The Financial System.ppt

8/2/2019 The Financial System.ppt

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INDIAN FINANCIAL SYSTEM


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NAME ROLL NO.

NIKHIL R. MONDE 32

DIPIKA S. TAMBE 49


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Consisting of a variety of institutions, markets, andinstruments related in a systematic manner.

It provides the principal means by which savings are

transformed into investment.

This chapter provides a conceptual framework forunderstanding how the financial system work such as:

Functions of the financial systems

Financial markets

Financial intermediaries

Regulatory system


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Payment system Pooling of funds

Transfer of resources

Risk management

Price information for decentralized decision-making. Dealing with the incentive problem


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A financial market is a market for creation and exchange offinancial assets.

Functions of financial markets:

Facilitate price discovery.

Provide liquidity to financial assets.

Considerably reduce the cost of transacting.


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By the type of financial claim.

By the maturity of claims.

Based on whether the claims represent new issues or

outstanding issues.

By the timing of delivery.

By the nature of its organizational structure.


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Financial intermediaries are firms that provides services and

products that customers may not be able to get more

efficiently by themselves in financial markets.

Financial intermediaries seem to offer several advantages:

Diversification

Lower transaction cost

Economies of scale

Confidentiality

Signaling benefit


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Reserve Bank OfIndia

Commercial

Banks

Public Sector

Banks

Private Sector

Banks

Developmental

Financial

Institutions

All India

Institutions

State Level

Institutions

Insurance

Companies

Life Insurance

Corporation Of

India

Private Sector

Insurance

Companies

General Insurance

Corporation Of

India

Other Public

Sector Financial

Institutions

POSB

NABARD

NHB

Mutual Funds

Public Sector

Mutual Funds

Private Sector

Mutual Funds

Non-Banking

Financial

Corporations

Public Sector

Firms

Private Sector

Firms


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As a maker and enforce of laws in a society, the government

has the responsibility for regulating the financial system.

The two major regulatory arms of the government of India are: The Reserve Bank of India(RBI)

The Securities Exchange Board of India(SEBI)


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As the central banking authority of India, the Reserve Bank of

India performs the following traditional functions of the

central bank:

It provides currency and operates the clearing system for the

banks.

It formulates and implements monetary and credit policies.

It functions as the bankers bank.

It supervises the operations of credit institutions.

It regulates foreign exchange transactions.

It moderates the fluctuations in the exchange value of the

rupee.


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The Securities Exchange Board of India has been entrusted

with the responsibility of dealing with various matters relatingto the capital market. SEBIs principal tasks are to:

Regulate the business in stock exchanges and any other

securities markets.

Register and regulate the capital market intermediaries. Register and regulate the working of mutual funds.

Promote and regulate self-regulatory organizations.

Prohibit fraudulent and unfair trade practices in securities

markets. Promote investors education and training of intermediaries of

securities markets.


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Prohibit insider trading in securities. Regulate substantial acquisition of shares and takeovers of

companies.

Perform such other functions as may be prescribed.


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Thank you

Documents

The Financial System.ppt