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The financial sector is composed of companies that are aided by the government to facilitate the saving of the domestic sector. Some common examples of financial companies are RBI, SBI, IFCI, IDBI, SEBI, etc. All these institutions are a part of the marketplace that lends money to individuals or businesses.
Financial institutions of India can be divided into nine categories based on the facilities extended by them. With gradual urbanization, the need for mortgage loans, investment policies, etc. has increased rapidly thus the varieties of such institutions have even cropped up more in recent years. With gradual development in technology, many organizations operate online which in turn relieves their clients from additional service charges. The most popular types of financial institutions include the central banks, internet banks, retail banks, credit unions, brokerage firms, insurance companies, and mortgage companies.
Reserve Bank of India (RBI)
Overview
The Reserve Bank of India (RBI) has been identified as the country’s central bank since 1926. It is undoubtedly the backbone of the Indian economy. It looks after the currency distribution of India. The idea of the Reserve Bank of India (RBI) was explained by Dr B.R. Ambedkar, the father of the Indian Constitution in his novel. It was founded by the Royal Council of Indian Rupee. After independence, the RBI received accreditation from Asian Clearing Union in 1949. The main motto of the Reserve Bank of India (RBI) is to maintain the trust of all the Indians in the country’s financial structure. They work towards improving the interest percentages offered by the banks to the customers, ensuring affordable banking facilities are offered throughout the country, and extending the offerings of corporate banks to those who are interested.
Controlling Board of Reserve Bank of India (RBI)
The central bench of directors administers the operation of RBI. They are recruited for four years by the RBI Act. This board consists of four deputy governors, four directors from each zonal office, two ministers from the department of finance, and the Governor of RBI himself. The Governor acts as the executive leader of the Reserve bank of India (RBI).
Structural Layout of RBI
The Reserve bank of India is composed of four zonal headquarters that are located in each corner of the country. These offices are situated in New Delhi, Kolkata, Chennai, and Mumbai. Apart from these establishments, there are nineteen regional offices along with 11 subdivisions to date. There are also two training centres in Chennai and Pune respectively.
State Bank of India
State Bank of India is one of the leading public sector financial organizations in India. At present SBI has emerged as the largest statutory financial establishment in the country by claiming 23% of the market cap. This banking institution has opened more than twenty-four thousand banking outlets all across the nation. It is a multinational corporation having offices spread across thirty countries. The cumulative assets of the State bank of India are estimated to be around 500 billion USD as per the reports published by the Ministry of Finance in 2017.
Functions of SBI
State Bank of India extends a wide range of banking services to its customers. It accepts cash deposits and account transfers from the public as well as representatives of organizations. The SBI lends money to budding companies whom they think have great business potential. This bank buys and sells gold at market price to the consumers. The bank can buy properties for commercial purposes. Some limitations have also been put on the authority as the SBI is not eligible to rediscount bills.
Industrial Finance Corporation of India (IFCI)
The Industrial Finance Corporation of India (IFCI) was founded by the central government in July 1948. The main purpose behind establishing this corporate body was to extend long-term loans to the commercial sector of the country. The IFCI was empowered to issue debentures and bonds only in the realm of the open market. They could also urge the World Bank to lend them foreign currency and also ask the RBI for occasional loans. While granting loans, the IFCI could deal with both Indian rupees as well as foreign currencies. This financial institution was only allowed to offer loan facilities to the public corporate sector and was prohibited from aiding private companies and firms.
Conclusion
The financial institutions in India play a pivotal role in stabilizing the economy of our nation. They operate based on certain principles that are dictated based on the type of financial organization. While some banks are open to the general population, others extend services only to limited consumers. The primary aim of banks is to safeguard the interests of the depositors and the investors.
