IFS-Lesson-1

Lesson-1Indian finance system : 

Lesson-1Indian finance system Introduction to financial system – Finance is bridge between the present and future and whether it be mobilization of saving or their efficient investment . Meaning – Supply funds to various sector and activity of economy in a way that fullest possible utilization of the resources without the destabilization of price level change or unnecessary interference with individual desire. Primary function of the financial system is the mobilization of saving and distribution for industrial investment .

Financial system : 

Financial system Savings- Finance- Investment- 1.capital formation- 2.Economic growth –

Q=The organization of financial system India : 

Q=The organization of financial system India Organization sector – financial institution sell their services to house hold, business and government. Central Bank - Banks - 26 leading public sector banks. Financial institution - Money and capital market - Informal financial enterprise – Financial institutions -

Unorganized : 

Unorganized In that less controlled moneylender . In that not direct control to RBI.

Indigenous Banking in India : 

Indigenous Banking in India the banking system is start with “HUNDI” it work for Goldsmiths, merchant and shipper of eighteen century. That time rural financial system is also start .

Q=The banking system : 

Q=The banking system that structure two basic factor – Economic and legal. (A). Public sector bank . (B). Private sector bank. Co-operative Sector- for village money lender in ruler area. Primary co-operative credit societies- for Particular locality. Central co-operative banks- for District. State Co-operative banks –for state. Land Development bank- for farmer.

Money market and Capital market : 

Money market and Capital market Money market – it main work for short term fund minted. it also work for equal demand of short term money. It also minted level of Interest Rate. it also work of clearing price of market.

Capital Market : 

Capital Market It work for long time money . on that lots of institution include investment bank, merchant bank, investment companies .

Q= Liberalization system realization of the finance : 

Q= Liberalization system realization of the finance In1992-93 is start base on FDI, Public enterprise performance, performance of taxation system. In that time less source of foreign money supply that –DEBT MARKET come place . In that tome capital market also come that in 1992 SEBI is come to control. Market work base on public issue , allotment of share, private placement, take over of company and VC. NBFC also come in that time .

Saving and Financial Intermediation : 

Saving and Financial Intermediation Saving – Is depend open largely martial income and its average propensity to consume. If national income increase that generally saving is also increasing. MPC-(marginal propensity of consume.)

Factor deterring saving : 

Factor deterring saving Public saving- in that fiscal policy tax structure ,state economy. Private saving –House hold saving and business saving . Business saving – retained saving and depreciation, dividend and other provision. Saving in house hold sector –PF,depost , pension fund, Share and debenture.

Service provide by banks : 

Service provide by banks RECEVING FUND - LENDING FUND - Saving A/C – Current A/c- FD a/C Recurring a/c- Cash certificated- OD- Bill discounting- Lone and advance – LC Collocation cheque- CC-

Liability of commercial banks : 

Liability of commercial banks Capital- Cover F.A and investment Assets Reserves- 20%of profit Deposit from Bank- 83%of bank liability Borrowing from other banking companies –IDBI, NABARD, IFC,IRDB. Other liability- Dividend an provision.

Assets of commercial bank : 

Assets of commercial bank Cash- CRR Balance with other bank- Call money- Investment – advance – Premises less deprecation- other assets-

Q=Instrument of monetary control : 

Q=Instrument of monetary control Bank rate –IT use full to bill discounting by commercial bank. Open money market- in that commercial bank sell security when RBI purchase. CRR- SLR- Selective credit control –It is use for specific commodity. Moral suas-RBI give advice to all banks. Credit Authorisation scheme- It main object of enforce financial discipline on large borrower.

Q=RBI : 

Q=RBI Objective- RBI act.1934 spell out the objective "to regulate the issue of bank notes and keeping of reserves with view of securing monetary stability in India and generally to operate the currency and credit system of the country to it advantages.”

FUNCTIONS OF RBI : 

FUNCTIONS OF RBI Issuing currency note- Serving banker to government – Banker bank and supervisor- Monetary regulation and management – Collocation of data and publication – Doing promotional activates- Agricultural finance-

Q= Public DEBT : 

Q= Public DEBT It is use full to meet and gap between budgeted receipt and payment. It work for – Meet budget deficits – cover other expanse – Finance development – Classification of Debt – 1.Intreal – 2.External – IMF, WORLD BANK,IRDB.