Foreign Banks are those banks which has its headquarters
in another country but has branches in other countries. Such banks are supposed
to follow all the rules and regulations of the country in which it is
operating. It includes Royal bank of Scotland, Citi Bank, etc… Apart from the
ownership, all these banks provide equally better service and they have almost
the same rate of interest. Regional Rural Banks or RRBs are local small level
banks operating in all the states of the country. The main aim of RRB is to
serve the rural areas which has basic banking and financial services. They have
been formed to cater the needs of weak and poorer sections of the society. RRBs
are regulated by the National Bank for Agriculture and Rural Development
(NABARD).

Cooperative Banks in India are registered under the
Co-operative Societies Act. It is a bank that holds deposits, provides loans
and various financial services to the cooperatives and member owned organizations.
They mainly serve small industry and self employed workers

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Non-banking institutions are the purveyors of credit
in the country. They does not have a full banking license and they are not
supervised by any banking regulatory agency. All the non-banking institutions
in the country are regulated by the Reserve Bank as in the case of banking
institutions.

Non-banking institutions can be divided into
Non-banking Finance Companies and Development Finance Institutions. According
to The Reserve Bank of India (RBI), “A Non-Banking Financial Company (NBFC) is a
company registered under the Companies Act, 1956 engaged in the business of
loans and advances, acquisition of shares/stocks/bonds/debentures/securities
issued by Government or local authority or other marketable securities.” They
can provide services like accepting deposits and lending money, but they do not
have a banking license and they cannot issue cheques to its customers. They can
provide services in money markets, underwriting, etc…

                                                                   

Mutual fund is a professionally managed investment
fund that pools money from the investors and invests them in securities like
shares, bonds and other money market instruments by a professionally managed
fund manager who is specialized in the work. They generate revenue from the
funds and it is passed back to investors. It is an ideal investment for people
who wants to invest money but does not have much information about investing.

Insurance is an agreement or a contract where the
insurer undertakes to provide guarantee to pay a certain sum of money to the
insurer in the case of any unforeseen events or for any uncertain financial
loss, as mentioned in the insurance contract. The insured pays a certain sum of
money known as premium to the insurer for the service provided.

 

Financial Markets: It is a
marketplace where traders buy and sell assets such as equities, bonds,
currencies, etc… It can be divided into capital market and money market.
Capital market deals in long term securities over one year. Capital market are
markets for selling and buying equity and debt instruments. It channelize
savings and investment between suppliers of capital. It channel the wealth of
savers to those who can it invest it productively. Capital market can be
divided into equity market and debt market. Equity market includes Public issues,
Private placement, National Stock Exchange, Bombay Stock Exchange, Derivatives
market, etc… Money market deals with short term securities of less than one
year. They are short term instruments of high liquidity which are issued by the
Governments, financial institutions and large corporations. It involves
Treasury bills, call money market, Commercial bills, Commercial papers,
certificates of deposit and Term money.

Financial Markets can be either organized markets or
unorganized markets. Organized Markets are markets where all the transactions
are regulated by the rules and regulations of a particular exchange that deals
in trading. Unorganized Markets include the financial transactions that takes
place outside a regulated exchange. It usually includes moneylenders and
unregulated non-banking financial intermediaries.

 

Financial Instruments:
These are monetary contracts between parties. It is a document such as
currency, share or bond that has a monetary value or represents a legally
binding agreement between two or more parties. It is a contract which results
in a financial asset for one company and liability for another. It can be short
term, medium term and long term. Short term instruments are those with maturity
of less than one year. Medium term instruments involves maturity period of up
to 10 years. Long term refers to those instruments which last for than short
and medium term deposits.

Financial instruments are of two types; primary
securities and secondary securities. Primary securities can be equity, preference,
debt and various other instruments. Secondary securities can be time deposits,
mutual funds, and insurance policies.

 

Financial Services: These are the
economic services provided by the finance industry which involves designing and
delivering financial instruments and services to various parties. It plays an
important role in the economy by moving funds from those with excess funds to
those who need it. Efficiency of a financial system depends on the quality and
variety of financial services provided by the intermediaries. Financial
Services are not generally limited to deposit taking or giving out loans, but
they are also present in the field of distribution of financial products. Financial
Services in the country are regulated by The Reserve Bank of India, Securities and
Exchange Board of India (SEBI) and other regulatory bodies. Some of the major
players of financial services in the country are SBI Capital Markets, Bajaj Capital,
Birla Global Finance, L&T Finance Ltd etc… Some of the main services
provided by them includes Depositories, credit rating, factoring, merchant
banking, leasing, hire purchase, portfolio management and underwriting.

Financial services include fund based and fee based services.
Fund based involves provision of funds against assets, bank deposits,
etc…  It involves underwriting,
factoring, insurance services, mutual funds, etc… Fee based involves rendering
the services for which the financial intermediary charges a fee or a
commission. It includes stock broking, merchant banking, credit rating, etc…