Key for the Economic Development of India

Money is known to be one of the most essential commodities that lead to growth; be it of any kind in today’s time and age. Banks are known to be the key places where people store their savings. There are many different types of banks, depending on its area and purpose. Some of the different types of banks include regional rural (banking organisations being operated in different states serving the rural areas), private-sector, foreign, post-office saving, scheduled commercial, small savings and cooperative.

Other than this, there are four institutions which are regulated by the Reserve Bank of India, pan India Financial Institutions. These include the Export-Import Bank of India (Exim Bank), National Bank for Agriculture and Rural Development (NABARD), Small Industries Development Bank of India (SIDBI) and National Housing Bank (NHB).

These financial institutions in India are known to be the key places for various financial transactions. They can be divided into two broad categories; regulatory institutions and intermediaries. Regulators refer to those bodies that are assigned with the job of governing all the divisions of the Indian financial system. Intermediaries refer to those bodies which are responsible for maintaining transparency as well as the national interest in the operations of different institutions.

They serve as an excellent intermediary between final lenders and borrowers; thereby providing liquidity and safety. Moreover, people can also earn different interest amounts on the amount that they hold in their accounts. This is known to be their profit. The rates are known to differ from one institution to another. Some of the regulatory bodies in India include the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Central Board of Direct Taxes (CBDT) and Central Board of Excise & Customs. Besides that, there are various service charges that are also levied by the institution.

Most of the financial institutions in the country are regulated by the Reserve Bank of India (RBI). The All India Financial Institutions (AIFI) refers to the group that is composed of Investment Institutions and Development Finance Institutions (DF). These bodies are known to play a key role in the functioning of the financial market. Some of the other financial institutions in the country include specialised financial institutions, commercial banks, SEBI (Securities and Exchange Board of India) and insurance companies. In fact, they play a significant role in the financial sector of the country and its overall development.

The institutions serve as a conduit for the transfer of resources from net savers to net borrowers. This basically means from those who spend less than their earnings to all those who spend more than their earnings. These bodies play a significant role in the economy of the country and are providers of depositary and transaction services. No economic activity can take place in the country, if it were not for these bodies that are strictly regulated. Moreover, foreign banks are known to play a significant role in international trade between different countries.

They bridge the geographical distance between people and with financial transactions occurring online, it is extremely easy for people to access their accounts and engage in banking transactions.