Escolar Documentos
Profissional Documentos
Cultura Documentos
OF FINANCIAL SYSTEM
System
Open system
Closed System
Definition of Financial System
Financial system
Shares
Commercial
Banks Merchant
Money Banking
Market Debentures /
Industrial Bonds
Banks Project
Commercial
Consultancy
Paper (CPs)
Provident Capital
Funds Market Certificate of
Deposits (CDs)
Mutual Public DepositS
Funds PDs)
Mutual Fund
NBFCs
Units
Insurance
Policies
Government
Bonds
Functions of Financial System
• Payment system
• Mobilisation of savings
• Size transformation
• Maturity transformation
• Risk transformation
• Provision of liquidity
• Cost reduction
• Price information
• Financial advice
Savers / Lenders
Flow of Funds
Funds Householders Securities:
Business Firms Shares/Bonds
Government
Deposits/Policies/Uni Foreigners Funds
ts
S
e
Financial Institutions c Financial
Banks Funds u Markets
F
Provident Funds r Money Market
u
Insurance Companies i Private Capital Market
n
Mutual Funds t Placement Forex Market
d
NBFCs i Mode
s
Securities e
s
Investors/Borrowers
Householders
Loans Business Firms Funds
Government
Foreigners Securities:
Funds Shares/Bonds
Assets and Financial Assets
Non- Marketable
Marketable
Equity Preference
Shares Shares
Return on Financial Assets
Bonds
Debentures Interest
Debt
Preference share
Equity share
Dividend
FINANCIAL SYSTEM & ECONOMIC
DEVELOPMENT
Financial system acts as an efficient mediator for allocating
resources among competing users.
The role and importance of FS is continuous economic growth.
A financial system provides services that are helpful for developing
the economy.
financial assets with attractive yield, liquidity and risk characteristics
encourage savings in financial form.
By evaluating alternative investments and monitoring the activities
of borrowers.
trade, the efficient use of resources, savings, and risk taking are the
cornerstones of a rapid economy.
govt take efforts to promote economic development by controlling
interest rates, directing credit to priority sectors.
Financial System and Economic
Development
Offering of wide range of products and services
through well developed capital and money
markets.
The economic development of any country
depends upon the financial structure.
The larger the proportion of financial assets to
real assets, the greater the scope for economic
growth.
Investment is a pre-condition for economic
growth.
Financial System and Economic
Development
Finance is an important input for economic
development.
Incentives to savers in to financial assets.
Promoting the overall savings of the
economy.
Distributing the existing savings in a more
efficient manner.
Deposit money and creating credit
Evolution of
Indian Financial System
Market Abuses.
Recent Trends
Book Building Process.
Features of Book Building Process.
- Pre-issue Cost & Risk.
- Participation of Institutional Investors.
- Determination of Price of the Securities.
- Person responsible for Book Building.
- Time Period of Book Building Process.
• Green Shoe Option.
Financial Sector Reforms
RBI is the apex financial institution of the
country’s financial system entrusted with the
task of control, supervision, promotion,
development and planning.
Existence on 1st April, 1935
Queen of the Indian Financial system
Free from political influence
Issuing currency notes
Serving as a banker to the government
Acting as a bankers bank
Supervising Authority
Monetary Stability
Exchange management and control
To maintain Financial stability
COUNTRY BANK
INDIA RESERVE BANK OF INDIA
Dr.Y.V.Reddy
September 6, 2003 to September 5, 2008
Dr. C.Rangarajan
December 22, 1995 to November 22, 1997
December 22, 1992 to December 21, 1995
S.Venkitaramanan
December 22, 1990 to December 21, 1992
R.N. Malhotra
February 04,1985 to December 22, 1990
A. Ghosh
January 15, 1985 to February 4, 1985
Dr. I.G.Patel
December 1, 1977 to September 15, 1982
Open market operations
Bank Rate
Cash Reserve Ratio
Statutory liquidity Ratio
Selective credit controls
Credit planning
RBI helps to create and maintain a stable ,
efficient and well functioning financial
system in India.
MONETARY POLICY
DEFINITION…
• Price stability
• Control of business cycle
• Stabilization of money market
• Stability in exchange rate
• Promotion of economic growth
INSTRUMENTS OF MONETARY
POLICY
QUANTITATIVE QUALITITATIVE
MORAL SUASION
DIRECT ACTION
BANK RATE
• Rate at which CB rediscounts the first
class bills of exchange of commercial
banks.
OPEN MARKET OPERATION