{"id":4913,"date":"2019-02-15T13:49:11","date_gmt":"2019-02-15T08:19:11","guid":{"rendered":"http:\/\/astan.lk\/al_virtualclassroom\/?p=4913"},"modified":"2019-02-16T11:36:31","modified_gmt":"2019-02-16T06:06:31","slug":"financial-institution","status":"publish","type":"post","link":"https:\/\/astan.lk\/al_virtualclassroom\/financial-institution\/","title":{"rendered":"Financial Institution"},"content":{"rendered":"<p>The following are the classification of financial institutions in Sri Lanka<\/p>\n<p>\u2022 The Central Bank of Sri Lanka<\/p>\n<p>\u2022 Banking Sector<\/p>\n<p>\u2022 Licensed commercial banks<\/p>\n<p>\u2022 Licensed specialized banks<br \/>\n\u2022 Other institutions which accept deposits<\/p>\n<p>\u2022 Registered finance companies<\/p>\n<p>\u2022 Co-operative rural banks<\/p>\n<p>\u2022 Thrift and credit co-operative societies (Sanasa)<br \/>\n\u2022 Other financial institutions<\/p>\n<p>\u2022 Specialized leasing companies<\/p>\n<p>\u2022 Vanik\/ Merchant banks<\/p>\n<p>\u2022 Primary<a class=\"t3NH6ZY84y B32mwhscL\" style=\"z-index: 2147483647;\" title=\"Click to Continue &gt; by Ads\" href=\"http:\/\/s.igmhb.com\/click?v=TEs6MTI4MjI0OjIxOTIyOmRlYWxlcnM6YzE3Y2Q0YjcyNjNkMGE1YjFiMTQ3ODk5NmM5MDU0ZmU6ei0yNTI3LTg4NDUwMjI1OmFzdGFuLmthbm5hbnIuY29tOjM3Mzk3MjowOjc4M2E3ODFjZTgwMDQ0NjQ4ZTRjZDU5YmQ0OTBiMWQwOjE6ZGF0YV9zcyw3Mjh4MTM2NjtkYXRhX3JjLDQ7ZGF0YV9mYixubzs6NTE0NjE3NTo6OjAuMDI&amp;subid=g-88450225-39bd787bdeaf45288a9f69e410f23967-&amp;data_ss=728x1366&amp;data_rc=4&amp;data_fb=no&amp;data_tagname=A&amp;data_ct=link_only&amp;data_clickel=link&amp;data_sid=9808fc32a5fe2c8bbd122ff2a246d517\" target=\"a652c_1485091850_astankannanrcom_373972\"> dealers<img decoding=\"async\" src=\"http:\/\/cdncache-a.akamaihd.net\/items\/it\/img\/arrow-10x10.png\" \/><\/a><\/p>\n<p>\u2022 Share<a class=\"t3NH6ZY84y B32mwhscL\" style=\"z-index: 2147483647;\" title=\"Click to Continue &gt; by Ads\" href=\"http:\/\/s.igmhb.com\/click?v=TEs6MTE1MjE0OjI0NTU6YnJva2VyIGNvbXBhbnk6Nzg1N2RhMjEzMmE0MDAzNTAxMzAyNTI4MTFmZjcwZmM6ei0yNTI3LTg4NDUwMjI1OmFzdGFuLmthbm5hbnIuY29tOjM2MjQ2Njo3OTA4YTE4YzcwNDZhMTBkMmVkMzM2N2NmMzhmNzc5ZjpmYjkxMWE3NWU3NzI0YTZhYWI4M2ViZDlmNDQ2YjQ5MjoxOmRhdGFfc3MsNzI4eDEzNjY7ZGF0YV9yYyw1O2RhdGFfZmIsbm87OjE0NDY3MjcxOjo6MC4wMQ&amp;subid=g-88450225-39bd787bdeaf45288a9f69e410f23967-&amp;data_ss=728x1366&amp;data_rc=5&amp;data_fb=no&amp;data_tagname=A&amp;data_ct=image_only&amp;data_clickel=link&amp;data_sid=9808fc32a5fe2c8bbd122ff2a246d517\" target=\"a652c_1485092117_astankannanrcom_362466\"> brokers companies<img decoding=\"async\" src=\"http:\/\/cdncache-a.akamaihd.net\/items\/it\/img\/arrow-10x10.png\" \/><\/a><\/p>\n<p>\u2022 Unit trusts<\/p>\n<p>\u2022 Venture capital companies<\/p>\n<p>\u2022 Credit rating organizations<br \/>\n\u2022 Contractual saving institutions<\/p>\n<p>\u2022 Insurance companies<\/p>\n<p>\u2022 Employees trust fund<\/p>\n<p>\u2022 Employees provident fund<\/p>\n<p>\u2022 Approved private provident fund<\/p>\n<p>\u2022 Government service provident fund (According to Central Bank annual report- 2008)<\/p>\n<p>\u2022 The financial organizations which accepts current account, savings account and other deposits, operates foreign exchange activities and are able to create money are called licensed commercial banks.<br \/>\n\u2022 There are large numbers of licensed commercial banks registered under the Central Bank of Sri lanka. A few banks are owned by the government sector whereas the majority of the banks are owned by the private sector.<br \/>\n\u2022 Licensed commercial banks provide various services including acceptance of deposits and lending money.<\/p>\n<p>\u2022 Give more clear information to the students about the various services which make business \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0activities easier.<br \/>\n\u2022 Licensed specialized banks can be defined as follows. Licenced specialized banks are the financial institutions which have obtained a license from the Central Bank to conduct specialized banking business under the banking act. These banks are not permitted to maintain current accounts or foreign exchange transactions. These are special characteristics of the licensed specialized banks. However, they are authorized to accept savings and time deposits.<br \/>\n\u2022 Explain clearly the<a class=\"t3NH6ZY84y B32mwhscL\" style=\"z-index: 2147483647;\" title=\"Click to Continue &gt; by Ads\" href=\"http:\/\/s.igmhb.com\/click?v=TEs6MTI4MjI0OjIxOTIyOmltcG9ydGVyczowN2M4NjMwOGNhODBiNDI0NzBkYmQ4ZDBjNmVjNzMzMDp6LTI1MjctODg0NTAyMjU6YXN0YW4ua2FubmFuci5jb206MzczOTcyOjA6YWM2M2I2ZTE5Y2UzNGQyMTk2ZWJjOTUzNTkyMzIzNjQ6MTpkYXRhX3NzLDcyOHgxMzY2O2RhdGFfcmMsNDtkYXRhX2ZiLG5vOzo1ODExNDExOjo6MC4wMw&amp;subid=g-88450225-39bd787bdeaf45288a9f69e410f23967-&amp;data_ss=728x1366&amp;data_rc=4&amp;data_fb=no&amp;data_tagname=A&amp;data_ct=link_only&amp;data_clickel=link&amp;data_sid=9808fc32a5fe2c8bbd122ff2a246d517\" target=\"a652c_1485092248_astankannanrcom_373972\"> importance<img decoding=\"async\" src=\"http:\/\/cdncache-a.akamaihd.net\/items\/it\/img\/arrow-10x10.png\" \/><\/a> of such services including accepting deposits and lending money to business by the licensed specialized banks<br \/>\n\u2022 Suggest examples of licenced specialized banks.<br \/>\n\u2022 The following is the description of registered finance companies. \u2022 A public limited company which is registered under the Financial Companies Act and obtains a license from the Central Bank of Sri Lanka.<br \/>\n<strong>The following functions are performed by finance companies<\/strong><\/p>\n<p>\u2022 Financing on hire purchase<\/p>\n<p>\u2022 Trading on real estate<\/p>\n<p>\u2022 Provision of leasing facilities<\/p>\n<p>\u2022 Providing<a class=\"t3NH6ZY84y B32mwhscL\" style=\"z-index: 2147483647;\" title=\"Click to Continue &gt; by Ads\" href=\"http:\/\/s.igmhb.com\/click?v=TEs6MTMwMDUxOjIxOTIyOnNob3J0czphNDI0MGQxZDcyNjM1MjlhM2UxMzE0ODE4NTA2NjIzZDp6LTI1MjctODg0NTAyMjU6YXN0YW4ua2FubmFuci5jb206Mzc5NTk4OjA6Y2RlMWY3OGIyYmJiNGM3MWExNDg5YWEzM2IxMjg0NDI6MTpkYXRhX3NzLDcyOHgxMzY2O2RhdGFfcmMsNTtkYXRhX2ZiLG5vOzo0MzI4NTQwOjo6MC4wMQ&amp;subid=g-88450225-39bd787bdeaf45288a9f69e410f23967-&amp;data_ss=728x1366&amp;data_rc=5&amp;data_fb=no&amp;data_tagname=A&amp;data_ct=link_only&amp;data_clickel=link&amp;data_sid=9808fc32a5fe2c8bbd122ff2a246d517\" target=\"a652c_1485092285_astankannanrcom_379598\"> short<img decoding=\"async\" src=\"http:\/\/cdncache-a.akamaihd.net\/items\/it\/img\/arrow-10x10.png\" \/><\/a> term loans<\/p>\n<p>\u2022<a class=\"t3NH6ZY84y B32mwhscL\" style=\"z-index: 2147483647;\" title=\"Click to Continue &gt; by Ads\" href=\"http:\/\/s.igmhb.com\/click?v=TEs6MTI5ODk3OjI0NTU6aW52ZXN0aW5nIG1vbmV5OjcyODA2Yzk2MGY5ZDIxZDE1NDNmY2EzYzQ4Y2I2ZjYzOnotMjUyNy04ODQ1MDIyNTphc3Rhbi5rYW5uYW5yLmNvbTozNzkzMDI6OTlmMmZiNDgwZDZhNzM1N2EzNjNiMmM5NTM0OGQ5YzY6OTg2ZTdmYWM3MDkzNDcyYjgxNDQ4NjVlMTE0M2JlMGQ6MTpkYXRhX3NzLDcyOHgxMzY2O2RhdGFfcmMsNDtkYXRhX2ZiLG5vOzo0NTU2OTkyOjo6MC4wMQ&amp;subid=g-88450225-39bd787bdeaf45288a9f69e410f23967-&amp;data_ss=728x1366&amp;data_rc=4&amp;data_fb=no&amp;data_tagname=A&amp;data_ct=image_only&amp;data_clickel=link&amp;data_sid=9808fc32a5fe2c8bbd122ff2a246d517\" target=\"a652c_1485092310_astankannanrcom_379302\"> Investing money<img decoding=\"async\" src=\"http:\/\/cdncache-a.akamaihd.net\/items\/it\/img\/arrow-10x10.png\" \/><\/a> on government securities, treasury bonds<\/p>\n<p>\u2022 Acceptance of term deposits<\/p>\n<p>\u2022 Describe the contribution rendered by the above functions for the performance and the growth of businesses<\/p>\n<p>\u2022 Mention a few examples of registered finance companies.<\/p>\n<p><strong>The various functions carried out by the cooperative rural banks are as follows<\/strong><\/p>\n<p>\u2022 Accepting both deposits of members as well as non- members.<br \/>\n\u2022 Providing pawning facilities<br \/>\n\u2022 Acceptance of different categories of deposits. (Savings and to Fixed deposits )<br \/>\n\u2022 Providing loans to its members for the purpose of agriculture, production, Industries and trade.<br \/>\n\u2022 Disseminate the co-operative life-style among rural people<br \/>\n\u2022 Thrift and credit cooperative society (Sanasa) gives a helping hand to business activities<br \/>\n\u2022 Basic objectives of the society is promoting saving habits and providing loans to members. It should obtain a license from the commissioner of cooperatives under the co-operative act. It accepts money as savings and shares from members and provides loans to members.<br \/>\n\u2022 Leasing companies could be defined as follows: A special financial institution which provides money for businessmen in order to lease<a class=\"t3NH6ZY84y B32mwhscL\" style=\"z-index: 2147483647;\" title=\"Click to Continue &gt; by Ads\" href=\"http:\/\/s.igmhb.com\/click?v=TEs6MTMwMDUxOjIxOTIyOmVxdWlwbWVudDpiZDI0MzVjNTk5ODkwMWU0YTc1OGZhMDlhOTYyNTFhZDp6LTI1MjctODg0NTAyMjU6YXN0YW4ua2FubmFuci5jb206Mzc5NTk4OjA6OGNhYzBhODU3YjUyNDA2NmE2Mzg3NDFhNWY3NjY0YWM6MTpkYXRhX3NzLDcyOHgxMzY2O2RhdGFfcmMsNDtkYXRhX2ZiLG5vOzo0Njg2OTM2Ojo6MC4wMQ&amp;subid=g-88450225-39bd787bdeaf45288a9f69e410f23967-&amp;data_ss=728x1366&amp;data_rc=4&amp;data_fb=no&amp;data_tagname=A&amp;data_ct=link_only&amp;data_clickel=link&amp;data_sid=9808fc32a5fe2c8bbd122ff2a246d517\" target=\"a652c_1485092417_astankannanrcom_379598\"> equipment<img decoding=\"async\" src=\"http:\/\/cdncache-a.akamaihd.net\/items\/it\/img\/arrow-10x10.png\" \/><\/a> or any other asset and is known as a leasing company. The main income of these leasing companies is the normal rent, received by giving the particular movable assets on lease.\\<br \/>\n<strong>\u00a0Advantages gained by a businessman from leasing companies are as follows<\/strong><br \/>\n\u2022 Arranging facilities for the use of valuable assets without paying the whole value.<br \/>\n\u2022 Exemption from income tax for the payment of rent on lease.<br \/>\n\u2022 Helps eliminate capital risks as well as losses incurred due to outdated machines.<br \/>\n\u2022 Is not shown on the liability side of the balance sheet of the business.<br \/>\n\u2022 Earning a high income without investing a large amount of money<br \/>\n\u2022 Indicates examples of leasing companies<\/p>\n<p>\u2022 A stock<a class=\"t3NH6ZY84y B32mwhscL\" style=\"z-index: 2147483647;\" title=\"Click to Continue &gt; by Ads\" href=\"http:\/\/s.igmhb.com\/click?v=TEs6MTE1MjE0OjI0NTU6YnJva2VyIGNvbXBhbnk6ZTk1YTNkZDhiODAwNmE3OGI1ZmFlZDcyMDEyNjRjYjM6ei0yNTI3LTg4NDUwMjI1OmFzdGFuLmthbm5hbnIuY29tOjM2MjQ2Njo3OTA4YTE4YzcwNDZhMTBkMmVkMzM2N2NmMzhmNzc5Zjo0YTExMjI5ODY0MWQ0MmVlYTRkZWExYjNhYTQ3MmEwMDoxOmRhdGFfc3MsNzI4eDEzNjY7ZGF0YV9yYyw0O2RhdGFfZmIsbm87OjE0NDY3MjcxOjo6MC4wMQ&amp;subid=g-88450225-39bd787bdeaf45288a9f69e410f23967-&amp;data_ss=728x1366&amp;data_rc=4&amp;data_fb=no&amp;data_tagname=A&amp;data_ct=image_only&amp;data_clickel=link&amp;data_sid=9808fc32a5fe2c8bbd122ff2a246d517\" target=\"a652c_1485092441_astankannanrcom_362466\"> brokers company<img decoding=\"async\" src=\"http:\/\/cdncache-a.akamaihd.net\/items\/it\/img\/arrow-10x10.png\" \/><\/a> acts as an intermediate person for the purchase or sale of stocks and debentures from incorporated companies<\/p>\n<p><strong>\u00a0The following are the commercial services carried out by stock<a class=\"t3NH6ZY84y B32mwhscL\" style=\"z-index: 2147483647;\" title=\"Click to Continue &gt; by Ads\" href=\"http:\/\/s.igmhb.com\/click?v=TEs6MTI5ODk2OjI0NTU6YnJva2VyIGNvbXBhbnk6MDI2YzVjM2E5YjllYjU5OWFjMDNjODUzMjFmYmQ3NjQ6ei0yNTI3LTg4NDUwMjI1OmFzdGFuLmthbm5hbnIuY29tOjM3OTMwNzo5OWYyZmI0ODBkNmE3MzU3YTM2M2IyYzk1MzQ4ZDljNjpiOWE0ZTYwOWRlOGM0NmRkYjg5OTI4YTFlYjkyOGE1YzoxOmRhdGFfc3MsNzI4eDEzNjY7ZGF0YV9yYyw1O2RhdGFfZmIsbm87OjE0NDY3MjcxOjo6MC4wMQ&amp;subid=g-88450225-39bd787bdeaf45288a9f69e410f23967-&amp;data_ss=728x1366&amp;data_rc=5&amp;data_fb=no&amp;data_tagname=A&amp;data_ct=image_only&amp;data_clickel=link&amp;data_sid=9808fc32a5fe2c8bbd122ff2a246d517\" target=\"a652c_1485092456_astankannanrcom_379307\"> broker companies<\/a><\/strong><br \/>\n\u2022 Accept sales or purchase orders from investors.<br \/>\n\u2022 Open up an account for investors at the central depositary system.<br \/>\n\u2022 Provide necessary advice to invest in shares and debentures.<br \/>\n\u2022 Confirm maximum advantages that could be obtained by the investors by analyzing the sharemarketand by preparing a report on market research.<br \/>\n\u2022 Give approval to listed companies after they have fulfilled the necessary requirements.<br \/>\n\u2022 Help capital formation at the public companies<br \/>\n\u2022 Present examples of share<a class=\"t3NH6ZY84y B32mwhscL\" style=\"z-index: 2147483647;\" title=\"Click to Continue &gt; by Ads\" href=\"http:\/\/s.igmhb.com\/click?v=TEs6MTI5ODk3OjI0NTU6YnJva2VyIGNvbXBhbnk6MTYyZjE1M2ZlYzg5Mjg3MTA1ZDQ4YmZlYWJiMDliMDA6ei0yNTI3LTg4NDUwMjI1OmFzdGFuLmthbm5hbnIuY29tOjM3OTE0MzozMThkZGRiODg2NTk4Zjk1MzM0MmQ3ZDNkYjVlMmIxZjpiMjljY2EwYWI0MzI0ZmY2YjYzZjNmOTdiMzJjZDM0YjoxOmRhdGFfc3MsNzI4eDEzNjY7ZGF0YV9yYyw0O2RhdGFfZmIsbm87OjE0NDY3MjcxOjo6MC4wMQ&amp;subid=g-88450225-39bd787bdeaf45288a9f69e410f23967-&amp;data_ss=728x1366&amp;data_rc=4&amp;data_fb=no&amp;data_tagname=A&amp;data_ct=image_only&amp;data_clickel=link&amp;data_sid=9808fc32a5fe2c8bbd122ff2a246d517\" target=\"a652c_1485092497_astankannanrcom_379143\"> brokers companies<img decoding=\"async\" src=\"http:\/\/cdncache-a.akamaihd.net\/items\/it\/img\/arrow-10x10.png\" \/><\/a>.<br \/>\n\u2022 The special financial institutions which are specialized in providing management and consultancy services are called merchant banks. They do not accept deposits.<br \/>\n<strong>Merchant banks provide various services to businessmen<\/strong>.<br \/>\n\u2022 Preparing project reports<br \/>\n\u2022 Providing consultancy services for finance and marketing<br \/>\n\u2022 Performing underwriting services<br \/>\n\u2022 Providing leasing services<br \/>\n\u2022 Give examples of merchant banks.<br \/>\n\u2022 Introduce unit trustees in the following manner.<br \/>\n\u2022 Unit trusts mobilize resources by selling its units to the investors and invests funds through the stock exchange. Funds are invested in the investment portfolio by professional investment managers. The benefits of the unit trust are distributed among the unit holders.<br \/>\n<strong>\u00a0There are three parties included in a unit trust.<\/strong><br \/>\n\u2022 Trustees<br \/>\n\u2022 Fund management companies<br \/>\n\u2022 Unit holders or investors<\/p>\n<p>\u2022 The following are the advantages of investing in a unit trust<br \/>\n\u2022 Risking money in various investments will be minimized through a unit trust.<br \/>\n\u2022 Obtain services from professional managers on investing.<br \/>\n\u2022 <strong>Venture capital companie<\/strong>s: Provide funds to start new business activities, expand present<br \/>\nbusiness activities, purchase or take over business activities. In addition to that it provides<br \/>\nunder writing services and syndicate of credit.<br \/>\n\u2022 Mention examples of venture capital<br \/>\n\u2022 Credit rating organizations provide services to businesses.<br \/>\n\u2022 Provision of guidance to investors to identity the features of financial<a class=\"t3NH6ZY84y B32mwhscL\" style=\"z-index: 2147483647;\" title=\"Click to Continue &gt; by Ads\" href=\"#92993239\"> instruments<img decoding=\"async\" src=\"http:\/\/cdncache-a.akamaihd.net\/items\/it\/img\/arrow-10x10.png\" \/><\/a> in<br \/>\nthe finance market. This helps to evaluate the financial strength of creditors and to<br \/>\ncompare them without difficulty in an international grade as there are common criteria<br \/>\nbeing used for the credit rating.<br \/>\n<strong>Contractual saving institutions also provide services to business.<\/strong><br \/>\n\u2022 Insurance company<br \/>\nThese organizations obtain funds by providing various insurance policies. Insurance<br \/>\ncompanies invest in the financial market. Insurance policies are issued to entrepreneurs<br \/>\nto cover their various risks.<br \/>\n\u2022 Employees provident fund and pensions schemes<br \/>\n\u2022 These schemes are constituted under labour law. This fund is formed with the<br \/>\ncontributions from both the parties. The contributed money with benefits would be<br \/>\ngiven to the employees at the time of their retirement.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The following are the classification of financial institutions in Sri Lanka \u2022 The Central Bank of Sri Lanka \u2022 Banking Sector \u2022 Licensed commercial banks \u2022 Licensed specialized banks \u2022 Other institutions which accept deposits \u2022 Registered finance companies \u2022 Co-operative rural banks \u2022 Thrift and credit co-operative societies (Sanasa) \u2022 Other financial institutions \u2022 [&hellip;]<\/p>\n","protected":false},"author":842,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[10,2391],"tags":[],"class_list":["post-4913","post","type-post","status-publish","format-standard","hentry","category-business-studies","category-unit-7"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Financial Institution - Learning &amp; 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