JNTU UNIVERSITY

SCHOOL OF MANAGEMENT
STUDIES.

3RD SEM,
I-MID EXAM.
Indian Financial System
 Financial System
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
 Financial System of any country consists
of financial markets, financial institutions
and financial instruments or financial
services

Flow of funds
Seekers of funds (savings)
Suppliers of funds
(Mainly business firms
Flow of financial services (Mainly households)
and government)
Incomes , and financial
claims

Financial System
INDIAN FINANCIAL SYSTEM
 Interrelation--Financial system & Economy

Financial System

Savers Lenders Households Foreign

Sectors

Investors Corporate Sector Un-organized

Borrowers Govt.Sector Sector

Economy
Role/ Functions of Financial
System:

* It Serves As A Link Between Savers And Investors.

* It Provides Payment Mechanism For Exchange Of Goods

And Services.

* It Provides A Mechanism For The Transfer Of Resources

Across Geographic Boundaries.
* It Provides A Mechanism For Managing And
Controlling The Risk Involved In Mobilizing Savings
And Allocating Credit.

* It Promotes The Process Of Capital Formation By

Bringing Together The Supply Of Saving And The
Demand For Investible Funds.

* It Helps In Lowering The Cost Of Transaction And

Increase Returns. Reduce Cost Motives People To Save
More.
 Financial Markets
Finance is a prerequisite for modern business and
financial institutions play a vital role in economic
system. It's through financial markets the financial
system of an economy works. The main functions of
financial markets are:

1. to facilitate creation and allocation of credit  and

liquidity;
2. to serve as intermediaries for mobilization of savings;
3. to assist process of balanced economic growth;
4. to provide financial convenience 
 Money Market

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
 Money Market
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

 Money Market Instruments

 Treasury Bills

 Commercial Paper

 Certificate of Deposit

 Money Market Mutual Funds

 Repo Market
Segment Issuer Instruments

Govern Central Zero Coupon Bonds, Coupon Bearing Bonds,

ment Government Capital Index Bonds, Treasury Bills.

Government
Public Agencies /
Govt. Guaranteed Bonds, Debentures
Sector Statutory
Bodies
Public Sector
PSU Bonds, Debenture, Commercial Paper
Units
Debentures, Bonds, Commercial Paper, Floating
Private Corporate Rate Bonds, Zero Coupon Bonds, Inter-
Corporate Deposits
Banks Certificate of Deposits, Bonds
Financial
Certificate of Deposits, Bonds
Institutions
 Why Capital Markets Exist

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.
 Role of Capital Markets
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
 Indian Capital Market

Market Instruments Intermediaries Regulator

SEBI
•Brokers
•Investment Bankers
Primary Secondary •Stock Exchanges
•Underwriters

Equity Hybrid Debt

Players

CRA Corporate Intermediaries Individual Banks/FI FDI /FII

 Stock Exchanges in INDIA
 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
MONEY AND CAPITAL MARKETS

IN INDIA, MONEY MARKET IS REGULATED BY

RESERVE BANK OF INDIA (WWW.RBI.ORG.IN) AND

SECURITIES EXCHANGE BOARD OF INDIA (SEBI)

[WWW.SEBI.GOV.IN ] REGULATES CAPITAL MARKET.
 The role of the stock exchange
 Raising capital for businesses

 Mobilizing savings for investment

 Facilitate company growth

 Redistribution of wealth
Factors contributing to growth of
Indian Capital Market

Establishment of Development banks &

Industrial financial institution.
Legislative measures
Growing public confidence
Increasing awareness of investment
opportunities
Setting up of SEBI
Mutual Funds
 Conclusion

The financial system is fairly integrated, stable, efficient.

The financial system is characterized by the presence
of integrated, organized and regulated financial markets, and
institutions that meet the short term and long term financial
needs of both the household and corporate sector
AL.MADHURI
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