The document discusses India's financial system, including money markets, capital markets, and financial intermediation. It describes key components of the money market like treasury bills, commercial papers, and call/notice money. The capital market deals in longer term instruments like stocks, bonds, and hybrid instruments. Financial intermediaries like banks, brokers, and investment banks facilitate the flow of funds between savers and borrowers. The system has grown significantly since the nationalization of banks and liberalization of the economy.

1. PRESENTED BY: SRIBATSA PATTANAYAK M.B.A ABA, BALASORE

2. I N T R O D U C T I O N EVERY MODERN ECONOMY IS BASED ON A SOUND FINANCIAL SYSTEM. THE PRINCIPAL AIM OF FINANCIAL SYSTEM IS TO TRANSFORM SURPLUS INCOME & SAVINGS INTO INVESTMENTS. FLOW OF FUNDS FLOW OF FINANCIAL SERVICES SEEKERS OF FUNDS, MAINLY BUSINESS FIRM & GOVT. SUPPLIERS OF FUNDS, MAINLY HOUSEHOLD

4. FINANCIAL MARKET FINANCIAL MARKET FINANCIAL MARKETS PROVIDE CHANNELS FOR ALLOCATION OF SAVINGS TO INVESTMENT. IT IS A MARKET WHERE FINANCIAL ASSETS ARE CREATED OR TRANSFERRED THROUGH BUYING & SELLING OF FINANCIAL ASSETS.

11. FINANCIAL INTERMEDIATION WHEN THE BORROWER OF THE FUNDS APPROACHES THE FINANCIAL MARKET TO RAISE FUNDS, ADEQUATE INFORMATION OF ISSUE, ISSUER & THE SECURITY SHOULD BE PROVIDED. SO THERE SHOULD BE A PROPER CHANNEL TO ENSURE SUCH TRANSFER WITHIN THE FINANCIAL SYSTEM. FOR THIS PURPOSE FINANCIAL INTERMEDIARIES CAME INTO EXISTENCE. IN INDIA FINANCIAL INTERMEDIATION IN THE ORGANISED SECTOR IS CONDUCTED BY VARIOUS INSTITUTIONS UNDER THE VIGILANCE OF R.B.I. IN THE INITIAL STAGE THE ROLE OF INTERMEDIARIES WAS MOSTLY RELATED TO ENSURE TRANSFER OF FUNDS FROM THE LENDER TO THE BORROWER. THIS SERVICE WAS OFFERED BY BANKS, INANCIAL INSTITUTIONS, BROKERS & DEALERS. HOWEVER, AS THE FINANCIAL SYSTEM WIDENED ALONG WITH THE DEVELOPMENTS TAKING PLACE IN THE FINANCIAL MARKETS, THE SCOPE OF ITS OPERATION TOO WIDENED.

14. NATIONALISATION OF BANKS IN 1969 WAS A MAJOR STEP TO ENSURE THAT TIMELY AND ADEQUATE CREDIT SUPPORT WAS AVAILABLE. GRANT OF CREDIT TO AGRICULTURAL & SMALL INDUSTRIES BY EXPANSION OF RURAL BANKING PROVED TO BE A BOON OFFERED BY THE NEW POLICY. THE INDIAN FINANCIAL SYSTEM HAS MADE COMMANDABLE PROGRESS IN EXTENDING ITS GEOGRAPHIC SPREAD & FUNCTIONAL REACH. THE SUDDEN BRST OF ACTIVITIES OF BANKING SYSTEM HAS BEEN A MAJOR FACTOR IN PROMOTING FINANCIAL INTERMEDIATION IN THE ECONOMY & GROWTH OF FINANCIAL SAVINGS. INDIAN MONEY MARKET CONSISTS OF FORMAL & INFORMAL SEGMENTS. THE FORMAL MARKET COMPRISES OF RBI, VARIOUS COMMERCIAL BANKS, COOPERATIVE BANKS, UTI ETC. INFORMAL MARKET CONSISTS OF CHITFUNDS, NIDHIS, INDEGENOUS BANKERS ETC. THE MONEY MARKET INSTRUMENTS INCLUDES TREASURY BILLS, COMMERCIAL PAPERS ETC.

15. MONEY MARKET HAS GAINED GREATER STRENGTH WITH THE RECENT WORLD WIDE LIBERISATION OF MONETARY & TRADE POLICIES. WITH THE ARRIVAL OF WTO & REMOVAL OF ARTIFICIAL BARRIERS AMONG COUNTRIES BOOSTING FREE FLOW OF GOODS & SERVICES, CAPITAL MARKETS HAVE GROWN MULTIFOLD & THE POTENCIAL OF FUTURE IS EVEN MORE LARGER. WITH THE INCREASING INDUSTRIAL & TRADE ACTIVITIES AFTER LIBERALISATION,THE DEMAND FOR CAPITAL MOBILISATION FROM THE MARKET HAS CROSSED ALL ESTIMATES & GIVING RISE TO MANY INNOVATIONS & REFORMS. THE MARKET PLAYERS IN THE INDIAN CAPITAL MARKET ESSENTIALLY CONSISTS OF VARIETY OF INVESTORS FROM DIFFERENT SECTORS, SUCH AS :SMALL INVESTORS, BANKS, MUTUAL FUNDS, COMPANIES, FINANCIAL INSTITUTIONS & SO ON. THE INVESTORS ARE EXPECTED TO ENQUIRE & INFORM THEMSELVES ABOUT THE STRENGTHS & WEAKNESSES OF DIFFERENT INSTRUMENTS & THE INSTITUTIONS IN WHICH THEY INVEST OR PLANNING TO INVEST. THEY SHOULD ALSO BE FAMILIAR WITH THE PREVAILING RULES & REGULATIONS OF THE COUNTRY APPLICABLE TO SUCH INVESTMENTS & INSTITUTIONS .THE CONCEPT OF SAFETY, LIQUIDITY & PROFITABILITY OF THE INVESTMENT SHOULD BE CLEAR BEFORE THE INVESTOR MAKES ANY DECISSION TO INVEST.

16. CONCLUSION IN INDIA MONEY MARKET IS REGULATED BY RESERVE BANK OF INDIA & SECURITIES EXCHANE BOARD OF INDIA/SEBI REGULATES CAPITAL MARKET. CAPITAL MARKET CONSISTS OF PRIMARY MARKET & SECONDARY MARKET. ALL INITIAL PUBLIC OFFERINGS/IPO ’ S COMES UNDER THE PRIMARY MARKET, & ALL SECONDARY MARKET TRANSACTIONS DEALS IN SECONDARY MARKET. SECONDARY MARKET REFERS TO A MARKET WHERE SECURITIES ARE TRADED AFTER BEING INITIALLY OFFERED TO THE PUBLIC IN THE PRIMARY MARKET & ARE LISTED ON THE STOCK EXCHANGE. SECONDARY MARKET COMPRISES OF EQUITY MARKET & DEBT MARKETS. IN THE SECONDARY MARKET TRANSACTIONS BSE & NSE PLAYS A GREAT ROLE IN EXCHANGE OF CAPITAL MARKET INSTRUMENTS.