FINANCIAL INSTITUTIONS & Role In Development In SSIs / MSME Sectors

1. FINANCIAL INSTITUTIONS
&
Role In Development In
SSIs / MSMEs Sectors

2. FINANCIAL INSTITUTIONS
• A company that deals with the monetary and financial transection such as loan,
investment, deposits and currency exchange.
• integral part of every economy and can vary by scope, size and geography,
financial institution can be into three board categories:
TYPES OF FINANCIAL INSTITUTION
• Depository institution
• Non-Depository institution
• Investment institution

3. TYPES OF FINANCIAL INSTITUTION
Depository institution:
• accepts and mange deposits. They make loan and include credit union, thrift
institution and commercial bank.
Non-Depository institution:
• known as construction institution including insurance companies, pension funds
and finance companies.
Investment institution:
• encompasses investment banks, underwriters and brokerage firms.

4. USES FINANCIAL INSTITUTIONS
• Individuals and businesses use these entities to serve their personal and
professional financial requirements and commitments.
• allow customers to deposit money, withdraw when needed, transfer them online
instantly, save them for future use, and manage them smartly for gains.
• Financial institution are also for those who want to buy and sell stocks, bonds,
and derivatives to earn profits.

5. FUNCTIONS OF FINANCIAL INSTITUTIONS
• aim to ensure a healthy economy, there are other minor and major roles they
play to ensure they achieve their final goal.
• to regulate the money supply. With the regular flow of money, the financial
entities keep the financial ecosystem active. The money supply process must be
efficient, given the wide use of money in carrying out transactions.
• banking and investment services. They serve individual customer needs, be it a
person or a business.
• allow to deposit their money, save it, earn interest, and invest further. In addition,
as a non-banking institution,

6. • offer consultation facilities to customers and help to know the pros and cons of
investing in a financial product, be it stocks, bonds, ETFs, mutual funds, etc.
• For start-ups, investment advice works and helps to build huge capital by opting
for Initial Public Offering (IPO) to raise sufficient funds.
• keeping the financial ecosystem active, institutions ensure being ready to manage
any financial risk and foster the economic growth of a nation.
• era of internet banking, financial entities make transferring funds from one
account to another online easy, smooth, and safe.

7. TYPES OF FINANCIAL INSTITUTIONS

8. TYPES OF FINANCIAL INSTITUTIONS
#1 – Central Banks:
• financial entities that monitor and oversee the procedures of the other financial
or banking institutions in the nation. They do
• not deal with individual customers directly. Instead, they finance other retail
banks.
• economy has a separate central bank and is named differently.
• For example, in the United States, the Federal Reserve Bank is the central bank.

9. #2 – Commercial Banks:
• widely available to serve the financial needs of individuals and businesses.
• From depositing money to borrowing amounts to buy property,
• banks act as saviors for people in need to secure their future financially.
• Some of the products that these banks offer include savings accounts, personal
loans, mortgage loans, certificates of deposits (CDs), credit cards, etc.

10. #3 –Non-banking financial institutions (NBFIs) :
• entities that neither acquire a valid banking license nor do they allow customers
to deposit amounts.
• offer alternative financial facilities to customers, including investment,
consultation, brokerage, transmission, and risk pooling services.

11. #4 – Credit Unions:
• institutions offer traditional banking services but are not publicly traded entities.
• established and operated by the members, the ultimate shareholders.
• associations use and reinvest the money received as an interest to keep the costs
low.
• better choices for members to fulfil their financial needs. These entities enjoy
tax-exempt status as not-for-profit organizations.

12. #5 – Investment Entities:
• The investment banks and brokerage firms fall under this non-depository
category.
• The investment firms help corporations, governments, and other entities build
capital, raise funds, and gain financial advice.
• brokerage ventures, let customers acquire finances by investing in securities, like
stocks, mutual funds, bonds, and exchange-traded funds (ETFs).
• guide to start-ups or companies in conducting complex transactional processes.
They also offer advice for initiating fruitful mergers and acquisitions (M&A).

13. #6 – Thrift Institutions:
• savings and loan associations, these entities allow up to 20% of total lending to
customers, who are also their owners.
• help individuals enjoy opening accounts and acquiring personal loans and home
mortgages.

14. #7 – Insurance Companies:
• allow individuals and businesses have policies against monthly premiums, which
they are subject to pay at regular intervals.
• schemes offer coverage or protection to assets against any financial risk they
remain exposed to.

15. THANK Q