This document provides an overview of the Indian financial system and various financial markets. It discusses the key institutions that regulate different segments of the financial system, including the Reserve Bank of India, Securities and Exchange Board of India, National Housing Bank, Insurance Regulatory and Development Authority of India, Pension Fund Regulatory and Development Authority, and National Bank for Agriculture and Rural Development. It also describes the major components of the Indian financial system, including financial institutions, markets, instruments, and services. Finally, it outlines the major segments of the financial markets, including the money market, debt market, foreign exchange market, and mutual funds market.

1. Module I:
Indian Financial System and Market
PRESENTED BY
JEEVITHA B SHIVANANDA
LECTURE
CBALC,KLE

2. Examples in India
 Shriram Transport Finance Company Limited-
 Bajaj Finance Limited
 Muthoot Finance Ltd
 HDB Finance Services
 Tata Capital Financial Services Ltd
 Aditya Birla Finance Ltd.
 SBI DFHI Limited

3. Indian financial system
 Indian financial system
1) Financial institutions
2) Financial markets
3) Financial instruments/assets/securities
4) Financial services

5. Roles and functioning of central banking
1) Monetary control
2) Functioning of banks
Commercial banks : Accepts deposits
a) Public banks
b) Government banks
c) Private banks
Cooperative banks
a) Primary agriculture credit societies(VL)
b) Central cooperative at (district level)
c) State cooperative banks (state level )

6. SEBI - Securities and Exchange Board of
India
 Functions of SEBI
1) Protective functions
2) Development functions
3) Regulatory functions

7. Protective functions
 Protect , development
 Check price rigging
 Prohibit insider trading
 Guidelines

8. Development functions
 Training
 Flexible approach (investors)

9. Regulatory functions
 Rules and regulation
 Register and regulate the working
 Inquires and audit of stock brokers
 Books of account of stock brokers

10. Functions of the National Housing Bank
Set under national housing bank act,1987
Wholly owned by RBI & paid up capital
Regulates housing finance companies
1) Regulatory
2) Financial support
3) Promotion and development

11. Regulatory function
 Empowered to determine the policy to HFI
 Guidelines asset liability management system
 Supervises

12. Financial support
 Refinance
 Direct finance to project undertaken by public housing agencies
 Repayment of bonds
 Guaranteeing the repayment
 Acting as Special purpose vehicle

13. Promotion and development
 Facilitator in promoting finance institutions
 Equity in housing finance
 HFC , scheduled commercial/cooperative banks to finance
 Training

14. The NHB RESIDEX
 NHB, in July 2007, created the NHB RESIDEX, which is the first official housing price
index in response to the Ministry of Finance, Government of India Directives.
 Since 2007, the NHB RESIDEX went through regular updates until 2015. In these
years, the main housing price index expanded over 26 cities present in the country.
The NHB RESIDEX witnessed the most recent development in April 2018.

15. Insurance Regulatory and Development
Authority of India-IRDAI
 IRDA is the body that governs the functioning of various General Insurance and Life
insurance companies of the nation.
 IRDA is the supervisory body in India that regulates and commands all the insurance
companies in the country, both Life Insurances and General Insurance
companies.(1999)

16. Duties, powers and functions of IRDAI
 COR to insurance company
 To protect the interest of policy holder
 Code of conduct and training requirement of agents
 Call for information
 Code of conduct for surveyors and loss assessors
 To adjudicate disputes between insurers and intermediaries
 To regulate investments of funds by insurance company

17. PFRDA- Pension Fund Regulatory and
Development Authority
 Act was passed on 19th September, 2013
 Same was notified on 1st February 2014
 Promotes old age income security
 Subscribers

18. Duties, powers and functions of PFRDA
 Regulating national pension scheme (NPS) &pension scheme
 Approving –Schemes , Norms , Guide lines
 Registering and regulating intermediaries
 Issuing –intermediary, COR ,renewing ,modifying ,withdrawing ,suspending or
cancellation
 Ensuring safety for subscribers
 Redresses grievance

19. Continued
 Adjudicate disputes
 Collecting data
 Educating subscribers
 Regulation to maintain book of account

20. NABARD-National Bank for Agriculture and
Rural Development(apex body )
 NABARD is instrumental in the development and efficiency of the current rural
credit system.
 Over half the credit in the rural region comes from Co-operative banks and
Regional Rural Banks.
 NABARD is responsible for regulating and supervising the functioning of
such banks. Over the years
 NABARD has been pushing for development in the credit schemes for rural
populations to meet their new credit requirements.

21. Roles and functions of NABARD
1) Credit functions
2) Development functions
3) Supervisory function

22. Credit functions
 Policy and guidelines
 Credit facilities
 Monitoring credit flows
 Credit plans

23. Development functions
 Monitoring action plans
 Financial support for training institution

24. Supervisory function
 Inspection of regional rural banks
 Recommendation on issue of license to cooperative banks by RBI

25. Non-banking financial companies (NBFC)
1) NBFC cannot accept demand deposits;
2) NBFCs do not form part of the payment and settlement system and cannot issue
cheque drawn on itself ;
3) The deposit insurance facility of deposit insurance and credit guarantee
corporation is not available to depositors of NBFC’s unlike incase of banks

26. No NBF can carry a business of NBFC without
1) COR net owned funds 2 cr from April 1999
2) avoiding dual regulation for merchant bankers. Sub brokers ,brokers …

27. Foreign investment in India
 The routes under foreign investment can be made as under
1) Automatic Route
2) Governement Route

28. Direct Foreign Investment
1) ESOP- employee stock ownership plan
2) Sweat equity
3) Bonus
4) Rights
5) Swap of shares
6) On mergers
7) Funds payable to a person resident outside India

29. Foreign portfolio investment
 Foreign portfolio investment by NRI(5%,10% & 24%),FPI (by 10% by individual & 24%)
 Investment in other securities (long term invest )
 Foreign venture capital investment
 Investment in investment vehicle (infrastructure ) governed by SEBI

30. FINANCIAL MARKET
 FINANCIAL MARKET AND SUB MARKETS
 A financial market is a market in which people trade financial securities and
derivatives at low transaction costs. Some of the securities include stocks and
bonds, raw materials and precious metals, which are known in the financial markets
as commodities.

32. Money market –participants and
instruments
Instruments
1) Treasury Bills (T-Bills)
2) Commercial Paper
3) Call Money
4) Certificate of Deposit
5) Commercial Bill

33. Participants
 Participants in the Money Market:
 Central Government
 State Government
 Public Sector Undertakings
 Scheduled Commercial Banks (SCBs)
 Private Sector Companies
 Provident Funds
 General Insurance Companies
 Life Insurance Companies

34. Different types of interest rate quotation
1) Fixed rate of interest
2) Floating rate of interest
3) Yield
a) Nominal yield
b) Current yield
c) Yield to maturity
4) Count conventions
5) Premium and discount

35. Debt market
 A market where fixed income securities of various types and features are issued and traded is
known as debt market.
 ISSUERS PROFILE :Can be issued by almost by any legal entity
 Central & state government ,PSU –Bonds
 Private corporate sector – Debentures

36. Risk associated with debt securities
1)Interest rate risk
2) Counter party risk
3) Liquidity risk

37. Types of instruments in debt market
 Non convertible debentures
 Partly convertible debentures
 Fully convertible debentures
 Optionally convertible debentures
 Deep discount bonds

38. Secondary debt market
 Wholesale debt market
 Retail debt market

39. Foreign exchange market
 A market for the purchase and sale of foreign currencies is called foreign exchange
market.
 The trading is done through the worldwide interbank market. The trading is done
by telephone , telex or the SWIFT (society for worldwide interbank financial
telecommunications) system
 Interbank through which most currency transactions are channeled , used for
trading amongst bankers.
 There are three markets 1) spot market 2)forward market 3)Swap market

40. Participants
 Central bank
 Commercial bank
 Investment funds

41. Exchange rate quotation
 American term and European term
 Direct and indirect quotes
 Bid, offer and spread
 Cross rates

42. Mutual funds
 A mutual fund is a mechanism for pooling the resources by issuing units to the
investors and investing funds in securities in accordance with objectives as
disclosed in offer document.
 Registered under SEBI regulation 1996

43. Insurance
 Life insurance: Life insurance is a financial cover for an individual and his/her cover
for contingency linked with human life.
 Life insurance is need for the following reasons:
1) Financial support for dependents
2) Saving plans for future
3) Provides financial contingencies

44. Thank you