Meaning of Financial Intermediaries in English.........

Meaning of Financial Intermediaries and Difference between banking & non-banking financial intermediaries

What is meant by financial intermediaries? Difference between banking financial intermediaries / institutions and non-banking financial intermediaries / institutions.

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Meaning of Financial Intermediaries

Financial intermediaries deal in securities. They issue fixed deposit insurance policies to collect funds from savers. These are financial institutions which intermediate between ultimate lenders and ultimate borrowers. FIs include commercial banks, co-operative credit societies, regional rural banks mutual funds, UTI, insurance companies, other financial institutions etc.

The various financial institutions which trade in stock and capital markets like ICICI, IFC and IDBI and various SFCs and IDBI are financial intermediaries. Institutions which issue primary securities to collect the savings from the public directly are UTI, GIC, LIC, etc. They collect savings of the public directly. These are investment institutions. Some public sector banks such as SBI, Indian Bank, Canara Bank, Bank of India, etc. have started their mutual funds, as also the LIC and GIC traded and invest in the financial markets. The securities traded by them may be the claims of the government or of the private corporate sector.

Financial intermediaries may also borrow from the banks and other financial institutions. The uses of their funds are investments in corporate hares, securities and bonds/debentures and loans and advances to corporate inits. More recently, a number of new finance companies have cropped up, namely, lease finance, housing finance, etc.

Difference between Banking Financial Intermediaries/ Institutions and Non-Banking Financial Intermediaries/ Institutions

s.no.	basis of Difference	Banking Financial Intermediaries	Non-Banking Financial Intermediaries
1.	create creation	Commercial banks are creditor of money. They create credit.	Non-banking financial institutions do not create credit as they do not have demand deposits.
2.	security	Banking financial institutions stress less on security.	Non-banking financial institutions stress more on security.
3.	Working criteria	Banking financial institutions follow certain criteria very strictly.	Non-banking financial institutions do not follow Criteria very Strictly
4.	cash reserve	Banking financial institutions are required to keep certain cash reserve of his deposits.	Non-banking financial institutions are not required to keep certain cash reserve.
5.	Investment list	Investment list of banking financial institutions is very large.	Investment list of it is smaller than banking financial institutions.