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FIM

The document discusses various aspects of the Indian financial system, including financial institutions, markets, and their evolution over time. It notes that the financial system serves as a link between savers and investors, facilitates capital formation and pooling of funds. It describes the financial system before independence, the developments post-independence till 1990s including nationalization of banks and insurance, and the growth of services sector industries and technology after 1990s. It also discusses various money market instruments and the roles of capital market, SEBI, primary and secondary markets.

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VIVEK SHARMA
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180 views20 pages

FIM

The document discusses various aspects of the Indian financial system, including financial institutions, markets, and their evolution over time. It notes that the financial system serves as a link between savers and investors, facilitates capital formation and pooling of funds. It describes the financial system before independence, the developments post-independence till 1990s including nationalization of banks and insurance, and the growth of services sector industries and technology after 1990s. It also discusses various money market instruments and the roles of capital market, SEBI, primary and secondary markets.

Uploaded by

VIVEK SHARMA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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FINANCIAL INSTITUTION

AND MARKET
• Submitted by - Group 10
1. Ankit Kumar Mishra
2. Ashok Kumar Verma
3. Nikunj Kumar Singh
4. Vivek Kumar Pandey
5. Vivek Kumar Sharma

Submitted to-
Dr. Shudhanshu Pandiya
FINANCIAL SYSTEM

• A financial system is a network of financial institutions, financial markets, financial instruments and financial services to facilitate the transfer of
funds.
ROLE OF FINANCIAL SYSTEM

Serves As A Link Between Savers And Investors

Financial Systems Operates At National Global

Pooling Fund

Capital Formation

Provides Liquidity

Better Decisions
FINANCIAL MARKET

• A financial market is a market is a market in which people trade financial securities and derivative such as futures and options at low transaction
costs. Securities include stock and bonds and precious metals
INDIAN FINANCIAL SYSTEM - AN OVERVIEW

1. Before Independent

2. After independent to till 1990s

3. After 1990s
INDIAN FINANCIAL SYSTEM – AN OVERVIEW

• Distributes resources to needy sectors.

• Transformation of saving into investment consumption

• Financial markets where the above the activities take place


BEFORE INDEPENDENT

1. Control of Money Lenders

2. No Laws / Total Private Sector

3. No Regulatory Bodies

4. Main concentration on Traditional Agriculture

5. Absence of intermediately institutions in long-term financing of industry

6. Industry had limited to outside saving/resources.

8
AFTER INDEPENDENT TO TILL 1990s

• Moneylenders ruled till 1951. No worth-while Banks at that time. Industries depended upon their own money. 1951 onwards 5 years
PLAN commenced.
•1st 5 year PLAN in 1951 – Planned Economic Process. As part of Alignment of Financial Systems – Priorities laid down by Govt. –
Policies.
• MAIN Elements of Financial Organizations

 Protection to Investors
CONT…

• Nationalization-

• RBI - 1949
• SBI - 1956 (take-over of Imperial Bank of India)
• LIC - 1956 (Merges of over 250 Life Insurance Companies)
• BANKS - 1969 (14 major banks with Deposits of over Rs. 50 Crore nationalized)
• INSURANCE - 1972 (General Insurance Corp. GIC by New India, Oriental, united and National.
POST 1990

INDUSTRIES

• Rise & Growth of Service Sector industries. Reliance & Dependence on technology.
• E-mail & mobile made sea-change in communication, data collection etc. Computerization – a catch phrase and inevitable need of an hour.
• Dependent on Capital Market rather than only Debts dependency. Scalability of operations through globally competitive size.
• Broad basing of Board. Professional Management.

• NBSCs
• NBFC under RBI governance to finance retail assets and mobilize
small/medium sized savings.
• Very large NBFCs are emerging (Shri Ram Transport Finance, Birla, Tata Finance, Sundaram Finance, Reliance Finance, DLF, Religare etc.

11
POST 1990

Commercial Bank

M u t u a l Funds

C a p i t a l Market

Secondary Market

M o n e y Market

12
MEANING OF MONEY MARKET

• A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. The money market is
used by participants as a means for borrowing and lending in the short term, from several days to just under a year.
FUNCTIONS OF MONEY MARKET

• Economic development – Money market assures supply of funds; financing is done through discounting of the trade bills, commercial banks,
acceptance houses and brokers.

• Borrowings by the Government – short term funds at very low interest.


MONEY MARKET INSTRUMENT
• CALL MONEY

• TREASURY BILLS

• CERTIFICATES OF DEPOSITS

• COMMERCIAL BILLS

• TRADE BILLS
CAPITAL MARKET
Capital market is a markets where buyers and sellers engage in trade of financial securities like bonds, stocks etc. the buying/selling is
undertaken by participants such as individuals and institutions.

• The market where investment instruments like bonds, equities and mortgages are traded is known as the capital market.

• The capital market offers both long term and overnight funds.
CONT…

• The different types of financial instruments that are traded in the capital markets are:

• equity instruments

• credit market instruments,

• insurance instruments,

• foreign exchange instruments,


TYPES OF CAPITAL MARKET

• PRIMARY MARKET

• SECONDARY MARKET
ROLE OF SEBI IN THE CAPITAL MARKET

• Power to make rules for controlling stock exchange

• To provide license to dealers and brokers

• To stop fraud in capital market

• To audit the performance of stock market

• To make new rules on carry-forward transactions

• To educate the investors.

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