2. The term "finance" in our simple understanding it is
perceived as equivalent to 'Money'. But finance exactly
is not money, it is the source of providing funds for a
particular activity.
Thus finance does not mean the money with the
Government, but it refers to sources of raising
revenue for the activities and functions of a
Government.
3. 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.
A Financial System is a composition of various institutions,
markets, regulations and laws, practices, money manager,
analysts, transactions and claims and liabilities.
4.
5. The word "system", in the term "financial system",
implies a set of complex and closely connected or
interlined institutions, agents, practices, markets,
transactions, claims, and liabilities in the economy.
The financial system is concerned about money,
credit and finance-the three terms are intimately
related yet are somewhat different from each other.
Indian financial system consists of financial market,
financial instruments and financial intermediation.
6. The financial system is the system that enables
investor and borrowers to exchange fund.
It includes the International Monetary Fund, central
banks, World Bank and major banks that practice
overseas lending.
7. Provision of liquidity
Mobilisation of savings
Size transformation function
Maturity transformation function
Risk transformation function
8.
9.
10. Financial assets are those which are used for
Production or consumption or for further creation
of assets.
Classification of assets:
A. Marketable B.Non-
Marketable
1.Shares 1.bank deposit
2.Govt securities 2.PF
3.Bond 3.LIC schemes
4.Mutual fund units 4.P.O certificates
11. A. capital market
1.Lending institutions (ie,finanical corporation)
2.Investing institutions (ie,LIC)
B.Money Market
1.Commercial banks
2.co-operative banks
12. The Places where financial transactions take place.
Therefore, financial market may be centre or
arrangement which facilitates buying and selling of
financial assets.
Classification of FM:
A.Unorganised Market
B.organised Market
13. 1. Money lenders (financier, pawnbroker)
2. Indigenous bankers (The Shroffs, the Marwaris,
the Multanis, the Jains, the Sowcars, the
Mahajans, Kharties, Seths and Banias or usance
or munddati hundi)
3. Traders
4. Pvt finance companies like chit funds etc
14. 1. Capital market
Industries Securities Market
a) primary market or new issue market
i) Public issue
ii) Rights issue
iii) private placement
b) Secondary market or Stock exchange
Govt securities market
STRIPS –separate trading of registered interest and principle of
securities
Long term loans market
a) Term loans market
b) Mortgages market
c) Financial guarantees market.
15. Call money market
Commercial bills market
Treasury bills market
Short term loan market
16.
17. 1. Nationalization of Financial Institutions
2. Starting of Unit trust of India
3. Establishment of development banks
4. Institution for Financing Agriculture
5. Institution for Foreign trade
6. Institution for housing finance
7. Stock holding corporation of India Ltd
8. Mutual Fund Industry
9. Venture capital institutions
10. Credit rating agencies
19. RBI is the leader of the financial system
It was nationalized in the yr 1948
Imperial bank of India nationalized in the yr 1956
245 LIC companies were merging under govt control
called as LIC
14 major commercial banks nationalized in the yr 1969
20. It was established in 1964 as a public sector
It is the oldest and largest MF in India
It has own legislative and regulations.
Since 1994 the schemes of UTI approved by SEBI
It has established : UTI Bank Ltd
UTI investor service Ltd
UTI security exchange Ltd
21. Multi purpose institutions
Discover investment projects
Develop backward regions and entrepreneurs.
Example:
IFCI-Industrial finance corporation of India
ICICI – Industrial credit and investment corporation of
India
IDBI –Industrial development bank of India
SIDCO- State industrial development corporation of
India.
22. ARDC- Agricultural refinance and development
corporation
Provide fund to –minor irrigation, farm
mechanisation,horticulture,dairy development etc.
NABARD –National bank of agriculture and rural
development.
23. EXIMbank -1982 take over the operation of
international finance.
It also refinance facility to other financial institutions
24. NHB – National Housing Bank -1988
It promotes housing finance both regional and local
level
Provide refinance facility to housing finance
institutions and schedule banks and also coordinates
with all agencies.
25. It was set up 1987 for stock and capital markets in
India.
It s to provide quick share transfer facilities ,clearing
services, depository services, management
information services and development services to
investors both individual and corporate.
It was set up by 7 all India institutions,viz
IDBI,IFCI,ICICI,LIC,GIC,UTI,IRBI
26. MF refers to the funds raised by financial service
companies by pooling the savings of the public and
investing them in a diversified portfolio.
MF have been floated by some public sector
banks,LIC,GIC and private sector also.
27. An investment fund that manages money from
investors seeking private equity stakes in startup and
small- and medium-size enterprises with strong growth
potential. These investments are generally
characterized as high-risk/high-return opportunities.
IFCI,ICICI,UTI,TDICI
28. The Indian credit rating industry has evolved over a
period of time. Indian credit rating industry mainly
comprises of
CRISIL-Credit rating information services of India Ltd
ICRA- International credit rating agency
CARE- credit analysis and research limited
29.
30.
31. 1. Mobilizing savings
2. Promoting investments
3. Encouraging investment in financial assets
4. Allocating savings on the basis of national priorities
5. Creating credit
6. Providing a spectrum of financial assets
7. Financing trade, industry and agriculture
8. Encouraging entrepreneurial talents
9. Providing financial services
10. Developing backward areas
32. Lack of co-ordination between different financial
institutions
Monopolistic market structures
Dominance of development banks in industrial
financing
Inactive and erratic capital market
Imprudent financial practice
