Non Banking Financial Institutions
Non-Banking Financial Institutions (NBFI) v/s Banks in India – Why NBFI are doing much business than Banks? A study of Kolkata based Upper and Middle Class Consumers.
In the era of globalization and liberalization the development of financial sector has played and important role in the economy of India. With the services offered by banks and non-banking financial institutions (NBFI) the life of consumer in India has completely changed. Borrowing is one of the important aspects that have changed the whole scenario of Indian society. Change in the trend of culture of upper & middle class consumers, change in the behaviour of consumer regarding borrowing and change in the norms of banks and NBFI regarding borrowing has made life of Indian consumer very comfortable. This research shows how non-banking financial institutions are fulfilling the demand of upper & middle class consumers and how they are doing more business than banks and why consumers rely more on NBFI rather than banks in India. This research uses questionnaires, interviews of consumers and direct sales agent of NBFI to examine the consumer borrowing and role of financial institutions. The research concludes that consumers are relying much more on NBFI and it is not risky & difficult to borrow loan because of policies & norms regarding loans and availability of flexible financial options.
CHAPTER - 1
This chapter is introduction about the research topic. It highlights the aims and objectives of the research. It also tells about the structure of the dissertation and the summary of this chapter.
1.2 BACKGROUND INFORMATION
Each and every country has its own financial system. Financial system usually consists of financial market, financial intermediaries and financial product or service. Finance in simple words means ‘money’ but finance is a source which provides funds to a particular activity. A financial sector/system acts as an agent to make sure that funds flow from the areas of surplus to the deficit area. A financial market is a place which creates financial assets and exchange of money for goods and services. Financial market consists of foreign exchange market, capital market, credit market and money market. (Web 8) Money is a fascinating thing which attracts human to a great extent. Over thousands of years the process of creating money and using money is making human enthusiastic. Financial intermediaries play an important role in building economy of a country. Financial Intermediaries includes banks, financial institutions, non-banking financial institutions (NBFI), investment companies, pension and mutual funds. (Web 9) Financial sector plays an important role in organizing and properly distributing & sharing the savings. Financial sector act as a passage or tube which transfers the financial resources from net savers to net borrowers .ie. from the person who spend less as compared to their earning to those who earn less and spend more then their earning. (Web 10) Indian financial system consists of huge network of banks and financial institutions (including non-banking financial institutions) and range of financial instruments. From the last two decades there have been great improvements in Indian Financial system and there is a huge supply of banking and other financial facilities provided to large population of India. (Web 10) A safe and sound financial sector is required to maintain the growth of an economy. With the help of globalization and change in technology the operating environment of banks and other financial institutions has changed significantly. Due to competition and change in customer demand there is increase in product innovation and change in strategy of banks and financial institutions. In order to face the competition and meet challenges Reserve Bank of India (RBI) has also changed its regulations and provided a new framework....
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