172075_633746061139007500 (3)

8/9/2019 172075_633746061139007500 (3)

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Joseph Anbarasu, ASU

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` To make a historical account of Indian Financial

system before and after liberalization;

` To appreciate the evolutionary process for having

attained the present phase;` To evaluate each component of the system in a

global context; and

` To loot at your business decisions in the context of

prevailing financial system of a state.

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` Most banks were state-owned` Banks, pension funds and

insurance companies wereforced to buy State Issuedbonds - primary investment.

` Bombay Stock Exchange was

closed market. Run by Brokersfor the benefit of its members.There was no right governanceand regulation.

` There was no single derivativemarket.

` All financial transactions were

controlled by the RBI andMinistry of Finance

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Socialistic Model Weapons

` Strict entry barriers in every sub-

industry.

` Difficult to start a bank, a mutual

fund, a brokerage firm, an

insurance company, a pension

fund, a securities exchange or sub-broking firm.

` Foreign firms were restricted to

touch any one of these parts

` Comprehensive capital control

and restrictive legislations

` Look at a typical bureaucrats of yester years as perceived

Big Villains were` MRTP act, 1969

` The Capital Issues

(control) act, 1947

` Indian Companies Act,

1956

` Industries Act, 1956

` Foreign Exchange

Regulation Act, 1973

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` Male , Balding head , Ugly stained metal rimmed glasses .

` Thick bushy eyebrows[Usually as a mono-brow],Mustache[See pictures], No beard., Paan Chewing [ Theteeth and tongue are often discolored].

` ³I-don't-care-what-you-say, I'll-do-it-only-my-way´ attitude.

` Drinking coffee 10 times a day.

` Looking for a slightest opportunity to take bribe.

` Take home salary is Rs. 5000[Official] + Rs. 25000[BribesandMisc. tips].

` Taking the rules and law by word and not understandingthe true essence of it. Even though the laws usually dateback to the 1850 British Colonial period .

` No respect for anyone's privacy.

`

Not taking anyone's ideas on improving productivity eventhough they are right.

` Piles and piles of paper with folders and gem-clips strewnabout.

` A rotary dial telephone on the desk..

` No air-conditioning and a ceiling fan that rotates 6 times inan hour.

` Runs errands for his bosses or chats with family duringwork. Also misuses official equipment.

` Is usually in a vital position of authority/ In a position thatrequires interaction with people everyday.

www.sriraminhell.com

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Individuals,Firms, State

Surplus Units MoneyMarket

DebtMarket

EquityMarket

DerivativeMarket

ForexMarket

Free Financial

System

Equity

BondsHybrid

MoneyMarketInstruments

All are customized

Vehicles

Individuals,Firms,

State Deficit Units

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` Market driven

` All players with integrity and accountability

` Innovators and Creators flourish

` Contributes favorably to the Economy` No greedy

` Global but not taking external shocks

` State facilitates rather than suppresses

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Liberalization Facilitators

` Eighteen to Three ±Scheduled Industries

` Eight Hundred to Fifty ± SSI` MRTP not active` Capital Issues Act repealed

` Foreign ExchangeRegulation Act repealed

` Insurance, BankingIndustries open its gates for Private Players

` MNC allowed

` Banking Regulation Actsimplified

` Security Exchange Boardconstituted

` Foreign ExchangeManagement Act ± passed

` Company¶s Act ± subject toscrutiny

` Private players allowed todo insurance and bankingbusiness

` SEZs opened` FDI encouraged

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` Lender's risk has dwindledsubstantially

` Liquidity position is improved

` Return is certain on his savings

(either fixed or variable)` Lender gets impetus to save

` He will get accurate informationfrom specialized financialinstitutions.

`

Lenders botheration with respectto selecting a prompt borrower isreduced

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` Borrower certainty in risingfunds is soared

` He needs make less effortand minimum time inquesting for an ultimatelender.

` In whatsoever fashion heneeds funds he canprocure

` He can seek professionalsand specialized assistance

from specialist in the field.

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` 1. Banking financial institutes (RBI, Commercialbanks and co-operative banks)

` 2. Development banks (all India financial instituteslike IDBI, IFCI)

` 3. Investment financial institutes (LIC,GIC,UTI,since 2000 Private insurance companies likeSunLife, Allianz Bajaj, ICICI Prudential etc. )

` 4. Non-Banking financial institutes (SBI capitalservices,Merchant banking companies Hire-purchase companies, etc.,)

` 5. Postal department Financial services (Recurringdeposits, NSC, KVP, Postal Life-Insurance etc.).

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Individuals,Firms, State Individuals,Firms, State

Surplus Units

Market

State

Market

State

FinancialSystem

MoneyMarket

EquityMarketDebtMarket

MoneyMarket

EquityMarketDebtMarket

FinancialMarket

CustomizedInstrumentsCustomizedInstruments

Vehicles

Individuals,Firms, State Individuals,Firms, State

Deficit Units

172075_633746061139007500 (3)

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