A financial system exists to serve the primary function of transferring economic resources from the lenders to the borrowers, i.e., from surplus units to deficit units. Financial institutions have evolved to serve the purpose of centralizing the lending and borrowing operations, remodelling economic growth. Institutions such as banks, non-banking financial institutions, etc. serve as mediators to fund transfer. This process of mediating fund transfer from an ultimate source to the ultimate user is termed as intermediation.

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