UNIT-IV

Financial Institutions

4.1 Financial Institutions: Commercial Banks- development financial institutions

What is a Commercial Bank?

A commercial bank is a type of financial institution that does everything from depositing and withdrawing money to the general public and providing loans for investment. These banks are commercial institutions and operate solely for commercial purposes.

The two main characteristics of commercial banks are lending and borrowing. Banks receive deposits and give money to various projects to earn interest (profit). The interest rate that a bank provides to depositors is called the borrowing interest rate, and the interest rate that a bank lends money to is called the lending interest rate.

Commercial bank functions:

The functions of commercial banks fall into two major divisions.

(A) Main functions

Accept Deposits: Banks receive deposits in the form of savings, current and fixed deposits. Surplus balances collected from companies and individuals are lent out as a temporary requirement for commercial transactions.

Providing Loans and Prepaid: Another important function of this bank is to provide entrepreneurs and businessmen with loans and prepayments and collect interest. For all banks, it is a major source of profit. In this process, the bank holds a small number of deposits as reserves and provides (lends) the remaining amount to the borrower at banks such as demand loans, overdrafts, cash credits and short-term loans.

Credit Cash: When a customer is offered a credit or loan, no liquid cash is offered. First, a bank account is opened for the customer and then the money is transferred to that account. This process allows banks to make money

(B) Secondary function

Bill of exchange discount: This is a written agreement approving the amount to be paid for goods purchased at a particular point in the future. You can also settle the amount before the estimated time by using the discount method of the commercial bank.

Overdraft Facility: A prepayment given to a customer by overdrawing the overdraft to a certain limit.

Buying and Selling Securities: Banks provide the ability to sell and buy securities.

Locker Equipment: Banks provide locker equipment to their customers to keep valuables and documents safe. The bank charges a minimum annual fee for this service.

Use various means such as promissory notes, checks, and bills of exchange.

Types of commercial banks:

There are three different types of commercial banks.

Private Bank –: A type of commercial bank in which an individual or company owns a majority of the equity capital. All private banks are recorded as limited liability companies. Banks such as Housing Development Finance Corporation (HDFC) Bank, India Industrial Credit Investment Corporation (ICICI) Bank, Yes Bank, etc.

Public Banks –: A type of nationalized bank in which the government holds important shares. For example, Bank of Baroda, State Bank of India (SBI), Dena Bank, Corporation Bank, Punjab National Bank.

Foreign Banks –: These banks are established abroad and have branches in other countries. For example, banks such as American Express Bank, Hongkong and Shanghai Banking Corporation (HSBC), Standard & Chartered Bank, and Citibank.

Commercial Bank Example

Here are some examples of commercial banks in India:

1. State Bank of India (SBI)
2. Housing Development Finance Corporation (HDFC) Bank
3. Indian Industrial Credit Investment Corporation (ICICI) Bank
4. Dena Bank

Regulatory Environment for commercial bank in Indian core banking.

India's financial system is regulated by independent regulators in a variety of areas, including banks, capital markets, insurance, commodity markets and pension funds. However, the Government of India, at least to some extent, plays an important role in influencing the regulatory framework of these institutions.

Primarily in India, banking and financial institution regulations comply with the Banking Regulation Act of 1949. It was passed as the Banking Companies Act of 1949 and came into effect on March 16, 1949. Banking Regulations Act from March 1, 1966.

For those who want to work in a bank, it is appropriate to know about the workings and regulations of Indian financial institutions. From a review perspective, you can ask objective questions about the chair of the regulatory body, the location of the headquarters, the year of establishment, and so on.

In addition, questions about banking regulation laws and related recent developments can be asked in the main and interviews.

Now let's take a brief look at the regulations of banks and financial institutions.

Banking Regulation Act 1949

The following are important points regarding the Banking Regulation Act of 1949.

It regulates all banking institutions in India. Initially applied only to banking companies, it was amended in 1965 to have jurisdiction over co-operative banks. Cooperative banks are established and operated by the state government, but authorization and regulation are under the control of the RBI.

The law authorizes RBI to license banks and regulates shareholding. Regulate bank operations. Oversees the appointment of the board of directors and management. Create an audit instruction. Issue directives for the public good. Manage moratoriums, mergers, liquidations and acquisitions. I will impose penalties.

Reserve Bank of India (RBI)

Founded under the RBI Act of 1934, RBI is the central bank of India. And it has various responsibilities under the Banking Regulation Act of 1949. Some of its main features are listed below.

1. Issuance of banknotes
2. Banker to the government
3. Commercial bank cash reserve custodian
4. Foreign exchange reserve custodian
5. Credit admin
6. Lender of last resort

Securities and Exchange Commission of India (SEBI)

The Securities and Exchange Commission of India (SEBI), established on April 12, 1992 under SEBI Act 1992, is a statutory body owned by the Government of India. Its main function is to protect the interests of investors on the stock exchange and regulate the securities market. SEBI is headquartered in Mumbai with branch offices in Delhi, Kolkata and Chennai.

India Insurance Regulatory Development Agency (IRDAI)

Established under the Insurance Regulatory Development Authority Act of 1999, IRDAI is a self-governing body responsible for regulating and promoting the Indian insurance and reinsurance industry. Headquartered in Hyderabad, it is a 10-member organization consisting of a president, 5 full-time members, and 4 part-time members appointed by the Government of India.

PFRDA under the Ministry of Finance

PFRDA stands for Pension Fund Regulatory Development Bureau. Established by the Government of India by Executive Order on August 23, 2003, PFRDA is obliged to act as a regulator of pension funds. Headquartered in Delhi, India, it is currently headed by Supratim Bandyopadhyay, chair of PFRDA. The organizational structure consists of a chairman, three full-time members of finance, law and economics, and a chief alert officer.

Candidates are encouraged to investigate in detail the primary objectives of each of these regulators. Keep an eye on recent developments in any of these institutions as they are very important from a testing perspective.

Key takeaway:

1. A commercial bank is a type of financial institution that does everything from depositing and withdrawing money to the general public and providing loans for investment.
2. Banks receive deposits in the form of savings, current and fixed deposits.
3. Surplus balances collected from companies and individuals are lent out as a temporary requirement for commercial transactions.
4. It regulates all banking institutions in India. Initially applied only to banking companies, it was amended in 1965 to have jurisdiction over co-operative banks.
5. When a customer is offered a credit or loan, no liquid cash is offered.
6. The two main characteristics of commercial banks are lending and borrowing.
7. Another important function of this bank is to provide entrepreneurs and businessmen with loans and prepayments and collect interest.
8. The Securities and Exchange Commission of India (SEBI), established on April 12, 1992 under SEBI Act 1992, is a statutory body owned by the Government of India.
9. PFRDA stands for Pension Fund Regulatory Development Bureau. Established by the Government of India by Executive Order on August 23, 2003, PFRDA is obliged to act as a regulator of pension funds.
10. Candidates are encouraged to investigate in detail the primary objectives of each of these regulators.

4.2 Nonbanking financial corporation’s-Mutual Funds, insurance companies – Objectives and functions (only a brief outline).

Nonbanking financial corporation’s

A financial intermediary is an institution that connects lenders and borrowers.

The process of transferring savings from a saver to an investor is known as financial intermediation. Commercial banks and co-operative credit unions are called "financial companies" or "financial companies." These very low-capitalized financial companies offer attractive interest rates and incentives and mobilize deposits by offering prepaid loans to wholesalers, retailers, small industries and self-employed people. They offer unsecured loans at very high interest rates. These are non-banks that perform the functions of financial intermediaries. It's not a bank.

Non-Bank Financial Institutions (NBFC) is a company registered under the Company Act of 1956, engaged in loans, stock acquisitions, securities, leasing, employment purchases, insurance and chit businesses.

Number of non-bank financial institutions

The number of non-bank financial institutions continued to increase year by year in the 1990s. Between 1996 and 1997, the total deposits of 13,970 non-bank financial institutions reached a total of Rs 3,57,150. As of March 31, 2012, the entire number of non-bank financial institutions registered with the RBI was 12,385, compared to 12,409 in 2011. Number of deposits

Non-bank financial institutions (NBFC-D), including the remaining NBFC (RNBC), also decreased from 297 at the end of March 2011 to 271 at the end of March 2012. The size of total assets of non-bank financial institutions has increased from Rs. As of the end of March 2012, it was 1,169 billion rupees to 1,244 billion rupees. NBFC's net holdings also increased by 25% from Rs 180 billion in 2011 to Rs 225 billion at the end of March 2012. 2,376 major financial companies accounted for 63% of deposits.

Functions of non-bank financial institutions:

The functions performed by non-bank financial institutions can be explained as follows.

1. You can attract huge deposits by offering attractive interest rates and other incentives. Half of the deposits are for less than two years.
2. They provide financing to the small industries of wholesalers and retailers and provide self-execution schemes.
3. They also offer loans without collateral. Therefore, they can charge interest rates of 24 to 36 percent.
4. They operate chit funds, discount Hundi, offer employment purchases, lease finance and merchant banking activities.
5. They adventure to provide loans to high-risk businesses. Therefore, they can charge high interest rates. They renew short-term loans from time to time. Therefore, they are long-term loans.
6. They can attract deposits by offering very high interest rates. In the process, many companies suffered losses and went into liquidation. The bankruptcies of many companies have had a negative impact on the middle class and low-income earners. There is no insurance protection for deposits as it is for bank deposits.
7. Financial companies can close credit gaps by offering lease finance, employment purchases and instalments. They offer loans to buy scooters, cars, TVs and other durable consumer goods. These enhancements make them mostly commercial banks.

The only difference is that non-banks cannot introduce a check system.

Differences between banks and non-bank financial institutions:

Non-bank financial institutions perform the same function as banks. However, there are some differences.

1)     Non-bank financial institutions cannot accept demand deposits.

2)     Checks cannot be issued to customers as they are not part of the payment and payment system.

3)     DICGC's deposit insurance function is not available to depositors of non-bank financial institutions, unlike the case of banks.

Various types of non-bank financial institutions:

There are various categories of non-bank financial institutions operating in India under the supervision of RBI. They are:

1. Non-bank financial company (NBFC)
2. Residual non-bank financial company (RNBC).
3. Other non-bank financial companies (MNBC)

Residuary Non-Banking Company is a class of Non-Banking Financial Corporations whose primary business is to receive deposits through schemes, arrangements, or other means rather than investing, leasing, or purchasing employment. , Loan company. In addition to liquid assets, these companies must maintain their investments as directed by the RBI. The functions of those companies differ from those of NBFC in terms of the tactic of mobilizing deposits and therefore the requirements for the deployment of depositors' funds. Peerless Financial Company is an example of RNBC.

Other non-bank financial companies are another type of non-bank financial company, and MNBC means a company that does all or either of collecting, managing, implementing, or supervising as a promoter or in any other position, conducting other forms of chit or chestnut different from the above types of business, and other types of business similar to the above business.

Types of services provided by non-bank financial institutions:

Non-bank financial institutions provide a variety of financial services to their clients. The types of non-bank financial services are as follows.

1. Hire a purchasing service
2. Lease service
3. Housing finance services
4. Asset management service
5. Venture capital service
6. Mutual Interest Financial Services (Nidhi) Bank.

The above types of companies can be further subdivided into companies that accept deposits and companies that do not accept deposits.

Mutual Funds

What are Mutual Funds?

Mutual Funds are one of the most popular mutual options these days. A mutual fund is a mutual instrument formed when an asset management company (AMC) or fund house pools mutual funds from multiple individuals and institutional investors with a common mutual objective. A fund manager, a financial expert, manages pooled mutual funds. Fund manager buys securities such as stocks and bonds in line with mutual mandates.

Mutual Funds are a great mutual option for individual investors to access a portfolio managed by professionals. In addition, asset allocation covers multiple products, so you can diversify your portfolio by investing in mutual Funds. Investors are assigned fund units based on their mutual amount. Therefore, each investor experiences a profit or loss that is directly proportional to the amount invested. The main purpose of a fund manager is to provide investors with optimal returns by investing in securities that are in sync with the purpose of the fund. The performance depends on the underlying asset.

Types of Mutual Funds

Indian mutual funds are broadly categorized into equity funds, debt funds and balanced mutual funds, depending on asset allocation and equity exposure. Therefore, the risks and returns assumed by a Funds plan depend on its type. The types of mutual Fund are categorized in detail below.

Equity Fund

As the name implies, invest primarily in the stock of a company across all market capitalizations. It has the potential to offer the highest returns of any class of mutual funds.

Debt Mutual Fund

It invests primarily in debt, money markets, and other bonds such as Treasury securities, government bonds, certificates of deposit, and other high-rated securities.

Balanced or hybrid mutual Fund

These funds invest in both equity and debt products. The main purpose of it is to balance the risk-reward ratio by diversifying the portfolio. 

Insurance Companies – Objectives and functions (only a brief outline).

Insurance is a risk management tool that not only benefits individuals and businesses, but also benefits society and the economy in many ways. Below are some of the important objectives of insurance.

1. Provides peace of mind:

Insurance provides protection against a variety of uncertainties that can put you and your family in a financial crisis. Insurance provides peace of mind by covering the uncertainties of human life and business. Having life insurance gives you the peace of mind that your family will be financially stable even if you don't have one. Having health insurance gives you the peace of mind that you don't have to pay all your savings for emergency medical care.

2. Facilitate risk management:

Insurance works on a risk transfer mechanism and thus facilitates risk management activities.

3. Promote economic growth:

Insurance funds are invested in a variety of projects such as water, electricity and roads, contributing to the economic growth of the country as a whole. Insurance also provides people with employment opportunities. Insurance contributes to economic growth in many other ways, including the acquisition of foreign direct investment, the payment of taxes on the profits earned, and the investment in capital markets.

4. Risk distribution:

Insurance risks are not concentrated in just one, but spread across different individuals and organizations.

5. Helps you get a loan easily:

There is a loan facility offered for insurance policies. For mortgages, you can easily get a loan from your lender by taking out insurance.

6. Teach savings habits:

There are many life insurance products with investment and protection benefits. Such products instil regular savings habits among individuals. Plans like endowment insurance plans help you reach your long-term financial goals. The pension system helps to receive the regular income flow of the elderly.

7. We provide tax incentives.

The insured receives tax incentives for premiums paid according to the type of insurance product. For example, premiums paid for life insurance plans are tax deductible under Section 80C of the Income Tax Act. And the premiums paid to your health insurance plan are tax deductible under Section 80D of the Income Tax Act.

Below are some examples of the importance of insurance.

Case 1:

Ram, a software engineer living in Bangalore, died in an accident and his wife and son were deeply emotionally shocked. He was only 40 years old! He also has an INR mortgage. 300,000 rupees are running. Fortunately, Lamb has Indian Rupee term life insurance. 1Cr. He is 32 years old for 25 years of insurance. His wife received compensation from an insurance company within 10 days, which helped her repay her debt and invest a corpus for her future needs. Had he not made the wise decision to invest in life insurance, his family would have been in a huge financial crisis today! Insurance is important to protect the future of the family.

Case 2:

Sunil, an employee of a Mumbai multinational corporation, suddenly lost consciousness due to a high fever. He was then taken to the nearest hospital. He was hospitalized for 3 days for diagnosis and treatment. When he was discharged three days later, his hospital bill reached about Indian Rupees. 70,000. Fortunately, he had INR health insurance. 3,00,000. The hospital was listed in his insurance company's network hospital, so the bill was settled directly at the hospital. If he didn't know the importance of insurance, he would have to pay INR.70,000 from his pocket. Insurance helps you to be financially stable in the event of an unforeseen event.

In conclusion, protect your life and your valuable assets from all the uncertainties with the help of insurance. Understand the insurance coverage you need, compare and invest wisely. It is important to understand that the need for insurance is to secure what you love.

There is no certainty or guarantee in life. There is no guarantee that your business will not suffer any unexpected loss or damage. Therefore, you cannot protect your profits from all risks, but you can choose insurance. Let's take a look at the concept of insurance and the functioning of insurance companies.

Insurance

Insurance is defined as a contract in which an individual or organization receives financial protection and damages from an insurer or insurer. At a very basic level, it is some form of protection from possible financial losses.

The basic principle of insurance is that a company chooses to use a small recurring amount for the potential for unexpectedly large losses. Basically, all policyholders pool risk together. The losses they incur are paid from the premiums they pay.

Insurance company function

1] Provides reliability

The main function of insurance is to eliminate the uncertainty of unexpected and sudden financial losses. This is one of the biggest concerns of the business. Instead of this uncertainty, it provides the certainty of regular payments, that is, the premiums to be paid.

2] Protection

Insurance does not reduce the risk of loss or damage that a company may incur. However, it does provide protection against such losses that businesses may incur. Therefore, at least the organization does not suffer any financial loss that impairs its daily functioning.

3] Risk pooling

With insurance, all policyholders pool the risk together. If all of them pay premiums and one of them suffers an economic loss, the payment will come from this fund. Therefore, the risk is shared among all of them.

4] Legal requirements

In many cases, land law actually requires some form of insurance. Fire insurance may be a mandatory requirement, for example, when goods are in transit or when opening public spaces. Therefore, insurance companies can help us meet these requirements.

5] Capital formation

The policyholder's pooled premiums help create capital for the insurer. This capital can be invested in productive purposes that generate income for the company.

Insurance principles

As explained earlier, insurance is actually a form of contract. Therefore, there are certain principles that are important to ensure the validity of the contract. Both parties must adhere to these principles.

1] Maximum integrity

Insurance contracts should be made in the utmost integrity (uberrimate fidei contract). It is important for the insured to disclose all relevant facts to the insurer. All facts that increase the premium or force a wise insurer to rethink their insurance policy must be disclosed.

If it is later discovered that such facts are hidden by the insured, the insurer is within the scope of the right to revoke the insurance policy.

2] Insured interests

This means that the insurer must have some financial interest in the subject of insurance. That is, the insurer does not necessarily have to be the owner of the insured, but must have some vested interests. If property is damaged, the insurer must incur some financial loss.

3] Compensation

Insurance such as fire insurance and marine insurance is a compensation contract. Here, the insurer is responsible for any damage or loss that the insured may or may not incur. Life insurance is not a compensation contract.

4] Subrogation

This principle indicates that ownership of an asset is transferred from the insured to the insurer when compensation is paid. As a result, the insured cannot profit from or sell the damaged asset.

5] Contribution

This principle applies when there are multiple insurers. In such cases, insurers can ask other insurers to donate their share of compensation. If the insured claims full insurance from one insurer, he loses the right to claim any amount from the other insurer.

6] Approximate cause

This principle states that the property is insured only for the incidents listed in the policy. If the loss is due to multiple such hazards, the one that is most effective in causing the damage is the cause that should be considered.

1. Indian Life Insurance Corporation (LIC)

The Indian Life Insurance Corporation was established under the LIC Act of 1956, when life insurance was nationalized. As a result, the businesses of 243 insurance companies were taken over by LIC from 1-9-1956.

As long as policyholder funds are invested and spread across different classes of securities, industries and territories, it is essentially an investment institution, protecting maximum profits in the long run. Life Insurance Corporation of India must invest at least 75% of its funding in central and state government securities, government-guaranteed marketable securities, and the socially oriented sector. Currently the largest institutional investor. It provides long-term funding for the industry. In addition, we provide resource support to other term lenders through equity and bond subscriptions and term loans.

In its 57th year, Life Insurance Corporation of India has emerged as the world's largest insurance company. Regarding the number of policies covered. The total insurance policy coverage of Life Insurance Corporation of India, including individuals, groups and social institutions, has exceeded Rs 1.1 billion.

Purpose of Life Insurance Corporation of India

Life Insurance Corporation of India was established for the following purposes:

1. Spread life insurance widely, especially in rural areas, socially and economically underdeveloped Clary, insure all insured persons in the country, and provide appropriate financial compensation for death at a reasonable cost. Is aimed at.

2. Maximize the mobilization of people's savings for nation-building activities.

3. Provides full security and promotes efficient service to policyholders at an economical premium rate.

4. We will do business with maximum economic efficiency and fully aware that the money belongs to the policyholder.

5. Act as a trustee of the insured from an individual and collective standpoint.

6. Meet the various life insurance needs of the community that will arise in a changing social and economic environment

7. We will maximize the involvement of all people working in the enterprise to promote the interests of the insured by providing polite and efficient services.

Roles and Functions of Life Insurance Corporation of India

The roles and functions of Life Insurance Corporation in India can be summarized as follows.

1. Collect people's savings through life insurance and invest money in various investments.

2. Invest money in profitable investments to get good returns. Therefore, policyholders receive benefits in the form of lower premium rates and higher bonuses. In short, Life Insurance Corporation of India is responsible for policyholders.

3. Underwrite the shares of the company or company. It is a major shareholder of many excellent companies.

4. Provide direct financing to the industry at low interest rates. We lend to industrial companies within 12% of our total commitment.

5. Provide refinancing activities through SFCs in various states and other industrial loan providers.

6. We have provided indirect support to the industry by underwriting stocks and bonds when financial institutions such as IDBI, IFCI, ICICI and SFC needed initial capital. We also directly subscribed to the shares of Agricultural Refinance Corporation and SBI.

7. We will finance projects that are important for national economic welfare. Socially oriented projects such as electrification, sewage and waterways are prioritized by the Indian Life Insurance Corporation.

8. Appoint a director of the investing company.

9. It offers a mortgage at a reasonable interest rate.

10. It acts as a link between savings and investment processes. It produces savings for small savers, middle-income earners, and high net worth individuals through several schemes.

11. Previously, LIC has played a major role in the Indian capital markets. We undertook a capital issue to stabilize the capital market. But recently it has moved to other financing methods. Underwriting patterns are now very selective.

2. General Insurance Corporation of India (GIC)

The Indian non-life insurance industry was nationalized and in November 1972 the central government established a government company known as the Indian Non-life Insurance Corporation. Non-life insurers have been proactive in responding to these growing demands and offering a large number of insurances that cover most of them. Anything in the sun. Insurance other than "life insurance" is classified as non-life insurance. It consists of: -

1. Property insurance against fire, theft, robbery, terrorism, natural disasters, etc.
2. Personal insurance such as accident insurance, health insurance, and liability insurance that covers legal liability.
3. Negligence insurance, credit insurance, etc. for professionals.
4. Policies include compensation for machinery for breakdowns, loss or damage in transit.
5. A policy that covers marine, air, rail, waterways, and road goods in transit and provides marine insurance that covers the hull.
6. Car insurance against damage or accidents and theft

All of the above form a major chunk of the non-life insurance business.

Non-life insurance products and services are offered as a packaging policy that offers the above cover combinations in various permutations and combinations. There are packaging policies specifically designed for householders, shopkeepers, business people, agronomists, entrepreneurs, employees, and professionals such as doctors, engineers, and certified accountants. In addition to standard coverage, general insurers are a customer's personal requirement.

Classification of Indian general insurance industry

Non-life insurance is also known as non-life insurance in India. There are a total of 16 non-life insurance companies in India. These 16 non-life insurers fall into two broad categories.

a) PSU (public sector business)

b) Private insurance company

a) PSU (Public Sector Business)

These insurance companies are wholly owned by the govt of India.

Total of 4 PSUs in India.

1. National Insurance Company Ltd
2. Oriental Insurance Company Limited
3. New India Assurance Company Limited
4. United India Insurance Company Ltd

b) Private insurance companies: -

There are a total of 12 private non-life insurance companies in India.

1. Apollo DKV Health Insurance Ltd
2. Bajaj Allianz General Insurance Co. Ltd
3. Cholamandalam MS General Insurance Co. Ltd
4. Future General Insurance Company Ltd
5. HDFC Ergo General Insurance Co., Ltd.
6. ICICI Lombard General Insurance Limited
7. Iffco Tokyo General Insurance Pvt Ltd
8. Reliance General Insurance Limited
9. Royal Sundaram General Insurance Co Ltd
10. Star Health and related insurance
11. Tata AIG General Insurance Co Ltd
12. Universal Sompo General Insurance Pvt Ltd

Key takeaways:

1. An economic institution (FI) is a enterprise engaged in corporations handling finance and economic transactions which includes deposits, loans, investments and overseas foreign money exchange.
2. Financial establishments cowl a huge variety of commercial enterprise operations inside the economic offerings sector, along with banks, accept as true with companies, coverage companies, brokerage companies and funding dealers.
3. Financial establishments may also range through size, scope and region.
4. When it involves getting mortgages, non-financial institution creditors, which includes Quicken Loans, may also locate it less difficult to get a loan than a conventional bodily financial institution, in particular for low-credit score customers.
5. Payday mortgage vendors are taken into consideration non-banks, however many bears in mind them predatory creditors.
6. Peer-to-peer creditors and personal fairness companies are taken into consideration non-financial institution banks.
7. The Indian Life Insurance Corporation was established under the LIC Act of 1956, when life insurance was nationalized.
8. Non-life insurance products and services are offered as a packaging policy that offers the above cover combinations in various permutations and combinations.
9. Insurance is defined as a contract in which an individual or organization receives financial protection and damages from an insurer or insurer.
10. At a very basic level, it is some form of protection from possible financial losses.
11. An investment trust is a type of investment instrument that consists of a portfolio of stocks, bonds, or other securities.
12. Trustees provide small or individual investors with access to a diverse and professionally managed portfolio at a low price.
13. Trustees fall into several categories that represent the type of securities you invest in, the purpose of your investment, and the type of return you seek.
14. Trustees charge an annual membership fee (called the cost ratio) and, in some cases, a fee. This can affect your overall bottom line.
15. The overwhelming majority of employer-sponsored retirement plans are used for investment trusts.

References:

1. Kohn, Meir: Financial Institutions and Markets, Tata McGraw Hill.
2. Bhole L.M: Financial Institutions and Markets, Tata McGraw Hill.
3. Desai, Vasantha: The Indian Financial System, Himalaya Publishing House.
4. Machiraju.R.H: Indian Financial System, Vikas Publishing House.
5. Khan M.Y: Indian Financial System, Tata McGraw Hill.
6. Varshney, P.N., & D K Mittal, D.K.: Indian Financial System, Sultan Chand & Sons