Presentation on Brief introduction to Indian financial markets (Indian Financial System). This presentation broad classification of the financial system into financial institutions, financial markets, financial instruments and financial services.

1. INDIAN FINANCIAL
MARKETS

2. Presenter Names Id N.o
Madhuri 18MBMB03
Vinodh Reddy 18MBMB09
Priya Bharathi 18MBMB15
Isaac Livingston 18MBMB21
Bhargav 18MBMB29

3. FINANCIAL SYSTEM
The financial system of a country is a system that allows
the exchange of funds between lenders, investors and
borrowers. It helps in creation of wealth by linking saving
with investment for economic development of the country. It
facilitate the flow of funds from the households (savers)
to business firms aid in wealth creation and development of
both the parties.

4. FUNCTIONS OF INDIAN FINANCIAL SYSTEM
 It bridges the gap between savings and investment through efficient
mobilization and allocation of surplus fund
 It helps a business in capital formation
 It helps in minimizing risk and allocating risk efficiently
 It helps a business to liquidate tied up funds
 It facilitates financial transactions through provision of various financial
instruments
 It facilitate trading of financial assets/instruments by developing and
regulating financial markets

5. IMPORTANCE OF INDIAN FINANCIAL SYSTEM
 It accelerates the rate and volume of savings through provision of various
financial instruments and efficient mobilization of savings
 It aids in increasing the national output of the country by providing funds to
corporate customers to expand their respective business
 It protects the interests of investors and ensures smooth financial transactions
through regulatory bodies such as RBI, SEBI etc.
 It helps economic development and raising the standard of living of people

6. CLASSIFICATION OF FINANCIAL SYSTEM

7.  In its simple meaning a financial
institution is an institution that
provides financial services.
 Financial services refer to the activity
of transfer of financial resources from
the savers or investors to the users
or borrowers.
 Thus, essentially financial institutions
are the intermediaries between the
savers and borrowers of the money.

8. ROLE OF FINANCIAL INSTITUTION IN THE FINANCIAL SYSTEM
 Financial institutions mobilize the savings of the public
 They provide credit facility to the needy persons
 They render various other financial services like transfer of funds from one place to another, payment
mechanism, etc.,
 Financial institutions enable transferring of funds from investors to corporate customers and other
business entrepreneurs.
 They facilitate the flow of money from one corner of the country to another corner
 They enable achievement of economy of large scale operations by providing funds for large
scale business activities
 They reduce the cost of transaction by increasing the number of transactions
 They reduce the risk of loss of capital through diversification of funds to different industries

9. CLASSIFICATION
OF FINANCIAL
INSTITUTIONS

10. 2. FINANCIAL MARKETS
A financial market is a market in which people trade financial securities and derivatives such as futures and
options at low transaction costs. Securities include stocks and bonds, and precious metals.
Basic classification of Financial markets:
Capital Market:
The market for companies and individuals who want to grow in tandem. It’s a platform where public and
private sectors often sell their stakes to raise fund in order to feed their projects in hand. The assets under
this market don’t have any fixed maturity time.
Money Market:
A major platform in financial market where securities and financial instruments with short-term maturities
are traded is called the money market. Financial assets like treasury bills, certificates of deposits, commercial
paper and bankers' acceptance are some of the short-term debt securities traded in the money market

11. RBI
Commercial and
Cooperative Banks
Primary market
Secondary
market
CLASSIFICATION OF FINANCIAL MARKETS
Financial
Markets
Organized
Capital markets
Money markets
Unorganized
Unorganize
d
Organized
Money Lenders
NBFI

12. FUNCTIONS OF FINANCIAL MARKETS
• It provides facilities for interaction between the Investors and borrowers
• It provides security to dealings in financial assets
• It provides information related to the financial markets to the investors and borrowers
• It ensure liquidity by providing a mechanism for an investor to sell their financial assets

13. 3. FINANCIAL INSTRUMENTS
Financial instruments are monetary contracts between parties. They can be created, traded, modified and
settled. They can be cash, evidence of an ownership interest in an entity, or a contractual right to receive or
deliver cash.
Financial Instruments are classified into 2 categories
1. Money Market Instruments
2. Capital Market Instruments

14. CLASSIFICATION OF FINANCIAL INSTRUMENTS

15. MONEY MARKET CAN BE
DEFINED AS A MARKET FOR
SHORT-TERM MONEY AND
FINANCIAL ASSETS THAT ARE
NEAR SUBSTITUTES FOR
MONEY

16. CAPITAL MARKET IS THE
MARKET FOR SECURITIES
WHERE COMPANIES
AND THE GOVERNMENT
CAN RISE LONG-TERM
FUNDS.

17. 4. FINANCIAL SERVICES
Financial services are the economic services provided by the finance industry, which encompasses a broad
range of businesses that manage money, including credit unions, banks, creditcard companies, insurance
companies, accountancy companies, consumer finance companies, stock brokerages, investment
funds, individual managers and some government-sponsored enterprises
MAIN SECTORS OF FINANCIAL SERVICE INDUSTRY
 BANKING COMPANIES
 FINANCIAL INSTITUTIONS
 NON BANKING FINANCIAL COMPANY

18. MAIN SECTORS OF FINANCIAL SERVICE INDUSTRY
 BANKING COMPANIES :
 Section – 5 of Banking Regulation Act , 1949 defines banking as , “ the accepting for the purpose of lending or
investments , of deposits of money from the public repayable on demand or otherwise and withdrawable by
cheque , draft , order or otherwise .”
 FINANCIAL INSTITUTIONS :
 Non banking institutions / financial companies engaged in any of the following activities :Financing by way of loans
, advances and so on Acquisition of shares / stocks / bonds / debentures / securitiesHire purchase and consumer
creditAny class of insurance , stock broking etc.
 NON – BANKING FINANCIAL COMPANY [NBFC] :
 It means and includes :Financial institution which is a companyA non – banking institution which is a company and
has as its principal business the receiving of deposits or lending .

19. KINDS OF FINANCIAL SERVICES
ASSET / FUND BASED SERVICES
 EQUIPMENT LEASING / LEASE FINANCING
 HIRE PURCHASE AND CONSUMER CREDIT
 BILL DISCOUNTING
 VENTURE CAPITAL
 HOUSING FINANCE
 INSURANCE SERVICES
 FACTORING
FEE BASED ADVISORY SERVICES
 MERCHANT BANKING
 CREDIT RATING
 STOCK BROKING

20. SUMMARY
 It helps to promote the development of weaker section of the society through
rural development banks and co-operative societies
 It helps corporate customers to make better financial decisions by providing
effective financial as well as advisory services
 It aids in Financial Deepening and Broadening:
Financial Deepening – It refers to the increase in financial assets as a
percentage of GDP
Financial Broadening – It refers to increasing number of participants in the
financial system.

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