Types of Common Banking Institutions

A friend of yours wants a loan for a two-wheeler. The bank asks for three months of statements and a guarantor. A finance company in the next lane will process the loan in an hour. A co-operative bank in her father's society offers a third route. All three lend money, but the law treats them as three different institutions, answerable to different provisions. How do you tell which is which, and why does it matter when something goes wrong?

In two minutes

Common institutions in Indian finance are banking companies, regional rural banks, co-operative banks, non-banking financial companies and asset reconstruction companies; each is defined in a different statute, and only banks may accept deposits withdrawable by cheque.

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