4/25/2018 Articles Junction: Indian Financial System and Classification of Financial Market

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ARTICLES
Indian Financial System and Classification of Financial COMMENTS
Market
Indian Financial System
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Meaning/ Definition/ Define/ Examples of

Trading on Equity
Functions of Nonverbal Communication,
Image credits © Manoj Patil. Features of Nonverbal Communication
Advantages/ Examples/ Classification/
The formal financial system consists of four components: ↓ Components/ Types of Ecotourism

1. Financial institutions, Principles / Characteristics / Criteria /

Concepts of Ecotourism
2. Financial markets, Definition of Management
3. Financial instruments and
4. Financial services.
WELL !!
The financial system acts as a connecting link between savers of money and users of money and Thanks
thereby promotes faster economic and industrial growth. Medical Tourism it is an important segment
in the ...
Thus financial system may be defined as “a set of markets and institutions to facilitate the
what about health factors that influence
exchange of assets and risks.” tourism
Where are the two remaining stones???
Efficient functioning of the financial system enables proper flow of funds from investors to Good job, th...
productive activities which in turn facilitates investment.

Classification of Financial Market in India Labels

Biology (9)
Type of financial market are given in the diagram below. ↓ Blood (1)
Business Communication (2)

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4/25/2018 Articles Junction: Indian Financial System and Classification of Financial Market
Communication (31)
Consumer Protection Act (6)
Economic activities (2)
Education (3)
Environment Management (3)
Finance (20)
Global Village (1)
Gmail (2)
Green Business (2)
Green Consumption (2)
Human body (5)
Insurance (5)
Management (3)
Marketing (8)
Morale (1)
Motivation (2)
Order (1)
Professional Mangement (2)
Spatial Interaction (1)
Suggestion (1)
Telecommunication (1)
Tourism (8)
Warning (1)
Image credits © Manoj Patil. World Industry (3)
WTO (1)
The financial markets are classified into two groups: ↓

Capital Market
ARTICLES
1. Corprate Market JUNCTION BLOG
by © Sandeep Patil
Primary Market and Manoj Patil.
Secondary Market

2. Government Securities Markets Copyright © 2017 ARTICLES JUNCTION

BLOG. Articles are Compiled and Written by
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Financial Guarantees Markets recommend a minimum resolution of 1024 x
768 and above.
Money Market

1. Unorganized Market

Money Lenders
Indigenous Bankers
Chit Funds

2. Organized Money Market

Treasury Bills
Commercial Paper (CP)
Certificate Of Deposit (CD) etc
Call Money Market
Commercial Bill Market

Capital Market

A capital market is an organized market. It provides long term finance for business. According to
Shri, K.S. “Capital Market refers to the facilities and institutional arrangements for borrowing and
lending long-term funds.”

Capital Market is divided into three groups: ↓

1. Industrial / Corporate Securities Market

It is a market for industrial securities. Corporate securities are equity and preference shares,
debentures and bonds of companies. Industrial security's market is very Sensitive and Active
Financial Market.

It can be divided into two groups: Primary and Secondary Market ↓

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4/25/2018 Articles Junction: Indian Financial System and Classification of Financial Market
Primary Market: It is a market for new issue of securities, which are issued to the
public for first time. It is also called as New Issue Market.
Secondary Market: In the secondary market, there is a sale of secondary securities.
It is also called as Stock Market. It facilitates buying and selling of securities.

2. Government Securities Market

In this market, government securities are bought and sold. It is also called as Gilt-Edged
Securities Market. The securities are issued in the form of bonds and credit notes. The buyers of
such securities are Banks, Insurance Companies, Provident funds, RBI and Individuals. These
securities may be of short-term or long term.

3. Long-Term Loans Market

Banks and Financial institutions provide long-term loans to firms, for modernization, expansion
and diversification of business.

Long-Term Loan Market can be divided into: ↓

Term Loans Market: Banks and Financial Institutions provide term loans to
companies for a period of one year. The financial institutions help in recognizing
investment opportunities to motivate emerging businessmen. They also give
encouragement to modernization.
Mortgages Market: It provides loans against securities of immovable assets like land
and buildings.
Financial Guarantees Market: Financial Institutions (FIS) and banks provide financial
guarantees on behalf of their clients to third parties.

Money Market

Money Market is the market for short term funds i.e. for a period up to one year.

The money market is divided into two: Unorganized and Organized Money Market. ↓

1. Unorganized Market

Unorganized market consists of: Money lenders, Indigenous Bankers, Chit Funds, etc. ↓

Money Lenders: Money Lenders lend money to individuals at a high rate of interest.
Indigenous Bankers: They operate like money lenders. They also accept deposits
from public.
Chit Funds: These collect funds from members and provide loans to members and
others.

2. Organized Money Market

Organized Markets work as per the rules and regulations of the RBI. RBI keeps a strict control
over the Organized Financial Market in India.

Organized Market consists of: Treasury Bills, Commercial Paper (CP), Certificate Of Deposit(CD),
Call Money Market, Commercial Bill Market. ↓

Treasury Bills: To raise short term funds treasury bills are issued by Government. It is
purchased by Commercial Banks. At present, Government issues 91 days and 364
days treasury bills.
Commercial Paper (CP): Commercial paper is issued by companies who are listed
on Stock Exchange. CP is issued at discount and repaid at face value. The maturity
period ranges from 7 days to one year. CP's are issued in multiple of 5 lakh. The
company issuing CP must have tangible net worth of at least 4 crore.
Certificate Of Deposit (CD): CD's are used by Commercial Banks and Financial
Institutions to raise finance from the market. The maturity period for CD's is between 7
days to 1 year. CD's is issued at a discount and repaid at face value. CD's is issued
for a minimum of 25 lakhs.
Call Money Market: A loan which is taken or given for a very short period, that is for
one day is called Call Money Market. It involves lending and borrowing of money on a
daily basis. No security is required for these very short-term loans.
Commercial Bill Market (CBM): This market deals with Bills of exchange. The drawer
of the bill can get the bills discounted with Commercial Banks. The Commercial Banks
can get the bills rediscounted with Financial Institutions.

Posted by Articles Junction Blog at 9/26/2013 12:52:00 pm

Labels: Finance

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4/25/2018 Articles Junction: Indian Financial System and Classification of Financial Market

7 comments:

Anonymous 23 May 2014 at 09:36

nicely laid article

Reply

altaf sida 4 August 2015 at 12:16

Useful for rrb preparation.
Reply

Love Dharma 27 September 2015 at 16:14

Thanks..helped alot..
Reply

tejasi bhandari 17 December 2015 at 09:12

Thank you so much for making things easy to understand

Reply

Shivakumar S 12 January 2016 at 00:24

Its really informative
Reply

Anonymous 23 June 2016 at 00:03

information is not complete in its own there are lot more things that you can add to it. anyway it is
helpful.
thanks

Reply

chandrashekhar n menasinakai 16 February 2017 at 10:56

It helps to me alot,..
Reply

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