Types of Financial Institutions
Common types of financial institutions include banks, Insurance Co, Leasing Co, Investment Co, and Mutual Funds.
Banks
A bank is a commercial or state institution that provides financial services, including issuing money in various forms, receiving deposits of money, lending money, and processing transactions and the creating of credit.
Central Bank
A central bank, reserve bank or monetary authority, is an entity responsible for the monetary policy of its country or of a group of member states, such as the European Central Bank (ECB) in the European Union, the Federal Reserve System in the United States of America, State Bank in Pakistan. Its primary responsibility is to maintain the stability of the national currency and money supply, but more active duties include controlling subsidized-loan interest rates, and acting as a "bailout" lender of last resort to the banking sector during times of financial crisis (private banks often being integral to the national financial system).
Commercial Bank
A commercial bank accepts deposits from customers and in turn makes loans, even in excess of the deposits; a process known as fractional-reserve banking. Some banks (called Banks of issue) issue banknotes as legal tender.
Investment Bank
Investment banks help companies and governments and their agencies to raise money by issuing and selling securities in the primary market. They assist public and private corporations in raising funds in the capital markets (both equity and debt), as well as in providing strategic advisory services for mergers, acquisitions and other types of financial transactions.
Saving Bank
A savings bank is a financial institution whose primary purpose is accepting savings deposits. It may also perform some other functions.
Micro Finance Bank
For the purpose of poverty reduction program, such kind of banks is working in the different countries with the contribution of UNO or World Bank. In Pakistan 7 Micro Finance Banks are providing services under the SBP prudential regulation.
Islamic Bank
Islamic banking refers to a system of banking or banking activity that is consistent with Islamic law (Sharia) principles and guided by Islamic economics. In particular, Islamic law prohibits usury, the collection and payment of interest, also commonly called riba in Islamic discourse.
Specialized Banks
1. ZTBL
The Zarai Taraqiati Bank Limited It is also known as Agricultural Development Bank of Pakistan (ADBP). It is the premier financial institution geared towards the development of the agricultural sector through the provision of financial services and technical know-how.
2. IDBP
Industrial Development Bank of Pakistan is one of Pakistan's oldest developments financing institution created with the primary objective of extending term finance for investment in the manufacturing sector and SME Sector of the economy.
3. SME Bank
SME bank Ltd was established to exclusively cater to the needs of the SME sector. It was created to address the needs of this niche market with specialized financial products and services that will help stimulate SME development and pro poor growth in the country.
