CORE AND INVESTMENT BANKING

Module 1
Financial Systems: Functions and
structure
 FINANCIAL SYSTEM
• Financial system of a country means a set of closely
linked complex of institutions, agents, practices,
markets, transactions, claims and liabilities in the
economy.
• Finance is the study of the nature, creation,
behaviour, regulation and administration of money.
Therefore, financial system includes all those
activities dealing in finance, organized into a system.
• The financial system consists of financial
institutions, financial markets, financial
instruments and the services provided by the
financial institutions.
FUNCTIONS OF THE FINANCIAL SYSTEM

The functions of a financial system are to

channelise the funds from the surplus units to
the deficit units. An efficient financial system
not only encourages savings and investments,
it also efficiently allocates resources in
different investment avenues and thus
accelerates the rate of economic
development.
• Provision of liquidity
• Mobilization of savings
• Policy function
• Credit function
STRUCTURE OF INDIAN FINANCIAL SYSTEM
Regulatory Bodies – RBI, SEBI,IRDA &PFRDA