Financial system is considered as the backbone of a country. Going for shallow meaning it’s the tool which assists the economic development of any particular country. Financial system basically generates wealth and resources for a country by bring together savings and investments. There is money from savers who are the common people and homes and investors which is businesses, companies and financial firms like banks, financial markets PF Balance check without UAN Number in passbook.epfindia.gov.in
Having a complex meaning financial system is networking of the financial institutions like banks, financial markets and instruments which come up to facilitate and produce funds. The chain has savers and intermediaries where money circulates. There is a link of transfer of finances from savers to a group of borrowers. Where the cycle continues and the countries develops economically.
Importance of financial system in Indian country
Financial system broadens finances in India and among citizens.
- The system helps the consumer make a reasonable decision on the money they acquire and benefit from the financial advisers.
- Financial system helps boost areas which are weak by introducing rural banks and cooperative societies. Members from this sections get funds and improve on their businesses.
- Financial system helps improve citizen’s livelihood.
- It helps in saving both money and assets which also help in the country’s growth.
- Investors feel secure as finances are well protected in their circulations.
- It helps country get funds to distribute to customers who expand their businesses and are able to refund the grants thus increasing the countries financial growth.
Service offered by the financial system
- Risk sharing: risk sharing is a two-way traffic where savers have more assets. You transfer risk from savers to borrowers. This is based on the financial market which creates the channel of savers and borrowers. The savers take up the risk of providing the borrowers but in the end results savers benefit from the interest and returns.
- Liquidity: Financial system offers this as a service for the savers and borrowers. it liquefies assets turning them to money. The money can be used to buy other assets and products. The assets can be bought/sold in exchange for money. With these individuals are more flexible and can work on anything.
- Information: The financial system corrects information about savers and borrowers. They learn about the borrower’s details what they make of the funds. Are they good at refunding money and so on? Sometimes it’s difficult for lenders to get full details as borrower’s don’t provide full information. Financial markets provide information about stock exchanges and lenders where borrowers will get information whether they can venture in their business.
Structure of Indian financial system
Indian financial system is divided in two sections….
- Indian money market: this market basically doesn’t deal with cash; it is short term. Here you get treasury bill, grade bill and exchange bill.
- Indian capital market: this a permanent market which works with long term money.
Constituents of the financial system of India
- Financial institutions
- Financial assets this sector has two divisions namely: primary securities and secondarysecurities
- Financial markets