Awareness About Financial Sector Other Than Banking
- Non-Banking Financial Companies (NBFCs):
- Provide loans, asset financing, and investments like banks but cannot accept demand deposits.
- Link to Banking: Banks provide funding to NBFCs, and NBFCs help in reaching customers banks may not directly serve.
- Insurance Sector:
- Provides risk protection (life, health, general insurance).
- Link to Banking: Banks distribute insurance products (bancassurance), and banks also insure their assets.
- Capital Markets:
- Platforms for buying/selling shares, bonds, and other securities (e.g., NSE, BSE).
- Link to Banking: Banks invest in bonds/shares and help companies raise funds through IPOs.
- Mutual Funds:
- Investment schemes pooling money from investors to invest in stocks, bonds, etc.
- Link to Banking: Banks distribute mutual fund products and manage their investments.
- Pension Funds:
- Provide long-term savings and retirement benefits (e.g., NPS – National Pension System).
- Link to Banking: Banks act as intermediaries to facilitate pension accounts and payments.
- Payment Systems and FinTechs:
- Digital platforms like UPI, wallets (Paytm, Google Pay), and payment gateways for smooth transactions.
- Link to Banking: These platforms are backed by banks to process transactions.
- Foreign Exchange Markets:
- Facilitate currency exchange for international trade and investments.
- Link to Banking: Banks act as intermediaries for forex transactions.
- Microfinance Institutions (MFIs):
- Provide small loans to low-income individuals, especially in rural areas.
- Link to Banking: Banks provide funds to MFIs, helping extend credit to underserved areas.
Importance of Linkages with Banking:
- Ensures better credit flow to various sectors of the economy.
- Promotes financial inclusion by reaching underserved populations.
- Banks serve as a backbone to fund and facilitate operations of these institutions.
- Enhances economic growth by linking savings, investments, and credit efficiently.
