1. THE FINANCIAL SYSTEM PAUL HONGKUNG T. A. MBA (Marketing) Christ University Bangalore

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3. CONTENT Financial Institution Non Banking Financial Institutions Non Banking Financial Companies Indian Banking System Banking Titbits 26-05-2009 Text 100, Bangalore

4. FINANCIAL INSTITUTION An institution that collects funds and invests them in financial assets. 1. Deposit-taking institutions that accept and manage deposits and make loans (banks, credit unions, trust companies, and mortgage loan companies) 2. Insurance companies and pension funds 3. Brokers, underwriters and investment funds. 26-05-2009 Text 100, Bangalore

5. FINANCIAL INSTITUTION Intermediary of the capital and debt markets Transfer funds from investors to companies Facilitate the flow of money through the economy Eg. EXIM, IDBI, IIBI, SIDBI and UTI 26-05-2009 Text 100, Bangalore

6. COMMERCIAL BANK Commonly referred to as simply a "bank“ Provides checking accounts, savings accounts, and money market accounts and that accepts time deposits Deal with deposits and loans from corporations 26-05-2009 Text 100, Bangalore

7. COMMERCIAL BANK It raises funds by collecting deposits from businesses and consumers via checkable deposits, savings deposits, and time deposits It makes loans to businesses and consumers. It also buys corporate bonds and government bonds Its primary liabilities are deposits and primary assets are loans and bonds 26-05-2009 Text 100, Bangalore

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9. INVESTMENT BANK It is a financial institution that raises capital, trades in securities and manages corporate M & A Raise money through issuing and selling securities in the capital markets and insuring bonds Provide advice on transactions such as M & A 26-05-2009 Text 100, Bangalore

10. UNIVERSAL BANK Financial services companies engaged in commercial and retail lending Diversified and engage in multiple activities Both banking and insurance Eg. Barclays, Citigroup, Deutsche Bankand HSBC 26-05-2009 Text 100, Bangalore

12. Risk pooling

13. Contractual savings

14. Market Brokering26-05-2009 Text 100, Bangalore

15. NON BANKING FINANCIAL INSTITUTIONS Development finance institutions (DFIs) [Government-owned] Providers of long-term project loans. Insurance companies, Non Banking Financial Companies (NBFCs) Primary dealers (PDs) Capital market intermediaries (MFs) 26-05-2009 Text 100, Bangalore

16. NON BANKING FINANCIAL COMPANIES Provide banking services without meeting legal defination of a bank 3 broad categories NBFCs accepting public deposit NBFCs not accepting/holding public deposit Core investment company with 90% of their total assets as investments in the securities of their group/holding/subsidiary company 26-05-2009 Text 100, Bangalore

17. DIFFERENCE BETWEEN NBFC AND BANKS An NBFC cannot accept demand deposits It is not a part of the payment and settlement system and as such cannot issue cheques to its customers Deposit insurance facility of DICGC is not available for NBFC depositors unlike in case of banks Deposit Insurance and Credit Guarantee Corporation 26-05-2009 Text 100, Bangalore

18. NON BANKING FINANCIAL COMPANIES Asset Finance Company (AFC) (equipment leasing company, hire-purchase company Investment Company (IC) Loan Company (LC) [VC, House Finance] 26-05-2009 Text 100, Bangalore

19. INDIAN FINANCIAL SYSTEM The financial system is concerned about money, credit and finance 26-05-2009 Text 100, Bangalore

20. FINANCIAL MARKET The market in which financial assets are created or transferred A financial transaction involves creation or transfer of a financial asset A claim to the payment of a sum of money in the future in the form of interest or dividend 26-05-2009 Text 100, Bangalore

21. FINANCIAL MARKET 26-05-2009 Text 100, Bangalore

22. FINANCIAL INSTRUMENTS Market for short-term money and financial assets that are near substitutes for money Any financial asset which can be quickly converted into money with minimum transaction cost 26-05-2009 Text 100, Bangalore

23. FINANCIAL INSTRUMENTS 26-05-2009 Text 100, Bangalore

24. FINANCIAL INTERMEDIARY Transfer funds from the lender to the borrower Transfer funds from investors to companies Intermediary of the capital and debt markets Facilitate the flow of money through the economy 26-05-2009 Text 100, Bangalore

26. Underwriters

27. Stock exchanges

28. Portfolio managers

29. Mutual funds

30. Banks

31. Dealers26-05-2009 Text 100, Bangalore

33. Secondary market (equity and debt market)26-05-2009 Text 100, Bangalore

34. BANKING TITBITS Banking in India originated in the late 18th century The oldest bank in existence in India, SBI traces its origins back to June 1806 In 1935, RBI formally took over responsibilities from the then Imperial Bank of India, relegating it to commercial banking functions. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers 26-05-2009 Text 100, Bangalore

35. BANKING TITBITS India has 77 scheduled commercial banks 26 public sector banks (GoI holding a stake) 22 private banks (may be publicly listed and traded on stock exchanges) 29 foreign banks Source: RBI 26-05-2009 Text 100, Bangalore

36. BANKING TITBITS The first chartered bank of the US was the First Bank of the United States, formed in 1791 Flatbush National Bank of Brooklyn, New York was the first bank to issue a credit card in 1946 The term "bank teller" originated in the wake of the 1929 stock market crash, when banks began hiring low-paid workers to "tell" throngs of frantic depositors that their money was gone. Source: Bargaineering 26-05-2009 Text 100, Bangalore

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38. THANK YOU 26-05-2009 Text 100, Bangalore