Many of us are still wondering, what’s the difference between banks and money lenders? Here we will explain the understanding and some differences from banks and Moneylender Singapore:
The Bank is a financial intermediary institution generally established with the authority to accept deposits of money, lend money, and issue promissory notes or banknotes. The word bank comes from Italian “banca” means a money changer. Meanwhile, according to bank banking law is a business entity that collects funds from the community in the form of savings and channelled to the community in the form of credit and or other forms in order to improve the standard of living of many people.
Non-bank financial institutions or money lenders are financial institutions that provide financial services and withdraw funds from the community indirectly (non-depository). Non-bank financial institutions consist of several types, namely financing institutions consisting of leasing, factoring, consumer financing and credit cards, insurance companies including financial and life insurance and reinsurance, pension funds consisting of pension fund lenders and pension funds institutions Finance, securities company funds, mutual funds, guarantee companies, venture capital firms and pawnshops.
Money lender keeps their loans document on their books but sells conventional loans to companies that market loans as securities. General laws require banks to deposit some cash on hand to handle losses tied to their unusual credits.
Here are some functions of money lender:
– Can provide credit in the short term or long term. Credit is included in the main activities of financial institutions. Usually, this credit is required by business owners to develop their owned business.
– Can be an intermediary for the owners of capital, both domestic and abroad, with companies that require capital. The function of moneylender this one certainly helps companies that are in need of capital paid by way of credit.