Notes on lesson on Financial Institutions |

Financial Institutions

Financial Institutions


Financial Institution

A financial institution is a banking or non-banking institution established under the certain act to contribute for the economic development by collecting the funds & investing in various productive sectors. This note has information about financial institutions and its types.

Central Bank

The central bank is the apex bank in a country. The central bank is a supreme banking institution which involves in controlling, supervising and regulating the activities of the commercial bank and other financial institutions. This note has information about central bank and its functions.

Commercial Bank

A commercial bank is regarded as the eldest financial institution in the history of banking. The bank, which is established to promote the trade and industry in the country, is called a commercial bank. This note has information about commercial bank and its functions.

Development Bank

The bank which facilitates the economic sectors such as industrial, agricultural, rural, etc. by providing capital and technical assistance for their development is known as a development bank. The oldest development bank named Societe Generale de Belgique was established in 1822 AD in Belgium.

Types of Development Bank

In Nepal, development banks are established under the provision of Development Bank Act, 2052. Nepal Industrial Development Corporation (NIDC), Agriculture Development Bank Ltd., Rural Development Bank and a number of private development banks have already been established as development banks in Nepal under this Act. This note has information about the types of development banks.


A cheque is an important means of payment. It is used for paying a large sum of money. A cheque is an unconditional order drawn upon a specified banker signed by the maker. This note has information about cheque, its characteristics and its types.

Rules of Issuing a Cheque

If the drawer makes the cheque properly and if the balance of the drawer at the bank permits, the bank must pay the amount of cheque as soon as it is presented. If the drawer does not make the cheque properly, the bank rejects payment. This note has information about rules of issuing a cheque.


Insurance is a way, which provides security to the man and his property against the risk and uncertainty. It is the cooperative method of distributing the risk of an individual caused by death, fire, accident etc. over a large number of individuals in exchange for a regular contribution called premium. This note has information about insurance.