10 There is no funding and lending process of financial institutes.

H11 There is funding and lending process of financial institutes.

H20 There are no such investment patterns in financial institutions.

H21 There are investment patterns in financial institutions.

H30 There is no difference between banking financial institutions and Non banking financial
institutions.

H31 There is difference between banking financial institutions and Non banking financial
institutions.
Data Analysis
Finding and Suggestions :
Age:
There are total 58 responses.
Age group 18 - 25 26 – 35 36 - 45 46 & Above
No of people 41 06 07 04

Gender:
The number of female respondents is more than the male respondents. The number of female
respondents is 44% where male respondents are 14%. The total sample of the respondents in this
research is 58 respondents.
 1. There are total 58 respondents, 70.2% are from age group 18 to 25,12.3% are from age
group 36 to 45 , 10.5% are from age group 26 to 35 and remaining 7% are from age group
46 & above.
2. There are total 58 respondents, 58.6% respondent are Students,32.8% respondent are
Private sector Employee and remaining 8.6% respondent are equally Government
employees,Businessmen and others.
3. In our survey,there are 27 % responses for Annual income ,which was optional.
4. Amongs 58 respondent, 75.9% respondent are aware of different types of Financial
institutions and remaining 24.1% are not aware of different types of financial institutions.
Here we can see knowledgeability of people.
5. From our survey, 48.3% respondent utilize their Funds by Saving them, 13.8%
respondent utilize their Funds by Investing them.37.9% are respondent who does both
Saving and Investing of Funds.
6. To know the Effectiveness of Funding services , we give respondent option between
Bank service and Finance service , 79.3% respondent felt Bank service is effective and
20.7% respondent felt Finance service to be effective .
7. To know the Investment pattern of respondent, preference between Long term
investments and Short term investment is given, in which 56.9% respondent prefer Long
term investment and 43.1% prefer Short term investment.
8. Amongs 58 responses , 41.4% respondent invest in Fixed Deposist, 17.2% in Shares ,
6.9% in Mutual Funds and Insurance and remaining 34.5% in All .
9. To know Saving pattern, options about types of Accounts were given, 82.8% respondents
have Saving account and remaing 17.2% equally saves in Current account, Demat
account

Conculsion :
The study of Awareness of Financial Institutions is done to know the knowledgeability of
people . Bibliography:
1)www.cvs.edu.in
2)http://tumkuruniversity.ac.in/oc_vg/comm./IFS%20FINAL.pdf
3)jhujprdistance.com
4)jhfinance.web.unc.edu
5)www.researchgate.net
6)courseware.cutm.ac.in
7)www.scribd.com
8)www.academia.edu
9)www.coursehero.com
10)www.oreily.com
11)www.mim.ac.mw
12)www.econlib.org
13)www.intelligenteconomist.com
14)www.educba.com
15)www.sc.edu

Appendix:
QUESTIONNAIRE:
NAME
AGE
a)18-25
b)26-35
c)36-45
d)46&above
OCCUPATION
a)student b) private employee c) government employee d)businessman e)other
ANNUAL INCOME(OPTIONAL)
1)Are you aware about different types of financial institutions?

a) yes

b) no

2) How do you Utilized your funds?

a) Savings

b) Investments

c)Both

3) Which funding option is more effective for you ?

a) Bank service

b)any finance service

4) what do you prefer ?

a) long term investments

b) short term investments

5) what do you prefer for investing in ?

a)fixed deposit

b)mutual funds
c)shares
d)insurance
e)all
6)what kind of account do you maintain in bank?
a)saving account
b)current account
c)demat account
d)loan account account
e)all