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Banking Vs Non Banking Financial Institutions

This document discusses and compares non-banking financial institutions (NBFIs) and commercial banks in Bangladesh. It notes that NBFIs, of which there are currently 25 operating in Bangladesh, provide long-term financing and fill credit gaps in ways that are unfamiliar to commercial banks. Specifically, NBFIs focus on term loan needs of large enterprises and foreign companies, while commercial banks deal with a wider range of customers and activities. The document also lists the key differences between NBFIs and commercial banks and concludes that both play an important role in Bangladesh's economic development when they work positively together.

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3K views2 pages

Banking Vs Non Banking Financial Institutions

This document discusses and compares non-banking financial institutions (NBFIs) and commercial banks in Bangladesh. It notes that NBFIs, of which there are currently 25 operating in Bangladesh, provide long-term financing and fill credit gaps in ways that are unfamiliar to commercial banks. Specifically, NBFIs focus on term loan needs of large enterprises and foreign companies, while commercial banks deal with a wider range of customers and activities. The document also lists the key differences between NBFIs and commercial banks and concludes that both play an important role in Bangladesh's economic development when they work positively together.

Uploaded by

FarihaFardeen
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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  • Introduction to Non-Banking Financial Institutions: Provides an overview of non-banking financial institutions (NBFIs) in Bangladesh, including their operations, importance, and role in the financial system.
  • List of Non-Banking Financial Institutions: Lists various non-banking financial institutions operating in Bangladesh, providing a detailed enumeration of these entities.

In Bangladesh now different commercial banks and the non banking financial organizations are operating

there business. And every organization now involved attracting the retail customers that means the
middle income group people of the country. To draw their attention the sells persons of different
organization try to knock every possible door. These activities of different organization increase the
interest about this sector. As both commercial banks and the non financial institutes are in the market, so
it makes confusion to the general people about the activities of these organizations. This article helps the
customers to makes differentiate between these.
Non-bank financial institutions represent one of the most important parts of a financial system.
InBangladesh, NBFIs are new in the financial system as compared to banking financial institutions (BFIs).
A total of 25 NBFIs are now working in the country. The NBFIs sector in Bangladesh consisting primarily
of the development financial institutions, leasing enterprises, investment companies, merchant bankers
etc. The financing modes of the NBFIs are long term in nature. Traditionally, our banking financial
institutions are involved in term lending activities, which are mostly unfamiliar products for them.
Inefficiency of BFIs in long-term loan management has already leaded an enormous volume of
outstanding loan in our country. At this backdrop, in order to ensure flow of term loans and to meet the
credit gap, NBFIs have immense importance in the economy. In addition, non-bank financial sector is
important to increase the mobilization of term savings and for the sake of providing support services to
the capital market.

The basic difference may include:-
A Bank is an organization that accepts customer cash deposits and then provides financial
services like bank accounts, loans, share trading account, mutual funds, etc.
A NBFC (Non Banking Financial Company) is an organization that does not accept customer cash
deposits but provides all financial services except bank accounts.
A bank interacts directly with customers while an NBFI interacts with banks and governments
A bank indulges in a number of activities relating to finance with a range of customers, while an
NBFI is mainly concerned with the term loan needs of large enterprises
A bank deals with both internal and international customers while an NBFI is mainly concerned
with the finances of foreign companies
A bank's man interest is to help in business transactions and savings/investment activities while
an NBFI's main interest is in the stabilization of the currency

Besides the differences between the both commercial banks and the non banking financial institutions
they play both for the development of the economic structure of the country. If the both play positively
than it can be said that, the development of the country is sure.

References:
http://wiki.answers.com/Q/Difference_between_bank_and_nonbanking_financial_institution
http://bbamba.info/Articles/Business/Roles-of-Commercial-Bank.html
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=574481
http://www.answers.com/topic/bank

Non-Banking Financial Institutions
Agrani SME Finance Co. Ltd.
Bangladesh Finance & Investment Co. Ltd.
Bangladesh Industrial Finance Company Limited (BIFC)
Bay Leasing & Investment Limited
Cosmopolitan Finance Limited (CFL)
Delta Brac Housing Finance Corporation Ltd. (DBH)
Forest Finance & Investment Limited
FAS Finance & Investment Limited
First Lease Finance & Investment Ltd.
GSP Finance Company (Bangladesh) Limited (GSPB)
Hajj Finance Company Limited
IDLC Finance Limited
Industrial and Infrastructure Development Finance Company (IIDFC) Limited
Industrial Promotion and Development Company of Bangladesh Limited (IPDC)
Infrastructure Development Company Limited (IDCOL)
International Leasing and Financial Services Limited
Islamic Finance and Investment Limited
LankaBangla Finance Ltd.
MIDAS Financing Ltd. (MFL)
National Finance Ltd
National Housing Finance and Investments Limited
Peoples Leasing and Financial Services Ltd
Phoenix Finance and Investments Limited
Premier Leasing & Finance Limited
Prime Finance & Investment Ltd
Reliance Finance Limited
Saudi-Bangladesh Industrial & Agricultural Investment Company Limited (SABINCO)
The UAE-Bangladesh Investment Co. Ltd
Union Capital Limited
United Leasing Company Limited (ULCL)
Uttara Finance and Investments Limited

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