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Role of Non Bank Financial Intermediaries

Updated on July 28, 2012

The non-bank financial institutions acting as intermediaries play a crucial role in bringing together the saver and the borrowers. The intermediation process of these institutions helps the individuals to invest their funds safely and enables business firms to borrow funds without problems

Acting as intermediaries, the non bank financial institutions help the individuals business firms and the nation as a whole in the following ways:

  • The non-bank financial institutions help the individual investors by providing them triple benefits.
  • They help the business firms in securing funds at reasonable cost and in time.They take the risk of mobilising savings from numerous small investors. The business firm are, thus relieved of the problem of approaching small investors scattered throughout the country.
  • The non-bank financial institutions also help the different sectors of the economy according to the priorities fixed by Government from time to time.
  • By providing financial help on softer terms to the enterprises set up in backward areas, these institutions help in correcting regional imbalances in the country.
  • When the programmers of rapid industrialization get bogged down due to the inadequacy of finance, these non bank financial institutions render valuable assistance in the form of loans, underwriting services or direct subscriptions of shares ad debentures.
  • They provide technical, financial and managerial assistance to entrepreneurs. These institutions undertake various promotional activities such as the formation of project ideas, conducting viability studies,the implementation of the project etc.

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