AS CHAKRAVARTHY NCFM ACADEMY HYDERABAD
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AS Chakravarthy NISM Hyderabad : Stock Market Training Institute
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STRUCTURE OF FINANCIAL MARKETS
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A BREIF ANALYSIS ON BANKING SYSTEM
Financial structure of the economy depends on the banking system as it is the core and supports the growth. Capital growth and formation through financial intermediation by accumulating savings from households, governments and businesses and making credit available for productive activities.
The Reserve Bank of India is the regulator of the banking system and the monetary authority as the Indian banking is the multi tier structure. As the functions include licensing banks andgathering and placing regulations for a strong and stable banking system, Beat the note-issuing authority and banker to the government and act as a lender of last resort to the other banks by providing accommodation in the form of advances. Majorly acting as a controller of credit in the monetary system by effecting changes in the Statutory Liquidity Ratio Cash Reserve Ratio and other selective credit controls, transact and regulating the foreign exchange market.
The topmost function of the banking system is to accept deposits and make credit available to those entities that qualify for it. The banks act as an intermediary between those that have excess funds to invest and those that need funds by undertaking the role of mobilizing these surplus funds by taking deposits and lending it on the basis of a credit evaluation done of the ability of the borrowers to pay interest and return the principal.Banks tie up with mutual funds, portfolio management service providers, insurance companies and others and offer their products and services.
STUDY ON SECURITIES MARKET
The securities market provides an institutional structure that enables a more efficient flow of capital in the system Securities market is a component of the wider financial market where securities can be bought and sold between subjects of the economy on the basis of demand and supply. Securities markets encompasses equity markets, bond markets and derivatives where prices are determined and participants both professional and non professionals can meet.
Securities markets can be split into below two levels. Primary markets, where new securities are issued and secondary markets where existing securities can be bought and sold. Secondary markets can further be split into organized exchanges such stock exchanges and over the counter where individual parties come together and buy or sell securities directly. For securities holders knowing that a secondary market exists in which their securities may be sold and converted into cash increases the willingness of people to hold stocks and bonds and thus increases the ability of firms to issue securities.
A security performs the terms of exchange of money between two parties. Securities are issued by companies, financial institutions or the government. Securities are purchased by investors who have money to invest. Security ownership allows investors to convert their savings into financial assets which provide a return there by security issuance allows borrowers to raise money at a reasonable cost. . Thus the objectives of the issuer and the investor are complementary and the securities market provides a vehicle to mutually satisfy their goals.
A securities market is used in an economy to attract new capital, transfer real assets in financial assets, determine price which will balance demand and supply and provide a means to invest money both short and long term.
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