Knowledge Park-II, Greater Noida

COURSE MANUAL

INDIAN FINANCIAL SYSTEM

PGDM/RM/IB/FS (2010-12)

Facilitator Dr. Puneet Dublish

E-mail ID puneet.dublish@iilmgsm.ac.in

Contact Details 0210-3374325

Dr. Gurendra Bhardwaj Dr. Anubha Gupta

gurendra.bhardwaj@iilmgsm.ac.in anubha.gupta@iilmgsm.ac.in

0120-3374335 0120-3374331

I. Course Overview:
The financial sector in India has developed tremendously thanks to the financial sector reforms initiated with the advent of liberalization and globalization of Indian economy. Today the growth of any economy depends on the efficiency of its financial system in general and its components viz. financial market, financial intermediaries, financial instruments and financial services in particular. A vibrant and efficient financial system helps both Government and Corporates in raising long-term funds and provide investors an avenue to park their savings while at the same time providing liquidity to their investments. The subject Indian Financial System, will give students a holistic insight into the components and regulation of financial system in India.

II. Course Topics:

1. Introduction to Financial System 2. Financial Markets & Instruments 3. Financial Intermediaries 4. Financial Services 5. Financial Regulation
III. Learning Outcome:
At the end of the course students will be able to understand: Structure of Financial System. Role of Financial System in the Economy. Classification of Financial Markets and Instruments Role of Financial Intermediaries. Types of Fund Based and Fee Based Financial Services. Role of Financial Regulators viz. RBI, SEBI and IRDA.

IV. Books and References: Text Book : 1. The Indian Financial System Markets, Institutions and Services by Bharati V. Pathak, Second Edition (Pearson Education) Other References: 1. Indian Financial System by M Y Khan, Sixth Edition (The McGraw-Hill Companies) 2. Financial Institutions & Markets by Bhole. Fourth Edition (The McGraw-Hill Companies). 3. Indian Capital Market by Rao K. Chandra Shekhar. (APH Publishing). 4. Capital Market: The Indian Financial Scene by N Gopalsamy. (Macmilan India Ltd). 5. Capital Markets by Dr. S Gurusamy. Second Edition. (Tata McGraw Hill). V. Journals/ Magazines: Dalal Street, Capital Market VI. On-line Resources: 1. www.rbi.org,

2. www.nseindia.com, 3. www.bseindia.com, 4. www.sebi.com, 5. www.irda.org.

6. Moneycontrol.com

VII. Assessment Criteria

Components Class Test Group Project Presentation End-Term Exam

Weight (%) 15 15 10 60

Session 14th Session After 10 Session 24 -26 Seession

VIII. Session Plan

Session Date Topic Introduction: Components of Financial System Financial System & Economy Reforms

1 to 3

4 to 12

Financial Markets & Instruments: Money Market Capital Market a) Equity Market 1. Primary Market & Intermediaries, 2. Secondary Market b) Debt Market Derivative Market Guest Lecture on Stock Market Trading Class Test Financial Intermdiaries: Development Financial Institutions Banking Institutions Non-Banking Institutions (NBFCs) Micro Finance Institutions Financial Services: Leasing & Hire Purchase Factoring & Forfaiting Venture Capital Insurance Investment Banking Mutual Funds Stock Broking.

13 14

15 to 18

19 to 20

21

Guest Lecture on Insurance

Financial Regulation Regulation of the Capital Market The Securities Exchange Board of India The Reserve Bank of India Group Project Presentation

22 to 23

24-26

Pedagogy: The teaching methodology is a judicious blend of lectures, real life situation analysis, case studies, presentation by students of their project work and field study. Group Project: Each group consisting of six students will develop a case on live issues concerning Indian Financial System in general or any of its components in particular. The group project will be followed by an individual presentation from 24th to 26th session. The group project will constitute 15 marks and 10 marks will be for individual presentation.

Submission Date Group project must be submitted by 22nd session of the term. Failure to submit without good cause (illness supported by a medical certificate or similar) will result in a zero mark.

IX.

SESSION DETAILS Session 1, 2, 3: In this session the students will be introduced to -

i) Components of the formal financial system ii) A Macro-economic framework analysis for exploring the role of the financial system in the economy iii) Relationship between the financial system and economic growth iv) Indian Financial system in pre-reform period and post-reform Learning Outcome: Understand Different components of financial system and its link with economic growth.

Session 4 to 12: In this session the students will be introduced to i) Money market instruments ii) Money market intermediaries iii) Link between the money market and monetary policy in India iv) An overview of money market v) Functions of new issues/primary market vi) Issue mechanism and intermediaries vii) Equity Secondary Market Stock exchanges and index, listing, trading and settlement, internet trading, depositories viii) Private and Public corporate debt market ix) Government (Gilt-edged) securities market and primary dealers x) Introduction to derivatives market and instruments Learning Outcome: Understand money, equity, debt and derivative market, intermediaries and instruments. Session 13: In this session a speaker from industry will provide practical insight into stock market trading Session 15 to 18: In this session the students will be introduced to i)Various development financial institutions ii) Scheduled commercial banks iii) Regional rural banks iv)Cooperative banking and financial inclusio v)Non-banking financial companies including micro finance institutions. A case study will be discussed on a micro finance institution. Learning Outcome: Understand the role of financial intermediaries in the growth of an economy. Session 19, 20 & 21: In this session the students will be introduced to the basics of different financial services like leasing & hire purchase, factoring & forfaiting, venture capital, investment banking, mutual funds and stock broking. All these financial services will be dealt

in brief as the same will be covered in detail under Financial Service paper to be taught under finance elective. Insurance will be covered in session 21 by a guest speaker from industry. Learning Outcome: Understand the concepts, functions and nature of various financial services.

Session 22 & 23: In this session the students will be exposed to various regulatory acts applicable to the Indian financial system and understand the role of financial regulators like SEBI and RBI. Learning Outcome: Develop an understanding of the regulation of the capital market, role and functions of SEBI and RBI.

Session 24, 25 & 26: Group project presentation.