FINANCIAL

INSTITUTIONS
INTRODUCTION OF FINANCIAL INSTITUTIONS
It is an establishment that conducts financial transactions
such as investments, loans and deposits. It is a kind of a institution that
accept money from savers and invest that money in stocks, bonds,
debentures and institutions will also lend loan to borrowers. It also
provides short, medium and long term finance.

MEANING
The term financial institution includes all kinds of
organization which intermediate and facilitate financial transactions of
both individual and corporate customers.
CATEGORIES OF FINANCIAL INSTITUTIONS
The financial institutions have been categorized as shown below,
MONEY MARKET
It refers where financial instruments with high liquidity and short term
maturities are traded.
I. ORGANISED
It is the one which are been registered under government such as RBI,
commercial banks.
II. UNORGANISED
They are not been registered under government such as indigenous financial
agencies, discount banks.
CAPITAL MARKET
It is a financial market in which money is provided for periods longer than a
year. It is consisting of several institutions such as Exim , IDBI , ICICI bank.
FEATURES OF FINANCIAL INSTITUTIONS

Lending of finance- personal credits, mortgage credits

Venture capital

Payment service issuing administering payments (credit cards, cheques)

Guarantee and commitment

Foreign exchange
FUNCTIONS OF FINANCIAL INSTITUTIONS

 Management of liquidity risk

 Information acquisition and resource allocation

 Monitoring of investment projects

 Mobilization of savings

 Resolving issue of market imperfection

Facilitating exchange of goods and services:
These institutions minimize transaction costs and promote
specialization, technological innovation and growth. they promotes
because activities to creative individuals to specialize in innovations.
Supply of capital:
They supply to the small, medium and large scale industries in form
of venture capital, services to faster industrial growth.
Promotion of financial institution:
They will invest in financial education programs across the globe.
they will also sponsored and encourages the ideas, skills in number of
students.
Promoting of saving:
They gather the savings of public, exchange and analyze information
about prospective users of financial resources, price risk, balance risk
against return and seems most profitable.
ADVANTAGES OF FINANCIAL INSTITUTIONS

 Sound financial position

 Maintain liquidity

 Easy access of funds

 Offer funds at cheaper rates

Regular supply of funds

Spread risks

Reduced default risk

Portfolio diversification

Provide correct forecast to meet funds demand

DISADVANTAGES OF FINANCIAL INSTITUTIONS

 Burden of operating cost on borrowers

 Long procedure of procuring funds

 Inconvenient and expensive

 Involve hidden cost

EXIM BANK

It is one of the financial institution was is been set up in 1982,under the
export-import bank of India act 1981.
It act as catalyst and a key player in the promotion of cross border trade and
investment.
Headquarters - Mumbai
Exim policy announced - 12th April, 1985
CEO – Shri Yaduvendra Mathur
Functions: segmented into several operating group’s
Corporate banking group:
It handles a variety of financing programs for export, importers and overseas
investment by Indian companies.
Project finance group:
It handles the entire range of export credit services such as suppliers credit,
buyers credit.
Agri business group:
It is formed to initiate to promote and support agri exports.
Small and medium enterprises group:
The group handles credit proposals from SME’s under various lending of the
bank.
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