FINANCIAL INTERMEDIARIES (NBFIS)
Wc have studied banks and their functioris. Besides the hanks there arc other financial institutions too which practically perform the same functions (e.g. deposit mobilisation and advancing loans as thc banks but in a different way. These arc the non-banking financial institutions. l\h·aniijg. Thc NUris arc just intermediaries
or middlemen transferring funds Ir orn ultimate lendersto ultimate borrowers .The financial intcrmcdiarics ohtniu funds by issuing to the public their own liabilities (q(.. saving de po: its and loan shares) and called !ibcralisation and globalisation policy the govcmmcnt initiated the process of privatisation as well as allowing foreign and Indian participation in the go vemment owned banks and non-bank financial institutions. Capitalistic economies main base is profit and business, whether they create social benefits or brings about huge inequalities. This brings about conflicting question in the academic circles. (i, Whether the governmentis moving away from social responsibilities? [In terms of providing employment, priority lending, reduction in inequalities ere]. (ii) Is ‘profit’ the main criteria of judging the efficiency of a banking institution in a country like India? and (iii) The future of monetary economics? In modern day banking sector, new methods of
“(financial activities have been introduced. Commercial banks arc concentrating more on secondary function, Commercial banks investment in stock-exchange (de-
. mat banking) etc., ATM (any time money), drafts, credit cards, lockers, safe deposits vaults, c-banking etc., arc the new ways and means to enlarge banking
business. This IS essentially increasing indirectly or directly the employment opportunities, but this may be a of temporary phenomenon and is based on the success and future of monetary economics. The commercial banks have neglected the importance of providing direct employment with the excuse of bringing about modernisation as well as profit as the main criteria criteria of judging the efficiency of the banks. The government can increase employment opportunities in this sector by bringing about certain reforms which may induce the staff to increase their efficiency. ‘Profit’ should not be the basis of judging the efficiency of a bank. If banks arc creating more deposits or enlarging the banking habits among the masses and helping a larger section of the people in their economic activities, which may hring either directly or indirectly the economic activities. Further more studies are required to justify this point. No economic policy of is a permanent nature. In the past, in 1930’s monetary economics collapsed.
Then emerged the fiscal economic policy of pumppriming. Many countries governments are following deficit finance or functional finance approach to redress their economic problems. This has led to increase in fiscal imbalances and specially the developing countries arc at the mcrecy of international monetary institution. In recent years after the GATr proposals and the emergence of WTO. the monetary economics has taken the front scat. which at present taking the economies into that direction which docs not know its destination. There is a need for cousenses among the economic policy makers to assess the real picture of economic course in future and involve a policy which may help, rather than create problem for the economics.