Structure of indian financial market
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The document describes the structure of the Indian financial market. It discusses various segments including the debt market, money market, capital market, and equity market. The money market deals in short term instruments like treasury bills, commercial bills, certificates of deposit, and commercial paper. It functions to reduce transaction costs, provide liquidity, facilitate price discovery, and mobilize savings. The capital market raises long term funds through stock and bond markets. It helps with capital formation, investment opportunities, and economic growth.
Structure of indian financial market
- 1. STRUCTURE OF INDIAN FINANCIAL MARKET
- 2. Debt market Treasury bill Call money market Certificate of deposit Commercial bill Commercial paper Cash management Treasury bill Call money market Commercial bill Commercial paper
- 3. Any market place where buyer and seller participate in the trade of financial securities , commodities and other fungible items of value at low transaction cost and at prices that reflect supply and demand. Securities include stock & bonds, and commodities include precious metals or agricultural goods. Financial market
- 4. Reduces the Cost of Transactions Provides Liquidity to Financial Assets Facilitates Price Discovery Mobilization of Savings and their Channelization into more Productive Uses Functions
- 5. As money became a commodity , the money market became a component of the financial market. The money market is the market for the financial assets that are close substitutes for money . it is a market for over night to short term fund and instrument having a maturity period of one or less than one year. Money market
- 6. Financing trade Financing industry Profitable investment Self-sufficiency of commercial Bank function
- 7. Treasury Bills Call Money Market Commercial Bills Commercial Papers Certificate Of Deposits Cash Management Bill
- 8. It deals in T-bills of short term duration 14 days, 182 days , 91 days , and 364 days. They are issued by the government & largely held by RBI The rate of interest for T-bills is determined by the market depending on demand & supply of fund in the money market Treasury bills
- 9. The call money market is a market for very short – term fund repayable on demand and with a maturity period varying between one day to a fortnight. The money that is lent for one day in this market is known as call money and if it exceeds one day but less than 15 days it is referred to as notice market. Call money market
- 10. Deals in a bill of exchange, a seller draws a bill of exchange on the buyer to make payment within a certain period of time . The bill can be domestic bill or foreign bill of exchange. The commercial bill are purchase & discounted by commercial bank & are rediscounted by FLS Like IDBI,SIDBI ,EXIM bank etc. Commercial bill
- 11. The schemes of cp was introduce in 1990 for short term financing issue . They can be issue in multiple of 5 lakh and in multiple thereof. As per RBI guideline , cps can be issue on the following condition : a) the minimum tangible net worth of the company should be at least rs 4 cr b) The working capital limit should have been sanctioned by a bank or financial institution. Commercial paper
- 12. Cds were introduce in June 1989. Cds are short term borrowings in the form of a promissory notes having a maturity of not more than 15 days up to a maximum of one year. Cd is subject to payment of stamp duty under Indian stamp act , 1899 (central act). Certificate of deposit
- 13. The capital market is the market for securities, where companies and the government can raise long term funds. The capital market include the stock market and the bond market. Capital market
- 14. Mobilization of saving Capital formation Provision of investment avenue Service provision Speed up economic growth and development Role of capital market
- 16. It is a marketplace in which shares are issued and traded, either through exchanges or over the counter markets. It is also known as stock market, it is one of the most vital areas of a market economy. Equity market
- 17. Debt market, also known as bond market. In this market, bonds are issued and traded. Bonds are securities that represent debt owned by the issuer to the investor. Debt market
- 19. Primary market Secondary market 1. The place where fresh issue of shares is made is known as primary market The place where formerly issued securities are traded is known as secondary market 2. Only ones securities can be sold Multiple times securities can be sold 3. Intermediary is underwriters brokers 4. Price is fixed Price is fluctuates, depends on the demand and supply force 5.Securities are buying &selling between company & investors investors to Investor
- 20. Capital market Money market 1. The primary instruments utilized as a part of the capital market are stocks, debentures, shares, bonds and securities The primary credit instruments of the money market are bills of exchange, call money 2. The capital market compact in borrowing and lending of long term funding which means the time period is more than one year. The money market make an agreement for borrowing and lending of short term funds which shows time period is one year or less than one year. 3. capital market instruments carry high risk The instruments traded in money market carry low risk 4. capital market are not that much liquid. The money market instruments are rich in liquidity.