2. Existence of a well organized financial
system
Promotes the well being and standard of
living of the people of a country
Money and monetary assets
Mobilize the saving
Promotes investment

3. Financial System of any country consists
of financial markets, financial
intermediation and financial instruments
or financial products
Flow of funds (savings)
Seekers of funds
(Mainly business firms
Flow of financial services
and government)
Incomes , and financial
claims
Suppliers of funds
(Mainly households)

4. Organized
Regulators
Financial Institutions
Financial Markets
Financial services
Non- Organized
Money lenders
Local bankers
Traders
Landlords
Pawn brokers
Chit Funds

5. Barter
Money Lender
Nidhi's/Chit Funds
Indigenous Banking
Cooperative Movement
Societies
Banks
Joint-Stock Banks

6. Consolidation
Commercial Banks
Nationalization
Investment Banks
Development Financial Institutions
Investment/Insurance Companies
Stock Exchanges
Market Operations
Specialized Financial Institutions
Merchant Banking
Universal Banking

7. Interrelation--Financial system & Economy
Financial System
Households Foreign
Sectors
Savers Lenders
Investors
Borrowers
Corporate Sector
Govt.Sector
Economy
Un-organized
Sector

8. Organized Indian Financial System
Regulators
Financial
Instruments
Forex
Market
Financial
Markets
Capital
Market
Money
Market
Primary Market
Secondary Market
Money Market
Instrument
Capital Market
Instrument
Financial
Intermediaries
Credit
Market

9. Mechanism which allows people to trade
Affected by forces of supply and demand
Process used
In Finance, Financial markets facilitates

10. Capital markets facilitate the transfer of capital
(i.e. financial) assets from one owner to
another.
They provide liquidity.
 Liquidity refers to how easily an asset can be
transferred without loss of value.
A side benefit of capital markets is that the
transaction price provides a measure of the
value of the asset.

11. Mobilization of Savings & acceleration of
Capital Formation
Promotion of Industrial Growth
Raising of long term Capital
Ready & Continuous Markets
Proper Channelisation of Funds
Provision of a variety of Services

12. Stock Market was for a privileged few
Archaic systems - Out cry method
Lack of Transparency - High tones costs
No use of Technology
Outdated banking system
Volumes - less than Rs. 300 cr per day
No settlement guarantee mechanism - High
risks

13. 1994-Equity Trading commences on NSE
1995-All Trading goes Electronic
1996- Depository comes in to existence
1999- FIIs Participation- Globalisation
2000- over 80% trades in Demat form
2001- Major Stocks move to Rolling Sett
2003- T+2 settlements in all stocks
2003 - Demutualisation of Exchanges

14. Each scam has brought in reforms - 1992 / 2001
Screen based Trading through NSE
Capital adequacy norms stipulated
Dematerialization of Shares - risks of
fraudulent paper eliminated
Entry of Foreign Investors
Investor awareness programs
Rolling settlements
Inter-action between banking and exchanges

15. Corporatisation of exchange memberships
Banning of Badla / ALBM
Introduction of Derivative products - Index
/ Stock Futures & Options
Reforms/Changes in the margining system
STP - electronic contracts
Margin Lending
Securities Lending

16. • 22 Stock Exchanges,
• Over 10000 Electronic Terminals at over 400 locations all
over India.
• 9108 Stock Brokers and 14582 Sub brokers
• 9644 Listed Companies
• 2 Depositories and 483 Depository Participants
• 128 Merchant Bankers, 59 Underwriters
• 34 Debenture Trustees, 96 Portfolio Managers
• 83 Registrars & Transfer Agents, 59 Bankers to Issue
• 4 Credit Rating Agencies

17. Indian Capital Market
Market
Primary
Instruments
•Brokers
•Investment Bankers
•Stock Exchanges
•Underwriters
Secondary
Equity
CRA
Intermediaries Regulator
Hybrid
Corporate Intermediaries
Individual
SEBI
Debt
Banks/FI
Players
FDI /FII

18. Mangalore Stock Exchange
Hyderabad Stock Exchange
Uttar Pradesh Stock
Exchange
Coimbatore Stock Exchange
Cochin Stock Exchange
Bangalore Stock Exchange
Saurashtra Kutch Stock
Exchange
Pune Stock Exchange
National Stock Exchange
OTC Exchange of India
Calcutta Stock Exchange
Inter-connected Stock
Exchange (NEW)
Madras Stock Exchange
Bombay Stock Exchange
Madhya Pradesh Stock
Exchange
Vadodara Stock Exchange
The Ahmedabad Stock
Exchange
Magadh Stock Exchange
Gauhati Stock Exchange
Bhubaneswar Stock
Exchange
Jaipur Stock Exchange
Delhi Stock Exchange Assoc
Ludhiana Stock Exchange

19. Raising capital for businesses
Mobilizing savings for investment
Facilitate company growth
Redistribution of wealth

20. Corporate governance
Creates investment opportunities for small investors
Government raises capital for development projects
Barometer of the economy

21. Growth Pattern of the Indian Stock Market
Sl.N
o.
As on 31st
December
1
No. of
Stock Exchanges
2
1946
1961
1971
1975
1980
1985
1991
1995
7
7
8
8
9
14
20
22
No. of
Listed Cos.
1125
1203
1599
1552
2265
4344
6229
8593
3
No. of Stock
Issues of
Listed Cos.
1506
2111
2838
3230
3697
6174
8967
11784
4
Capital of Listed
Cos. (Cr. Rs.)
270
753
1812
2614
3973
9723
32041
59583
5
Market value of
Capital of Listed
Cos. (Cr. Rs.)
971
1292
2675
3273
6750
25302
11027
9
47812
1
6
Capital per
Listed Cos. (4/2)
(Lakh Rs.)
24
63
113
168
175
224
514
693
86
107
167
211
298
582
1770
5564
7
Market Value of
Capital per Listed
Cos. (Lakh Rs.)
(5/2)
Appreciated value
of Capital per
358
170
148
126
170
260
344
803
8

22. Hybrid
Equity
Equity
Shares
Preference
Shares
ADR / GDR
Debentures Zero coupon
bonds
Debt
Deep
Discount
Bonds

23. Establishment of Development banks &
Industrial financial institution.
Legislative measures
Growing public confidence
Increasing awareness of investment
opportunities

24. Growth of underwriting business
Setting up of SEBI
Mutual Funds
Credit Rating Agencies

25. Lack of transparency
Physical settlement
Variety of manipulative practices
Institutional deficiencies
Insider trading

26. Market for short-term money and financial
assets that are near substitutes for money.
Short-Term means generally period upto one
year and near substitutes to money is used to
denote any financial asset which can be quickly
converted into money with minimum
transaction cost

27. It is a place for Large Institutions and
government to manage their short-term cash
needs
It is a subsection of the Fixed Income Market
It specializes in very short-term debt securities
They are also called as Cash Investments

28. Lack of Integration
Lack of Rational Interest Rates structure
Absence of an organized bill market
Shortage of funds in the Money Market
Seasonal Stringency of funds and fluctuations in
Interest rates
Inadequate banking facilities

29. Treasury Bills
Commercial Paper
Certificate of Deposit
Money Market Mutual Funds
Repo Market

30. Segment Issuer
Instruments
Govern
ment
Central
Government
Zero Coupon Bonds, Coupon Bearing Bonds,
Capital Index Bonds, Treasury Bills.
Public
Sector
Government
Agencies /
Statutory
Bodies
Govt. Guaranteed Bonds, Debentures
Public Sector
Units
PSU Bonds, Debenture, Commercial Paper
Corporate
Debentures, Bonds, Commercial Paper, Floating
Rate Bonds, Zero Coupon Bonds, InterCorporate Deposits
Banks
Certificate of Deposits, Bonds
Financial
Institutions
Certificate of Deposits, Bonds
Private

32. Securities and Exchange Board of India
(SEBI)
Reserve Bank of India
Ministry of Finance

33. Securities and Exchange Board of India
(SEBI) was first established in the year
1988
Its a non-statutory body for regulating
the securities market
It became an autonomous body in 1992

34. Regulates Capital Market.
Checks Trading of securities.
Checks the malpractices in securities
market.

35. It enhances investor's knowledge on market by
providing education.
It regulates the stockbrokers and sub-brokers.
To promote Research and Investigation

36. It tries to develop the securities market.
Promotes Investors Interest.
Makes rules and regulations for the securities
market.

37. Sole Control on Brokers
For Underwriters
For Share Prices
For Mutual Funds

38. Established on April 1, 1935 in accordance with
the provisions of the RBI Act, 1934.
The Central Office of the Reserve Bank has
been in Mumbai.
It acts as the apex monetary authority of the
country.

39. Monetary Authority:
Formulation and Implementation of monetary
policies.
Maintaining price stability and ensuring adequate
flow of credit to the Productive sectors.
Issuer of currency:
Issues and exchanges or destroys currency and
coins.
Provide the public adequate quantity of supplies of
currency notes and coins.

40. Functions Of RBI
Regulator and supervisor of the financial system:
Prescribes broad parameters of banking operations
Maintain public confidence, protect depositors' interest
and provide cost-effective banking services.
Authority On Foreign Exchange:
Manages the Foreign Exchange Management Act, 1999.
Facilitate external trade, payment, promote orderly
development and maintenance of foreign exchange
market.

41. Functions Of RBI
Developmental role:
Performs a wide range of promotional functions to
support national objectives.
Related Functions:
Banker to the Government: performs merchant banking
function for the central and the state governments.
Maintains banking accounts of all scheduled banks.

42. (a) Bank Rate:
The Bank Rate was kept unchanged at 6.0 per cent.
(b) Reverse Repo Rate:
The Repo rate is around 7 per cent and Reverse repo
rate is around 6.10 per cent.
(c) Cash Reserve Ratio:
The cash reserve ratio (CRR) of scheduled banks is
currently at 5.0 per cent.

43. Pre-reforms period
Steps taken
Objectives
Conclusion

44. The period from the mid 1960s to the early 1990s.
Characterized by:





Administered interest rates
Industrial licensing and controls
Dominant public sector
Limited competition
High capital-output ratio

45. Banks and financial institutions acted as a
deposit agencies.
Price discovery process was prevented.
Government failed to generate resources for
investment and public services.
Till 90s it was closed, highly regulated, and
segmented system.

46. Economic reforms initiated in June 1991.
The committee appointed under the chairmanship
of M Narasimham.
He submitted report with all the
recommendations
Government liberalized the various sectors in the
economy.
Reform of the public sector and tax system.

47. Reorientation of the economy
Macro economic stability
To Increase competitive efficiency in the
operations
To remove structural rigidities and
inefficiencies
To attain a balance between the goals of
financial stability & integrated & efficient
markets

48. Reduce the level of state ownership in
banking
Lift restrictions on foreign ownership of
banks
Spur the development of the corporate-bond
market
Strengthen legal protections

49. Deregulate the insurance industry
Drop proposed limits on pension reforms
Increase consumer ownership of mutual-fund
products
Introduce a gold deposit scheme

50. Speed up the development of electronic
payments.
Separate the RBI's regulatory and centralbank functions
Lift the remaining capital account controls
Phase out statutory priority lending and
restrictions on asset allocation

51. The financial system is fairly integrated, stable,
efficient.
Weaknesses need to be addressed.
The reforms have been more capital centric in
nature.
Foreign capital flows and foreign exchange
reserves have increased but absorption of foreign
capital is low.

52. Thank you