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The structure of a financial system varies from one country to another, but its primary purpose remains the same: to facilitate the flow of funds and capital within an economy. A well-structured financial system is essential for efficient resource allocation, ...

The Indian financial system plays a crucial role in the country's economic development and growth. It encompasses various functions to facilitate the flow of funds, support financial stability, and meet the diverse needs of individuals and businesses. 1. Liqu...

I. Financial Assets In any financial system, understanding financial assets is fundamental. Financial assets are instruments that represent ownership or a claim to the economic resources of an individual, business, or government. These assets can be used for ...

The financial system plays a significant role in the process of economic development of a country. The financial system comprises of a network of commercial banks. Non-banking companies, development banks and other financial and investment institutions offer a...

Pre-Independence Phase (Before 1947): Establishment of the Bank of Hindustan in Calcutta during this period marked an early development in India's financial system. Evolution of Financial System (1947-1991): Post-Independence Phase: Following India's indepe...

Background The pre-reforms period, spanning from the mid-1960s to the early 1990s, was characterized by administered interest rates, industrial licensing and controls, a dominant public sector, and limited competition in the Indian economy. This resulted in in...

Leasing refers to a contractual arrangement where one party (the lessee) obtains the right to use an asset from another party (the lessor) for a specified period, in exchange for periodic payments. This arrangement is common in scenarios where acquiring the as...

Hire purchase (HP) is a popular way to finance the acquisition of items, especially when they're expensive, such as vehicles or equipment. It allows individuals and businesses to get the item they want immediately and pay for it in installments over a specific...

A mutual fund is a type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities, which is managed by an investment company. Individuals can buy shares of mutual funds, which makes them shareholders of the fund. Meaning and Definit...

Factoring Mechanism Factoring is a financial service that involves the purchase of accounts receivable by a third party, called a factor, from a business, called a client. The factor pays the client a percentage of the invoice value upfront and the remaining a...

Forfaiting is a financing technique used in international trade where exporters sell their receivables to a forfaiter at a discount in exchange for immediate cash. This method is particularly useful in transactions involving large sums and longer credit terms....

Credit rating is a service that assesses the creditworthiness of a borrower, which can be an individual, corporation, government, or a country. It indicates the likelihood of the debtor meeting their financial obligations, including interest and principal repa...

Loan syndication refers to the process where a group of lenders, known as syndicates, work together to provide a loan to a single borrower, usually for large-scale financing needs that are too substantial for a single lender to fund. This collaborative approac...

Portfolio management is a strategic practice vital to both individual and institutional investors. It involves making decisions about investment mix and policy, matching investments to objectives, asset allocation, and balancing risk against performance. Funda...

Wealth management service is a comprehensive financial advisory service that combines various financial disciplines and services to address the needs of affluent clients. It is a consultative process whereby the advisor gleans information about the client's wa...

The money market is a crucial segment of the financial market where short-term borrowing and lending of funds take place. It deals with financial instruments and assets with high liquidity and maturities of one year or less. Participants in the money market in...

The Indian money market is a complex financial system composed of both organized and unorganized sectors. These sectors serve various purposes and cater to different segments of the economy. Here's an overview of the structure of the Indian money market: Orga...

High Liquidity: Money market instruments have a maturity period of one year or less, making them highly liquid. They can be easily converted into cash, and investors often use them as close substitutes for cash due to their short-term nature. Secure Investm...

Development of Trade and Industry: The money market provides essential financing for trade and industry by offering various instruments that can be used to meet working capital requirements. This facilitates the growth and development of businesses, both wit...

Central Bank (RBI in the case of India): The central bank plays a pivotal role in the money market by regulating and controlling the money supply, implementing monetary policy, and providing liquidity to the financial system when necessary. It issues and man...