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Some of you may often hear the word financial institutions, but do you know the definition of an institution engaged in this financial sector? There are many experts who describe the definition of this institution, and in Indonesia we are very close to institutions that provide financial services, whether we realize it or not. Let's discuss one by one on this occasion.
Definition of Financial Institutions
In general, the definition of a financial institution is defined as a business entity engaged in finance by providing funds storage, distribution and lending services to its customers. The main assets owned by these financial businesses are in the form of money and bills.
In addition to providing financial services, financial institutions also provide various forms of services, such as offering various forms of savings, insurance, transfer services, to programs for the future such as pension plans. So it can be concluded that the institutions engaged in finance is one part of the modern financial and economic system that plays an important role in maintaining the economic condition of the community.
Types of Financial Institutions
In Indonesia, financial institutions are divided into 2. The first is the type of bank financial institutions. This type of institution consists of the Central Bank which is still held by Bank Indonesia with the task of maintaining monetary policy, commercial banks or commercial banks that are in charge of serving all banking services to its customers both individuals and institutions, and rural credit banks that specialize in serving several financial services in the community district or village.
And the type of the second financial institution is a non-bank institution, the scope of this institution is broader when compared to the type of institution which is only engaged in banking. Among others are institutions engaged in investment, namely the capital market and money market, hereinafter are institutions engaged in credit services, such as savings and loan cooperatives, pawnshops and leasing or leasing services, all of which are forms of financing or providing capital as desired by customers both for individual needs or business needs.
Next is a factoring business or called factoring where the business is taking over the credit payments of a troubled company or managing credit at a company that needs it, almost the same as a factoring business is a venture capital company that also provides credit or financing assistance to risky companies without guarantee.
And the last type of non-bank financial institution is a pension fund, which is an institution whose main activity is managing pension funds for an institution, both government and private.
Function of Financial Institutions
There are several functions of financial institutions that you need to know of which include the following. The first function is to launch good transactions of goods and services using money or credit, collect public funds in the form of deposits or investments and distribute them in the form of loans.
Not only that, there are several other functions, namely providing information related to economic analysis for the benefit of customers, disseminating information that will benefit customers and providing legal and moral guarantees related to the security of funds entrusted to institutions, both banks and non-banks.
And the last is to create and provide liquidity or confidence to customers that the funds that have been entrusted will be returned. Thus some information related to financial institutions, hopefully useful ...
Description: A financial institution is a business entity engaged in finance by collecting funds from the public and channeling them to the community.

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