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    financial instituitions

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    Attribution Non-Commercial (BY-NC)
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    91 views33 pages

    Financial Institutions

    Uploaded by

    John Mathew
    financial instituitions

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 33

    Financial Institutions

    Alen Koshy Alby TD Tinu Thomas Aysha Rafiq Ashwin M.P Jittu Neenu Dominic Aame Mathew

    Introduction
    An establishment that focuses on dealing with financial transactions, such as investments, loans and deposits. Banks, trust companies, insurance companies and investment dealers.

    Role of Financial Institutions


    Act as an intermediary between the capital market and debt market. Responsible to transfer funds from investors to the companies.

    Key entities that control the flow of money in the economy.

    Types of Financial Institutions


    Commercial Banks Credit Unions

    Stock Brokerage Firms


    Insurance Companies Finance Companies

    RESERVE BANK OF INDIA

    About RBI:
    It is the Central bank of India. It was established on April 1st 1935 under the RBI Act, 1934. Constituted as a Private Shareholders Bank. Nationalized on January 1st, 1949.

    Preamble
    to regulate the issue of Bank notes and keeping of Reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage

    Functions of RBI:
    Bank of Issue. Banker to the Government. Bankers Bank & Lender of Last resort. Controller of Credit. Custodian of Foreign reserves. Promotional functions.

    Commercial Banks in India

    Commercial Banks in India


    The commercial banks in India are categorized as Private banks Public sector banks Foreign banks

    Private Banks

    Public Sector Banks

    Foreign banks

    Functions of a Commercial bank


    Accepting deposits Giving loans Overdraft Investment of Funds Agency Functions Miscellaneous Functions

    Credit rating agency


    Assesses the credit worthiness

    Calculated from financial history and current assets and liabilities


    Ability to pay back a loan A poor credit rating indicates a high risk of defaulting on a loan, and thus leads to high interest rates poor credit will have difficulty finding financing expressed in code numbers

    Indian Credit Rating Agencies


    ICRA was set up by IFCI on 16th January 1991. It is a public limited company with an authorized share capital of Rs.10crores, Rs. 5 crores is paid up. OBJECTIVE -to provide information & guidance to investors for determining the credit risk associated with a debt instrument.

    Indian Credit Rating Agencies


    CRISIL : Credit rating information services of India limited. ICRE : Investment Information & credit rating agency of India limited.

    CARE : Credit analysis & research limited.


    Fitch ratings India private limited.(earlier-Duff &Phelps credit rating ) Fitch is the only international agency with a presence on the ground in INDIA.

    Benefits of Credit Rating :


    Low cost information Quick investment decision Independent investment decision Investor protection

    Grades
    High investment grades: AAA & AA - Highest safety A -Adequate safety BBB -moderate safety Speculative grades : B -high risk C-substantial risk D -default

    Every Time a rating is assigned, the agencys name, integrity and credibility are online and subject to inspection by the whole community

    SEBI

    SEBI
    12th april 1992 U K SINHA provisions of the Securities and Exchange Board of India Act, 1992. Securities appellate tribunal. Plot No.C4-A,'G' Block, Bandra Kurla Complex, Bandra (East), Mumbai 400051<head office>

    CONT
    Insider trading. Share buyback. Arrest head of sahara Off-shore finance-infrastructure USD 5 billion 25 billion Reduce tax 20%-5% (off-shore= Infrastructure debt fund).

    INSURANCE COMPANY

    Insurance company
    Insurance companies provide protection against losses They collect savings from investors Reinvest savings in the market Main income is premium

    Functions
    Restore loss Spread risk Protection Safety Profit

    Types of insurance
    Life insurance General insurance Fire insurance Health insurance Medical insurance House insurance

    Major Players
    LIC HDFC Standard life insurance Co. ICICI prudential life insurance Co. MAX NEW YORK Life insurance Co. SBI Life insurance Co. Reliance general insurance Co. Bajaj allianz general insurance Co.

    SPECIALIZED FINANCIAL INSTITUTES (SFIs)


    Institute setup by government Provide medium and long term assistance to industry Provide developmental finance Funding through govt and other public institutions Also raise fund from capital market

    Reasons for SFIs


    Help small & medium sized enterprises.(SMEs) To help new ventures Specific industries need funds for modernization Concern involve in innovation and technology development provide long term financial requirements on economic and social grounds

    Types of SFIs

    All India Development Banks

    State level Institutions

    Investment Institutions

    All India development banks


    Industrial Development Bank of India(IDBI) Small Industries Development Bank of India(SIDBI) Industrial Finance Corporation of India(IFIC) National Bank of Agriculture And Rural Development(NABARD) Industrial Investment Bank of India Ltd

    State Level Institutions


    State Finance Corporations(SFCs) State Industrial Development Corporation(SIDC) State Industrial Investment Corporation(SIIC)

    Investment Institutions
    Life Insurance Corporation of India(LIC) General Insurance Corporation(GIC) Unit Trust of India(UTI)

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