PRESENTED BY:

Rahul shrma
Topic
 FINANCIAL INSTITUTION

A financial institution is an institution which

collects funds from the public, and places them in
financial assets, such as deposits, loans and
bonds rather than tangible property.

FINANCIAL INSTITUTION
• Banking institution
• Non banking institution
 NON BANKING FINANCIAL INSTITUTION

A non-bank financial institution (NBFI)

is a financial institution that does not
have a full banking license or is not
supervised by a national or
international banking regulatory
agency.
 IMPORTANCE

Non banking financial institutions have the following importance in

economy.

 Greater reach. 
 Flexibility in tapping resources. 
 Retail services to small and medium business.
 Important component of financial market.
 Role of NBFIs

 Development of sectors like Transport &

Infrastructure
 Substantial employment generation 
 Help & increase wealth creation 
 Broad base economic development 
 To finance economically weaker sections
 FUNCTIONS

 Financial Intermediation
 Economic basic of financial
intermediation
 Inducement to Save
 Mobilisation of savings.
 investment of Funds
 REGULATIONS

NBFIs are not supervised by a national or international

banking regulatory agency. An NBFI will facilitate bank-
related financial services, without holding the status of a
'bank'.
 TYPES

• Risk-pooling institutions
• Contractual savings
institutions
• Market makers
• Specialized sectoral
financiers
• Financial service providers
 Cont,

Risk-pooling institutions

 Insurance companies underwrite economic risks associated with

illness, death, damage and other risks of loss.
 There are two main types of insurance companies: (a)general
insurance (b)life insurance. 
Contractual savings institutions:

 Contractual savings institutions (also called institutional investors)

give individuals the opportunity to invest in collective investment
vehicles (CIV).
 Cont,

Market makers
 Market makers are broker-dealer institutions that
quote a buy and sell price and facilitate
transactions for financial assets.

Specialized sectoral financiers:
 They provide a limited range of financial services to
a targeted sector.
For example
 real estate financiers channel capital to prospective
homeowners.
 Cont,

Financial service providers

 Financial service providers include

brokers management consultants,
and financial advisors, and they
operate on a fee-for-service basis.
 COMPANY’S UNDER NBFc

They are also categorized in a different

format categories.

 LOAN COMPANY HIRE PURCHASE COMPANY

 INVESTMENT COMPANY MUTUAL BENEFIT
 COMPANY HOUSING FINANCE COMPANY
 EQUIPMENT LEASING COMPANY
 Current status

 NBFI have improved their operations and

strategies. Industry experts that they are
much more mature today than they were
during the last decade. 
 In fact, aggressive strategies helped LIC
housing finance to grab new customers and
increase its market share in national
mortgage market.
 CONCLUSION

 Strengthening the professionalism of NBFIs

sector through education and training, making
them more organised. 
 RBI needs to educate people about NBFIs.
 The credit delivery mechanism needs to be
more transparent and hassle free. 
 There should be more stringent norms for the
defaulters.