Overview on Function of Specialized Financial Institutions

Established with each establishment Act, specialised institutions are those which are owned by the government. Based on this specific factual information, the current study has aimed to discuss the specialised financial institutes. In addition to this, the present study will include a discussion regarding the definition alongside an overview of the functions of the specialised financial institutes. On the other hand, the types of specialised financial institutes will be discussed as well. Besides this, the study will include information regarding the nature and features of the specialised financial institutes. 

Definition of the specialised financial institute

In accordance with the general terms, specialised financial institutions mean those specific financial institutional sectors of a country that have been established by the specific laws of the government. As per the information, the specialised financial institutions have been directed under the institutional or corporate Acts that have been developed by the state government. These kinds of financial institutions have been established under such special legislation of the government in order to increase or improve the economic conditions of the specific country. Including granting loans for the diversification or expansion of the industries, the government of the country allows these financial institutes to work under such specially developed regulations. 

Overview of the functions of the specialised financial institute

The mobilisations of domestic savings along with the conversion of these funds have been recognised as one of the most important functions of the specialised financial institutes. Mobilisation and digital savings are considered by certain specialised financial institutes. It represents that these kinds of financial institutes are bound to the government for the improvement of the economy of the respective country. Therefore, the main financial institutional role is to have an eye on the specialised financial services which have been provided to the industry professionals or the common population in order to improve the financial status of that particular country. 

Types of specialised financial institutes 

As per the general information, the government has the power of establishing or managing three kinds of specialised financial institutions. The names of these three different types of specialised financial institutes are: 

• Export-Import Bank of India which have been recognised as the principal institution that takes care of the industrial import and export transactions
• Small industries development banks of India have the main function of establishing a small scale business unit or industry
• The national bank for Agricultural and Rural Development has been recognised as the central institute for financing the rural and agricultural sectors

The main function of a specialised financial institute

Including the financial role of granting loans for the development of any industrial investment or establishment, the main function of the specialised financial institutes is specially bound to the governmental regulations. Based on the Acts developed by the government, one of the main functions of the specialised financial institutions is to help in the establishment of a kind of business unit. In order to offer the specialised services, these financial institutions have the main function in offering such advisory services, as one of the main intentions of these special financial institutes is to provide support to the government for the economic development of the country. 

Features of the specialised financial institute

The main feature of the specialised financial institute is to offer a high rate of return to those kinds of customers who have already invested in the industrial development of the country. Besides that, the special financial institutes are responsible for the reduction of the costs of the financial services that have been provided by these kinds of specific financial institutions. 

Advantages and disadvantages of specialised financial institutes

The most recognised advantage of specialised financial institutions is to provide financial services to the customers including providing underwriting facilities. On the other hand, its specific facility of repayment is also an important and well-managed advantage of the specialised financial institutes. On the contrary, the structure of these institutes and the way this financial institute work is very complex. Therefore, as a disadvantage, the time that the whole process consumes to work can be discussed. In addition, the customers can face major worse circumstances in case of a major default done by the management section of the specific financial institution.

Conclusion

The current study has to share an overview of the specialised financial institutional functions after defining what a specialised financial institution is prior to the discussion section of this study. In the further discussion of this present study, it has been stated that the government owns the financial institutes. These specialised financial institutes have some different functions and specific roles to play in order to improve the financial development of the country. Based on these facts, the current study has discussed the nature of specialised financial institutions. The types of specialised financial institutions have been included in the discussion section of this study as well.