FINANCIAL SYSTEM
MODULE I
Introduction
Financial system is an Integral part of modern economy. Economic development of any economy
depends upon the existence of a well organised financial system.
It is Defined as ‘a set of institutions, instruments and markets which encourage saving and
channelize them to their effective use’
It is the financial system that supplies necessary financial inputs for the production of goods and
services, which in turn promote the wellbeing and standard of living of the people of the country. It
mobilize the savings in the form of money and monetary assets and invests them to productive ventures.
It ffacilitates the free flow of funds to more productive activities and promotes investment.
It is the financial system which intermediate between savers and investors and promote faster economic
development
STRUCTURE
I. Financial Institutions/Intermediaries
Financial Institutions are all kinds of organisations which intermediate and facilitate financial
transactions of both the individuals and corporate customers. Business organisations that act as
mobilisers and depositories of savings and as suppliers of credit or finance.
They deal financial assets such as deposits, loans, securities etc.
Financial Institutions are classified in to four categories
, (i).Regulatory
Those which regulate the Financial Institutions
RBI –Regulatory Institution in Money market
SEBI-Regulatory Institution in capital market
ii).Intermediaries
Those intermediate between savers and investors.Intermediaries may be Banking Financial
Intermediary (BFI ) or Non-Banking Financial Intermediary ( NBFI)
BFIs are the creators of credit. They accept deposit and give loans and advances-
Commercial Banks (Public and Private), Co-op. Banks, RRBs are the Banking Financial Intermediaries
NBFIs are mere suppliers of credit .They have no credit creation capacity-Eg:-LIC,GIC,UTI
(iii).Non-Intermediaries
Non-Intermediaries do the loan business but their resources are not directly obtained from
savers. They came into exist because of governmental effort to provide for specific purposes, sections
and regions-
Eg:-IDBI,IFCI,NABARD
iv).Others
They are unorganised in nature. It includes Money Lenders, Indigenous bankers, Traders, Pawn
Brokers, Land Lords etc.
II.FINANCIAL MARKETS
MODULE I
Introduction
Financial system is an Integral part of modern economy. Economic development of any economy
depends upon the existence of a well organised financial system.
It is Defined as ‘a set of institutions, instruments and markets which encourage saving and
channelize them to their effective use’
It is the financial system that supplies necessary financial inputs for the production of goods and
services, which in turn promote the wellbeing and standard of living of the people of the country. It
mobilize the savings in the form of money and monetary assets and invests them to productive ventures.
It ffacilitates the free flow of funds to more productive activities and promotes investment.
It is the financial system which intermediate between savers and investors and promote faster economic
development
STRUCTURE
I. Financial Institutions/Intermediaries
Financial Institutions are all kinds of organisations which intermediate and facilitate financial
transactions of both the individuals and corporate customers. Business organisations that act as
mobilisers and depositories of savings and as suppliers of credit or finance.
They deal financial assets such as deposits, loans, securities etc.
Financial Institutions are classified in to four categories
, (i).Regulatory
Those which regulate the Financial Institutions
RBI –Regulatory Institution in Money market
SEBI-Regulatory Institution in capital market
ii).Intermediaries
Those intermediate between savers and investors.Intermediaries may be Banking Financial
Intermediary (BFI ) or Non-Banking Financial Intermediary ( NBFI)
BFIs are the creators of credit. They accept deposit and give loans and advances-
Commercial Banks (Public and Private), Co-op. Banks, RRBs are the Banking Financial Intermediaries
NBFIs are mere suppliers of credit .They have no credit creation capacity-Eg:-LIC,GIC,UTI
(iii).Non-Intermediaries
Non-Intermediaries do the loan business but their resources are not directly obtained from
savers. They came into exist because of governmental effort to provide for specific purposes, sections
and regions-
Eg:-IDBI,IFCI,NABARD
iv).Others
They are unorganised in nature. It includes Money Lenders, Indigenous bankers, Traders, Pawn
Brokers, Land Lords etc.
II.FINANCIAL MARKETS
