INDIAN FINANCIAL SYSTEM

Land BuildingEquipmentsInventoriesDurables

Financial Assets

Real Assets

Equity InstrumentsDebt InstrumentsDepositsInsurance PoliciesUnitsPension Reserves

Surplus Units

HouseholdRest of the world

Deficit Units

Government Corporate

Financial System

Role of Financial System

• Linking saving and investment

• Accelerating the rate of savings & investment by offering diversified financial services and instruments

• Larger production of goods and services

• Economic Growth

FINANCIAL SYSTEMFINANCIAL SYSTEM A financial system is a set of : * institutions, * instruments and * markets which foster savings and channels them to their most

efficient use. The system consists of : * individuals (savers), * intermediaries, * markets and * users of savings.

Indian Financial System

Formal / Organized Financial System

Informal / Unorganized Financial System

Regulators MoF, RBI, SEBI , IRDA

Financial Markets Capital Market Money Market

Financial Intermediaries Banking Institutions Non Banking Institutions

Money lenders Local Bankers Traders Landlords Pawn Brokers

RECENT REFORMS IN THE INDIAN FINANCIAL RECENT REFORMS IN THE INDIAN FINANCIAL SYSTEMSYSTEM

• Deregulation of interest rates paid on deposits with commercial banks by RBI

• Introduction of on-line trading in capital mkt.

• Measures taken to protect the investors and improve the transparency

• Introduction of modern financial instruments to elicit interest from broad range of savers

• Improving financial soundness and credibility of banks by adopting capital adequacy norms in relation to the risks to which the banks are exposed .Prudential norms for income recognition and provision of bad debts.

• Measures to control volatility

• Laying down insider regulations to protect integrity of markets

• Dematerializing share

• Wide dissemination of the information

• Thank you