Nowadays, the word finance is definitely read and heard in news, newspapers, and magazines etc. Because finance is an important word related to our financial needs. The word finance becomes a buzzword during the budget session across the country. Many people might have heard and read this word, but very few people might know about it.
Finance is a very broad and multi-meaning word, which in simple words means that finance is a means of carrying out many types of business activities. Finance companies play a very important role in the economic condition of the country and our economic needs. In this article, I will tell you what finance is, and what is the work of finance companies?
What are finance companies?
Finance is an important word related to financial management. And when this word is associated with a company, it is called a finance company. Finance companies, in a way, work by giving loans. Their work is slightly different from banks, although it works exactly like a bank.
Finance companies give loans to the right candidates at a fixed interest rate. It does not deposit money like a bank, nor does it provide facilities like banks. However, finance companies now provide many other facilities apart from loans, like credit cards, insurance etc.
Those companies which deal with financial transactions are called finance companies. A finance company brings good earnings, but it also comes with some risks.
Types of Finance Companies
There are different types of finance companies, and they also have different types of functions. Let me tell you the types of finance companies, which are as follows.
1. Non-Banking Finance Company: These types of companies are somewhat different from banks, although they work just like banks. These finance companies work under the Reserve Bank of India.
2. Trust and Society Companies: Trust and Society Finance Companies are quite famous at small level or district level. Small financial tasks can be done in this.
3. Nidhi Finance Company: This is also a type of finance company, which you can start in a very low budget. Nidhi company also provides financial services.
4. Micro Finance Company: These are small finance companies, which provide loan facilities in rural areas. These companies give loans to financially weak people at low interest rates.
5. Production Company: This type of companies was introduced under the Companies Act 2013 of India. These companies give loans for activities related to production i.e. agriculture.
6. Local Finance Company: These are small finance companies of local area, which provide financial facilities to the people of their local area. Nowadays local finance companies are earning a lot.
What is the work of finance companies
The work of finance companies is mainly related to financial transactions. The first task of these companies will be to arrange funds. After this, many other tasks are done, like investing at the right place, getting interest at low rates, providing loans, providing facilities like credit cards, doing banking related cards etc.
The main job of a finance company is to make investments at the right place and earn profits from it. Such companies provide different types of loans to people depending on their needs. If people do not repay the loan on time, then the work of getting the total loan amount is also done by the finance company.
Nowadays finance companies are providing different types of loan facilities. Apart from this, it has also been providing facilities like insurance and credit card. Note that finance companies work under RBI. If finance companies work against RBI rules, then it is a legal offense.
How to open a local finance company
To start a local finance company, you must first obtain all the licenses as per the rules from the government. After this you will have to collect enough budget to start the company. And then you can start your local finance company.
Let me tell you step by step how to start a local finance company.
- You can start a local finance company in a local area, for which you will first have to choose a good place for the company.
- After this you will have to obtain government license to start the company.
- You will have to register your company name and logo.
- You must have adequate identification documents.
- After the registration is complete, you can start the company work.
- You should employ only verified employees in the company.
In this way you can start a local finance company. However, before starting a local finance company, do consult a good advisor who is running a local finance company.
Benefits of finance companies
- By starting a finance company we can help people in giving loans.
- Finance companies earn very good income from interest on loans.
- You can invest money in finance companies in many ways.
Note: Risk is also very high in finance companies.
How to get a job in a finance company
If you want to work in a finance company, then for this you will have to study Economics subject. If you have completed graduation, and you have knowledge related to finance, then you can easily get a job in a finance company.
You will get many types of job offers in a finance company, such as-
- Accountant
- Accounting
- Financial Adviser
- Financial Analyst
- Investment Management
- Corporate Finance
- Analyst
- Loan Officer
- Investment Banking
If you want to make your career in finance then you should do MBA in Finance. You can get better placement in a finance company after doing Master in Financial Management, PG in Economics or Commerce.
What is the work in finance
There are many different types of posts in a finance company, and they also have different types of work. Mainly work related to financial transactions takes place in a finance company. In a finance company you have to manage financial transactions.
Apart from this, there are many other tasks, which are available to different officers of different posts, such as Investment Advisory Manager, Retail Relationship Officer, Mutual Fund Manager, Market Researcher, Data Analyst, Business Analyst etc.
Many people have a question as to where the finance companies get so much money from, so let me tell you that this money comes from the Federal Reserve System and commercial banks. Finance companies take loans from them at lower interest rates, and then give the same money to needy people at higher interest rates. This is how finance companies work, and make money.
What is the career scope in finance
Nowadays the career scope in finance is huge. Finance is not just a transaction of money, rather it is an art, which is learned. If you pursue a career in finance, it means you will learn the numbers, charts, patterns, and rules that influence the world’s economies.
Finance companies are still looking for expert financial people. There are many career options in the field of finance, with unlimited growth potential. Nowadays, new career options are emerging in the finance sector, in which you can make your career.