Indian Financial System – An Overview?

You are fully aware that business units have to raise short-term as well as long-term funds to meet their working and fixed capital requirements from time to time. This necessitates not only the ready availability of such funds but also a transmission mechanism with the help of which the providers of funds (investors/ lenders) can interact with the borrowers/ users (business units) and transfer the funds to them as and when required. This aspect is taken care of by the financial markets which provide a place where or a system through which, the transfer of funds by investors/lenders to the business units is adequately facilitated. OBJECTIVES After studying this lesson, you will be able to: • explain the concept and functions of financial markets; • state the nature and importance of money market; • state the nature and types of capital market; • distinguish between capital market and money market; • explain the nature and functions of a stock exchange; • state the advantages of stock exchanges from the points of view of companies, investors and society as a whole; • state the limitations of stock exchanges; • explain the concept of speculation and distinguish it from investment; • outline the stock exchanges in India; and • describe the nature of regulation of stock exchanges in India and the role of SEBI. Contain 18.1 Financial market 18.2 Types of financial markets 18.3 Money market 18.3.1 Money market instruments 18.4 Capital market 18.4.1 Primary market 18.4.2 Secondary market 18.5 Distinction between primary market and secondary market. 18.6 Distinction between capital market and money market 18.7 Stock exchanges 18.7.1 Functions of a stock exchange 18.7.2 Advantages of stock exchanges 18.7.3 Limitations of stock exchanges 18.8 Speculation in stock exchanges 18.9 Stock exchanges in India 18.10 Regulations of stock exchanges 18.11 Role of SEBI

An Overview Banking Sectore?

A bank is a financial institution that provides banking and other financial services to their customers. Banks are a subset of the financial services industry and play an important role in the global economies. They are a key player in stimulating economic growth. Banking is an important undertaking. The movement of capital handled by banks allows economies to grow and prosper. Businesses and governments need money to operate, and banks act as intermediaries between the suppliers of funds and users of funds.

Reserve Bank of India?

The Reserve Bank of India is the Central Bank of India, which means it is at the apex of the banking structure of the economy. It is one of the main governing body and regulatory body in India and helps the government in its role as a business facilitator. The RBI was first established on the 1st of April 1935 and nationalized in 1949. The governing of the RBI is done in accord to the RBI Act by the government. Its day to day affairs are take care of the Board of Directors who are chosen by the government.

Types of Customers & Mode of Operation?

TYPE OF CUSTOMERS On the basis of banking nature, Customers can be classified as : 1. Depositors 2. Borrowers 3. TPP 4. NRIs 5. Walkin TYPE OF CUSTOMERS On the Basis of Society customer may be classified as: Gender Male Female Others Age Minor Major Senior Citizen Profession Salaried P&SE Business man Farmer Income Poor Rich HNI Manner Gentle Tough Short Tempered Occupation Employed Unemployed Student House wife.

Banker – Customer Relationship?

BANK- CUSTOMER RELATIONSHIP Banking relationship is a contract between the Bank & the Customer. Therefore, for establishing relationship with the customer, Bank has to ensure that the customer is legally capable of entering into a valid contract & he has applied to the Bank in the proper form (Indian Contract Act, 1872).

Negotiable Instruments?

Negotiable Instruments are written contracts whose benefit could be passed on from its original holder to a new holder. In other words, negotiable instruments are documents which promise payment to the assignee (the person whom it is assigned to/given to) or a specified person. These instruments are transferable signed documents which promises to pay the bearer/holder the sum of money when demanded or at any time in the future.

Retail Banking Products?

Typical retail banking services offered by banks include: Transactional accounts ,Checking accounts (American English) ,Current accounts (British English) ,Savings accounts ,Debit cards ,ATM cards ,Credit cards ,Traveler's cheques ,Mortgages ,Home equity loans ,Personal loans ,Certificates of deposit/Term deposits.

Foreign Exchange Business of Banks?

Foreign Exchange (forex or FX) is the trading of one currency for another. For example, one can swap the U.S. dollar for the euro. Foreign exchange transactions can take place on the foreign exchange market, also known as the Forex Market. The forex market is the largest, most liquid market in the world, with trillions of dollars changing hands every day. There is no centralized location, rather the forex market is an electronic network of banks, brokers, institutions, and individual traders (mostly trading through brokers or banks).

Insurance?

Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured. Insurance policies are used to hedge against the risk of financial losses, both big and small, that may result from damage to the insured or her property, or from liability for damage or injury caused to a third party.

Security Analysis, Porfolio,Equity, Bond,Mutual Fund?

Security analysis: fundamental analysis, technical analysis, efficient market hypothesis. The returns and risks from investing Markowitz portfolio theory, mean variance approach,portfolio selection-efficient portfolios, the single index model capital asset pricing model,arbitrage pricing theory.Equity analysis & valuation, balance sheet analysis equity valuation models, intrinsic value &market price, the p/e ratio & earnings multiplier approach, price/book value, price/ sales ratio,economic value added , overview of derivatives markets, option markets, option strategies and option valuation forward & future markets, strategies.Types of mutual funds schemes, structure, net asset value, risk and return, performance evaluation models Sharpe model, trey nor model, Jensen model, fame’s decomposition.

Recent Trends in Banking Regulation?

1) Electronic Payment Services – E Cheques 2) Real Time Gross Settlement (RTGS) 3) Electronic Funds Transfer (EFT) 4) Electronic Clearing Service (ECS) 5) Automatic Teller Machine (ATM) 6) Point of Sale Terminal 7) Tele Banking 8) Electronic Data Interchange (EDI)

Marketing of Banking Services?

CONCEPT OF BANK MARKETING Dentifying the most profitable markets now and in future;Assessing the present and future needs of customers; Setting business development goals and making plans to meet them; Managing the various services and promoting them to achieve the plans; Adapting to a changing environment in the market place.

Banking Regulations in India?

The Indian banking sector is regulated by the Reserve Bank of India Act 1934 (RBI Act) and the Banking Regulation Act 1949 (BR Act). ... In addition, the Foreign Exchange Management Act 1999 (FEMA) regulates cross-border exchange transactions by Indian entities, including banks.

MIS & Technology in Banking?

‘A Management Information System is a set of combined procedures that gathers and produces reliable, relevant, and properly organized data that supports the decision making process of an organization. To sum up, it is a group of processes through which data is obtained, sorted, and displayed in a useful way for decision-making purposes.’

International banking?

An international bank is a financial entity that offers financial services, such as payment accounts and lending opportunities, to foreign clients. These foreign clients can be individuals and companies, though every international bank has its own policies outlining with whom they do business.

Bank Management?

n general, bank management refers to the process of managing the Bank's statutory activity. Bank management is characterized by the specific object of management - financial relations connected with banking activities and other relations, also connected with implementation of management functions in banking.

Bank Lending Policies and Procedures?

Making loans is the principal economic function of banks ◦To fund consumption and investment spending by businesses, individuals and units of government. How well a bank performs its lending function has a great deal to do with: ◦Economic health of the region◦Growth of new businesses◦Employment◦Promotion of economic vitality Bank loans conveys information regarding the credit quality of the borrower in the market place.

Micro Financing?

Microfinance is defined as, financial services such as savings accounts, insurance funds and credit provided to poor and low income clients so as to help them increase their income, thereby improving their standard of living.

Risk Management?

Risk management refers to the practice of identifying potential risks in advance, analyzing them and taking precautionary steps to reduce/curb the risk. Description: When an entity makes an investment decision, it exposes itself to a number of financial risks

Rural & Co-Operative Banking?

Rural banking traditionally has serviced the financial needs of people living in remote areas of the United States. Unlike banks located in more populous urban areas, rural banks may have relatively small and specialized customer bases spread over a far greater geographical area. Cooperative banking is retail and commercial banking organized on a cooperative basis. Cooperative banking institutions take deposits and lend money in most parts of the world.

DIGITAL BANKING PRODUCTS?

Digital banking is part of the broader context for the move to online banking, where banking services are delivered over the internet. The shift from traditional to digital banking has been gradual and remains ongoing, and is constituted by differing degrees of banking service digitization. Digital banking involves high levels of process automation and web-based services and may include APIs enabling cross-institutional service composition to deliver banking products and provide transactions. It provides the ability for users to access financial data through desktop, mobile and ATM services

CARDS?

A bank card is a payment card issued by a bank. Bank cards let customers access funds in checking or savings accounts or make purchases against a line of credit. ATM cards, debit cards, and credit cards are all considered types of bank card.

EMV technology?

EMV is a payment method based upon a technical standard for smart payment cards and for payment terminals and automated teller machines which can accept them. EMV originally stood for "Europay, Mastercard, and Visa", the three companies which created the standard.

ATM’s?

An automated teller machine (ATM) is an electronic banking outlet that allows customers to complete basic transactions without the aid of a branch representative or teller. Anyone with a credit card or debit card can access cash at most ATMs. ATMs are convenient, allowing consumers to perform quick self-service transactions such as deposits, cash withdrawals, bill payments, and transfers between accounts. Fees are commonly charged for cash withdrawals by the bank where the account is located, by the operator of the ATM, or by both. Some or all of these fees can be avoided by using an ATM operated directly by the bank that holds the account.

CASH DEPOSIT MACHINES?

Cash Deposit Machine. Your dealings in cash are set to become a cakewalk. The Cash Deposit Machine (CDM) is a self-service terminal that lets you make deposits and payment transactions by cash. All successful transactions are immediately credited and customers will be issued an advice slip confirming the transaction.

MOBILE BANKING & INTERNET BANKING?

The biggest difference between the two is their functionality. Internet Banking allows you to conduct online transactions through your PC or laptop and an internet connection. On the other hand, mobile banking can be done with or without internet. Many banks nowadays have their mobile apps for mobile banking. Although, you need to have an internet connection to use such mobile banking apps; banks also offer mobile banking through SMS. So, even if you have a very basic mobile and not a smartphone, you will still be able to use some features of mobile banking through SMS.

POS TERMINALS?

A point of sale terminal (POS terminal) is an electronic device used to process card payments at retail locations. A POS terminal generally does the following: Reads the information off a customer's credit or debit card. Checks whether the funds in a customer's bank account are sufficient.

BRANCHLESS BANKING?

Branchless banking is defined as the delivery of financial services outside conventional bank branches, often using agents and relying on information and communications technologies to transmit transaction details – typically card-reading point-of-sale (POS) terminals or mobile phones.

Virtual Banking?

Virtual Banking (VB) is a strategy of distribution channels which are used to provide financial services and seeks to expand the concept of the traditional bank branch. This is done through the growth and development of technology.

PAYMENT SYSTEMS?

A payment system is any system used to settle financial transactions through the transfer of monetary value. This includes the institutions, instruments, people, rules, procedures, standards, and technologies that make its exchange possible.
Banking & Structure of Banking in India

A bank is a financial institution that provides banking and other financial services to their customers. A bank is generally understood as an institution which provides fundamental banking services such as accepting deposits and providing loans. There are also non-banking institutions that provide certain banking services without meeting the legal definition of a bank. Banks are a subset of the financial services industry.

A banking system also referred as a system provided by the bank which offers cash management services for customers, reporting the transactions of their accounts and portfolios, through out the day. The banking system in India, should not only be hassle free but it should be able to meet the new challenges posed by the technology and any other external and internal factors. For the past three decades, India’s banking system has several outstanding achievements to its credit. The Banks are the main participants of the financial system in India. The Banking sector offers several facilities and opportunities to their customers. All the banks safeguard the money and valuables and provide loans, credit, and payment services, such as checking accounts, money orders, and cashier’s cheques. The banks also offer investment and insurance products. As a variety of models for cooperation and integration among finance industries have emerged, some of the traditional distinctions between banks, insurance companies, and securities firms have diminished. In spite of these changes, banks continue to maintain and perform their primary role—accepting deposits and lending funds from these deposits