IFS- • BBA 335

• Faculty: Ms Deeksha
Introduction • School of Business & Management
 • Mobilize and allocate savings
• Monitor corporate performance
• Provide payment and settlement systems
Functions of • Optimum allocation of risk-bearing and
reduction
a Financial • Disseminate price related information
System • Offer portfolio adjustment facility
• Lower the cost of transactions
• Promote the process of financial deepening and
broadening
Functions

Savings Liquidity Payment Risk function Policy

function function function function
 • A strong legal and regulatory environment
• Stable money
Basic • Sound public finances and public debt
elements of management
• •A central bank
financial • Sound banking system
system • Information system
• Well-functioning securities market
Economic growth vs economic development
Economic growth refers to increase in per capita income. Economic
development implies changes in income, savings and investment along
with progressive changes in socio- economic structure of country.

Quantitative & Qualitative

Economic growth reflects the growth of national or per capita income

whereas Economic development reflects progress in the quality of life
in a country.
 •Facilitates economic activity and growth.

Financial • Helps accelerate the volume and rate of savings.

• Lower financial intermediation costs
system and • Makes innovation least costly.
economic • Helps in evaluating assets.

growth • Helps the central bank to conduct monetary

policy.
• Monitors the management of companies.
Reforms in Financial sector in India
• Financial System in the Pre-reforms Period
• Closed
• Highly regulated by the government
• Segmented.
The main objective of the financial sector reforms in India initiated in
the early 1990s was to create an efficient, competitive and
stable financial sector that could then contribute in greater measure to
stimulate growth
Objectives of economic
reforms
1. Reorientation of the economy from one that was statist, state-
dominated, and highly controlled to one that is market-friendly.
In order to achieve this, it was decided to reduce direct controls,
physical planning, and trade barriers.

2. Macro-economic stability by substantially reducing fiscal deficits

and the government’s draft on society’s savings.
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