Function

The functions of financial institutions like investment banks are

also vital and related to the investment sector. These companies
are involved in a number of financial activities, such as
underwriting securities, selling securities to investors, providing
brokerage services, and fundraising advice.

Financial Regulation

Financial regulation is a form of regulation or supervision, which

subjects financial institutions to certain requirements, restrictions
and guidelines, aiming to maintain the integrity of the financial
system. This may be handled by either a government or non-
government organization. Financial regulation has also influenced
the structure of banking sectors by increasing the variety of
financial products available. Financial regulation forms one of three
legal categories which constitutes the content of financial law, the
other two being market practices, case law.[1]
Banks
A bank is a financial institution licensed to receive deposits and make loans. Banks may also
provide financial services, such as wealth management, currency exchange and safe deposit
boxes. There are two types of banks: commercial/retail banks and investment banks. In most
countries, banks are regulated by the national government or central bank.

DIFFERENT TYPES OF BANKS

Commercial Banks

Commercial banks are the banks that accept money in the form of deposits from the public and
give loans and advances to its customers by charging interest. They mobilize small savings and
promote the growth of trade and commerce. Generally, commercial banks lend money for a short
period only. They only provide working capital to the organizations. But in recent times
commercial banks are providing long-term capital also to the organizations.

There are several types of deposits which are accepted by the commercial banks like

⦿ Savings Deposits
⦿ Current Deposits
⦿ Fixed Deposits
⦿ Seasonal Deposits
⦿ Recurring Deposits, etc

The Commercial banks give different types of loans and advances to the businessmen like

⦿ Cash Credits
⦿ Overdrafts
⦿ Loans
⦿ Discounting Bills

Co-operative Banks
Co-operative Banks are the banks that usually provide short term, medium term, long term credit
to agricultural purposes. Co-operative Banks also provides loans to small-scale artisans. Co-
operative Banks usually provide credit facilities to farmers, small-scale industries, etc at a
cheaper rate of interest. Co-operative Banks are mainly situated in rural areas and can also be
seen in urban areas.

Every country has its own Central Bank. The Central bank aims at non-profit functioning. It
regulates the monetary and credit system of the country. Central Bank acts as controller,
supervisor, and regulator of the activities of commercial banks and other financial institutions in
the country. The Central bank is considered as the apex institution of the country’s money
market.

Industrial Banks

Industrial banks are also called as Investment Banks. Industrial banks provide long-term loans to
the industries. Industries require long-term capital for buying machinery, construction of
buildings, expansion of operations, etc. These capital required by industries is provided by
industrial banks for industrialists to grow their businesses. Industrial banks accept long-term
deposits from the public. They secure capital by issuing shares and debentures.

Agricultural Banks

Agricultural Banks are the banks which provide agricultural credit to the farmers. The
Agricultural Development Banks provide medium term and long term credit. Some examples of
Agricultural Banks in India are Agricultural Finance Corporation, Agricultural Refinance and
Development Corporation, National Bank for Agricultural and Rural Development
(NABARD).Agricultural Banks are established by the government to promote agricultural credit
in the country.

Savings Banks mainly concentrates on the mobilization of savings of the people. In India Post
offices run by Postal department act as savings banks. Since Commercial banks are providing
these facilities of savings banks to the public, the need for separate savings bank is fading.

Foreign Exchange Banks

Foreign Exchange Banks are the banks which provide finance for foreign trade.These banks
accept deposits from the public. Foreign Exchange Banks are specialized banks in providing
credit for the foreign trade. These banks usually have their branches in foreign countries for
uninterrupted functioning of their services.But in recent times commercial banks are also
financing foreign trade.
Exchange Banks

Exchange Banks are the banks which operate by financing the imports and exports of the
country. These banks are mainly concerned with providing foreign exchange to their customers
and help to promote international trade. They also offer to discount of foreign bills of exchange
to their customers.

Private Bankers

Private Bankers are the individuals who do banking business individually or as a partnership. It
is purely an unorganized sector.Most of the private bankers do not receive or accept any deposits
from the public, they do banking business with their own capital. They lend money to the people
for high-interest rates

Quasi-banks
Nonbank banks are financial institutions that are not considered full-scale banks because they do
not offer both lending and depositing services. Nonbank banks can engage in credit card
operations or other lending services, provided they do not also accept deposits.