Benefits of Financial Institutions
Pawnshop companies are useful for providing loans to those who need funds
Useful to provide a guarantee of a risk that may occur in accordance with the services offered by the company
Useful for providing welfare to company employees, especially those who have retired
Useful to provide a loan to the community in terms of funding a consumption activity.
Useful to provide a benefit to all members in terms of togetherness and the remaining business results.
Financial institutions help channel funds from the household sector to borrowers that are unlimited and unknown to the owner of the fund with relatively lower transaction costs and information costs than if the borrower had to find and conduct transactions directly.
Related to the role of financial institutions in reducing the possibility of the risk borne by the owner of the fund or saver. If the owner of the fund has deposited his money in the financial institution, the risk of not being paid back the deposit money will be reduced by the financial institution strategy for some fund allocations.
Types of Financial Institutions
1. Bank Financial Institutions
This type of institution consists of the Central Bank, Commercial Bank and Rural Credit Bank. Based on the Basic Banking Law No. 23 of 1998 there are two types of banks in Indonesia namely Commercial Banks and Rural Credit Banks.
Central Bank
The Central Bank in Indonesia is held or implemented by Bank Indonesia. The main objective of Bank Indonesia as a central bank is to achieve and maintain stability in the value of the rupiah. To achieve these objectives, the Central Bank has the duty to establish and implement a monetary policy, regulate and maintain the smooth foreign exchange system and regulate and supervise the Bank.
commercial banks
Commercial banks are banks that are able to provide services in the payment traffic, whereas in rural banks are banks that accept deposits only in the form of time deposits or other similar forms.
Rural Credit Bank (BPR)
BPR is a bank financial institution that accepts deposits only in the form of time deposits, savings or other forms which are equalized and distribute funds as a business of the BPR. This BPR is a Bank specifically for serving small communities in an area, sub-district or village. Rural Credit Banks come from Village Banks, Lumbung Desa, Market Banks, Employee Banks and other Banks which are later merged into People's Credit Banks.
Besides that, banks also conduct other supporting services. These services are provided to support the smooth collection and distribution of funds, both directly related to savings and credit activities or indirectly. Other banking services include:
Money transfer services (Transfers)
billing services (collections)
clearing services
Foreign currency sales services (Forex)
safe deposit box services
Travelers Check
Bank Card
Bank draft
Letter of Credit (L / C)
Bank Guarantee and Bank Reference
As well as other bank services.
So more and more variety of products offered are seen in terms of the ability of banks in terms of capital, management, and facilities they have.