Indian Fianancial System

Indian Financial System Overview
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By:
Atharva M. Panse
INTRODUCTION
The Indian financial system is a complex network of institutions, markets, and instruments
that facilitate the flow of funds between savers and borrowers. It plays a vital role in the
economic development of the country by mobilizing savings and allocating them to
productive investments.
Important party's involved in India Financial system are Reserve Bank of India
(RBI),Commercial Banks,Non-Banking Financial Companies (NBFCs),Stock Exchanges:
BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) ,Insurance Companies
etc.
STRUCTURE OF INDIAN FINANCIAL MARKET
The Indian Financial market comprises of two main

components
 CAPITAL MARKET
 MONEY MARKET
REGULATORY BODIES
•Securities and Exchange Board of India (SEBI): Regulates securities markets

•Reserve Bank of India (RBI): Central bank, regulates money and forex markets
•Insurance Regulatory and Development Authority of India (IRDAI): Regulates
insurance sector
•Pension Fund Regulatory and Development Authority (PFRDA): Regulates pension
funds
MAJOR STOCK EXCHANGE
 NSE  BSE
Current Trends and Performance
o India Stack:
The Foundation for Financial Revolution : India Stack, built on the foundation of Aadhaar (a unique
identification system), has accelerated digital transformation. Digital Payments for Cashless Economy: With
an 87% fintech adoption rate, digital payments have become ubiquitous. investment tech. Even MSMEs
India boasts over 2,000 fintech startups, making it the 3rd largest fintech ecosystem globally. By 2025, the
market worth is expected to surpass $150 billion. Lending, payments, and insurance drive this growth
o Collaboration Between Traditional Banks and FinTech's:
Conventional lenders are reevaluating their roles and partnering with fintech's. This collaboration offers
bespoke loans, savings, insurance, and other credit products.
o Financial Inclusion and Financial Literacy:
Initiatives like Jan Dhan Yojana and educational campaigns have improved financial inclusion. Overdraft
facilities and increased bank account enrollments have played a crucial role.
INVESTOR DEMOGRAPHICS
 As of January 2024, India has approximately 87 million investors in the stock market, a
significant increase from the 17.9 million investors recorded in 2015. The surge in
investor participation reflects growing interest and accessibility, driven by factors like
smartphone-based investment apps and a robust domestic investor community.
INVESTOR DEMOGRAPHIC
20%
men
women
80%
 Investor Gender Ratio
 Investment Heatmap
ANALYSIS OF INVESTMENT PATTERN
•Men: More aggressive, higher proportion in direct equity, derivatives.

•Women: Prefer stability, higher proportion in mutual funds, fixed deposits.
•Young Investors (18-25): Risk-takers, favoring equities and cryptocurrencies.
•Mid-Age Investors (26-35): Balanced portfolio, combining equities with mutual funds.
•Older Investors (36-50 and above): Conservative, higher investments in debt, real estate, and gold.
CAPITAL MARKET
 EQUITY MARKE
1. Primary Market(IPO)
2. Secondary Market( Stock Trading)
 DEBT MARKET
1. Government bonds
2. Corporate bonds
MONEY MARKET
 MONEY MARKET INSTRUMENT

1. Treasury bill
2. Commercial Paper
3. Certificate of Deposit
 ROLE IN SHORT TERM FINANCING

DERIVATIVE MARKET
o INSTRUMENT
1. FUTURE
2. OPTION
o PURPOSE AND SIGNIFICANCE IN RISK MANAGEMENT
COMMODITIES MARKET
•Key commodity exchanges (MCX,

NCDEX)
•Major traded commodities
•Role in hedging and investment
FUTURE OUTLOOK
Economic Growth and Geopolitical Influence
Stock Market Potential: Jefferies analysts predict that India’s stock market could more than double
in value to $10 trillion by 2030.
Banking Sector Outlook: Stable interest rates, robust GDP, and declining inflation create favorable
conditions for lending and deposit activities.
Fastest-Growing Economy: Deloitte Insights expects India to grow by 7.1%–7.6% in FY22–23 and
6%–6.7% in FY23–24.
Challenges in the Indian Financial Market
 Credit Gap: Bridging the credit gap is crucial for economic expansion. Ensuring adequate credit
availability to businesses, especially small and medium-sized enterprises (SMEs), remains a challenge.
 Digital Innovation: The financial sector must embrace digital transformation to enhance efficiency,
accessibility, and customer experience.
 ESG Integration: Environmental, Social, and Governance (ESG) factors are gaining prominence.
Integrating ESG principles into financial systems is essential for sustainable growth.
CONCLUSION
 Bridging the Credit Gap: Enhance credit availability to businesses, especially SME
efficient lending mechanisms and risk assessment. Strengthen the capital base of banks
to support credit growth.
 Digital Innovation: Embrace technology for efficiency, accessibility, and customer
experience. Address cybersecurity risks and ensure regulatory compliance. Promote
financial inclusion through digital channels.
 ESG Integration: Focus on Environmental, Social, and Governance (ESG) factors.
Integrate responsible practices into financial systems. Balance profit motives with
sustainable practices.
THANK YOU!

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Indian Fianancial System

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Indian Financial System Overview

The Indian Financial market comprises of two main

•Securities and Exchange Board of India (SEBI): Regulates securities markets

 Investor Gender Ratio

•Men: More aggressive, higher proportion in direct equity, derivatives.

 MONEY MARKET INSTRUMENT

 ROLE IN SHORT TERM FINANCING

•Key commodity exchanges (MCX,

Economic Growth and Geopolitical Influence

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