Indian Financial System -
Functions of the financial system
- Provision for liquidity.
- Mobilizing and allocating the saving efficiently and effectively.
- Monitoring the performance of the investment.
Provide price related information.
- Helps in the creation of financial structure that lowers cost of transaction.
- Helps in the process of financial deepening and broadening.
Indian Financial System Broadly divided under 2 heads
- Organised
- Unorganised
Organised in the sense it contains
- Regulators like MoF, SEBI, RBI, IRDA
- Financial Institutions
- Financial Instruments
- Financial Services
Urorganised Contains
- Money lenders
- Local Bankers
- Traders
- Landlords
- Pawn Brokers too,
Now what is known to be financial systems,
They are business organisations serving as a link between savers and investors and help in credit allocation process. They provide three transformational services
- Liability, asset and size transformation
- Maturity transformation.
- Risk transformation..
Fianncial Markets
what is that -
It is a mechanism for trading of financial product under a policy framework. Main participant are borrowers, lenders and financial intermediaries.
Their important characteristics are,
- Large volume of transaction at a very high speed
- There are various segments of financial markets
Scope of instant arbitrage
- Highly volatile
- Closely monitored and supervised
Functions of Financial Markets -
- Enabling economic units to exercise their time preference
- Separation, distribution, diversification and reduction of risk
- Efficient payment mechanism
- Providing information about companies
- Enhancing ...