Different Types And Roles Of Financing Institutions

Different Types And Roles Of Financing Institutions – Finacing institutions are institutions that have an important role in economic development. This is because Finacing Institutions are business entities that help channel funds through financing and funding for various investments and economic development projects.

This institution is slightly different from finacing institutions in that apart from channeling funds, they also have a license to raise funds. Therefore, finacing institutions have an important role in economic development because they are institutions that can be an alternative to getting capital.

The presence of finacing institutions makes it easier for businesses to get funding to develop their businesses, thus helping the movement of the economy. For that, let’s discuss more what a finacing institution is and the types of these institutions.

Finacing Institutions

Based on Presidential Regulation of the Republic of Indonesia Number 9 of 2009, a financing institution is a business entity that carries out financing activities by providing funds or capital. When compared to finacing institutions, these institutions have a more specific task, namely helping channel funds for various economic activities such as businesses that need capital to develop their business activities.

These institutions help the economy move better by setting up capital to help businesses run optimally. Unlike finacing institutions, finacing institutions do not have the authority to raise funds so they focus on channeling funds to support economic activities. Next, let’s discuss the various types of finacing institutions in Indonesia.

Types Of Financing Institutions

This type is a business entity specifically formed for leasing, factoring, consumer financing, and credit card businesses. Further, let’s discuss one by one:

Rent

This type is often also referred to as leasing, where these institutional companies help companies obtain finance leases to obtain goods to support their business processes. The presence of this type of company helps companies increase their productivity by helping procure goods needed for business development.

Show Accounts Receivable

This type is often called factoring where this type of company helps finance through the purchase, collection, and arrangement of short-term receivables originating from trade transactions carried out by the business previously.

Consumer Finance

This type of financing provides financing by helping consumers get goods such as vehicles, electronics, and various other necessities and consumers will make payments back in installments.

Credit Card Business

This company is a company that helps finance the purchase of goods or services with credit card media. This company provides credit card services to various parties whose funding process is based on Bank Indonesia regulations.

Important Role Of Financing Institutions

Following are the important roles of finacing institutions for the wider community:

Improving People’s Welfare

This institution helps people get funding more easily so they can avoid moneylenders who usually charge high-interest rates.

Helping Business Development

Easier access to financing makes business development easier because they can get various things to support their business with low-interest rates.

Infrastructure Development

The existence of a finacing institution allows infrastructure to develop more optimally. This is because many infrastructure developments require substantial costs so finacing institutions become the solution for infrastructure development.

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