INDIAN FINANCIAL

SYSTEM
The Indian financial system is a complex network of institutions,
markets, regulations, and intermediaries that facilitate the flow of funds
between savers, investors, borrowers, and lenders in the Indian
economy. It plays a crucial role in mobilizing savings, allocating
resources, and facilitating economic growth
INDIAN FINANCIAL SYSTEM

(1)The part of a financial system concerned with raising

capital by funds ( money ) for short or long term

(2)The financial system concerned with raising capital by

dealing in shares, bonds, and other long-term
investments.
INDIAN FINANCIAL SYSTEM

• Capital Market is composed of those institutions and

mechanisms with the help of which medium and long term
funds are combined and made available to individuals,
businesses and government. Both private placement sources
and organized market like securities exchange are included in
it.
 INDIAN FINANCIAL SYSTEM

• Money market is a key component of national financial

market and comprises various types of instruments
designed to perform specific functions. Key functions
performed by various instruments traded in money markets
include borrowing (short term), lending as well as buying
and selling instruments with an initial maturity of up to 1
year.
•
INDIAN FINANCIAL SYSTEM

• Different avenues and alternatives

of investment include share market,
debentures or bonds, money market
instruments, mutual funds, life
insurance, real estate, derivatives.
INDIAN FINANCIAL SYSTEM
• FEATURES OF CAPITAL MARKET
• Connect Savers and entrepreneurial borrowers
• Deals in medium and long term investments.
• Presence of intermediaries
• Money markets are used for short-term lending or borrowing
usually the assets are held for one year or less whereas,
Capital Markets are used for long-term securities they have a
direct or indirect impact on the capital. Capital markets
include the equity market and the debt market.
INDIAN FINANCIAL SYSTEM

OBJECTIVES OF STOCK EXCHANGES.

REGULATION OF STOCK EXCHANGES
ROLE OF DIFFERENT BSE ,NSE & MCX
EXCHANGES.
INDIAN FINANCIAL SYSTEM

OBJECTIVES OF STOCK EXCHANGES.

REGULATION OF STOCK EXCHANGES
ROLE OF DIFFERENT BSE ,NSE & MCX
EXCHANGES.
 CAPITAL MARKET I

OBJECTIVES OF STOCK EXCHANGES.

REGULATION OF STOCK EXCHANGES
ROLE OF DIFFERENT BSE ,NSE & MCX
EXCHANGES.
 INDIAN FINANCIAL SYSTEM
 ENACTMENT OF SEBI
 IMPORTANCE & GROWTH OF SECURITY
EXCHANGE OF INDIA IN REGULATING INDIAN
CAPITAL MARKETS,
LISTING FUNCTION ( REQUIREMENTS FOR
COMPANY LISTED ON STOCK EXCHANGE )
 SEBI
 ENACTMENT OF SEBI
 IMPORTANCE & GROWTH OF SECURITY EXCHANGE OF
INDIA IN REGULATING INDIAN CAPITAL MARKETS,
 LISTING FUNCTION ( REQUIREMENTS FOR
COMPANY LISTED ON STOCK EXCHANGE )
 Financial system in India

Financial system in India

The Indian Financial System is one of the most important
aspects of the economic development of our country. This
system manages the flow of funds between the people
(household savings) of the country and the ones who may
invest it wisely (investors/businessmen) for the betterment of
both the parties.
 Financial system in India

A developing country – India is the 5th largest economy in the world

in terms of its nominal GDP. The Indian Financial System refers to all
institutions, structures, and services that provide pecuniary facilities
to the public.
It makes possible trade and transfers of funds in a secure manner.
India, being a democracy has independent pillars of the financial
system especially in the areas of banking, capital and stock markets,
insurance, liabilities, claims, transactions, and investments.
It is important for wealth creation and the economic development of
the country.
 Financial system in India
Components Of The Indian Financial System
It has 5 major components:
1. Financial Institution
•Their role is to mediate between the lender and the borrower.
•The lender’s savings are gathered through various commercial markets.
•These can turn risky financings into safe investments.
•A liability that is for a short duration can be turned into an investment
for a longer duration.
•These can make comparable large deposits and loans with small
deposits and loans due to uniform denominations.
•These provide a balance between the loan taker and the amount
depositor.
Financial Institutions have 2 major types:
a. Banking Institutions or Depository Institutions
•Their role is to acquire money from the public.
•Interests are paid on these deposits made by the people.
•The lent money is then provided as loans to those who
need it.
•Interests are charged on these loans given to those who
require it.
•Examples include banks and other credit unions.
 b. Non-banking Institutions or Non-depository Institutions
•Their role is to sell commercial and financial goods and products to
those who visit them.
•These are based on offering insurance, mutual funds, brokerage deals,
etc.
•Examples of these majorly include companies.
These further have 3 categories:
•Regulatory: Those managements and institutions which regulate and
overlook the commercial and financial market. Example – RBI, IRDA,
SEBI, etc.
•Intermediates: Those institutions which provide financial counseling and
help by offering loans etc. Example – PNB, SBI, HDFC, BOB, Axis Bank.
•Non – Intermediates: These institutions help corporate visitors with their
finances. Examples – NABARD, SIDBI, etc.
2. Financial Assets
•The objective of these is to provide convenient trade of securities in
the commercial and financial market based on the requirements of
those who seek credit.
•These are the goods or products which are sold in the financial
market.
•Call Money: Without any assurance, this is a loan lent for just a day which is repaid the next
day.
•Notice Money: Without any assurance, this is a loan rent for more than a day but less than a
duration of 14 days.
•Term Money: When the duration of the maturity of a particular amount deposited is more
than 14 days.
•Treasury Bills: With the duration of maturity of less than a year, these belong to the
government in the bond or debt security format. These are bought in the form of government
T– Bills which are taken as loans from the government.
•Certificate of Deposit: This works on the format of electronic funds that remain deposited in a
particular bank for a fixed period of time.
•Commercial Paper: Used by corporates, it is an instrument that is not secured even though for
a short duration of debt.
•Banking Services: Functions performed by a bank such
as the provision of loans, accepting debits, giving out
credit or debit cards, account opening, granting
checkbooks, etc are a part of these services.
•Insurance Services: These include services of offering
insurance, selling policies, brokerage deals, etc.
•Investment Services: These services include overlooking
and management of investment, assets, and deposits.
•Foreign Exchange Services: These include currency
exchanges, foreign exchanges, and foreign fund transfers.
3. Financial Services
•The major objective of these is to provide counseling to
their visitors regarding the purchase or selling of a
property, permitting transactions, deals, lending, and
investments.
•These make sure the effectiveness of the investment and
arrangement of the fund source too.
•These are usually taken up by asset and liability
management companies.
Financial services also include in them:
. Capital Market
•These deal with trades and transactions
which take place in the market.
•These take place for a period of 1 year.
•These are of 3 major types:
•Corporate Securities Market
•Government Securities Market
•Long Term Loan Market
4. Financial Markets
The markets where trade and exchange of bonds, shares,
money, investments, and assets take place between
buyers and purchasers are these.
Financial markets have 4 major types:
b. Money Market
•These are for short-duration investments.
•They are denominated by the government, banks, and
other institutions.
•This market is based on wholesale debt having a low-
risk factor with transparent instruments and formats
used.