kinds of financial intermediaries and Characteristics of Banking

State the kinds of financial intermediaries.

Contents

Kinds of Financial Intermediaries

1. Banking Financial Intermediaries / Institutions: Banker financial intermediaries generate secondary securities. Commercial banks, cooperative credit securities, regional rural banks are participants of banking financial institutions. They take primary securities and deposits and provide demand deposits and indirect securities. They make secondary securities.

Following are the kinds of BFIs :

(a) Banking financial intermediaries from organised

Commercial banks
Co-operative credit societies or co-operative banks
Regional rural bank (RRBs)

(b) BFIs from non-organised sectors

Indigenous bankers.

Characteristics of Banking Financial Intermediaries:

These are as under:

1. Mediatorship between Ultimate Lenders and Ultimate Borrowers: Banking financial intermediaries accept loan, deposits and primary securities from ultimate borrowers and provide indirect securities nd demand deposits to ultimate lenders.

2. Creation of Loanable Fund: Banking financial intermediaries generate loanable fund through creation of money.

3. Liquid Liabilities: Banking financial intermediaries have very quid and comprehensive liabilities.

4. Regulated by the Central Bank: Operations of the banking financial intermediaries are controlled by the central bank i.e. R. B. I. in India, Federal Reserve System in England, Bank of England in England, bank of France in France etc.

5. Two Types: There can be two types of B. F. Is :

(i) Organised sectors, and (ii) Unorganised sectors.

2.Non-Banking Financial Intermediaries/ Institutions NBFCs collect fund from savers and provide it to business sector and local bodies. Industrial Finance Corporation of India, Life Insurance ‘corporation of India, General Insurance Corporation of India, Unit Trust of India, Industrial Development Bank of India, National Bank for Agriculture ad Rural Development etc. are included in it.

Kinds of Non-Banking Financial Intermediaries: Following are kinds of non-banking financial intermediaries:

(a) Non-Banking Financial Intermediaries from Organised sector: They collect money from various sources and provide loans for medium and long-term. These are found in public sector. They follow government rules and regulations.

(b)Non-Banking Financial Intermediaries from Unorganised sector: These are also termed as non-banking financial companies. It includes mainly hire-purchase companies, housing companies, leasing companies, chit funds, investment companies, mutual funds etc.