Banking Licenses for the Nbfcs: a Necessary Evil?

There are various categories of banking; these include retail banking, directly dealing with small businesses and persons. Commercial and Corporate banking which offers services to medium and large businesses (Koch & MacDonald 2010). Private banking, deals with individuals, offering them one on one service. The last category is investment banking. These help clients to raise capital and often invest in financial markets. Most global banking institutions provide all these services combined. With all these institutions in existence within the same localities and offering similar services, there is a need to regulate the industry so as to protect the consumer and provide fair working environment for all banks (Du & Girma, 2011).

Normally banks offer a suite of services over and above taking deposits and lending money, but Non-banking financial Services Company could offer similar service in some extent like insurance, mutual funds or fixed income securities. In the case of lending sides, bank also faces unconventional companies like General Motor, Sony or Microsoft offer preferred financing to customers who buy big items with relatively low cost.

Commercial banking provides consumers and potential customers with various financial services, such as deposits and loans, in a means of ensuring social stability, economic stability, and sustainable growth of the economy. Commercial banks offer a large range of investment products. While these products are not only for the use of personal accounts, they are also put to great use within organizations. Savings accounts, certificates of deposit, business loans, auto loans and mortgages are all examples of products that are offered in commercial banking. Due to the fact that certificates of deposit, saving and checking accounts are secured by the Federal Deposit Insurance Corporation (FDIC) in the United States, customers and consumers are

As I have stated before bank regulations are in place to be the backbone of the U.S. economy. Therefore, we live in a system that affects us every day. Banks have certain requirements and instruments that help them stay open and be profitable. In the 1990s, interstate banking was finally permitted to create nationwide banks of unprecedented size. Congress 's also attempted to force banks to make home loans to people who had limited creditworthiness. These regulations are a major factor in why as many banks failing and disappearing today as we did pre Federal Reserve System.

Small and medium enterprises play an important role in providing employment, improving people’s livelihood and in the overall economy. It is therefore imperative that the MSMEs explore other cheaper means of finance e.g. equity,

Threats of new entrants potential entrants: banks with microfinance pose a threat to Barclays Bank because of the targeting of these banks the owners of little income and owners of small businesses and that prevent the arrival of these customers to Barclays Bank because of the high cost of transactions , in contrast , it made Barclays Bank for over many years of working a capital large base than at that. will make the entry of new entrants is very difficult because the banking sector needs huge capital .

The banking industry is highly competitive. The financial services industry has beenaround for hundreds of years and just about everyone who needs banking servicesalready has them. Because of this, banks must attempt to lure clients away fromcompetitor banks. They do this by offering lower financing, preferred rates andinvestment services. The banking sector is in a race to see who can offer both the

The Microcredit Foundation of India is a non- profit organization, and effective tool for alleviating poverty. The Microcredit Foundation has its base located in southern rural India. Microcredit works with just about everyone who needs their help; however their focus is women. Microcredit presents the women of rural communities with the opportunity to start a business. The services of micro credit are dedicated to creating a better stable economy, opportunities in the establishment of medium sized enterprises, and co-operative development. The Microcredit Foundation of India provides sufficient and affordable customer oriented funding and other financial services as well as consulting and training to the target groups. Microcredit also

These are national or regional financial institution designed to provide medium- and long-term capital for productive investment, often accompanied by technical assistance, in poor countries.

Private banking industry has changed in a very basic way, driven by many key factors such as: free competition systems, modern developments in information technology (in particular, developments of the internet), and changing demographics. Private banks now operate in an environment shaped by increasing and shifting regulations, and in markets influenced by the uncontrolled situations of the world economy and geopolitical issues.

The regulatory system has enabled banks to continue with their unique and central role in America's financial markets by carrying out deposit-taking, lending, and other activities. The importance of banks in the U.S. financial system has resulted in the fact that regulation and supervision by the government extends to many banking aspects. While the current banking laws and supervision has been developed by several stakeholders, the regulatory system has mainly responsible to various needs and serves as a critical part in setting up the standards and guidelines with which banking services are provided (Spong, 2000).

SME sector which contributes significantly to India’s GDP is a lucrative segment for credit too

As a young Indian, I always want India to be filled with people of new innovative, creative and productive ideas and thoughts. And I strongly believe that if these thoughts can be made into actions with the advancements in Information technology, it can heal India’s soaring problems like unemployment, illiteracy to an extent. But recent reports on India’s ‘ease of doing business’ rankings is very alarming. Even after 20 years of economic reforms, India slipped from 131st position in 2013 to 134th position in 2014.Among BRICS countries, India is doing the worst. And among the issues faced by Small, Medium Enterprises which includes startups, credit issues is a main concern. In a recent secondary research done by me in finding credit issues of SMEs, results showed that out of all SMEs, 92.77% have no finance or self-finance. This has really affected the growth of SMEs in India. Even after increase in number of venture capitalists/angel investors to protect new ideas, this result shows that time has been exceeded to find a sustainable solution for this issue.

Microfinance institutions are playing an important role in the delivery of financial services to the poor. Increasingly, these MFIs are for-profit, limited liability companies, the ownership of which is in the hands of multiple shareholders. In most cases, shares are privately held (i.e., not publicly traded). Most such MFIs are licensed financial institutions finance companies and banks. Many are deposit takers. The microfinance industry has directed to change all that by building a financial market to meet diverse financial needs of under-served people (Armendáriz de Aghion and Morduch, 2004; Hermes and Lensink, 2011), and emerged merely with the objective of alleviating poverty, especially in developing countries (Brau, Hiatt, & Woodworth, 2009; Daley-Harris, 2006).

Within the segment, small enterprises led the demand for financing: around Indian rupees 6.42 trillion ($116 billion), approximately 74 percent of the total requirement. This was mostly due to unmet working capital and investment finance needs. Micro enterprises with a requirement of Indian rupees 2.05 trillion ($37 billion), accounted for 24 percent. Most of this requirement was largely focused around working capital needs. Women-owned medium-scale enterprises, which account for 0.01 percent of the total MSME sector had finance requirements of around Indian rupees 0.21 trillion ($4 billion), about 2 percent of the total requirement. Microfinance loans for seed capital allow women borrowers build credit habits and become more bankable. Thus, microfinance plays a key role in expanding access to finance for low-income women aspiring