Financial Markets

and Institutions

Jadhav Aditya Mohan

Financial Management-I

IBS, Hyd - B

Financial System

Seekers of Funds (mainly

business firms and government)

Flow of Funds

(Savings)Suppliers of

Funds (Mainly

Households)

Flow of Financial Services

Incomes, and Financial Claims

Functions of Financial SystemSavings FunctionLiquidity FunctionPayment FunctionRisk FunctionInformation Function

Money Markets

Call Money Market

Treasury Bills

Commercial Paper

Certificate of deposit

MMMFs

Capital Markets

Primary Markets Secondary Markets

Public Issue

Rights Issue

Bonus Issue

Private Placement

Bought-out Deals

Trading Systems

Depositories

Clearing mechanism

Carry Forward System

Settlement Procedure

Financial Markets

Types

Central Govt. Securities

State Govt. Securities

Securities Guaranteed byCentral Govt.

Securities Guaranteed byState Govt.

RBI Treasury Bills

Forms

Stock Certificates

Promissory Notes

Bearer Bonds

Treasury Bills

NSC

Deposit Certificates

Annuity Certificates

PPF

Capital Investment

NDC

Government Securities

Primary Markets Secondary Markets

Bond Market

Yankee Bonds

Samurai Bonds

Bulldog Bonds

Shibosai Bonds

Equity Market

Foreign Equity Euro Equity

ADR

IDR

GDR

International Capital Markets

Foreign Bonds Euro Bonds

Eurodollar

Euroyen

Europound

Forex Markets

Characteristics:Telephonic MarketGeographic

LocationExchange rate

Types of Quotes:Direct QuoteIndirect QuoteTwo Way Quote

Players in Forex Markets

‡ Exporters‡ Importers‡ Commercial Banks‡ Brokers‡ Central Banks‡ Authorized Dealers‡ Authorized Money Changers

Derivatives Market

Types

Forwards

Futures

Options

Swaps

Players:

Hedgers

Speculators

Arbitrageurs

Financial Institutions

IDBI

IFCI

ICICI

IIBI

EXIM Bank

SFCs

SIDCs

Investment Institutions

LIC

GIC

UTI

Other Mutual Funds

Non-Scheduled Banks Scheduled Banks

Commercial Banks State Cooperative Banks

Reserve Bank of IndiaFunctions: Currency Issue; Banker’s Bank; Banker to Government;

Credit Control ; Creation of Money

Indian Banks Foreign Banks

Public Sector Private Sector

Other Nationalized BanksSBI & Subsidiaries Regional Rural Banks

Financial Sector ReformsPrivatization of BanksIRDA Established to regulate the Insurance Sector (both Life Insurance & General Insurance)

Non Banking Financial Companies (NBFCs)

Investment Trusts/ CompaniesNidhisMerchant BanksHire Purchase Finance Companies

Lease Finance CompaniesHousing Finance CompaniesNational Housing BankVenture Capital Funding Companies

THANK YOU