Financial institutions (Intermediaries) Financial institutions are the formal and legal institutions that conduct various types of financial transactions and also provide financial services to its customers and members like accepting voluntary deposits, compulsory deposits, providing loans against collateral, investment on financial assets, discounting financial assets, exchange and transfer of foreign currencies, transfer of home currency within the nation, issue of travel cheque, bank draft, letter of credit, debit card, credit card, etc. Hence, financial institutions work as a bridge between/among the ultimate savers and ultimate lenders, exchange of goods/s, transfer of currencies etc. There are two broad categories of financial institutions like banking and financial institutions BFIs and non-banking financial institutions NBFIs . BFIs NBFIs a) Central bank a) Development banks b) Commercial banks
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