Financial Institutions

Financial Institutions

Financial institutions are institutions that conduct money transactions with integrity. But financial institutions existed before the existence of ' money ' . In other words , the world's earliest financial institutions began operating before the advent of today's currency notes and coins. In ancient times, metals and other things were entrusted to religious places for safekeeping. The sophisticated model of banking began in Italy during the Renaissance. The banking system in India is believed to be as old as the Vedic period. The ancient text ' Manusmriti ' mentions deposits , loans , collateral for loans, etc. A new banking system began with the arrival of the British East India Company. Modern banking began in India in the nineteenth century. Financial institutions can be classified as banks and non-banking financial institutions.

Banks operate on the basis of general rules and regulations prepared by the Reserve Bank of India. Based on the differences in their activities, banks can be classified as commercial banks , cooperative banks , development banks , and specialized banks. A person or institution that carries out the banking business is called a banker. The main function of a bank is to deposit money and provide loans. Anyone who transacts with a bank can be called a customer. Non-banking financial institutions are institutions that operate in the financial sector and do not perform all the functions provided by a bank.