Question

Discuss how the degree of regulation is different for depository institutions versus non-depository institutions.

Answer 1

Most of the money and credit readily available to the company comes from repository corporations that is Bank that accept deposits from public in the form of Savings and mobilize the same by lending banks have two major functions accept deposit and lend money however as opposed to banks there are non depository Institutions also which are financial intermediaries that cannot accept deposit but do pool the payments in the form of premiums or contributions how many people invest in a provide credit to others.

Non depository Corporation is a blanket term for Institutions like Insurance Company pension funds investment forms Government sponsored Enterprises cooperative societies and non banking financial company

Non banking financial corporation land and make investment and hence their activities are akin to that of banks

Non banking financial corporation cannot accept demand deposits they do not form a part of payment and settlement system in cannot issued cheques drawn on itself the basic difference between a non depository corporation and non Bank financial institution is that the first refers to those companies that mobilise funds from sources other than deposits from public the latter is a subset of first with functions akin to a bank.

a depository Institutions a financial institution in United States such a savings bank Commercial Bank savings and Loan Association of credit unions that is legally allowed to accept monetary deposit from consumers and example of non depository Institutions might be a mortgage Bank while lincensed to lend cannot accept deposit.

This institution performer variety of functions other than direct banking with customers all together they support of financial system of the country mutual fund security firms Pension Fund insurance companies their professionally managed funds by fund management companies which collectively invest money taken by big and small investors in Bond shares pension funds mainly handle the pension deposit of the people living in a country insurance companies provide the necessary insurance services to the common people hence they cannot issue cheque deposit cannot receive deposit cannot provide day today banking services such as RTGS or NEFT.