An Overview of Indian Financial System |
Financial System of any country consists of financial markets,financial intermediation and financial instruments or financial products. Thispaper discusses the meaning of finance and Indian Financial System and focus onthe financial markets, financial intermediaries and financial instruments. Thebrief review on various money market instruments are also covered in thisstudy. India’s 72% of the population lives in villages. However a significantproportion of 6,50,000 villages does not have a single bank branch leading to afinancial exclusion of rural population. As Indians development, to a largeextent, depends on this segments economic growth. So, it is imperative to bringthe unbanked population within the ambit of banking. Invariably financiallyexcluded people depend on money lenders even for their day-to-day needs,borrowing at exorbitant rates to finally get caught in a debt trap. On theother hand, these people are completely ignorant of financial products likeInsurance, which may protect them adverse circumstances. More over the ruralpoor suffer from financial impediments due to their season income, irregularityof work and job related migration. In the light of such issue, the need of thehour is a financial ecosystem built to meet their living standards ensuring thegrowth of the economy as whole.