What is the financial institution? Explain with examples.

A financial institution is a mediator between consumers and the capital or the debt markets providing banking and investment services. The most common types of financial institutions comprise commercial banks, investment banks, brokerage firms, insurance companies, and asset management funds. Other types consist of credit unions and finance firms. Financial institutions are synchronized to control the supply of money in the market and protect consumers.

A central bank is a financial institution accountable for the oversight and administration of all other banks. Reserve Bank of India is the central bank of India. The RBI was established in 1^st April 1935 under the Reserve Bank of India Act, 1934. The main function of RBI is to control the financial institutions and commercial banks in the economy.