Financial SystemHarpreet Singh aKa Chris

Definition

Financial system is system that allow transfer money between savers and borrowers

Financial system is most important institution and functional vehicle for economic transformation. finance is a bridge between present and future whether and mobilization of saving or effective and equitable allocation for investment .

Definition

Supply funds to various sector and

activities of economy in way promote

fullest possible utilization of resource

without unnecessary interference with

individuals desire.

Provide link between saving and

investment.

Feature of financial system

Provide ideal linkage between savers

and investor and also encourage

saving and investment .

Mobilization of saving or effective and

equitable allocation for investment.

COMPONENTS OF FINANCIAL

SYSTEM

Financial Institutions

Financial Markets

Financial Instruments

Financial Service

Financial Institutions

Financial institutions are

intermediaries and mobilize saving

and facilities of allocation fund in

efficient manner.

Financial Institutions can be classify

banking and non-banking institutions.

Financial Market

Financial market in India are money

and capital market.

First market is short-term securities.

Money market is market which deal

with financial asset and securities

which have maturity period up to one

year.

Second market is long-term securities

which have maturity up to one year

and more.

Financial Instrument

Financial instruments also called

financial securities. It can be classify

into :-

1. Primary Securities

2. Secondary Securities

Primary Securities

These securities directly issued by

ultimate investor to ultimate savers

for example :- Shares and Debenture

directly issued to public

Secondary Securities

These securities issued intermediaries

to ultimate savers.

1. Short-term securities (1 year)

2. Medium-term securities (1to 4 year)

3. Long-term securities (more than 5

year)