4 - financial intermediaries

8/3/2019 4 - Financial Intermediaries

1/14

Financial Intermediaries


2/14

` Financial Intermediaries are firms that provide service &

products to customer more efficiently.

` Benefits of FI:

1. Diversification

2. Lower transaction cost

3. Confidentiality

4. Signaling


3/14

Regulatory

Body

Commercialbanks

Public Private

Insurancecompanies

Private Public

Mutualfund

NBFCDevelopme

ntalinstitution

Other publicsector

institution

POSB NHB NABARD


4/14

` Public sector banks

` Private sector banks

` Foreign banks

` Development in banking structure results in

1. Wide geographical spread & deeper penetration in

rural area

2. Higher mobilization of deposits

3. Reallocation of bank credit to priority activities


5/14

` Insurance is a form of risk management primarily used to

protect against the risk of a contingent, uncertain loss.

` Its define as the equitable shift of a loss from one entity

to another entity in exchange for payment.

` Insurance company classified in two category:

1. Life insurance

2. Non life insurance

LIC, GIC, I Pru, TATA Aig, United india assurance, Oriental

insurance.


6/14

` In governance of AMFI mutual fund represent a vehicle

foe collective investment.

` MF is a pool of money collected from investors to

achieve their some common goal.

` In India MF is established as a trust.

` Constitution of MF is Trust, AMC & sponcor.

` Also R&T, custodians are part of their constitution.

` Regulated by SEBI & RBI.


7/14

` NBFC representing companies engaged in transferring

the funds from lender to borrower.

` As perRBI 1997, a NBFC means:

1. A financial institution which registerd as a company

2. a companys principle business is receiving of

deposits.

3. Require previous approva of central govt


8/14

` Post Independence many developmental institutions

have been established to cater to the long term financing

needs of the industrial sector.

` IDBI, ICICI, IFCI established for industial growth.

` Also focused on small sector industry so started SIDBI.


9/14

` POSB:

Saving account, recurring, MIS, term deposits, PPF,

KVP.

` NABARD :

RRB, State Cooperative Banks

` NHB:

HUDCO

Bank sponsored institution

LIC housing finance Ltd.

Private Housing institution


10/14

` Merchant Banks

` Venture Capital firms

` Information or service Firms


11/14

` Reserve bank of India:

Apex bank of India acts as a monetary authority of the

country

Government bank

Bankers bank

Central bank & key institute in bringing development &

growth in economy.

Regulate forex market

Regulate all financial institutions viz banks, MF, NBFC by

formulating policies & regulations.


12/14

` Security Exchange Board of India:

SEBI established by GOI in 1988 to regulate Indian

capital market as a apex regulatory Body, in 1992 SEBI

upgraded with SEBI Act has been passed.

Main objective is to protect interest of investor

To promote the development of securities market

Te regulate security market

Two major tasks are regulatory & development.


13/14

` Insurance Regulatory And Development Authority:

IRDA Act 1999 passed to regulate, promote & assure

growth of insurance business re insurance business.

Protect interest of investors in terms of policy

information, nomination, premium, term, settlement of

claim, surrender.

Mandatory qualification & training for intermediaries

Code of conduct for insurer, surveyors, loss evalutors

Conduct Audit,supervision, dispute handling.


14/14

` Financial intermediaries structure in India

` Commercial banks

` Insurance company

`

Mutual funds` NBFC

` Developmental institution

` Other public sector institution

`

Other institution` Regulatory body

4 - financial intermediaries

Documents