Indian Financial System
Join now to read essay Indian Financial System
Indian Financial System –
Functions of the financial system
– Provision for liquidity.
– Mobilizing and allocating the saving efficiently and effectively.
– Monitoring the performance of the investment.
Provide price related information.
– Helps in the creation of financial structure that lowers cost of transaction.
– Helps in the process of financial deepening and broadening.
Indian Financial System Broadly divided under 2 heads
– Organised
– Unorganised
Organised in the sense it contains
– Regulators like MoF, SEBI, RBI, IRDA
– Financial Institutions
– Financial Instruments
– Financial Services
Urorganised Contains
– Money lenders
– Local Bankers
– Traders
– Landlords
– Pawn Brokers too,
Now what is known to be financial systems,
They are business organisations serving as a link between savers and investors and help in credit allocation process. They provide three transformational services
– Liability, asset and size transformation
– Maturity transformation.
– Risk transformation..
Fianncial Markets
what is that –
It is a mechanism for trading of financial product under a policy framework. Main participant are borrowers, lenders and financial intermediaries.
Their important characteristics are,
– Large volume of transaction at a very high speed
– There are various segments of financial markets
Scope of instant arbitrage
– Highly volatile
– Closely monitored and supervised
Functions of Financial Markets –
– Enabling economic units to exercise their time preference
– Separation, distribution, diversification and reduction of risk
– Efficient payment mechanism
– Providing information about companies
– Enhancing liquidity of financial claim.
– Portfolio management
Financial Markets can be Classified into,
Capital Market and Money Market