The financial system assists in channeling funds from surplus units to deficit units. It mobilizes savings and allocates capital resources productively to accelerate economic development. The financial system has objectives like accelerating growth, encouraging industrialization, providing support to various economic sectors like industry and agriculture. It also aims to finance housing, small industries, and develop backward/rural areas. The financial system plays a key role by providing a link between savers and investors, encouraging savings and investment, promoting diverse financial markets and institutions, and influencing the pace of economic development. It performs controlling functions through regulatory bodies and promotional functions like managing payments and information systems.

1. FINANCIAL SYSTEM

2. Financial System
• Financial System assists to channelize funds from surplus to deficit units. An
efficient financial system efficiently mobilizes savings into different investment
avenues and helps in accelerating the rate of economic development. It also plays
a crucial role in allocating scarce capital resources to productive use.
• Objectives:
• To accelerate the growth of economic development;
• To encourage rapid industrialization
• To act as a medium to various economic factors such as industry, agricultural
sector, Government, etc.;
• To provide necessary financial support to industry.
• To finance housing and small-scale industries.
• To accelerate development of backward and rural areas, infrastructure, and
livelihood;
• To control the interest rate;
• To safeguard the financial environment.

3. Significance of Financial System
• It provides an ideal link between depositors/ savers and
investors;
• It encourages savings and investment in the economy;
• It facilitates expansion of financial markets over a period of
time;
• It promotes banking sector as well as financial institutions;
• It assists in the diversification and reduction of financial
risk;
• It promotes allocation of financial resources.
• It assists in generating new financial instruments over a
period of time.
• It influences the pace of economic development.

4. Functions of Financial System
There are two main functions of financial system in India are:
• Controlling Functions:
The Central Government imposes certain controls over the financial
and business activities of different organizations with the help of
DEA, DCA, SEBI, RBI and IRDA.
• Promotional Functions
Efficient operation of the payment mechanism.
Managing information to make it easily available to all interested
parties.
Providing training to investors, intermediaries and employees;
Conducting development and research activities in order to update the
system;
Creation and establishment of need-based financial institutions.
Promotion of practices which are fair, transparent and effective..

5. Financial System

6. FinancialSystem and Economic
Development

7. Thank You