Indian Financial System final

Topics: Monetary policy, Economics, Central bank Pages: 17 (2199 words) Published: August 4, 2015
Business Environment
Group No. 05
Indian Financial


• Aruna Raman-Roll No.05
• Cyrus Gordon- Roll No. 15
• Divesh Narverkar- Roll No. 35
• Tejal Shah –Roll No. 45
• Pankaj Tari- Roll No. 55

Topics Covered
• 1.Indian financial system-Banks and
2. Regulatory architecture-functions
of various regulators
3. Money & Capital markets
4.Monetary & Fiscal policy
5. Interplay between monetary &
fiscal policy

Financial System
• 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
• Financial System of any country consists of
financial markets, financial intermediation and
financial instruments or financial products .

Constituents of financial

Financial Market
• A Financial Market can be defined as the market in
which financial assets are created or transferred.
• Mechanism which allows people to trade.
 Money market
▫ (Short term instrument)

The most important distinction between the two:
 The difference in the period of maturity.

BIET- MBA 2013

 Capital markets
▫ (Long term instrument)

Financial Market
• Capital Market -  The capital market is designed to finance the long-term investments.  The transactions taking place in this market will be for periods over a year.
• Money Market- The money market is a wholesale debt market for low-risk, highly-liquid, short-term instrument.  Funds are available in this market for periods ranging from a single day up to a year.  This market is dominated mostly by government,

banks and financial institutions.

• Credit Market- Credit market is a place where banks, FIs and NBFCs purvey short, medium and long-term loans to corporate
and individuals.

BIET- MBA 2013

• Forex Market - The Forex market deals with the multicurrency requirements,which are met by the exchange of currencies. 
Depending on the exchange rate that is applicable, the transfer of funds takes place in this market.  This is one of the most developed and integrated market across the globe.

Market Regulators
• Ministry of Finance

Financial Instruments
Government Securities: Issued by central government, state government, semi government authorities such as municipalities, state electricity boards and public sectors corporations.

Industrial Securities: These are securities issued by the corporate sector  to finance their long term and working capital requirements.  The Major Instruments that  fall under Industrial Securities are Debentures

Preference Shares
Equity Shares
Call money market
Commercial Paper (CP)
Certificate of deposit (CD)
Repo market ( Repurchase agreement ) etc.

Regulatory Architecture - Functions of
Various Regulators

• Regulators exercise regulatory or supervisory authority over a variety of endeavors in India. The financial system in India is regulated by independent regulators in the field of
banking, insurance, capital market, commodities market,
and pension funds. However, Government of India plays a
significant role in controlling the financial system in India and influences the roles of such regulators at least to some extent.
• Statutory Bodies via parliamentary enactments:
Reserve Bank of India, Securities and Exchange Board of
India, Insurance Regulatory and Development Authority.
• Part of the Ministries of the Government of India:
Forward Market Commission India & PFRDA under the
Finance Ministry.

The Following is a List of Regulators in India



Financial system and monetary

Reserve Bank of India

Financial Audit and Accounting

Institute of Chartered Accountants of India

Commodity Market

Forward Markets Commission


Company- related matters

Registrar of Companies


Inland Waterways for shipping and...
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