Commercial banks

Commercial Banks are those profit seeking institutions which accept deposits from general public and advance money to individuals like household, entrepreneurs, businessmen etc. with the prime objective of earning profit in the form of interest, commission etc. Examples of commercial banks ICICI Bank, State Bank of India, Axis Bank, and HDFC Bank

Classification
Scheduled banks :- Banks which have been included in the Second Schedule of RBI Act 1934. They are categorized as follows: Public Sector Banks :- E.g.. SBI, PNB, Syndicate Bank, Union Bank of India etc. Private Sector Banks :- E.g.. ICICI Bank, IDBI Bank, HDFC Bank, AXIS Bank etc. Foreign Banks :- E.g.. Citi Bank, Standard Chartered Bank, Bank of Tokyo Ltd. etc. Non scheduled banks :- Banks which are not included in the Second Schedule of RBI Act 1934.

Commercial Banks

Public Sector Banks

Foreign Banks

Private Sector Banks

SBI & Associate Banks(7)

Other Nationalized Banks

Money Lender

A money lender is a person who lends money to others. However, there is a lot more to the job than just giving money to individuals or companies. There are a lot of tasks and responsibilities that a money lender holds. There are also many kinds of money lenders. Each position offers money to different markets.

Function
A money lender is responsible for determining who may receive a loan. Banking institutions hold the highest amount of lenders. The money lender helps applicants file for loan approval and determines whether or not the applicant should receive the loan. Money lenders can lend money to both individuals and companies.

Function
The main responsibility of a money lender is to determine whether or not a company or individual is qualified to receive a loan. The money lender must decide whether or not that person or company will be able to repay the loan. The money lender also has to determine whether or not the financial institution can offer the necessary loans to clients. The role of a money lender is to balance the amount of money lent with the amount of money the institution has available for loans

Discount houses

 Primarily operating in the United Kingdom, a firm that buys, sells, discounts and/or negotiates bills of exchange or promissory notes. This is generally performed on a large scale with transactions that also include government bonds and treasury bills. Also called a bill broker.

 Large retail store that offers consumer durables at heavily discounted prices, due to its bulk-buying power and bare minimum expenses on customer service.

A discount house is a money dealer that participates in the buying and discounting of bills of exchange and other financial products such as money markets, certain government bonds and banker's acceptances.

Function of discount houses

To promote rapid growth and efficiency of the money To facilitate the issue and sale of short term government securities To provide discount/re-discount facilities To provide fund management services To provide financial advisory services To accept funds for investment purposes

Accepting houses

 An accepting house (also known as an acceptance house) is a British institution specializing in accepting or guaranteeing bills of exchange. A service fee is charged for guaranteeing payment, enabling the bill to be discounted at preferential rates on the money market. The decline in the use of bills of exchange has forced the accepting houses to widen their financial activities, many of whom have returned to their original function of merchant banking

 An accepting house is a financial institution that accepts a bill of exchange. A bill of exchange is a financial instrument closely related to a cheque - in fact, a cheque is a bill of exchange drawn on a bank. When an accepting house "accepts" a bill of exchange, it guarantees it. The bill can then be more easily sold, as this greatly reduces the credit risk. From most investors' point of view, accepting houses are not a hugely important part of the financial landscape.

Merchant Banks
Merchant banking may be defined as an institution which covers a wide range of activities such as underwriting of shares, portfolio management, project counseling, insurance etcThey render all these services for a fee

function
PROJECT COUNSELLING :

It includes preparation of project reports,deciding upon the financing pattern, appraising the project relating to its technical, commercial and financial viability. It includes filling up of application forms for obtaining funds from financial institutions

 LOAN SYNDICATION :

Assistance is rendered to raise loans for projects after determining promoters contribution. These loans can be obtained from a single institution or a consortium.

 ISSUE MANAGEMENT :

Management of issues involves marketing of corporate securities ieequity shares, preference shares and debentures by offering them to public.
Pre-issue activities:

They prepare copies of prospectus and send it to to SEBI and then file them to Registrar of Companies
They conduct meetings with company representatives and advertising agencies to decide upon the date of opening issue,closing issue,launching publicity campaign etc.. They help the companies in fixing up the prices for their issues

Post-issue activities:
It includes collection of application forms,screening of applications,deciding allotment procedure,mailing of allotment letters,,share certficates and refund orders

 UNDERWRITING OF PUBLIC ISSUES : Underwriting is an insurance to the company which makes public issues.Raising of external resources is easy for the issues backed by well known underwriters.

MANAGERS,CONSULTANTS OR ADVISERS TO THE ISSUE :

SEBI insist that all issues should be managed by atleast one authorised merchant banker but not more than two.For an issue of 100 crores,upto a maximum of four merchant bankers shall be appointed.They help in listing of shares in stock exchange, completion of formalities under Companies Act etc..

 PORTFOLIO MANAGEMENT :
Portfolio refers to investment in different kinds of securities such as shares,debenture issued by different companies.It is a combination of assets but a carefully blended asset combination. Portfolio management refers to maintaining proper combination of securities in a manner that they give maximum return Investors are interested in safety,liquidity and profitability of his investment but they cant choose the appropriate securities.So merchant bankers help their investors in choosing the shares.They conduct regular market and economic surveys.

 NRI INVESTMENT :

NRIs has to follow lots of complicated rules for investing in the shares in India.Merchant bankers help them in choosing the shares and offer expert advice fulfilling government regulations thus mobilising more resources for corporate sector.

investment company

 An investment company is a company whose main business is holding securities of other companies purely for investment purposes. The investment company invests money on behalf of its shareholders who in turn share in the profits and losses.

types
Open-End Management Investment Companies (mutual funds) Closed-End Management Investment Companies (closed-end funds) UITs (unit investment trusts)

Open-End Management Investment Companies (mutual funds)

A mutual fund is a type of professionally managed collective investment vehicle that pools money from many investors to purchase securities.

 Open funds sell and redeem shares at any time directly to shareholders. To make an investment, you purchase a number of shares through a representative, or if you have an account with the investment firm, you can buy online, or send a check. The price you pay per share will be based on the funds net asset value as determined by the mutual fund company. Open funds have no time duration, and can be purchased or redeemed at any time, but not on the stock market.

Closed-End Management Investment Companies (closed-end funds)

Close-ended or closed mutual funds are really financial securities that are traded on the stock market. Similar to a company, a closed-ended fund issues a fixed number of shares in an initial public offering, which trade on an exchange. Share prices are determined not by the total net asset value (NAV), but by investor demand. A sponsor, either a mutual fund company or investment dealer, will raise funds through a process commonly known as underwriting to create a fund with specific investment objectives. The fund retains an investment manager to manage the fund assets in the manner specified.

Development banks

 "Development banks are those financial institutions whose prime goal (motive) isto finance the primary (basic) needs of the society. Such funding results in thegrowth and development of social and economic sectors of the nation. However,needs of the society vary from region to region due to differences seen in itscommunal structure, economy and other aspects."

 "Development banks are financial institutions established to lend (loan) finance(money)on subsidized interest rate. Such lending is sanctioned to promote anddevelop important sectors like agriculture, industry, importexport, housing andallied activities

 1)A development bank does not accept deposits from the public likecommercial bank s and other financial institutions that entirely depend upon saving mobilization. 2) It is a specialized financial institution which provides medium term and long-term lending facilities. 3) It is a multipurpose financial institution. Besides providing financial help itundertakes promotional activities also. It helps an enterprises from planning tooperational level. 4) It provides financial assistance to both private as well as public sector institutions.

Features

 5) The role of a development bank is of gap filler. When assistance from other sources is not sufficient then this channel helps. It does not compete with normalchannels of finance. 6) Development banks primarily aim to accelerate the rate of growth. It helpsindustrialization specific and economic development in general. 7) The objective of these banks is to serve public interest rather than earning profits.8) Development banks react to the socioeconomic needs of development.

Mutual Funds
Mutual funds are simply a means of combining or pooling the funds of a large group of investors. The buy and sell decisions for the resulting pool are then made by a fund manager, who is compensated for the service provided. Like commercial banks and life insurance companies, mutual funds are a form of financial intermediary.

 Mutual funds are a type of investment that takes money from many investors and uses it to make investments based on a stated investment objective. Each shareholder in the mutual fund participates proportionally (based upon the number of shares owned) in the gain or loss of the fund

function
1 professional management 2 affordability 3 liquidity 4 diversification

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