Indian Financial System

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FINANCIAL MANAGEMENT ASSIGNMENT ON INDIAN FINANCIAL SYSTEM & SOURCES OF LONG TERM AND SHORT TERM FINANCES

SUBMITTED BY, PREMJITH.A P10144 PGDM 2010-12

INDIAN FINANCIAL SYSTEM
The financial system in india refers to the system of borrowing and lending of funds or the demand for and the supply of funds of all individuals, institutions, companies and of the government. Commonly the Indian 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 a nd supply of funds to meet government expenditure The mobilization of savings and the effective distribution of the savings among all those who demand the funds for investment purposes. * The banking system, the insurance companies, mutual funds, investment funds and other institutions which promote savings among the public, collect their savings and transfer them to the actual investors * The investor in the country composed of individuals investors, industrial investors, industrial and trading companies and the government, these enters in the financial system as borrowers. FUNCTIONS OF INDIAN FINANCIAL SYSTEM

The Indian financial system performs a crucial role in economic development of india through saving investment process also known as capital formation. Sometimes it is also calls financial market. The purpose of financial market is to mobile savings efficiently and allocates the same efficiency among the ultimate users of funds, ie: investors * Increase in savings, that is resources that are would have been normally used for consumption purposes should be released for other purposes. * Mobilization of savings – domestic savings collected by banking and financial institutions and placed at disposal of actual investors; and * Investment proper, which is the production of capital goods.

COMPOSITION OF THE INDIAN FINANCIAL SYSTEM
The Indian money market is the market in which short term funds are borrowed and lent. The capital market in india on the other hand, is the market for medium- term and long term funds.

Reserve bank of india

Organized sector
Sub Market
Unorganized sector

Public sector banks
Private sector banks

NBFC

IDFC, GIC, LIC

Call money
T- Bills
Certificate for Deposit
Commercial Papers

SHORT TERM AND LONG TERM FUNDS
SHARES
Shares comes in the Long term funds. A share is a unit of capital of the company. It has a definite face value. It represents ownership rights of their holders. Buyers of shares are called shareholder and they are legal owners of the firm whose shares they hold. Each shareholder invest their money in the shares of a company in exception of a return on their investment capital. The return of shareholder consists of dividend and capital gain. Share holder make capital gain or (loss) by selling their share. Each share carries a distinct number. Shares are...
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