## Special Rules: Financial vs Non-Financial Institutions
For Financial Institutions (banks, NBFCs), lending money and earning interest/dividend IS the core business — so those items are Operating.
For Non-Financial Institutions (manufacturers, traders, schools, etc.), those same items relate to investments and borrowings — so they follow the standard Investing/Financing classification.
### Summary Table
| Transaction | Non-Financial Institution | Financial Institution |
|---|---|---|
| Loan given to 3rd party | Investing | Operating |
| Interest earned on loan given | Investing | Operating |
| Investment purchased (shares/deb) | Investing | Operating |
| Dividend received on investment | Investing | Operating |
| Loan taken from 3rd party | Financing | Operating |
| Interest paid on loan taken | Financing | Operating |
| Issue of shares | Financing | Financing (always) |
| Dividend paid to shareholders | Financing | Operating OR Financing |
### Universal Rules (Same for ALL entities)
1. Loan given to employees or suppliers → Operating (both financial & non-financial)
2. Interest earned on employee/supplier loans → Operating (both)
3. Loan taken from customers or suppliers → Operating (both)
4. Interest paid on customer/supplier loans → Operating (both)
5. Issue of shares → Always Financing (both)
### Why the Distinction?
For a bank, giving loans is like selling goods — it's the revenue-generating activity. But for a factory, giving a loan to another company is an investment decision, not part of core operations.