Components of Indian Financial System.pptx
- 1. Components of Indian Financial System
- 3. Types of Financial Institution Banking Institution They are governed by RBI, and come under Banking Regulations Act 1949. Non-Banking Institution These are institutions which do not have full license or is not supervised by a National or International Banking Regulatory Agency.
- 4. Financial Assets • The products which are traded in the Financial Markets are called Financial Assets. Based on the different requirements and needs of the credit seeker, the securities in the market also differ from each other.
- 5. • Call Money – When a loan is granted for one day and is repaid on the second day, it is called call money. No collateral securities are required for this kind of transaction. • Notice Money – When a loan is granted for more than a day and for less than 14 days, it is called notice money. No collateral securities are required for this kind of transaction. • Term Money – When the maturity period of a deposit is beyond 14 days, it is called term money.
- 6. • Treasury Bills – Also known as T-Bills, these are Government bonds or debt securities with maturity of less than a year. Buying a T-Bill means lending money to the Government. • Certificate of Deposits – It is a dematerialised form (Electronically generated) for funds deposited in the bank for a specific period of time. • Commercial Paper – It is an unsecured short- term debt instrument issued by corporations.
- 7. Financial Services • Services provided by Asset Management and Liability Management Companies. They help to get the required funds and also make sure that they are efficiently invested.
- 8. • Banking Services – Any small or big service provided by banks like granting a loan, depositing money, issuing debit/credit cards, opening accounts, etc. • Insurance Services – Services like issuing of insurance, selling policies, insurance undertaking and brokerages, etc. are all a part of the Insurance services • Investment Services – It mostly includes asset management • Foreign Exchange Services – Exchange of currency, foreign exchange, etc. are a part of the Foreign exchange services
- 9. Financial Markets • The marketplace where buyers and sellers interact with each other and participate in the trading of money, bonds, shares and other assets is called a financial market.
- 10. The financial market can be further divided into four types Capital Market – Designed to finance the long term investment, the Capital market deals with transactions which are taking place in the market for over a year. The capital market can further be divided into three types: (a)Corporate Securities Market (b)Government Securities Market (c)Long Term Loan Market
- 11. • Money Market – Mostly dominated by Government, Banks and other Large Institutions, the type of market is authorised for small-term investments only. It is a wholesale debt market which works on low- risk and highly liquid instruments. The money market can further be divided into two types: (a) Organised Money Market (b) Unorganised Money Market
- 12. • Foreign exchange Market – One of the most developed markets across the world, the Foreign exchange market, deals with the requirements related to multi-currency. The transfer of funds in this market takes place based on the foreign currency rate. • Credit Market – A market where short-term and long-term loans are granted to individuals or Organisations by various banks and Financial and Non-Financial Institutions is called Credit Market.