The diagram below will give a clear idea of what the Indian financial system refers to:
2. Financial markets: These marketplaces are used by buyers and sellers to trade assets like shares, bonds, currencies, and other financial instruments. They are of two types:
3. Financial assets, instruments, and services: Financial assets include cash deposits, checks, loans, bank notes, letter of credit, and all other financial instruments that either specify a certain amount on a specific future date or pay a principal amount. Financial services are services that are concerned with the design and delivery of these financial instruments.
Overall, the financial system has been formulated with the idea of financial deepening and broadening.
However, the services offered by various institutions may differ. The table below will give a detail:
|Intermediaries||Type of Market||Example of institutions||Role Performed|
|Stock Exchanges||Capital Market||NSE, BSE, Calcutta Stock Exchange, Cochin stock exchange etc.||Secondary markets to securities|
|Investment Bankers||Capital Market, Credit Market||Commercial banks, cooperative banks||Corporate advisory services, Issue of services|
|Underwriters||Capital Market, Money Market||Development banks, NBFC||Subscribe to unsubscribed portion of securities|
|Registrars, Depositories, Custodians||Capital Market||Insurance companies, mutual fund companies, and so on.||Issuance of securities to the investors on behalf of the company.
Handle share transfer activity.
|Primary Dealers Satellite Dealers||Money Market||Registered entities, commercial banks and their subsidiaries which have the license to purchase and sell government securities like SBI.||The market making in government securities.|
|Forex Dealers||Foreign Exchange Market||Western Union||Ensure exchange link currencies|