Institutions are financial institutions those accepts deposits. These deposits represent the liabilities of the deposit-accepting institution. With the funds raised through deposits and other funding sources, depository institutions both make direct loans to various entities and invest in securities. Their income is derived from two sources: a) the income generated from the loans they make and the securities they purchase, and b) fee income.
The various types of depository institutions are:
1. Commercial Banks: It provides numerous services in financial system.
The
services can classify into i) individual banking, ii) institutional banking, and
iii)
global banking.
2. Credit unions: They are commonly known as cooperative societies. The purpose of credit union is to service their members’ saving and borrowing needs.
3. Savings
and
loan associations (S&Ls): The basic
aspects
behind to providing of funds for financing the purchase of homes. The collateral for
the loans would be the home being financed.
S&Ls are either mutually owned or have corporate stock ownership.
4. Saving Banks: this can be mutually owned (in which case they are called
mutual savings banks) or stockholder
owned. The principal assets of savings banks are residential mortgages and the principal source of founds is deposits.