This document provides an overview of the Indian financial system, including its key components and markets. It discusses the organized financial system which includes financial institutions, markets, and instruments. It describes the money market and its short-term instruments, as well as the capital market and its various long-term instruments such as stocks, bonds, and depository receipts. It also discusses the roles and functions of the financial system and key regulatory bodies like SEBI which regulates financial markets and protects investors.

1. CAPITAL MARKET AND
INVESTMENT MANAGEMENT
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2. MODULE-1

3. A financial system may be defined as
a set of institutions,instruments and
markets which foster savings and
channelize them to their most
efficient use.

4. Features
• Organised and unorganized
financial markets
• Linkage between depositors and
investors
• Efficient allocation of resources
• Promotes economic development
• Expansion of financial markets

5. INDIAN FINANCIAL SYSTEM
FINANCIAL
SERVICES
CAPITAL
MARKET
MONEY
MARKET
PRIMARY
MARKET
SECONDARY
MARKET
• CALL MONEY
MARKET
• COMMERCIAL
BILLS MARKET
• DISCOUNT
MARKET
• TREASURY
BILLS MARKET
• REPO MARKET
BANKING
INSTITUTIONS
NON-BANKING
INSTITUTIONS
SPECIALISED
FINANCIAL
INSTITUTIONS
MONEY
MARKET
INSTRUMENTS
CAPITAL
MARKET
INSTRUMENTS
• INDIGENOUS
BANKERS
• LOCAL
MONEY
LENDERS
• CHIT FUNDS
• NIDHIES
FINANCIAL
INSTRUMENTS
UNORGANISED FINANCIAL SYSTEM
ORGANISED FINANCIAL SYSTEM
FINANCIAL
INSTITUTIONS
FINANCIAL
MARKETS
PRIMARY
INSTRUM
ENTS
SECONDA
RY
INSTRUM
ENTS
• MERCHANT BANKING
• MUTUAL FUNDS
• CREDIT RATING
• BANKING SERVICES
• INSURANCE SERVICES
• VENTURE CAPITAL
• LEASING
• HIRE PURCHASING
• SECURITISATION
• STOCK BROKING
• FACTORING&FORFAITI
NG ETC.

6. Financial markets
A financial market is an
institutional arrangement that
facilitates the exchange of
financial assets, including
deposits and loans, stocks and
bonds, options and futures.

7. Financial institutions
Organisations that
mobilize savings and
provide finance or
credit to individuals
and organisations

8. Financial services
Activities and benefits connected with
sale of money or money's worth. It
covers a wide range of activities
including insurance,banking asnd credit
services such as merchant banking,
mutual funds,venture capital etc.

9. Financial instruments
Documentary evidence of claim
against an individual/firm/state
for payment of principal and/or
interest or dividend on a
specified maturity date or on the
spot. They are issued by
financial intermediaries

10. ROLE AND FUNCTIONS OF FINANCIAL
SYSTEM
• Mobilisation of savings
• Transfer of savings
• Investment of savings
• Re-allocating the savings
• Arranging the payment system
• Ensuring liquidity
• Improving corporate governance
• Generating information for decision making
• Managing uncertainty and risk
• Financial engineering
• Financial innovation
• Adapt to changes in global economy
• Introducing reforms

11. FINANCIAL MARKETS
CAPITAL MARKET MONEY MARKET
PRIMARY
MARKET
SECONDARY
MARKET

12. CAPITAL
MARKET
IT REFERS TO THE MARKET IN
WHICH CORPORATE EQUITY
AND LONG TERM DEBT
SECURITIES WITH MATURITY
PERIOD OF MORE THAN ONE
YEAR ARE ISSUED AND
TRADED.

13. CAPITAL MARKET INSTRUMENTS
OWNERSHIP SECURITIES CREDITORSHIP SECURITIES DEPOSITORY RECEIPTS GOVT. SECURITIES
• EQUITY SHARES
• PREFERENCE
SHARES
• DEBENTURES
• BONDS
• AMERICAN
DEPOSITORY RECEIPT
• GLOBAL DEPOSITORY
RECEIPTS
• INDIAN DEPOSITORY
RECEIPTS
• BONDS

14. FEATURES OF
EQUITY
SHARES

15. Preference
shares

18. Debentures

19. TYPES OF DEBENTURES

20. Bonds

21. Depository Receipts
• A negotiable instrument, in
the form of a certificate,
denominated in US dollars
issued by an overseas
depository against certain
underlying stocks or shares.
• Shares are deposited by the
issuer company with the
depository and the
depository in turn gives a
receipt called DR to the
investors.

22. AMERICAN
DEPOSITORY
RECEIPT

25. G-Sec Market

26. GOVT BONDS
• LONG TERM SECURITIES
• FIXED OR FLOATING COUPON RATES
• SOLD BY RBI

27. TYPES OF GOVERNMENT BONDS
• Fixed rate bonds
• Floating rate bonds
• Zero coupon bonds
• Capital indexed bonds
• Special securities

28. Money
market

29. MONEY MARKET INSTRUMENTS
CALL MONEY
TREASURY
BILLS
COMMERCIAL
PAPERS
CERTIFICATE
OF DEPOSITS
COMMERCIAL
BILLS
REPO/REVERS
E REPO
COLLATERALISED
BORROWING
AND LENDING
OBLIGATIONS
INTER
CORPORATE
DEPOSITS
BANKER'S
ACCEPTANCE
MONEY
MARKET
MUTUAL
FUNDS

30. • VERY SHORT TERM
MARKET
• INTER BANK
TRANSACTIONS
• CALL MONEY – ONE DAY
• MONEY AT SHORT
NOTICE - 2-14 DAYS

31. • ISSUED BY RBI ON
BEHALF OF
CENTRAL GOVT.
• PERIOD OF 91
DAYS, 182 DAYS
AND 364 DAYS
• ISSUED AT
DISCOUNT
• NO INTEREST
PAYMENT
• ZERO RISK

32. • NEGOTIABLE
• ISSUED BY
BANKS/FINANCIAL
INSTITUTIONS
• DOCUMENT OF
TITLE TO TIME
DEPOSIT

33. • UNSECURED
PROMISSORY NOTE
• 7-365 DAYS
• ISSUED AT DISCOUNT
• ISSUED BY LARGE
CREDIT WORTHY
COMPANIES

34. • DISCOUNTING OR
REDISCOUNTING
BILLS
• 30-90 DAYS
• TRANSFERABLE
BY ENDORSEMENT
AND DELIVERY
COMMERCIAL BILL

35. REPO AND REVERSE REPO: Agreement for sale of security
with a commitment to repurchase the same at a specified price on
a specified date in future.
SHORT TERM LOAN MARKET: It is a market where the short
term loan requirements of corporates are met by commercial
banks.
INTER CORPORATE DEPOSITS(ICD): represents unsecured
loan given by a corporate entity to another corporate entity, facing
shortage of funds.High rated companies lends to low rated
companies.

36. MONEY MARKET MUTUAL
FUNDS: pool funds from retail
investors and invest in various
short term money market
securities.more liquid and safe.

37. MONEY MARKET CAPITAL MARKET
SPECULATION IS LESS
ASSURED RETURN AND
LOW RISK
CALL
MONEY,TREASURY
BILL,CPs etc are traded
NO PARTICULAR
TRADING FLOOR
SECURITIES ARE OF HIGH
DENOMINATIONS
INSTITUTIONAL
MARKET
LESS THAN ONE YEAR ONE YEAR OR MORE SECURITIES ARE OF
LOW DENOMINATIONS
INSTITUTION AND
INDIVIDUALS
ORGANISED
EXCHANGES
EQUITY,PREFERENCE
SHARES,DEBENTURES
etc are traded
HIGH RETURN AND
HIGH RISK
SPECULATION IS MORE

38. SECURITIES AND
EXCHANGE BOARD OF
INDIA (SEBI)

39. ORGANISATIONAL
STRUCTURE OF
SEBI
• Management of SEBI is done by a board constituted under
section3 of SEBI Act.
• Board consists od chairman and eight other members
• They shall be appointed by central govt.
• At least three members shall be whole time members
• Two members shall be nominated by central govt. From
the ministries dealing with finance and company affairs.
• RBI will nominate one member from its top officials
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40. OBJECTIVES OF SEBI
• To protect the interest of investors in
securities market
• To promote the growth and development of
securities market
• To regulate the securities market
• To discharge the responsibilities connected
with or incidental to above functions

41. Functions of SEBI
• Regulating all segments of capital market
• Regulating business in stock exchanges
• Registering and regulating the working of stock brokers, sub brokers,bankers,registrars
etc
• Prohibits fraudulent and unfair trade practices
• Promotes investor education and training of intermediaries
• Prohibits insider trading
• Conducts market researches

42. Powers of SEBI
Frames rules,regulations and guidelines
for market participants
calling for information,undertaking
inspections,conducting enquiries and
auditn of stock exchanges,mutual funds
etc
Inspection of any document of a listed
public company
Calling for information from any bank
Levying fees or other charges for carrying
out the functions
Specify requirements for listing Issue appropriate directions Order for investigating affairs

43. RECENT DEVELOPMENTS IN INDIAN FINANCIAL
SYSTEM
(SEMINAR PRESENTATION)