Indian Financial System

source:-web

Money Market: A market where short term borrowing and lending of securities take place,with maturity up to one year.The return of investment is lower than capital market at lower risk.

example:-Government Securities,Bond and debentures etc.

Capital Market:-A market where long term securities are issued and traded.Maturity more than one years or some time indefinite.The return of investment is higher than money market.the risk is higher than money market also.

example:-Treasury Bill,Commercial papers,money funds etc.

  • Capital Market divided into two market :

1- Primary Market: companies sells stock to public for the first time. example IPO(Initial Public Offering)

2-Secondary Market:Investor and traders buy and sell stocks to each other.The companies does not participate in these transactions.

Indian Financial System

Indian financial system is an economic system that collect money from a person/Institution and distribute it to those who need it(person/Institute/company etc.)

financial system is very important as its play :

  • major role for economic development of a country.
  • increase saving and investment.
  • economic awareness as proper use of money.
  • maintain flow and liquidity of money.
  • Its create capital formation.
  • expansion of financial market etc.

Indian Financial system some important component are:

  • Financial Institutions

Its has Banking Institutions and Non Banking Institutions.

The explanation is given in the table below:

Banking Institution Non Banking Institutions
Commercial Bank:Insurance Institute like-LIC etc.
1-Public Bank (SBI ,total 12 bank now)Mutual Funds-UTI etc.
2-Private Bank(Yes Bank etc.)Development Banks:
3-Regional Rural Bank(Purvanchal Bank etc.)——IDBI,SIDBI,ICICI etc.
Co-operative Bank:(PMC Bank)

All banks are regulated by RBI.

Co-operative banks are regulated By both state and RBI.

However NBFI are regulated by RBI partially.

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