Analysing Indian Financial System as an Important Factor for Economic Growth

The financial structure plays a crucial role in the economic development of a nation. It encourages both savings as well as an investment as well as produces links between investors and savers as well as facilitates the expansion of financial markets as well as aids in financial broadening and deepening. The financial structure speeds up the amount as well as the volume of savings via the provision of different financial instruments and cost-efficient mobilization of savings. It helps in raising the national output of the nation by offering them money to the company buyers to grow the respective company of theirs. Additionally, it protects the interests of the investors as well as guarantees the smooth financial transitions through regulatory systems like RBI, SEBI, etc.

The financial system is a set of institutional arrangements through which financial surpluses in the economy are actually mobilized from surplus models and transferred to deficit spenders. The institutional arrangements include all conditions plus mechanisms governing the production, distribution, exchange, and holding of financial assets or maybe instruments of the organizations and all types also the fashion of operations of financial markets as well as institutions of all descriptions.

(a) Financial Assets (b) Financial Markets, and (c) Financial Institutions.

Financial assets are subdivided below 2 heads: Secondary securities in addition to primary securities. The former is actually financial statements against real sector devices, for instance, bills, bonds, equities etc. They're developed by real sector products as main borrowers for raising money to finance the deficit spending of theirs. The secondary securities are actually financial statements issued by financial institutions or maybe intermediaries against themselves to raise money from the public. For example, bank deposits, life insurance policies, UTI devices, IDBI bonds etc. Features of Financial.

The financial system works through financial markets & institutions. The Indian Financial System (financial markets) is broadly divided below 2 heads: • Indian Money Market • Indian Capital Market The Indian cash market is the market place where short term finances are borrowed as well as lent. The cash market doesn't deal in money, or maybe cash but in bills of exchange, grade costs as well as other instruments and treasury bills. The capital market of India on the additional hand in the industry for the medium term as well as lasting money. Role of the financial system in the economic development of a nation.

The financial institutions are actually intermediaries of financial markets that facilitate financial transactions involving people & financial clients. The financial institutions have collects the cash from individuals as well as invests that hard-earned cash in financial assets like stocks, bonds, loans and bank deposits etc., The following are actually the financial institutions • Banking institution • Non-banking institutions • Regulatory institutions • Intermediaries After the introduction of planning, rapid industrialization has taken place. It has in turn led to the growth of the corporate sector and the Government sector. In order to meet the growing requirements of the Government and the industries, many innovative financial instruments have been introduced. Besides, there has been a more growth of financial intermediaries to meet the ever growing financial requirements of different types of customers. Hence, the Indian financial system is more developed and integrated today than what it was 50 years ago. Yet, it suffers from some weaknesses as listed below: • Lack of co-ordination between different financial institutions • Monopolistic market structures • Dominance of development banks in industrial financing • Inactive and erratic capital market • Imprudent financial practice

The procedure for economic development calls for as one of its accompanying structural changes in the economy, the improvement of a capital industry that will supply a sufficient and correctly distributed source of finance to the entrepreneurs creating new manufacturing plants or may be thinking of growing or perhaps modernizing the already developed one. While finance itself creates no output, but it enables the entrepreneurs to gain control over actual energy which allows them to participate in the market by making as well as distributing manufacturing products. At the beginning stage of development, the would be business owners typically find the own financial resources of theirs insufficient and resort to outside sources. This kind of finances is actually made readily available by the financial intermediaries. In a contemporary economy, that is characterized by income exchange, the majority of the investors are actually company firms, while the top savers are actually the households. Enterprise companies desiring money for investment might and do borrow several of what they need straight from savers by promoting to them bonds and stocks, but a lot of savers are actually hesitant to lend the money of theirs straight to business in exchange for these kinds of financial statements. In such a scenario, some intermediary is necessary to bring the deficit as

There's yet another vital angle to the job of the financial system in economic development, especially of banks, that have been popularised by notable economists as Schumpeter, Keynes as well as Kalecki. To Schumpeter, bank credit plays a crucial role in stimulating economic development. Based on him, "created credit" allows a business owner to proceed with the innovation of his fear of savings.

The' financial system' is actually worried about the mobilization of the savings of the general public and providing of funds that are required to the needy persons as well as institutions for allowing the generation of items and also for provision of services as well as enables the exchange of money involving lenders, investors, and borrowers. The financial system which facilitates the motion of finance from the people with surplus money to the persons that want it's called a financial system. It consists of complex, directly associated services, markets, and institutions used to offer a regular and efficient linkage between depositors and investors. The financial systems run at national, global, as well as firm-specific amounts. It provides the public, private and financial instruments and government areas that could connect with huge assets & liabilities. India has a monetary system which is actually managed by self-governing regulators in the sectors of banking, capital markets, insurance, different services sectors as well as opposition. In a selection of sectors, the federal government plays the job of the regulator. Ministry of Finance, Government of India appears after financial sector in India. The top five innovations in the Indian financial system recently. 1. Withdrawal of legal tender status for Rs 500 and Rs 1000 notes 2. Setting up of the monetary policy committee 3. Passage of the goods and services tax bill 4. Passage of the insolvency and bankruptcy code 5. Thrust towards digitization of government payments.

Based on this particular paper The Indian financial system has undergone a structural transformation policy atmosphere. While contests, consolidation as well as convergence have been realized as the important drivers of the banking industry in the coming years Financial system plays a tremendous role in the economic development of a nation. Financial markets contained 3 leading efficiencies for the benefit of growth and they're operational information and allocation effectiveness. Financial institutions are actually profit-maximizing companies that earn profits by obtaining money at interest rates less than they earn on the assets theirs.

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Research Scholar, Department of Management, OPJS University, Churu, Rajasthan baindasunil123@gmail.com