PBMMPGC, MYSORE

1. Financial markets:

financial mrkts

organised mrkts

unorganised mrkts

capital mrkts

money mrkts

A. Unorganised markets: In these markets there are a number of money lenders indigenous bankers, traders etc, who lend one to the public. They are also private finance companies, chit funds etc, whose activities are not controlled by the RBI. The RBI has taken some steps to bring the unorganised sector under the organised fold. They have not been successful. The regulations concerning their financial instruments have not been standardised.

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B. Organised markets: In the organised markets, there are standardised rules and regulations governing their financial dealings. These markets are subject to strict supervision and control by the RBI or other regulatory bodies. These organised markets can be further classified into two. They are: 1. Capital markets 2. Money markets CAPITAL MARKETS The capital market deals with long term securities which have a maturity period of above one year. Capital market may be further divided into three namely: 1. Industrial securities market 2. Government securities market and 3. Long term loans market. 1. INDUSTRIAL SECURITIES MARKET: As the very name implies, it is a market for industrial securities namely: Equity shares or Ordinary shares Preference shares and Debentures and bonds. It can be further subdivided into: i. Primary market or new issue market ii. Secondary market or stock exchange
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i. PRIMARY MARKET: The primary market deals with those securities which are issued to the public for the first time. Primary market facilitates capital formation. There are three ways by which a company may raise capital in a primary market. They are: Public issue Rights issue Private placement ii. SECONDARY MARKET: Securities which have already passed through the new issue market are traded in this market. Generally, such securities are quoted in the stock exchange and it provides a continuous and regular market for buying and selling of securities. This market consists of all stock exchanges recognised by the government of India. The Bombay stock exchange is the principal stock exchange in India which sets the tone of the other stock markets. 2. GOVERNMENT SECURITIES MARKET: It is otherwise called Gilt-Edged securities market. It is a market where government securities are traded. In India there are many kinds of govt securities1. Short term
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i. ii. iii.

2. Long term Long term securities are traded in this market while short term securities are traded in the money market The govt securities are in many forms. These are generally: Stock certificates Promissory notes Bearer bonds which can be discounted

3. LONG TERM LOAN MARKETS: Long term loans can be classified into: i. Term loan market ii. Mortgages market iii. Financial guarantees market

MONEY MARKETS Money market is a market for dealing with financial assets and securities which have a maturity period of upto one year. The money market may be subdivided into four. They are: 1. 2. 3. 4. Call money market Commercial bills market Treasury bills market Short term loan market