MANAV RACHNA INTERNATIONAL INSTITUTE OF RESEARCH AND STUDIES

(Deemed to be University under section 3 of the UGC Act 1956)

BBA-DSE-006: MONEY AND BANKING
Periods/week Credits: 3 Max. Marks: 200
L: 3 Continuous Evaluation: 100
Duration of Examination: 3 Hrs End Semester Exam: 100
Course Outcomes: By the end of this course, students will be able to:
1. Demonstrate good comprehension of the subject and its main elements.
2. Apply basic research methods including research design, data analysis and interpretation and analyze a
range of current monetary issues.
3. Identify environmental problems and apply both micro and macro theories to the real-world situations
in the areas of money and banking.
4. Evaluate appropriate information from various sources to formulate and evaluate views about pertinent
monetary and fiscal issues.

PART-A
Sr. No. Topic Reference
UNIT 1:
1 An overview of the financial system
2 Money; inflation; interest
3 Money supply process

UNIT 2:
4 Financial markets
5 Financial instruments and their characteristics
6 Banking and non-banking financial intermediaries

UNIT 3:
7 Understanding Interest rates
8 Risk and term structure of interest rates
9 Independence of markets and interest rates

PART-B
UNIT 4:
10 Banking institutions: Revenues, costs and profits
11 Basic issues and performance of depository
institutions
12 Bank management

UNIT 5:
13 Central Banking: Regulations; monetary policy
14 RBI: Structure, functions and working
15 Reforms in the banking sector

UNIT 6:
16 Essentials and objectives of monetary theory
17 Monetary theories: Classical; Keynesian; modern
theories
18 Conduct of monetary policy and inter linkages;
international monetary regimes
 Distribution of Continuous valuation Table
Sessional I 30%
Sessional II 30%
Assignment 20%
Class Performance 10%
Attendance 10%

Recommended Books:
1. Stephen G Cecchetti, Money Banking and Financial markets, Tata McGraw Hill Publication.
2. Robert E Wright and Vincenzo Quadrini, Money and Banking. Flat World Knowledge, Inc.
3. Federic S Mishkin, The Economics of Money, Banking and Financial Markets, Pearson New
International edition
4. R K Uppal, Money, Banking and Finance in India: Evolution and present structure, New
Century Publication.
Only latest available editions of the books are recommended.
Instructions for paper setting: Seven questions will be set in all, out of which students will attempt
five questions. First question will conceptually cover the entire syllabus and is compulsory. Three
questions will be set from each Part A and Part B, one from each unit. Students will be required to
attempt two questions from each part. Each question will be of 20 marks.

Degree of Correlation:
1 – Low
2 – Medium
3–

High

Overview Of Indian Financial System

 Last Updated : 20 Jun, 2022

The Indian Financial System plays a very important role in the Indian Economy and it
shows the economic growth of our economy. This chapter covers all the government
sector exams in our economy. It helps in the flow of funds to people and the people use
this money economically for their betterment.      
                        
  

 Definition of Financial System:

The various type of services that are provided by financial institutions like banks,
insurance companies, pensions, fund etc. to the people of the country makes a financial
system. 
1. The Financial Institutions in India are broadly divided into two categories viz. Banks
and Non-Banking Financial Institutions (NBFI). A bank accepts demand deposits while
NBFIs do not accept them. The banks have been authorised to issue checks but NBFIs
cannot issue them. Overview Of Indian Financial System

Last Updated : 20 Jun, 2022

The Indian Financial System plays a very important role in the Indian Economy and it
shows the economic growth of our economy. This chapter covers all the government
sector exams in our economy. It helps in the flow of funds to people and the people use
this money economically for their betterment.
Definition of Financial System:

The various type of services that are provided by financial institutions like banks,
insurance companies, pensions, fund etc. to the people of the country makes a financial
system.

1. The Financial Institutions in India are broadly divided into two categories viz. Banks
and Non-Banking Financial Institutions (NBFI). A bank accepts demand deposits while
NBFIs do not accept them. The banks have been authorised to issue checks but NBFIs
cannot issue them.

2. Banks are classified into commercial and cooperative. Commercial banks operate their
business for profit purposes while the basis of operation for cooperative banks is on
cooperative lines i.e. service to its members and the society. In comparison to a
commercial bank, Cooperative banks provide a higher rate of interest.
Commercial banks are of two categories viz.

a) Scheduled commercial banks

b) Non-scheduled commercial banks.

A scheduled bank is a bank that has been included in the 2nd schedule of the RBI Act
1934. A scheduled bank also had to be a corporation and the Paid-up capital for it should
be at least Rs. 500 crores.

The Non-Scheduled banks have to put some reserve requirements like SLR, and CRR
according to the banking regulation act 1949. Scheduled Banks are required to maintain
reserve requirements with RBI as per the RBI Act 1934.

3. Co-operative Banks: These are of two types-

a) Urban Co-operative banks (UCB)

b) Rural Co-operative banks.
The Urban Co-operative banks (UCB) are also known as Primary Co-operative Banks.
They help the communities, and localities workplace groups and are set up mostly in
urban and semi-urban areas. Their main customers are mainly small borrowers and
businesses.
These UCBs are also classified into Scheduled and Non-scheduled categories, which are
then further classified into a single state and multi-state.

4. Public Sector Banks:

Banks are controlled by the federal or state governments, with a combined ownership of
more than 51 percent. SBI and its affiliates, Punjab National Bank, Bank of India, and
others are examples. Those Nationalized Banks (private banks taken over by the
government) which were nationalized in 1969 and 1980s are also public sector banks as
the government owns more than 51% of these banks.

5. Private Sector Banks:

These are those Indian Banks that are owned by private individuals for example ICICI
bank, HDFC bank, Axis Bank etc.

6. Foreign Banks:

Those Banks that are established and provided services of banking in India but are owned
by foreign entities are called foreign banks. for example, Citi Bank, HSBC Banks,
Standard chartered banks etc.

7. Regional Rural Banks (RRBs):

The Regional Rural Banks Act of 1976 established RRBs in 1975 with the goal of
developing the rural economy by providing credit and other facilities, particularly to
small and marginal farmers, agricultural labourers, artisans, and small entrepreneurs, for
the purpose of developing agriculture, trade, commerce, industry, and other productive
activities in rural areas. The national government, the concerned state government, and
the sponsor bank each own 50:15:35 of RRBs (each RRB is sponsored by a particular
bank). RRBs are required to distribute 75% of their funding to priority industries.
NABARD also supervised RRBs.

8. Local Area Banks (LAB):

They were established in 1996 as part of a Government of India scheme. The government
intended to establish new private local banks with control over two or three adjacent
areas. The goal of establishing local area banks was to allow local institutions to mobilise
rural savings and make them available for investments in local areas. There are just four
Non-Scheduled Local Area Banks in India, one of which is Coastal Local Area Bank in
Vijayawada, Andhra Pradesh.

The RBI regulates and supervises three main areas of the Non-Banking Financial
Institutions (NBFIs) sector in India: All India Financial Institutions (AIFIs), Non-
Banking Financial Companies (NBFCs), and Primary Dealers (PDs). Credit Information
Companies (CIC) are a type of non-banking financial organisation regulated by the
Reserve Bank of India.
9. AIFIs are institutional mechanisms tasked with delivering long-term finance to specific
sectors. The RBI currently regulates and supervises four AIFIs, also known as
Development Financial Institutions (DFIs).

10. NABARD:

NABARD was established in 1982 under the provisions of the National Bank for
Agriculture and Rural Development Act 1981. NABARD gives credit to promote
agriculture, small scale industries, cottage and village industries, handicrafts and other
rural crafts and other allied economic activities in rural areas. NABARD extends
assistance to the government, RBI and other organizations in matters relating to rural
development. It offers training and research facilities for banks, cooperatives and
organizations in matters relating to rural development

11. Small Industries Development Bank of India (SIDBI):

SIDBI was established in 1990 under the provisions of the Small Industries Development
of India Act 1989 SIDBI serves as the primary financial institution for promoting,
funding, and developing the Micro, Small, and Medium Enterprise (MSME) sector, as
well as for coordinating the functions of other organisations involved in similar activities.
SIDBI primarily provides banking institutions with indirect financial support (in the form
of refinancing) in order for them to lend to MSMEs.

12. MUDRA Bank:

MUDRA (Micro Units Growth and Refinance Agency Ltd.) is a government-owned

financial agency dedicated to the development and refinancing of micro-enterprises.
MUDRA Ltd, a non-banking finance company, has been set up as a subsidiary of SIDBI
pending the passing of an act creating MUDRA Bank. MUDRA’s goal is to provide
funding to non-corporate (informal sector) small businesses in rural and urban areas with
financing needs of up to Rs 10 lakhs, such as small manufacturing units, shopkeepers,
etc. MUDRA would be in charge of refinancing all Last Mile Financiers, including Micro
Financial Institutions, Non-Banking Finance Companies, Societies, Trusts, Companies,
Co-operative Societies, Small Banks, Scheduled Commercial Banks, and Regional Rural
Banks, who lend to micro/small business entities engaged in manufacturing, trading, and
services.

13. Non-Banking Financial Companies (NBFCs):

The NBFC is a company governed by the Companies Act, 1956/2013, that deals with
loans and advances, the acquisition of shares/bonds/debentures issued by the government
or a local authority, or other marketable securities of a similar nature, leasing, hire-
purchase, insurance, and chit business, but not with agriculture, industrial activity, or the
purchase or sale of any goods. Private sector institutions make up the majority of NBFCs.
14. Primary dealers (PDs):

Primary dealers are RBI-registered companies with the authority to buy and sell
government securities. In the primary market, PDs purchase government securities
directly from the government (RBI issues these assets on behalf of the government), with
the intention of reselling them to other buyers in the secondary market. As a result, they
play an important role in the primary and secondary government securities markets.

15. Credit Information Companies (CIC):

A CIC is a non-profit organisation that accepts banks, NBFCs, and financial institutions
as members and collects data and identity information for individual customers and
enterprises. CICs tell banks whether or not a potential borrower is creditworthy based on
his payment history. The ability of lenders to assess risk and of consumers to receive
credit at competitive rates is determined by the quality of information available. The RBI
regulates and licenses credit information companies (CICs) under the Credit Information
Companies (Regulation) Act 2005. TransUnion Credit Information Bureau of India
Limited (CIBIL), Equifax, Experian, and High Mark Credit Information Services are the
four CICs currently operating in India.

16. Payment Banks:

In August 2015, the Reserve Bank of India (RBI) approved 11 applications for Payment
Bank licenses. The Reserve Bank of India has capped the amount of deposits that
payment banks can receive from individuals at Rs. 1 lakh. Only those companies that are
truly engaged in targeting the poor will be able to apply for payment bank licenses as a
result of this restriction. As a result, migrant workers, self-employed individuals, low-
income households, and others will be the primary beneficiaries of payment banks’ low-
cost savings accounts and remittance services, allowing those who currently transact only
in cash to make their first foray into the formal banking system (payment banks will not
be permitted to lend or issue credit cards). Only demand deposits will be accepted by
payment banks.

17. Small Finance Banks:

In September 2015, RBI granted licenses to 10 applicants for Small Finance Banks which
is a step in the direction of furthering financial inclusion.

The small finance banks shall primarily undertake basic banking activities of acceptance
of deposits and lending to unserved and underserved sections including small business
units, small and marginal farmers, micro and small industries and unorganized sector
entities.
Components of the Financial System:

Financial institutions
The term financial institution defines those institutions which provide a wide variety of
deposit, lending, and investment products to individuals, businesses, or both. Some other
financial institutions provide services and account for the general public, others are more
likely to serve only certain consumers with more specialized offerings.

1. Central Banks

These are the financial institutions that regulate, oversight and look after the management
of all other banks. RBI is known as the central bank of India. An individual does not have
direct contact with a central bank instead, large financial institutions work directly with
the RBI to provide products and services to the general public.

2. Retail and Commercial Banks

These Banks provide products to consumers and commercial banks worked directly with
businesses. At present, most banks offer deposit accounts, lending and financial advice.
These banks cater for services like checking and savings accounts, certificates of deposit
(CDs), personal and mortgage loans, credit cards, and business banking accounts.

3. Internet Banks

These types of banks work the same as retail banks. Internet bank is of two type-
• Digital banks- These are online-only platforms affiliated with traditional banks.
• Neo banks- These banks are not affiliated with any bank but themselves. These are pure
digital native banks.

4. Credit Unions

These are the financial institution that was founded and administered by its member and
provide standard banking services.
These unions help a specific population based on their field of membership, such as
military personnel or teachers.

5. Insurance Companies

These companies help individuals in transferring the risk of loss. These companies take
care of individuals and businesses from financial loss caused due to disability, death,
accidents, property damage and other catastrophes.

Financial Markets
The marketplace where buyers and sellers participate in the trade of assets such as
equities, bonds, currencies, and derivatives.

Consists of 2 types:
1. Money Market – deals in short-term credit (< 1 yr).
2. Capital Market –handles medium-term & long-term credit. (> 1 yr).

Money Market:
It is characterised by two sectors:

1. Organised sector — this sector comes within the direct purview of RBI. It includes
banking & sub-markets.

a. Banking sector – Commercial banks [under Banking regulation act 1949 & consist of
both private & public], RRBs, Cooperative Banks.
b. Sub Markets – Meet the need of govt and industries. It includes call money, Bill
market [Commercial bill, T-Bill], Certificate of Deposit [CD] & Commercial Paper [CP].

2. Unorganised sector– consists of indigenous bankers, money lenders, non-banking

financial institutions, etc.

Capital Market:

This market comprises buyers & sellers, who trade in equity (ownership of asset) &debt
(loan). It is regulated by SEBI (established in 1992).
The institutions in the capital market are called NBFCs (Non-banking financial
companies). But it’s not necessary that all NBFCs are capital market institutions.

RBI defines NBFC as – ‘A NBFC is a company registered under the Companies Act,
1956 and is engaged in the buss of loans & advances, acquisition of share/ stock issued
by Government. It doesn’t include any institution whose principal buss is agriculture
activity, industrial activity, or sale/purchase of the immovable property.

Security Market:

This market is known as-

a) Government Securities [gilt edge] security market and

b) Industrial Security Market [New Issue Market is the primary market & Old Issue
Market is the secondary market].
Development Financial Institutions: They provide long-term loans to industries engaged
in infrastructure where projects have long gestation periods & require long term loans.

Financial services:
The purpose of Financial Services is to cater for a person with borrowing, selling or
purchasing securities, allowing payments and settlement, lending and borrowing. These
services help in the management of funds as the money is invested efficiently and also
help to get the required funds. These services are provided by the assets management and
liability management companies.
These services are-
• Banking services- like cash deposit, issuing debit and credit cards, opening accounts,
Fixed deposit, loan facility etc.
• Insurance services- like issuing of insurance, selling policies, insurance undertaking and
brokerages, etc.
• Foreign exchange services- currency exchange, foreign exchange, etc.
• Investment services- like asset management etc.
2. Banks are classified into commercial and cooperative. Commercial banks operate their
business for profit purposes while the basis of operation for cooperative banks is on
cooperative lines i.e. service to its members and the society. In comparison to a
commercial bank, Cooperative banks provide a higher rate of interest.
Commercial banks are of two categories viz. 
a) Scheduled commercial banks 
b) Non-scheduled commercial banks. 
A scheduled bank is a bank that has been included in the 2nd schedule of the RBI Act
1934. A scheduled bank also had to be a corporation and the Paid-up capital for it should
be at least Rs. 500 crores. 
The Non-Scheduled banks have to put some reserve requirements like SLR, and CRR
according to the banking regulation act 1949. Scheduled Banks are required to maintain
reserve requirements with RBI as per the RBI Act 1934.
3. Co-operative Banks:  These are of two types- 
a) Urban Co-operative banks (UCB) 
b) Rural Co-operative banks. 
The Urban Co-operative banks (UCB) are also known as Primary Co-operative Banks.
They help the communities, and localities workplace groups and are set up mostly in
urban and semi-urban areas. Their main customers are mainly small borrowers and
businesses. 
These UCBs are also classified into Scheduled and Non-scheduled categories, which are
then further classified into a single state and multi-state.
4. Public Sector Banks: 
Banks are controlled by the federal or state governments, with a combined ownership of
more than 51 percent. SBI and its affiliates, Punjab National Bank, Bank of India, and
others are examples. Those Nationalized Banks (private banks taken over by the
government) which were nationalized in 1969 and 1980s are also public sector banks as
the government owns more than 51% of these banks.
5. Private Sector Banks: 
These are those Indian Banks that are owned by private individuals for example ICICI
bank, HDFC bank, Axis Bank etc.
6. Foreign Banks: 
Those Banks that are established and provided services of banking in India but are owned
by foreign entities are called foreign banks. for example, Citi Bank, HSBC Banks,
Standard chartered banks etc.
7. Regional Rural Banks (RRBs):
The Regional Rural Banks Act of 1976 established RRBs in 1975 with the goal of
developing the rural economy by providing credit and other facilities, particularly to
small and marginal farmers, agricultural labourers, artisans, and small entrepreneurs, for
the purpose of developing agriculture, trade, commerce, industry, and other productive
activities in rural areas. The national government, the concerned state government, and
the sponsor bank each own 50:15:35 of RRBs (each RRB is sponsored by a particular
bank). RRBs are required to distribute 75% of their funding to priority industries.
NABARD also supervised RRBs.
8. Local Area Banks (LAB):
They were established in 1996 as part of a Government of India scheme. The government
intended to establish new private local banks with control over two or three adjacent
areas. The goal of establishing local area banks was to allow local institutions to mobilise
rural savings and make them available for investments in local areas. There are just four
Non-Scheduled Local Area Banks in India, one of which is Coastal Local Area Bank in
Vijayawada, Andhra Pradesh.
The RBI regulates and supervises three main areas of the Non-Banking Financial
Institutions (NBFIs) sector in India: All India Financial Institutions (AIFIs), Non-
Banking Financial Companies (NBFCs), and Primary Dealers (PDs). Credit Information
Companies (CIC) are a type of non-banking financial organisation regulated by the
Reserve Bank of India.
9. AIFIs are institutional mechanisms tasked with delivering long-term finance to
specific sectors. The RBI currently regulates and supervises four AIFIs, also known as
Development Financial Institutions (DFIs).
10. NABARD: 
NABARD was established in 1982 under the provisions of the National Bank for
Agriculture and Rural Development Act 1981. NABARD gives credit to promote
agriculture, small scale industries, cottage and village industries, handicrafts and other
rural crafts and other allied economic activities in rural areas. NABARD extends
assistance to the government, RBI and other organizations in matters relating to rural
development. It offers training and research facilities for banks, cooperatives and
organizations in matters relating to rural development
11. Small Industries Development Bank of India (SIDBI):
SIDBI was established in 1990 under the provisions of the Small Industries Development
of India Act 1989 SIDBI serves as the primary financial institution for promoting,
funding, and developing the Micro, Small, and Medium Enterprise (MSME) sector, as
well as for coordinating the functions of other organisations involved in similar activities.
SIDBI primarily provides banking institutions with indirect financial support (in the form
of refinancing) in order for them to lend to MSMEs.
12. MUDRA Bank: 
MUDRA (Micro Units Growth and Refinance Agency Ltd.) is a government-owned
financial agency dedicated to the development and refinancing of micro-enterprises.
MUDRA Ltd, a non-banking finance company, has been set up as a subsidiary of SIDBI
pending the passing of an act creating MUDRA Bank. MUDRA’s goal is to provide
funding to non-corporate (informal sector) small businesses in rural and urban areas with
financing needs of up to Rs 10 lakhs, such as small manufacturing units, shopkeepers,
etc. MUDRA would be in charge of refinancing all Last Mile Financiers, including Micro
Financial Institutions, Non-Banking Finance Companies, Societies, Trusts, Companies,
Co-operative Societies, Small Banks, Scheduled Commercial Banks, and Regional Rural
Banks, who lend to micro/small business entities engaged in manufacturing, trading, and
services.
13. Non-Banking Financial Companies (NBFCs): 
The NBFC is a company governed by the Companies Act, 1956/2013, that deals with
loans and advances, the acquisition of shares/bonds/debentures issued by the government
or a local authority, or other marketable securities of a similar nature, leasing, hire-
purchase, insurance, and chit business, but not with agriculture, industrial activity, or the
purchase or sale of any goods. Private sector institutions make up the majority of NBFCs.
14. Primary dealers (PDs): 
Primary dealers are RBI-registered companies with the authority to buy and sell
government securities. In the primary market, PDs purchase government securities
directly from the government (RBI issues these assets on behalf of the government), with
the intention of reselling them to other buyers in the secondary market. As a result, they
play an important role in the primary and secondary government securities markets.
15. Credit Information Companies (CIC): 
A CIC is a non-profit organisation that accepts banks, NBFCs, and financial institutions
as members and collects data and identity information for individual customers and
enterprises. CICs tell banks whether or not a potential borrower is creditworthy based on
his payment history. The ability of lenders to assess risk and of consumers to receive
credit at competitive rates is determined by the quality of information available. The RBI
regulates and licenses credit information companies (CICs) under the Credit Information
Companies (Regulation) Act 2005. TransUnion Credit Information Bureau of India
Limited (CIBIL), Equifax, Experian, and High Mark Credit Information Services are the
four CICs currently operating in India.
16. Payment Banks:  
In August 2015, the Reserve Bank of India (RBI) approved 11 applications for Payment
Bank licenses. The Reserve Bank of India has capped the amount of deposits that
payment banks can receive from individuals at Rs. 1 lakh. Only those companies that are
truly engaged in targeting the poor will be able to apply for payment bank licenses as a
result of this restriction. As a result, migrant workers, self-employed individuals, low-
income households, and others will be the primary beneficiaries of payment banks’ low-
cost savings accounts and remittance services, allowing those who currently transact only
in cash to make their first foray into the formal banking system (payment banks will not
be permitted to lend or issue credit cards). Only demand deposits will be accepted by
payment banks.
17. Small Finance Banks: 
In September 2015, RBI granted licenses to 10 applicants for Small Finance Banks which
is a step in the direction of furthering financial inclusion. 
The small finance banks shall primarily undertake basic banking activities of acceptance
of deposits and lending to unserved and underserved sections including small business
units, small and marginal farmers, micro and small industries and unorganized sector
entities. 
Components of the Financial System:
Financial institutions
The term financial institution defines those institutions which provide a wide variety of
deposit, lending, and investment products to individuals, businesses, or both. Some other
financial institutions provide services and account for the general public, others are more
likely to serve only certain consumers with more specialized offerings. 
1. Central Banks
These are the financial institutions that regulate, oversight and look after the management
of all other banks. RBI is known as the central bank of India. An individual does not have
direct contact with a central bank instead, large financial institutions work directly with
the RBI to provide products and services to the general public. 
2. Retail and Commercial Banks
These Banks provide products to consumers and commercial banks worked directly with
businesses. At present, most banks offer deposit accounts, lending and financial advice.
These banks cater for services like checking and savings accounts, certificates of deposit
(CDs), personal and mortgage loans, credit cards, and business banking accounts. 
3. Internet Banks
These types of banks work the same as retail banks. Internet bank is of two type-
• Digital banks- These are online-only platforms affiliated with traditional banks.
• Neo banks- These banks are not affiliated with any bank but themselves. These are pure
digital native banks. 
4. Credit Unions
These are the financial institution that was founded and administered by its member and
provide standard banking services. 
These unions help a specific population based on their field of membership, such as
military personnel or teachers.
5. Insurance Companies
These companies help individuals in transferring the risk of loss. These companies take
care of individuals and businesses from financial loss caused due to disability, death,
accidents, property damage and other catastrophes.  

Financial Markets 
The marketplace where buyers and sellers participate in the trade of assets such as
equities, bonds, currencies, and derivatives.
Consists of 2 types:
1. Money Market – deals in short-term credit (< 1 yr).
2. Capital Market –handles medium-term & long-term credit. (> 1 yr).
Money Market:
It is characterised by two sectors:
1. Organised sector — this sector comes within the direct purview of RBI. It includes
banking & sub-markets.
a. Banking sector – Commercial banks [under Banking regulation act 1949 & consist of
both private & public], RRBs, Cooperative Banks.
b. Sub Markets – Meet the need of govt and industries. It includes call money, Bill
market [Commercial bill, T-Bill], Certificate of Deposit [CD] & Commercial Paper [CP].
2. Unorganised sector– consists of indigenous bankers, money lenders, non-banking
financial institutions, etc.
Capital Market:
This market comprises buyers & sellers, who trade in equity (ownership of asset) &debt
(loan). It is regulated by SEBI (established in 1992).
The institutions in the capital market are called NBFCs (Non-banking financial
companies). But it’s not necessary that all NBFCs are capital market institutions.
RBI defines NBFC as – ‘A NBFC is a company registered under the Companies Act,
1956 and is engaged in the buss of loans & advances, acquisition of share/ stock issued
by Government. It doesn’t include any institution whose principal buss is agriculture
activity, industrial activity, or sale/purchase of the immovable property.
Security Market:
This market is known as-
a) Government Securities [gilt edge] security market and 
b) Industrial Security Market [New Issue Market is the primary market & Old Issue
Market is the secondary market].
Development Financial Institutions: They provide long-term loans to industries engaged
in infrastructure where projects have long gestation periods & require long term loans.
Financial services: 
The purpose of Financial Services is to cater for a person with borrowing, selling or
purchasing securities, allowing payments and settlement, lending and borrowing. These
services help in the management of funds as the money is invested efficiently and also
help to get the required funds. These services are provided by the assets management and
liability management companies.
These services are-
• Banking services- like cash deposit, issuing debit and credit cards, opening accounts,
Fixed deposit, loan facility etc. 
• Insurance services- like issuing of insurance, selling policies, insurance undertaking and
brokerages, etc. 
• Foreign exchange services- currency exchange, foreign exchange, etc.
• Investment services- like asset management etc.