2. A non-banking financial institution
(NBFI) is a financial institution that does
not have a full banking license and
cannot accept deposits from the public
NBFIs do facilitate alternative financial
services, such as investment , risk
pooling, financial consulting, brokering,
money transmission, and check cashing.
3. NBFIs are a source of consumer credit.
NBFIs include insurance firms, venture
capitalists, currency exchanges, some
microloan organizations, and pawn
shops.
These non-banking financial institutions
provide services that are not necessarily
suited to banks, serve as competition to
banks, and specialize in sectors or
groups.
5. Housing Finance:
Create mechanisms allowing lenders to raise long-term
resources for lending in local currency, and to support
increased access to housing and housing finance for the
poor.
6. Do not accept deposits.
Obtain funds by issuing commercial paper
(short-term, unsecured debt).
Generate revenues by making loans.
Not gov’t regulated like banks.
7. Insurance:
The insurance group aims to develop
insurance market infrastructure and new
products, to strengthen regulatory and
supervisory capacity in particular move to
risk-based supervision, support initiatives to
improve consumer protection, and support
the development of professional capacity
through training.
8. Transform Risk.
Spread cost over a
large group of
policy holders
Insurance Types:
Casualty
Life
Types of Life
Insurance:
Term Life - payment
made only if death
occurred during the term
policy
Whole Life - premiums
build-up a balance to be
paid upon death, or
borrowed prior.
9. Cash Flows required by life insurance
companies are more predictable than
those for casualty insurance companies.
10. Pensions:
The pension group aims to assist
countries in building sustainable and fair
pension systems, in coordination with the
HD network, to put pension funds to
work, and to bridge the knowledge gap
between policy work and academia.
11. Exist to pay
retirement and death
benefits to members.
Typically created by
large
employers/employer
groups.
Plan creator is called
the sponsor.
Pension Plan Types:
Defined Benefit Plan
Defined Contribution
Plan
12. Investment Funds:
The investment fund group is a joint
group between the NBFI and Capital
Markets and Corporate Governance
Service Lines that aims to support the
development of mutual funds, private
equity funds, infrastructure funds and
sovereign wealth funds.
13. Special class of closed-end investment
companies
Do not pay corporate taxes.
Required to distribute at least 95%.
95% of earnings must be from real estate, or
gov’t securities.
