What do you understand by financial institutions ? Write their merits and limitations

sourcesofb.f
cbse

#1

Financial institutions have been established all over the country to provide financial assistance to business organisations. These institutions have been established by the central as well as state governments to fulfil the medium as well as long-term requirements of the business. Besides provi-ding financial assistance, these institutions also conduct market surveys and provide technical assistance and managerial services to their clients. Merits:

  1. They provide long-term finance, not provided by commercial banks.
  2. They provide funds during periods of depression when other sources are not available.
    Limitations:
  3. The procedure for obtaining loan from these institutions is time consuming and expensive. Moreover, it involves many formalities.
  4. They impose many restrictions on the power of borrowing of the company.