Financial system of India and its reforms

1. FINANCIAL SYSTEM OF
INDIA
BY,NAVYA KINI H.
Roll No.1891112

2. CONTENTS
• MEANING
• INTRODUCTION
• IMPORTANCE
• COMPONENTS
• GROWTH & DEVELOPMENT OF FINANCIAL
SYSTEM IN INDIA
• REFORMS IN INDIAN FINANCIAL SYSTEM
• OBJECTIVE OF FINANCIAL SECTOR
REFORM

3. WHAT IS FINANCIAL SYSTM?
• A financial system is a set of institutions, such as
banks, insurance companies, and stock exchanges,
that permit the exchange of funds
• The financial system also includes sets of rules and
practices that borrowers and lenders use to decide
which projects get financed, who finances projects,
and terms of financial deals.

4. INTRODUCTION
• It is a part of economy, which includes all the financial
institutions and markets involved in
 Moving savings from savers(households & firms) to borrowers
 Transferring, sharing and insuring risks
• It consists 0f 3 economic unit
 Government
 Industry
 Household

5. • HOUSEHOLDS
• BUSINESSFIRM
• GOVERNMENT
• FOREIGNORS
LEADERS SAVERS
• FINANCIAL
INSTITUTIONS
FINANCIAL
MARKET
• BUSINESSFIRMS
• GOVERNMENT
• HOUSEHOLD
• FOREIGNORS
BORROWERS SENDERS
FUNDS FUNDS
FUNDS FUNDS
FUNDS FUNDS
F
U
N
D
S

6. IMPORTANCE
• Financial system acts as a channel of transfer
• It contributes to higher production and efficiency
• It improves well being of consumers
• It helps in judicious allocation of resources
• It helps in providing liquidity to the economy

7. COMPONENTS
• Financial Institutions
Organized
Unorganized
• Financial Markets
Organized
Unorganized

8. GROWTH & DEVELOPMENT OF
FINANCIAL SYSTEM IN INDIA
• Indian Financial system has grown significantly over
years.
• During pre-reform era , It catered government in mixed
economic framework
• During this time there was deficits and long gestations
projects which required long term finance
• The government reduced interest on securities
• The unorganized lenders were raised.
• There was lack of transparency accountability and proper
norms
• All these necessitated the introduction of reforms

9. REFORMS IN INDIAN FINANCIAL
SYSTEM
• After 1991 India has had more than a decade of
financial sector reforms during which there has been
substantial transformation and liberalization of the
whole financial system.
.

10. Objective of financial sector reform
• Removed financial repression
• Create an efficient, productive and profitable financial sector
industry
• Enable price discovery, particularly by the market
determination of interest rates that then helps in efficient
allocation of resources
• Provide operational and functional autonomy to institutions
• Prepare the financial system for increasing international
competition
• Promote the maintainance of financial stability