List the Non-Banking Finances that involved in the Capital Market Operations.
The various non-banking financial institutions that are involved in the capital market operations are:
Investment banks: A financial intermediary that performs a variety of services. This includes underwriting, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and corporate organizations, and also acting as a broker for institutional clients.
Merchant banks: A bank that deals mostly in (but is not limited to) international finance, long-term loans for companies and underwriting. Merchant banks do not provide regular banking services to the general public.
Investment Companies: An investment company is a company whose main business is holding securities of other companies purely for investment purposes. The investment company invests money on behalf of its shareholders who in turn share in the profits and losses.
Insurance Companies: The insurance companies have huge funds for investment purposes and are classifies as Life Insurance Companies, General Insurance Companies, Marine Insurance Companies, etc. Life Insurance Company is the most prominent of all and performs two major functions i.e, protection of policy against loss due to pmature death and secondly investment of funds in various financial instruments.
Development Banks: Development banks are specialized financial institutions. They provide medium and long-term finance to the industrial and agricultural sector. They provide finance to both private and public sector. Development banks are multi-purpose financial institutions. They do term lending, investment in securities and other activities. They even promote saving and investment habit in the public.
Pension Funds: A fund established by an employer to facilitate and organize the investment of employees retirement funds contributed by the employer and employees. The pension fund is a common asset pool meant to generate stable growth over the long term, and provide pensions for employees when they reach the end of their working years and commence retirement.
Finance Companies: Finance companies raise a huge amount of fund through inter-corporate deposits and sometimes the rate of interest is very high. The finance companies go for financing of consumer durable goods, automobiles, furniture, etc., which is normally on an installment basis.