FINANCIAL INSTITUTION

AND MARKET
• Submitted by - Group 10
1. Ankit Kumar Mishra
2. Ashok Kumar Verma
3. Nikunj Kumar Singh
4. Vivek Kumar Pandey
5. Vivek Kumar Sharma

Submitted to-
Dr. Shudhanshu Pandiya
FINANCIAL SYSTEM

• A financial system is a network of financial institutions, financial markets, financial instruments and financial services to facilitate the transfer of
funds.
 ROLE OF FINANCIAL SYSTEM

Serves As A Link Between Savers And Investors

Financial Systems Operates At National Global

Pooling Fund

Capital Formation

Provides Liquidity

Better Decisions
 FINANCIAL MARKET

• A financial market is a market is a market in which people trade financial securities and derivative such as futures and options at low transaction
costs. Securities include stock and bonds and precious metals
INDIAN FINANCIAL SYSTEM - AN OVERVIEW

1. Before Independent

2. After independent to till 1990s

3. After 1990s
INDIAN FINANCIAL SYSTEM – AN OVERVIEW

• Distributes resources to needy sectors.

• Transformation of saving into investment consumption

• Financial markets where the above the activities take place

 BEFORE INDEPENDENT

1. Control of Money Lenders

2. No Laws / Total Private Sector

3. No Regulatory Bodies

4. Main concentration on Traditional Agriculture

5. Absence of intermediately institutions in long-term financing of industry

6. Industry had limited to outside saving/resources.

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 AFTER INDEPENDENT TO TILL 1990s

• Moneylenders ruled till 1951. No worth-while Banks at that time. Industries depended upon their own money. 1951 onwards 5 years
PLAN commenced.
•1st 5 year PLAN in 1951 – Planned Economic Process. As part of Alignment of Financial Systems – Priorities laid down by Govt. –
Policies.
• MAIN Elements of Financial Organizations

 Protection to Investors
 CONT…

• Nationalization-

• RBI - 1949
• SBI - 1956 (take-over of Imperial Bank of India)
• LIC - 1956 (Merges of over 250 Life Insurance Companies)
• BANKS - 1969 (14 major banks with Deposits of over Rs. 50 Crore nationalized)
• INSURANCE - 1972 (General Insurance Corp. GIC by New India, Oriental, united and National.
 POST 1990

INDUSTRIES

• Rise & Growth of Service Sector industries. Reliance & Dependence on technology.
• E-mail & mobile made sea-change in communication, data collection etc. Computerization – a catch phrase and inevitable need of an hour.
• Dependent on Capital Market rather than only Debts dependency. Scalability of operations through globally competitive size.
• Broad basing of Board. Professional Management.

• NBSCs
• NBFC under RBI governance to finance retail assets and mobilize
small/medium sized savings.
• Very large NBFCs are emerging (Shri Ram Transport Finance, Birla, Tata Finance, Sundaram Finance, Reliance Finance, DLF, Religare etc.

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 POST 1990

Commercial Bank

M u t u a l Funds

C a p i t a l Market

Secondary Market

M o n e y Market

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 MEANING OF MONEY MARKET

• A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. The money market is
used by participants as a means for borrowing and lending in the short term, from several days to just under a year.
FUNCTIONS OF MONEY MARKET

• Economic development – Money market assures supply of funds; financing is done through discounting of the trade bills, commercial banks,
acceptance houses and brokers.

• Borrowings by the Government – short term funds at very low interest.

MONEY MARKET INSTRUMENT
• CALL MONEY

• TREASURY BILLS

• CERTIFICATES OF DEPOSITS

• COMMERCIAL BILLS

• TRADE BILLS
CAPITAL MARKET
Capital market is a markets where buyers and sellers engage in trade of financial securities like bonds, stocks etc. the buying/selling is
undertaken by participants such as individuals and institutions.

• The market where investment instruments like bonds, equities and mortgages are traded is known as the capital market.

• The capital market offers both long term and overnight funds.
CONT…

• The different types of financial instruments that are traded in the capital markets are:

• equity instruments

• credit market instruments,

• insurance instruments,

• foreign exchange instruments,

TYPES OF CAPITAL MARKET

• PRIMARY MARKET

• SECONDARY MARKET
ROLE OF SEBI IN THE CAPITAL MARKET

• Power to make rules for controlling stock exchange

• To provide license to dealers and brokers

• To stop fraud in capital market

• To audit the performance of stock market

• To make new rules on carry-forward transactions

• To educate the investors.