Chapter
FINANCIAL SYSTEM – Overview
Introduction
Financial System: It is a set of all financial institution which facilitates financial transactions in financial
markets. It brings under its fold the financial markets and the financial institution which support the system.
A financial system is a complex, well-integrated set of sub-systems of financial institutions, markets,
instruments, and services which facilitates the transfer and allocation of funds, efficiently and effectively.
Indian Financial System
The Indian financial system can also be broadly classified into:
1. Formal (organised) financial system
The formal financial system comes under the purview of the Ministry of Finance (MoF), Reserve Bank of
India (RBI), Securities and Exchange Board of India (SEBI), and other regulatory bodies.
2. Informal (unorganized) financial system.
Individual moneylenders such as neighbours, relatives, landlords, traders, and storeowners.
Indian financial system
Financial Financial Financial
Institutions Markets Financial Regulators
Instruments Service
Ministry
Capital Money
of
Market Market Cash
Asset Finance
Instruments
Based or
or
IFSC Fee Based Ministry
Banking Pension Derivative
Insurnace of
Non Investment fund Units Instruments Corporat
banking e Affairs
Finance
RBI
SEBI
IRDA
PFRDA
IFSCA
Prepared by: Raman Luthra
Chartered Accountant
