The government has established a number of financial institutions all over the country to provide finance to business organizations.
These institutions are established by the central as well as state governments. They provide both owned capital and loan capital for long and medium term requirements and supplement the traditional financial agencies like commercial banks. As these institutions aim at promoting the industrial development of a country, these are also called ‘development banks’. In addition to providing financial assistance, these institutions also conduct market surveys and provide technical assistance and managerial services to people who run the enterprises. This source of financing is considered suitable when large funds for longer duration are required for expansion, reorganization and modernization of an enterprise.
There are several types of financial institutions, such as banks, credit unions, brokerage companies, insurance companies and trust companies — all of which have different primary functions and assist with the transferring of funds from investors to companies in need of funds.