what is the difference between a bank and financial institution?

Answer 1

Bank is about risk management. Banks receive money from depositors and lend it to borrowers. Banks are mainly profitting from the interest rate differences or spread.

Financial institution is more on asset management. This include insurance, mutual funds or unit trusts and hedge funds. The institution earn money from services they provide.

But nowadays, many banks had diversified their income to mutual funds, credit cards, insurance, goodwill etc. Their research team continuously generate new products as the demand grows.

You can read more about what are they made of and how they make money in "The Five Rules for Successful Stock Investing" by Pat Dorsey. Read my review about this book here:
http://www.stock-investment-made-easy.com/five-rules-for-successful-stock-investing.html

Answer 2

All banks are financial institutions, but not all financial institutions are banks (banks are a subset). Financial institutions include insurance, hedge funds, stock markets, mortgage organizations like Fannie Mae, and the student loan organization Sallie Mae.

Even within banks, there are categories: retail, investment, merchant, commercial and trust.

Answer 3

all r under RBI

doing specific function independently

all bank r FI, all FI r not bk