INDIAN FINANCIAL SYSTEM

The Indian financial system consists of many institutions, instruments and markets. Financial instruments range from the common coins, currency notes and cheques, to the more exotic futures swaps of high finance.

The Indian financial system is broadly classified into 2 broad Groups:-

1. Organized Sector

2. Unorganized Sector

1. ORGANISED SECTOR

The organized sector consists of: -

i). Financial institutions

a) Regulatory

The regulatory institutions are the ones, which forms the regulations, and control the Indian financial system. The Reserve Bank of  India is the regulatory body, which regulates, guides controls and promotes the IFS.

b) Financial intermediaries

They are the intermediaries who intermediate between the saver and investors. They lend money as well mobilizes savings; their liabilities are towards ultimate savers, while their assets are from the investors or borrowers.

They can be further classified into: - 

Banking: -

All banking institutions are intermediaries.

Non-Banking: -

Some Non-Banking institutions also act as intermediaries, and when they do so they are known as Non-Banking Financial Intermediaries.UTI, LIC, GIC & NABARD are some of the NBFC’s in India.

c) Non intermediaries:-

Non-intermediaries institutions do the loan business but their resources are  not directly obtained from the saver.

ii. Financial Markets

Financial Markets are the centers or arrangements that provide facilities for buying & selling of financial claims and services. Financial markets can be classified into: -

Organized markets

These markets comprise of corporations, financial institutions, individuals and governments who trade in these markets either directly or indirectly through brokers on organized exchanges or offices.

Unorganized markets

The financial transactions, which take place outside the well-established exchanges or without systematic and orderly structure or arrangements constitutes the unorganized markets. They generally refer to the markets in the villages.