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What is Finance? Definition, Importance and Types of Finance.
In today's rapidly changing economic era, "finance" is a word that we often hear—be it the Finance Minister, the Finance Department or the finance report of a company. But have you ever wondered what finance actually is? What does it mean? Where did it come from and what is its importance in our lives? In this article, we will understand in detail what finance is, why it is necessary and how many types of finance are there.
6 Trillion Market Cap Milestone.
Another major milestone achieved recently is that Bajaj Finance’s market capitalisation has crossed ₹6 trillion for the first time – to be precise, it now stands at ₹6.03 trillion. It is the 8th Indian listed company to enter this exclusive club, and the 4th financial company to do so.
Importance of Finance
If we call finance an ocean of money, it will not be an exaggeration. Just as the ocean is very vast and deep, the world of finance is also full of depth and diversity. No economic activity, whether small or big, is possible without finance. Machines, raw materials, employees and resources are required to run a company, and all these require funding i.e. capital.
If a company does not have its own capital, it obtains a loan from a bank or any other financial institution. Similarly, a person also resorts to financing for his needs like buying a house, studying or buying a vehicle etc.
Finance in simple words
In simple language, finance means planning, managing, investing and controlling money on time. For example, when a person keeps some part of his salary for expenses, some for savings and some for investment, then it is a type of personal finance planning.
Types of Finance
Finance is mainly of three types:
1.Personal Finance
It deals with the financial plan that a person makes to meet the needs of his life. It includes things like income, expenses, savings, investments and insurance. For example, how a person budgets his monthly salary, saves for retirement, or plans for children’s education—all this is a part of personal finance.
2.Corporate Finance
his is the part of finance that deals with companies. Capital is required to start, grow and maintain continuous progress in any company. Corporate finance looks at where to get capital from (such as shares, debentures or bank loans), how to use it properly, and how to maximize profits.
3.Public Finance
This is the financial management done by the government and public institutions. It is a plan to maintain a balance between the government’s income (such as taxes) and expenditure (such as infrastructure, education, health, etc.). Public finance includes budget, tax policy, subsidies and other economic plans.
Finance related institutions
There are many institutions working in the field of finance that provide financial services to individuals and businesses. The major ones among them are: banks, NBFCs (Non-Banking Financial Companies), micro finance institutions, insurance companies, mutual fund houses and stock market. All these institutions operate different aspects of finance.
Conclusion
Finance is not just a transaction of money, but it is an art that involves planning, understanding, and management. Whether you are a student, a housewife, a working professional or an entrepreneur—knowledge of finance is necessary for everyone. If you want to strengthen your financial position, then you must understand the basics of finance. Only the right financ