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Indian Financial SystemIndian Financial System

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The Structure of the Financial SystemThe Structure of the Financial System

Commonly, the financial system is classified into

Industrial Finance

Funds required for the conduct of industry and trade.

Agricultural Finance

Funds needed and supplied for the conduct of agriculture and allied activity.

Development Finance

Funds needed for development; actually it includes both industrial finance and

agricultural finance.

Government Finance

Relates to the demand for and supply of funds to meet Government expenditure.

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BroadlyBroadly,, TheThe IndianIndian financialfinancial systemsystem isis composedcomposed ofof

TheThe banking banking system,system, thethe insuranceinsurance companies,companies, mutualmutual funds,funds, investmentinvestment

fundsfunds andand otherother institutionsinstitutions whichwhich

PromotePromote savingssavings amongamong thethe publicpublic

CollectCollect theirtheir savingssavings

TransferTransfer themthem toto thethe actualactual investorsinvestors..

TheThe investorsinvestors inin thethe countrycountry composedcomposed ofof individualindividual investors,investors, industrialindustrial andand

tradingtrading companiescompanies andand thethe governmentgovernment.. TheyThey enterenter thethe financialfinancial systemsystem asas

borrowersborrowers..

ApartApart fromfrom thesethese twotwo broadbroad categoriescategories ofof institutions,institutions, therethere areare certaincertain otherother

essentialessential institutionsinstitutions ofof thethe indianindian financialfinancial systemsystem whichwhich areare actuallyactually

facilitatorsfacilitators..

Ex: New Issues Market, Stock Exchange.

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Composition of the Indian Financial SystemComposition of the Indian Financial System

It consists of two partsIt consists of two parts

Indian Money MarketIndian Money MarketShortShort--term funds are borrowed and lentterm funds are borrowed and lent

Indian Capital MarketIndian Capital Market

Medium

Medium--term and Longterm and Long--term funds are borrowed and lentterm funds are borrowed and lent

Indian money market is classified intoIndian money market is classified into

Organised SectorOrganised Sector

Consists of commercial banks in India, which includes private sector, public sector andConsists of commercial banks in India, which includes private sector, public sector and

also foreign banks.also foreign banks.

Unorganised SectorUnorganised Sector

Consists of indigenous bankers including the nonConsists of indigenous bankers including the non--banking financial companiesbanking financial companies(NBFCs)(NBFCs)

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Banking Structure in IndiaBanking Structure in India

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Reserve Bank of India

Central bank and supreme Monetary Authority of the Country

Scheduled Banks

Scheduled Commercial Banks Scheduled Co-operative Banks

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