What Is Non-Bank Financial Institutions: Here's The Detail

What Is Non-Bank Financial Institutions (Image @KalahMirzabey - Unsplash)

YOGYAKARTA - Even though many people avoid debt and credit, it cannot be denied that financial services are listed as one of the ways to be free from financial problems. By applying for a loan, you can deal with urgent financial obligations that must be met immediately. Usually, this loan application is made through non-bank financial institutions which are even considered as significant wheels that drive the state of the country's economy.

Yes, non-bank financial institutions exist with the aim of helping the general public facilitate their economic activities. With these benefits, everyone definitely needs to understand exactly what is included as a non-bank financial institution, including its types and uses.

So, if you want to know more about what a non-bank financial institution is and all the important things surrounding it, follow the description below.

What is a Non-Bank Financial Institution

As previously explained, non-bank financial institutions or non-bank financial companies are institutions that have formal permission to raise capital from the public. These funds are then managed so that they can be channeled into supporting facilities for economic activities related to investments or valuable messages.

Referring to the Decree of the Minister of Finance No. 38/MK/lV/Year. 1972, non-bank financial institutions, more often called non-bank financial institutions, aka LKBB, are referred to as institutions established for the purpose of helping to improve people's welfare.

The encouragement given by LKBB can be in the form of collecting public funds and redistributing them to finance various needs in economic activities. LKBB itself first appeared in Indonesia in 1972.

Not only carrying out fundraising and managing it, LKBB is also committed to implementing 2 important principles.

Notify all types of suspicious transactions to avoid the risk of money laundering, acts of terror or other criminal activities.

Finding out background data from customers as completely as possible, for example complete identity, transaction habits, to credit history.

Various Types of Non-Bank Financial Services

It is necessary to understand that there are many types of non-banking financial institutions that can be used by the public, including:

• Pawnshop
• Saving and loan cooperative
• Capital market
• Money market
• Venture Capital Company
• Insurance company
• Leasing Company or Lease
• Factory Company or Factoring Company
• Fintech or Financial Technology
• Pension Fund Services

The Role of Non-Bank Financial Institutions

Not only raising funds, LKBB also has various other functions that are no less important to understand. What are they?

• Raising Funds
• Providing Credit Services
• Running a Business in the Financial Sector
• Become an Intermediary for Companies

Advantages of Applying for Loans at Non-Bank Financial Institutions

There are many advantages of applying for a loan at a non-bank financial institution, including:

• Easy requirements.
• Safe and fast fund disbursement process.
• The submission requirements are simple and can be done offline or online.
• Usually requires checking the credit score to ensure loan eligibility.
• There are loan options without collateral or KTA.
• Become a means of obtaining injections of funds to address urgent financial problems.

So after knowing what a non-bank financial institution is, see other interesting news on VOI, it's time to revolutionize reporting!