INDIAN FINANCIAL

SYSTEM
&
CAPITAL MARKETS
Himanshu Ahire 13
Meghana Deshpande 4

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 OBJECTIVES

Introduction to Indian Financial Market

Introduction to Indian Capital Market

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CONSTITUENTS OF FINANCIAL
MARKET

Credit Market
Debt Market
Money Market
Capital Market
Foreign Exchange Market

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 CREDIT MARKET
Institutional Vs Non Institutional
Institutional - Banks & Non Banking e.g.
Development Financial Institutions (DFI), other
financial Institutions ( FI’s) & Non Banking Financial
Companies ( NBFC’s)
Non Institutional - money lenders, indigenous
bankers.
Short Term vs Long Term

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 DEBT MARKET
Government Securities
Other Securities
Government Securities -
Treasury Bills , Long term Bonds
Other Securities - Private
corporate debt,Public Sector
Undertaking (PSU) Bonds

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 MONEY MARKET

Short-Term Funds
Organized vs Unorganized Sector
Examples - Certificates of Deposit (CD) [Banks],
Commercial Paper [Companies], Treasury Bills
[Government]

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 CAPITAL MARKETS

Importance of Capital Market

Money Market & Capital Market
Short Term Vs Long Term
Lenders
Borrowers
Intermediaries

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 CAPITAL MARKET STRUCTURE

Capital Market In India

Development Financial Government Industrial

Financial Intermediaries Securities Securities
Institutions Market
(DFIs)

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 DEVELOPMENT FINANCIAL
INSTITUTIONS

Definition : Development Bank is a multipurpose

institution which shares entrepreneurial risk, changes
its approach in tune with the industrial climate and
encourages new industrial projects to bring about
speedier economic growth.
First development bank – Indian Finance
Corporation of India – in 1948

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TYPES OF FINANCIAL ASSISTANCE
PROVIDED
Provision of rupee and foreign currency loans
Subscription to shares and debentures
Underwriting of shares and debentures
Guaranteeing of deferred payments and loans

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 TYPES OF DEVELOPMENT
ACTIVITIES

Identifying industrial potential in different areas

Development of entrepreneurship through training
and motivation
Assistance in project identification
Feasibility studies and preparation of project reports
Technical and managerial consultancy
Seed/ risk capital assistance

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 IDBI
IDBI – established 1964. First – it was wholly owned
subsidiary of RBI – now owned by Government of
India
IDBI’s strengths
Diversified portfolio across different industries, regions
and sectors.
Long standing business relationships with all major
industrial houses
Proven core competence in project financing

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 IDBI
Large balance sheet and sound financials
Capacity to take large single party exposure
Capacity to leverage
Sizeable stock of cost effective, long term funds
Fairly good retail network with large investor base
Lean organization with a sizeable pool of qualified,
experienced professionals

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 SUBSIDIARY ORGANISATIONS OF IDBI

SIDBI ( Small Scale Industry)

IDBI Capital( A Stock Brooking)
IDBI Bank ( Universal Bank)
INTECH ( IT related Services)

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 IDBI PRODUCTS/ SERVICES:

Project finance ( New Projects)

Equipment finance ( Specific Equipments)
Venture capital fund (Innovative Products & services)
Corporate loan ( Capital Expenditure )
Working capital loan
Equipment lease ( Purchase of Equipment on lease)
Finance with medium scale industries
Bills rediscounting
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 INDUSTRIAL FINANCE
CORPORATION OF INDIA

Established 1948
Activities:
Project financing – Setting up new projects,
expansion & diversification schemes, modernization/
balancing schemes of existing projects
Financial Services – Equipment finance, equipment
credit, equipment leasing, supplier’s credit, buyer’s
credit, leasing and hire purchase concerns, corporate
loans, short term loans, Working capital term loans

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 ICICI BANK

Industrial Credit and Development

Corporation of India Limited was merged with
ICICI Bank in 2001.
Industrial Credit and Development
Corporation of India was founded in 1955 to
encourage and assist industrial development and
investment in India.

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 ICICI BANK OBJECTIVE

Providing assistance in creation, expansion,

modernization of industrial enterprise
Encouraging and promoting the participation of
private capital, both internal and external in such
enterprise
Encouraging and promoting industrial investment and
expansion of investment

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 INVESTMENT INSTITUTIONS

Unit Trust of India

Public sector mutual fund established in 1964
Objective
To mobilise the savings of the community and
channelize them into productive corporate investments

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 INVESTMENT INSTITUTIONS

LIC - 1956
General Insurance Corporation of India -1972
Four subsidiaries:
United India Insurance Co ltd
Oriental Fire and General Insurance Co Ltd
National Insurance Co Ltd
New India Assurance Co Ltd.

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 FINANCIAL INTERMEDIARIES

Merchant Banks- New Ventures, mergers &

acquisitions.
Mutual Funds
Venture Capital - Development of entrepreneurship.

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 SECURITIES MARKET

Stock Exchange
Type of Stock Market
Number of Stock exchanges in India

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 OTCEI (OVER THE COUNTER
EXCHANGE OF INDIA)

Incorporated in 1990
Aid enterprising promoters in raising finance for new
projects in a cost effective manner
Provide investors with a transparent & efficient mode
of trading.
Modeled along the lines of the NASDAQ market of
USA

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 FACTS -OTCEI

Quick Payment & Delivery of shares

Decentralized Working
Enable smaller companies to get listed - is the only
exchange to allow listing of companies with paid-up
below Rs.3 crores
Is the only exchange to allow companies with less than
3 year track record to tap capital market

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NATIONAL STOCK EXCHANGE OF
INDIA

Established in 1994
National wide Electronic Screen based trading system.
NEAT System ( National Exchange Automated
Trading)
Order Based System - Time, Price & size

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 NSE - OBJECTIVES
Nation Wide Trading facility for equities , debts &
hybrids
Equal access to investors across Country
Provide fairness, efficiency & transparency
Meet International securities standard.
Shorter settlement cycle

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 NSE TYPE OF MARKET

Normal Market - Regular lot size

Odd Lot Market - odd lot size - Buy & Sell orders
should exact match
Spot Market - same as Normal Market but has
different settlement period
Auction Market- Auction in case of dispute

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 SEBI

Securities & Exchange Board of India ( SEBI)

Protect Interest of Investors
Regulating stock exchanges & securities Market
Prohibiting fraudulent & unfair trade practices
Prohibiting unexpected take-overs
Investor Education

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THANK YOU

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