INDIAN FINANCIAL SYSTEM

BY- SALVI LOHIA

B.COM
INTRODUCTION TO INDIAN FINANCIAL SYSTEM-

• The financial system of a country is a important tool

for economic development of the country, as its
help in creation of wealth by linking saving with
investment. It facilitates the flow funds from the
households (savers) to business firms (investors) to
development of both parties.
Indian financial system is a backbone of
Indian economy. It has two parts:
1. Indian money market
2. Indian capital market
INDIAN MONEY MARKET

• Indian money market is a market which

provides short term lending and borrowing
facilities. Money market is a place which fulfills
financial requirement of individuals corporate as
well as economy of the country.
IT HAS TWO SECTORS

Organised
Unorganised
ORGANISED SECTORS:

RBI
COMMERCIAL BANKS
POST OFFICE
SAVING BANKS
NON BANKING COMPANIES
UNORGANISED SECTORS:

• INDiGENOUS BANKERS
• MONEY LENDERS
FUNCTIONS OF MONEY MARKET

• It provides short term finance to individual and corporate

• To insure liquidity
• Money market helps to maintain demand and supply
equilibirium with regard to short term firms
• It provides short term finance to government also.
FEATURES OF MONEY MARKET

o Organised sector is very systematic and well defined.

oGovernment has full control over the organized sector.
oUnorganised sector do not have systematic arrangement.
oThere are various big unit for ex: commercial banks which
provides long term finance also.
INDIAN CAPITAL MARKET

Indian capital market is the market for long term

loanable funds as distinct from money market which
deals in short term fund.
It refers to the facilities and institutional
arrangement for borrowing and lending term funds,
medium term and long term funds.
NATURE OF CAPITAL MARKET

• It has two segments

• It deals in long term securities
• It creates dispersion in business ownership
• It helps in capital formation
• It helps in creating liquidity
TYPES OF CAPITAL MARKET

Primary Secondary
market market
PRIMARY MARKET

It is that market in which shares debentures and

other securities are sold for the first time for
collecting long term capital.
This market is connected with new issues Therefore,
the primary market is called NEW ISSUE MARKET.
SECONDARY MARKET

• The secondary market also called the

aftermarket, is the financial market in which
previously issued financial instruments such as
stock, bonds,options and futures are bought and
solds.
THANKYOU