Fiancial System

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- S.Y.BFM


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FINANCIAL SYSTEM

Existence of a well organized financial

system.

Promotes the well being and the

standard of living of the people in a

country.

Money and monetary assets.Mobilize the saving.

Promotes investment.


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Financial system of any country

consists of financial markets

,financial intermediaries ,financial

instruments and financial

products.

Flow of financial

services ,

Seeker of funds(mainlybusiness firms

andgovernment)

Supplier offunds(mainly

households)

Flow of funds (savings)

Income ,and financial claims

FINANCIAL SYSTEM


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INDIAN FINANCIAL SYSTEM

ORGANISED NON ORGANISED

oRegulatorsoFinancial marketsoFinancialinstitutionsoFinancial services

oMoney lendersoLocal bankersoTradersoLandlordsoChit fundsoPawn brokers


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EVOLUTION OF FINANCIAL SYSTEM

BARTER

MONEYLENDER

NIDHIS/CHIT

FUNDS

INDNIGENOUSBANKERS

COOPERATIVEMOVEMENT

SOCIETIES BANKS


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JOINT STOCKBANKS

CONSOLIDATION

COMMERCIALBANK

NATIONALISATION

INVESTMENTBANKS

DEVELOPMENTFINANCIALINSTITUTIONS


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INVESTMENT INSURANCECOMPANIES

STOCK EXCHANGE

MARKET OPERATION

SPECIALISED FINANCIALINSTITUTIONS

MERCHANT BANKING

UNIVERSAL BANKING


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INTERRELATION-financial system and economy

Financial system

Savers/lendersHouseholds/foreign sectors

Investors/borrowers

Economy

Unorganized sector

Corporate

sector/government sector


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The Banking Companies Act of 1949, define

Banking Company as a company which transacts the business ofbanking in India. It defines banking as, accepting for the purpose of

lending or investment of deposit money from the public, repayable ondemand or otherwise and withdraw able by cheque draft , order orotherwise

A bank as an institution dealing in money and credit. It safeguard ofthe savings of the public and gives loans and advances.


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ORIGIN OF BANKING SYSTEM

PRE-INDEPENDENCE SYSTEM


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POST-INDEPENDENCE PERIOD

POLICIES OF INDIAN BANKING SYSTEM DURING1991


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1) Central Bank

2) Commercial Banks

3) Cooperative Banks

4) Private sector Banks

5) Public Sector Banks


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6)Industrial/Development Banks

7)Land Development /Land Mortgage Banks

8)Saving Banks

9)Consumer Banks


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Indian marched towards the establishment of public sector banking through The progressive nationalisation

of commercial banks. There were three phases of bank nationalisation:

Nationalistion of Imperial Bank of India in1955 and its seven associate banks in 1959-60.

Nationlisation of the 14 major commercial banks in 1969.

Nationlisation of 6 more commercial banks in 1980.

On July 1, 1955 the government of India nationlised the Imperial Bank of India and converted it into theState Bank of India. The establishment of the State Bank of India was a pioneering attempt in public

introducing sector banking in the country. Later on in 1959-60, seven subsidiary State Banks were also

nationalised to form the SBI Group.

For a short period during December 1967 to June 1969, the Government of India pursued the banking of

policy control of banks, aiming at an equitable and purposeful distribution of credit towards developmenta

-l needs.

A such over 90 percent of the banking activity in the country is brought under into the public sector.

In short, nationalization of banks implied a bold and major economic step in the process of banking

reforms in the country. It has resulted in the evolution of public sector banking.


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Banking sector in India is expanding at an incredibly faster pace, with more and more banks reliazing the

benefits offered by globalization. Publicly owned banks handle more than 80% of the banking business in

India and the rest is in the hands of private sector banks. However, banking in both the government and

private sector is being revolutionized by this latest phenomenon called globalization.

As per the latest market research report named, Indian Banking Sector Analysis (2006-2007),published,

by RNCOSThe banking sector in India is heading towards consolidation. There are about 90 players in

.the banking sector in India, with 30competitors from each of the public, private and foreign sectors With

so many players present in the banking sector in India, a few of them will emerge as global competitors

in the near future.

The report highlights:

1) An overview of the current trends in banking sector in India to enable the clients Profiles of 5 prominentplayers, from each of the public, private and foreign segment, in the banking sector.

2) Discussion of the opportunities and challenges faced by the banking sector in India.3) Future forecast of the banking industry in India till the year 2010.


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Documents

Fiancial System