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NBFI.pptx

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NBFI.pptx

  1. 1. NON-BANK FINANCIAL INTERMEDIARIES (NBFIS)
  2. 2. Non-bank financial intermediaries (NBFIs) comprise a mixed bag of institutions, ranging from leasing, factoring, and venture capital companies to various types of contractual savings and institutional investors (pension funds, insurance companies, and mutual funds) Examples of nonbank financial institutions include insurance firms, venture capitalists, currency exchanges, some microloan organizations. These non-bank financial institutions provide services that are not necessarily suited to banks, serve as competition to banks, and specialize in sectors or groups.  Non-Bank Financial Intermediaries (NBFIs) is a heterogeneous group of financial institutions other than commercial and co-operative banks.  They include a wide variety of financial institutions, which raise funds from the public, directly or indirectly, to lend them to ultimate spenders. The development banks (such as the IDBI, IFCI, IGICI, SFCs, land development banks, etc.). They specialize in making term loans to their borrowers. Three other all-India big termlending institutions are the LIC, the GIC and its subsidiaries, and the UTI. Of these, only the UTI is a pure NBFI, the others raise funds as premium from the sale of insurance. Then, there are provident funds and post offices that mobilize public savings in a big way for onward transmission to ultimate spenders.
  3. 3. In the USA and the UK the NBFIs have made phenomenal progress after the First World War. They compete vigorously with banks for the public’s savings and as sources of finance to deficit spenders.  In India their progress is more recent and that, too, with a lot of initiative from the government and the RBI. They fill important gaps in the financial structure of India’s economy and have come to play an important role in the industrial as well as agricultural development of the economy.  There is still vast scope as well as need for growth of the existing NBFIs and improvement in their organization and working and for promoting new types of NBFIs, especially those that specialize in the provision of mortgage finance for residential houses, like the building societies in the UK or the savings and loan associations in the USA which, unlike the HUDCO and the HDFC, mobilize directly the savings of the public for housing finance
  4. 4. ROLE OF NBFCs
  5. 5. Reduce Hoarding By bringing the ultimate lenders (or savers) and ultimate borrowers together, NBFIs reduce hoarding of cash by the people under the “mattress”, as is commonly said. Help the Household Sector The household sector relies on NBFIs for making profitable use of its surplus funds and also to provide consumer credit loans, mortgage loans, etc. Thus they promote saving and investment habits among the ordinary people. Help the Business Sector NBFIs also help the nonfinancial business sector by financing it through loans, mortgages, purchase of bonds, shares, etc. Thus they facilitate investment in plant, equipment and inventories. Help the Central Government Similarly, they buy and sell central government securities and thus they help the central government.
  6. 6. Lenders and NBFIs both Earn When savers deposit their funds with NBFIs, they earn interest. When NBFIs lend to ultimate borrowers, they earn profits. In fact, the reward of intermediation arises from the difference between the rate of return on primary securities held by NBFIs and the interest or dividend rate they pay on their indirect debt. Provide Liquidity NBFIs provide liquidity when they convert an asset into cash easily and quickly without loss of value in terms of money. When NBFIs issue claims against themselves and supply funds they, especially banks, always try to maintain their liquidity. Low Interest Rates Benefit both Savers and Investors : When interest rates decline, both savers and investors benefit. First, the real costs of lending to borrowers are reduced. These, in turn, tend to reduce costs and prices of goods and services. With reduction in interest rates, the return on time deposits is also’ reduced which induces savers to deposit their funds with NBFIs even though the latter pay lower interest rates. Still the savers benefit because NBFIs provide greater safety, convenience and other related services to them thereby increasing the savers’ real return and income. Benefit to the Economy NBFIs are of immense help in the working of financial markets, in executing monetary and credit policies of the central bank and hence in promoting the growth of an economy. By transferring funds from surplus to deficit units. NBFIs create large financial assets and liabilities.
  7. 7. STATUTORY FINANCIAL ORGANIZATION
  8. 8. STATUTORY FINANCIAL ORGANIZATION A statutory authority is a body set up by law which is authorized to enact legislation on behalf of the relevant country or the government. Statutory financial statements are your company's official financial statements that are submitted to the regulatory authorities, across jurisdictions. These statements provide information on the income, expenses, balance sheets, budgets, and are reviewed by a statutory auditor. The statutory report is the obligatory submission of financial and non-financial information to a government or concerned agency. This is a report that a company or organization must make public by law, especially its financial report. A copy is also sent to the registrar of joint-stock companies for registration.
  9. 9. Statutory Financial Organization in India NABARD (National Bank for Agriculture and Rural Development) Established: NABARD was established on 12th July 1982 on the recommendation of CRAFICARD committee which is also known as the Sivaraman Comittee. Headquarter: Mumbai, Maharashtra. Chairman: Harsh Kumar Bhanwala.  Biggest Rural Development Bank  Established on 12 July 1982 on recommendation of Shivaraman committee to implement NABARD act 1981  AIM To uplift Rural India & rural non-farm sector.  NABARD acts as regulator for co-operative banks &RRB's (Regional Rural Banks).
  10. 10. Primary Function: NABARD is the apex organization related to financing in the agricultural sector. It looks after matters concerned with policy, planning and operations in rural areas in India. Rural Infrastructure Development Fund (RIDF) is operated by NABARD. Provides refinance to lending institutions in rural areas. Helps SHG (Self Help Group) & poor people in rural areas. Runs programme for agricultural & rural development. Recommends about licensing for RRBs, Co-operative banks to RBI
  11. 11. SIDBI (Small Industries Development Bank of India) Established: Small Industries Development Bank of India (SIDBI in short) was established on 2nd April 1990 under the Small Industries Development Bank of India Act 1989 as a subsidiary of Industrial Development Bank of India. Headquarter: Lucknow, Uttar Pradesh. Primary Function: SIDBI refinances loan & advances provided by the existing lending institution to smallscale units. SIDBI is an independent financial institution which provides help for the growth and development of micro, small and medium-scale enterprises (MSME’s). The second fund is a debt fund called SIDBI make in India loan for enterprises (SMILE), which was announced in the Union budget (2015) in February. The fund will provide short-term loans and loans in the nature of quasi-equity of MSMEs to meet debt-to- equity norms and pursue growth
  12. 12. IRDAI (Insurance Regulatory and Development Authority of India) Established: IRDDAI was set up in the year 1999 by the Insurance Regulatory and Development Authority Act, 1999, which was passed by the Government of India. Headquarter: Hyderabad, Telengana. Primary Function The IRDAI is an autonomous, statutory agency tasked with regulating and promoting the insurance and re-insurance industries in India. EXIM BANK (Export Import Bank Established: EXIM Bank was established on January 1, 1982 for the purpose of financing, facilitating and promoting foreign trade of India. Headquarter: Mumbai, Maharashtra. Primary Function: The Export-Import (EXIM) Bank of India is the principal financial institution in India for coordinating the working of institutions engaged in financing export and import trade
  13. 13. SEBI (Securities and Exchange Board of India) Established: SEBI was first set up as a non-statutory body in April 1988, to regulate the working of the stock exchange. Later it was made an autonomous body on 12 April 1992 via SEBI Act 1992. Headquarter: Mumbai, Maharashtra. Objective: Protects the interest of investors and to promote the development of stock exchange & regulate the activities of stock market

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