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Financial Institutions in India

Table of Contents

A Financial Institution is an organization that manages money-related and financial exchanges like deposits, loans, investments, and currency exchange. So check out the complete details about the list of financial institutions in India. 

Types of Financial Institutions

  • Fixed-Term Credit InstitutionsTheir main activity is direct lending through fixed-term loans and investments.
  • Refinancing Institutions – They fund their refinancing mainly to banks and non-bank institutions.
    For example:
    – The National Bank for Agriculture and Rural Development (NABARD)
    – The Small Industries Development Bank of India (SIDBI)
    – The National Housing Bank (NHB).
  • Investment Institutions – They invest their assets primarily in financial securities.
    For example:
    – Life Insurance Corporation (LIC)

List of Financial Institutions in India

Here are some major financial institutions in India:

Reserve Bank of India (RBI)

The Reserve Bank of India was established in 1935. It aims to organize the financial framework and promote economic stability in India. The bank acts as the regulator for the operation of the various commercial banks and other financial institutions in India. The bank formulates various interest rates and policies too. It also offers assistance to the central government and institutions.

Commercial Banks

There are three types of Commercial Banks in India:

1. Foreign Banks
2. Private Banks
3. Public Sector Banks.

Commercial banks go about various activities such as taking deposits and lending for various purposes. They can even collect taxes on behalf of institutions and the central government.

Securities and Exchange Board of India

The Securities and Exchange Board of India was established in 1992. It aims to protect the interests of investors. It also monitors market conditions, registers institutions, and is dedicated to risk management. 

Insurance Companies

Insurance companies offer damage protection. They deal with life insurance, transport insurance, car insurance, etc. They collect the small savings from investors and then reinvest these savings in the market. The insurance companies are collaborating with different foreign insurance companies after the liberalization process. This move aimed to expand the Indian insurance market.

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Credit Rating Agencies

The credit rating agencies in India were mainly formed to assess the condition of the financial sector. It also finds different options for improvement. The credit rating agencies offer various services as:

  • Operation upgradation
  • Training to employees
  • Analyze new projects and find out the weak sections in it
  • Rate different sectors

The two most important credit rating agencies in India are:

  • ICRA

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Specialized Financial Institutions

Specialized Financial Institutions in India are government companies established to support various sectors. They affect the overall development of the Indian economy. 

The significant institutions falling under this category include:

  • Board for Industrial & Financial Reconstruction
  • Export-Import Bank Of India
  • Small Industries Development Bank of India
  • National Housing Bank

What are Public and Private Sector Banks?

The Institute of Professional Banking (IPB) has developed a clear vision to train and prepare Indian college graduates to perform well in banking. IPB helps students to get a job in retail banking and perform well. IPB paves a remarkable path for all those aspirants who want to make a career in banking.

Private financial institutions in India

Here is a list of some private financial institutions in India

  • Axis Bank
  • HDFC
  • Kotak Mahindra Bank
  • City Union Bank
  • Federal Bank
  • Bandhan Bank
  • IndusInd Bank
Q: What do you mean by Financial Institution?

Ans: A financial institution is an organization that manages money-related and financial exchanges like deposits, loans, investments, and currency exchange.

Q: What are the types of financial institutions in India?

Ans: You can check complete details about the type of financial institution.

Q: Why financial institutions are important?

Ans: To get more information about financial institutions, read the details above.

Q: How many financial institutions are there in India?

Ans: There are a total of 91 commercial banks operating in India. Out of these, 20 Public Sector Banks in India including SBI, and 19 nationalized banks.

Q: What are the 9 major types of financial institutions?

Ans: The major categories of financial institutions are:
central banks, retail and commercial banks, internet banks, credit unions, savings and loan (S&L) associations, investment banks and companies, brokerage firms, insurance companies, and mortgage companies

Q: Which is the biggest financial institution in India?

Ans: SBI, or the State Bank of India, is the largest in India by total assets, while HDFC Bank tops the list in terms of market capitalization.