2. “It’s a set of institutions, instruments and markets
which fosters savings and channels them to their
most efficient use.”
• H.R. Machiraju
“Financial system consists of a variety of
institutions, markets and instruments related in a
systematic manner and provides the principal
means by which savings are transformed into
investments.”
• Prasanna Chandra
Financial System
3. Organised
Sector
• Banking
System
• Cooperative
System
• Money Markets
• Financial
Institutions
• Development
Unorganised
Sector
• Chit Fund
• Nidhi
• Loans &
Finance
Company
• Money Lenders
(Sahukars)
Indian Financial System
4. • Money Market
Instruments
• Capital
Market
• Banking
Services
• Non-Banking
Services
• Banking
• Non-Banking
• Primary &
Secondary
• Money &
Capital
• Organised &
Unorganised
Financ
ial
Marke
t
Financ
ial
Instit
utions
Financ
ial
Instru
ments
Financ
ial
Servic
es
Structure of Financial System
6. Financial Markets (contd.)
Money Markets: Highly liquid short term
debt – instruments market including Call
Money Market, Certificates of Deposits,
Commercial Papers and Treasury Bills.
Capital Markets: Market for Long-Term
securities and provides risky capital in
the form of equity, debentures etc.
7. Financial Institutions
Banking
Institutions:
Participate in the
economy's
payment
mechanism,
deposit liabilities
constitute a major
part of national
money supply.
Non-Banking
Institutions: LIC,
SIDBI, IIBI, IFCI
( All India
Financial
Institutions),
SFCs & SIDCs
8. Financial Instruments
Capital Market Instruments:
Shares, Debentures, Mutual
Funds, Term Loans etc.
Money Market Instruments: Call
Loans, Promissory notes, Bills of
exchange etc.
