structure of indian financial system

1. Presented by- saurabh surve
Class -M.com (part-II)
Roll no -252, Div-A

2.  Introduction of Indian Financial
 Features of Indian Financial System
 Structure of Indian Financial System
 Financial Institution
 Financial market
 Financial instrument
 Financial services
 Conclusion

3.  The financial system of a country is an important tool for economic
development of the country, as it helps in creation of wealth by linking
savings with investments. It facilitates the flow of funds form the
households (savers) to business firms (investors) to aid in wealth creation
and development of both the parties.
 The financial system of a country is concerned with:
• Allocation and Mobilization of savings
• Provision of funds
• Facilitating the Financial Transactions
• Developing financial markets
• Provision of legal financial framework
• Provision of financial and advisory services

4.  According to Robinson, the primary function of a financial
system is
 “to provide a link between savings and investment for
creation of wealth and to permit portfolio adjustment in
the composition of existing wealth”
 A Financial System consists of various financial Institutions,
Financial Markets, Financial Transactions, rules and
regulations, liabilities and claims etc.

5.  It plays a vital role in economic development of a country
 It encourages both savings and investment
 It links savers and investors
 It helps in capital formation
 It helps in allocation of risk
 It facilitates expansion of financial markets
 It aids in Financial Deepening and Broadening

7. Financial institution are intermediaries of financial market. It
simple refer to an organization that collect money from individuals and
and invest that money in financial assets such as stock, bonds, bank
deposite , loans ,etc
1. Banking institution- These are bank and credit union that collect
money from the public in return for interest on money deposit and use
that money to advance and loans to financial customer .The following sub
types of banking institution.
1.Commercial Bank- Private Bank
Public Bank
2.Co-operative Bank
3. Reginal Rural Bank
4. Foreign Bank

8. 2. Non-Banking institution:-
These are brokerage firm ,insurance and mutual funds
companies that cannot collect money deposit and use that money
to advance loans to financial customer.
Non-bank financial institutions include:
• Finance and loan companies
• Insurance companies
• Mutual funds
• Commodity traders

9.  The financial market is a broad term describing any
marketplace where trading of securities including equities,
bonds, currencies and derivatives occur.
Types of financial markets There are two types of
financial markets
1.Unorganized market
2.organized market

10. 1.Unorganized sector – The unorganized sector mean which is not
incorporated with government. In the case of Indian Banking System,
indigenous bankers and private money lenders are included in the
unorganized sector.
2.Organized market The institutions which are controlled by the
central bank of the country namely RBI, SEBI, IRDA are called as
institutional or organized. There are two types of capital market.
1.Capital market
2. Money market
Capital market:- A capital market is a financial market in which
long-term debt (over a year) or equity-backed securities are bought
and sold

11.  1. Primary Market :- Otherwise called as New Issues
Market, it is the market for the trading of new securities, for
the first time.
 2. Secondary Market :- can be described as the market for
old securities, in the sense that securities which are previously
issued in the primary market are traded .
 Money market Money market comes under the preview of
RBI. It can be defined as a market for short term money and
financial assets that are near substitute for money.

12.  Financial instruments are assets that can be traded. They can
also be seen as packages of capital that may be traded. Most
types of financial instruments provide an efficient flow and
transfer of capital all throughout the world's investors. These
assets can be cash, a contractual right to deliver or receive
cash or another type of financial instrument, or evidence of
one's ownership of an entity.
Types of financial instrument There are two types of
financial instruments
1. Cash instrument
2. Derivative instrument

13.  Financial services are the economic services provided by the
finance industry, which encompasses a broad range of
businesses that manage money, including credit unions, banks,
credit cards companies, insurances companies, accountancy
companies, consumer- finance companies, stock brokerages,
investment funds, individual managers and some government-
sponsored enterprises.
 Types of financial services There are two types of financial
services
 1. Fund based services
 2. Fee based services

14.  Finance is the ‘brain’ of the economy.
 Economic growth and development of a nation depends upon
the efficiency of a developed financial system.
 There are two different viewpoints regarding the relationship
between financial development and economic growth.
 At last, it can be concluded that a developed financial system
leads the economic growth and development of the country.
Hence, there is a positive and direct correlation between the
growth in financial system and economic development.

15. Thank You