This document provides information on non-bank financial intermediaries (NBFIs) in India and around the world. It defines NBFIs as financial institutions other than commercial and cooperative banks that raise funds from the public to lend to borrowers. Examples mentioned include insurance firms, venture capitalists, and microloan organizations. The document discusses the role of NBFIs in reducing hoarding, helping the household and business sectors, and providing liquidity. It also outlines some major statutory financial organizations in India that regulate NBFIs, such as NABARD, SIDBI, IRDAI, and SEBI.

1. NON-BANK FINANCIAL INTERMEDIARIES
(NBFIS)

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. 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. ROLE OF NBFCs

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. 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. STATUTORY FINANCIAL
ORGANIZATION

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. 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. 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. 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. 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. 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