Playing an indispensable role in the
overall development of the country, the financial sector plays a very important
role in the welfare of the Indian economy. There are different types of banks,
NFBC’s (Non-Financial Banking Institutes) which are known to provide various
banking options for people across the country.
One of the most important constituent of
the financial sector is the financial institution. These
establishments focus on providing various financial transactions such as loans,
deposits and investments. It is an institution where financial services are
provided to people.
Most of these bodies are known to be regulated
by the Government of India. In India, the RBI (Reserve Bank of India) usually
takes care of all the financial institutions. The RBI is also known as the
Central Bank of India and serves as a regulatory authority with regard to the
functionality of different commercial banks.
In order to provide adequate supply to the
different sectors of the economy, the Government of India has evolved a very
well-structure of financial institutions in the country. They may broadly be
categorised into All India institutions and State level institutions.
Other then the RBI, some of the other
financial institutions in India include commercial banks, credit rating
agencies, specialised financial institutions, SEBI and insurance companies.
Commercial
banks: These are categorised into private,
commercial and public sector banks. They engage in a wide variety of activities
such as acceptance of deposits, offering loans, acting as trustees, etc. Both
private as well as public sector banks fall under this category. These banks
can also be categorised into scheduled commercial banks and unscheduled
commercial banks.
Credit
Rating Agencies: These bodies assess the condition
of the financial sector and try to find out different avenues for improvement.
Two of the most important credit rating agencies in India include CRISIL and
ICRA.
Specialised
Financial Institutions: These bodies provide
assistance to different sectors, leading to the overall growth of the Indian
economy. Some of the important institutions are Small Industries Development
Bank of India, Export-Import Bank of India, Board for Industrial &
Financial Reconstruction and National Housing Bank. These institutions serve as
intermediaries of financial markets. Thus, they are responsible for the
transference of funds from investors to
companies (in need of funds).They, thus facilitate the flow of money in the
economy.
SEBI: Also known as the securities and exchange board of India, this
body is in charge of protecting the interest of investors. It also facilitates the
functioning of the market intermediaries. This body, thus, supervises market
conditions, indulges in risk management and registers institutions.
Insurance
Companies: These companies are known for offering
financial protection against any sort of loss. The two main categories include
life insurance and general insurance. Under the latter, there is car, home,
health, travel, home, liability and any other ‘non-life insurance plan. These
bodies are in charge of a tremendous amount of risk management. A person is
provided with equitable transfer of risk of loss from one entity to another; in
exchange for a payment of a premium amount.
Summary: Financial institutions play a very important role in the growth of
the economy of the nations. These bodies may be of different types such as
commercial banks, credit rating agencies in India, specialised financial
institutions, SEBI and insurance companies.
Resource
Box: The different financial institutions in the
country play a very important role in determining the economy of the nation.
Some of the different types of financial institutions in India, other than the
Reserve Bank of India (RBI) include commercial banks, private sector banks,
SEBI, credit rating agencies and insurance companies.
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