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    Financial System

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    shivakumar N
    The financial system consists of various financial institutions, markets, instruments and services that work together to mobilize savings and channel funds from savers to borrowers. It includes banks, non-banking financial companies, insurance companies, mutual funds and other entities that facilitate transactions, take deposits, make loans and offer other financial services. The Reserve Bank of India, Securities and Exchange Board of India, and Insurance Regulatory and Development Authority regulate the major components of India's financial system.

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    Financial System

    Uploaded by

    shivakumar N
    442 views16 pages
    The financial system consists of various financial institutions, markets, instruments and services that work together to mobilize savings and channel funds from savers to borrowers. It includes banks, non-banking financial companies, insurance companies, mutual funds and other entities that facilitate transactions, take deposits, make loans and offer other financial services. The Reserve Bank of India, Securities and Exchange Board of India, and Insurance Regulatory and Development Authority regulate the major components of India's financial system.

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    The financial system consists of various financial institutions, markets, instruments and services that work together to mobilize savings and channel funds from savers to borrowers. It includes banks, non-banking financial companies, insurance companies, mutual funds and other entities that facilitate transactions, take deposits, make loans and offer other financial services. The Reserve Bank of India, Securities and Exchange Board of India, and Insurance Regulatory and Development Authority regulate the major components of India's financial system.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    442 views16 pages

    Financial System

    Uploaded by

    shivakumar N
    The financial system consists of various financial institutions, markets, instruments and services that work together to mobilize savings and channel funds from savers to borrowers. It includes banks, non-banking financial companies, insurance companies, mutual funds and other entities that facilitate transactions, take deposits, make loans and offer other financial services. The Reserve Bank of India, Securities and Exchange Board of India, and Insurance Regulatory and Development Authority regulate the major components of India's financial system.

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    Download as ppt, pdf, or txt
    of 16

    THE FINANCIAL

    SYSTEM

    1
    shivusira.webs.com

    Students career guide, part time


    job opportunities, life time income
    earning opportunities, mast fun
    and entertainment.
    Visit once and stay connected

    2
    System

    System is a set of inter-related components working


    together to achieve some purpose

    3
    Financial System
    Financial System

    Financial Financial Financial Financial


    Institutions Markets Instruments Services

    Shares
    Commercial
    Banks Merchant
    Money Banking
    Market Debentures /
    Industrial Bonds
    Banks Project
    Commercial
    Consultancy
    Paper (CPs)
    Provident Capital
    Funds Market Certificate of
    Deposits (CDs)
    Mutual Public DepositS
    Funds PDs)

    Mutual Fund
    NBFCs
    Units

    Insurance
    Policies
    Government
    Bonds
    4
    Functions of Financial System
    • Payment system
    • Mobilisation of savings
    • Size transformation
    • Maturity transformation
    • Risk transformation
    • Provision of liquidity
    • Cost reduction
    • Price information
    • Financial advice

    5
    Evolution of
    Indian Financial System

    Phase I: Transition (1950 to 1960)

    Phase II: Expansion and Diversification (1969 to 1985)

    Phase III: Consolidation, Innovation and Liberalisation


    (after 1985 )

    6
    Savers / Lenders
    Flow of Funds
    Funds  Householders Securities:
    Business Firms Shares/Bonds
    Government
    Deposits/Policies/Uni Foreigners Funds
    ts

    S
    e
    Financial Institutions c Financial
    Banks Funds u Markets
    F
    Provident Funds r Money Market
    u
    Insurance Companies i Private Capital Market
    n
    Mutual Funds t Placement Forex Market
    d
    NBFCs i Mode
    s
    Securities e
    s

    Investors/Borrowers

    Householders
    Loans Business Firms Funds
    Government
    Foreigners Securities:
    Funds Shares/Bonds
    7
    Assets and Financial Assets

    • Assets are the rights of owners


    • Fixed assets can be seen and can be touched
    (Tangible)

    8
    Classification of Financial Assets
    Financial Assets

    Non- Marketable
    Marketable

    Post Shares Govt. Debe MF


    Bank Insurance
    Office Securities -ntures Units
    Deposits Schemes
    Certifica
    tes

    Equity Preference
    Shares Shares

    9
    Return on Financial Assets

    }
    Bonds
    Debentures Interest
    Debt

    }
    Preference share
    Equity share
    Dividend

    10
    Functions of Financial Markets

    • Price information

    • Marketability/Liquidity

    • Reduction of Transaction cost

    • Promotes savings and investments

    11
    Distinguish between Money Market and Capital Market
    Points of Difference Money Market Capital Market

    Maturity of Funds Less than one year Above one year


    Instruments Call Money market, Treasury Equity Shares,
    Bills (TBs) Market, Commercialpreference shares,
    Bills (CBs) market, Commercialdebentures, Government
    Papers (CPs) market, Certificatesecurities and loans
    of Deposits (CDs), Banker’s
    Acceptances (Bas), Repurchase
    Agreements (Repos), Money
    Market Mutual Funds (MMMF),
    etc.

    Existence ofNo Yes


    Secondary market
    Place of Market No specific place Stock Exchanges

    12
    Financial Instruments
    • Securities issued to public to raise funds
    • Example
    – Equity Share
    – Reference Share
    – Debenturers
    – Commercial papers
    – Certificate of Deposits etc.,

    13
    Financial Intermediaries
    • FIs that act as bridge between savers and investors
    and provides needed funds to investors

    • FIs include: Banks and NBFCs

    Banks : RRBs, DBs (Industrial Banks), Cooperative


    Banks, Investment Banks, Commercial Banks.
    NBFCs: Insurance companies (life as well as
    General); Mutual funds etc

    14
    Structure of Indian Financial Intermediaries
    Structure of Financial Intermediaries in India

    RBI SEBI IRDA

    Public and Pvt.


    Commercial Banks
    Mutual Funds Private Sector
    All India Insurance Companies
    Development Banks

    Specialised FIs
    Venture
    Exim Bank, IFCI Public Sector
    Capital Funds
    Insurance Companies
    Refinance
    Institutions
    NABARD, NHB
    NBFCs 15
    Regulatory Institutions

    • RBI
    • SEBI
    • IRDA
    • NABARD
    • NHB

    16

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