FUNCTIONS OF A FINANCIAL INSTITUTIONS


1. They provide venture capital

2. They provide facilities for large lending

3. They provide technical expertise and support emerging projects transferable from other sectors of development economies.

4. They are risk capital providers in areas which are not attractive to commercial banks and other major lenders due to risk involved.

5. They carry out feasibility study to evaluate viability of projects.

Case against Specialized Institutions and Development Banks

1. They are being phased out by Globalisation and liberalization where needy sectors can easily get expertise from outside.

2. Commercial banks have now matured up to provide capital for all sectors.

3. They were only useful during periods of foreign exchange restriction

4. They are risk capital providers in areas which are not attractive to commercial banks and other major lenders due to risk involved.

5. They increase government spending.