This document discusses the role of financial institutions in India. It outlines the key components of the formal financial system, including financial instruments, markets, institutions, and services. It then describes the evolution of the Indian banking system in three phases from 1786 to the present. The document also discusses how financial institutions provide various services like financing small businesses, microfinance loans, and insurance. Some major financial institutions mentioned include the State Bank of India, IDBI Bank, and NABARD.

1. Role of financial Institutions in India
Ritvika
BBM 3rd year 1

2. Components of the Formal Financial System:
 Financial Instruments
 Financial Markets
 Financial Institution
 Financial Services
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3. FINANCIAL MARKET
 It is a market in which
people trade
financial securities and
commodities.
Types:
a. Money Market
b. Capital Market
c. Derivative Market
d. Currency Market
FINANCIAL SERVICES
 Financial services refers to
services provided by the
financial institutions in a
financial system.
 Ex: Insurance, Foreign
currency exchange.
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4. FINANCIAL INSTRUMENTS
 Tradable assets of any
kind.
 A document that has a
monetary value.
or
 A legally enforceable
agreement between two or
more parties.
FINANCIAL INSTITUTIONS
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 It is an establishment that
conducts financial
transactions such as
investments, loans and
deposits.

5.  The journey of Indian banking system can be
segregated into three different phases:
i. Early phase from 1786 to 1969 of Indian banks.
ii. Nationalization of Indian Banks and up to 1991
prior to Indian banking sector reforms.
iii. New phase of Indian Banking System with the
advent of Indian financial and Banking Sector
reforms after 1991.
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6. 1.One of the more recent microeconomic approaches to
economic growth is the promotion of entrepreneurial
activities.
2. Entrepreneurial efforts have been found to generate a
wide range of economic benefits, including new
businesses, new jobs, innovative products and services.
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7. 3. Financing the small scale sector:
Credit is the prime input for sustained growth of small
scale sector and its availability is thus a matter of great
importance.
4. Micro FinanceCredit:
Providing loans to unemployed or low-income
individuals or groups who would otherwise have no
other means of gaining financial services.
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8. 5. State level Institutions:
Several financial institutions have been set up at the
State level which supplement the financial assistance
provided by the all India institutions.
6. Insurance and Financial services:
The institutions are supporting a broad range of
financial services to help expand local capital markets
and develop local financial infrastructure.
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9. 1. SBI: India’s oldest and largest bank.
2. IDBI: It was established in 1964 by an Act of Parliament to
provide credit and other financial facilities for the
development of Indian industry.
3. National Bank for Agriculture and Rural
Development (NABARD): It was established on 12
July 1982 by a special act by the parliament and its main
focus was to uplift rural India.
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