INTRODUCTION INDIAN FINANCIAL SYSTEM

Indian financial system consists of financial market, financial institutions, financial instruments or products and financial instruments. The economic development of a nation is depending on the progress of the economic units, broadly classified into corporate sector, government and household sector. Some of the sector may be in surplus and some of them may in deficit. A financial system or financial sector functions as an intermediary and facilitates the flow of funds from the areas of surplus to the areas of deficit.

An Introduction to Financial Market

In economics, a financial market is a mechanism that allows people to easily buy & sell (trade) financial securities ( such as stocks & bonds ), commodities ( such as precious metals or agricultural goods ).

FINANCIAL INSTITUTION

FINANCIAL MARKET

FINANCIAL SYSTEM

FINANCIIAL SERVICES

FINANCIAL INSTRUMENTS

COMPONENTS OF FINANCIAL SYSTEM

1. FINANCIAL INSTITUTION :Financial institutions are the intermediaries who facilitates smooth functioning of the financial system by making investors and borrowers meet. They mobilize savings of the surplus units and allocate them in productive activities promising a better rate of return. 2. FINANCIAL INSTRUMENTS:financial instruments represent a claim against the future income and wealth of others. It will be a claim against a person or an institutions, for the payment of the some of the money at a specified future date. for e.g:- shares, debenture, bonds, fixed deposits

CONTI..
3. FINANCIAL SERVICES:Financial services is any kind of services of a financial nature offered by a financial service provider. All Banking & Insurance related services are include

4.FINANCIAL MARKET:Finance is a prerequisite for modern business and financial institutions play a vital role in economic system. It's through financial markets the financial system of an economy works. The main functions of financial markets are:
1. to facilitate creation and allocation of credit and liquidity; 2. to serve as intermediaries for mobilization of savings; 3. to assist process of balanced economic growth; 4. to provide financial convenience

FINANCIAL MARKET
A Financial market deals in financial assets & instruments such as currency, deposits, cheque & bill etc. financial transactionsthrough the creation,sale and transfer of financial securities, Part of the economy, Companies and governments need to raise capital,Allow investors toinvest in financial securities and earn a reasonable rate of return.

FINANCIAL MARKET

CAPITAL MARKET

MONEY MARKET

PRIMARY MARKET

SECONDARY MARKET

CALL MONEY MARKRT

GOVT. SECURITIES MARKET

I.Capital Market
Capital Market is a market for financial investments that are direct or indirect claims to capital. It comprises of the institutions and mechanisms through which funds are pooled and made available to business, government and individuals

A. PRIMARY MARKET
Primary market is a market in which companies issues shares or

debentures to the investors directly.

This is the market for new long term equity capital. The primary

market is the market where the securities are sold for the first time. Therefore it is also called the new issue market
If public limited company issues shares for the 1st time, it is

known as INITIUAL PUBLIC OFFERING (IPO)

B.SECONDARY MARKET

Secondary market is a market in which old shares or shares already issued by the companes are traded. It is stock market.
SECURITIES EXCHANGE BOARD OF INDIA Primary market will not function withoutwell-organized and efficient secondarymarket, Must have depth and width characteristics:

It is also orgnised market which is regulated by the govt. through

Liquid

Low transaction costs

Incorporates all available information

Well regulated

Conclusion

Investors looks at superior returns and measured risk therefore he has to select a dynamically balanced asset allocation mix consisting of the different investment options available in the Financial Market.