MODULE 1.pptx
- 1. Module I: Indian Financial System and Market PRESENTED BY JEEVITHA B SHIVANANDA LECTURE CBALC,KLE
- 2. Examples in India Shriram Transport Finance Company Limited- Bajaj Finance Limited Muthoot Finance Ltd HDB Finance Services Tata Capital Financial Services Ltd Aditya Birla Finance Ltd. SBI DFHI Limited
- 3. Indian financial system Indian financial system 1) Financial institutions 2) Financial markets 3) Financial instruments/assets/securities 4) Financial services
- 5. Roles and functioning of central banking 1) Monetary control 2) Functioning of banks Commercial banks : Accepts deposits a) Public banks b) Government banks c) Private banks Cooperative banks a) Primary agriculture credit societies(VL) b) Central cooperative at (district level) c) State cooperative banks (state level )
- 6. SEBI - Securities and Exchange Board of India Functions of SEBI 1) Protective functions 2) Development functions 3) Regulatory functions
- 7. Protective functions Protect , development Check price rigging Prohibit insider trading Guidelines
- 8. Development functions Training Flexible approach (investors)
- 9. Regulatory functions Rules and regulation Register and regulate the working Inquires and audit of stock brokers Books of account of stock brokers
- 10. Functions of the National Housing Bank Set under national housing bank act,1987 Wholly owned by RBI & paid up capital Regulates housing finance companies 1) Regulatory 2) Financial support 3) Promotion and development
- 11. Regulatory function Empowered to determine the policy to HFI Guidelines asset liability management system Supervises
- 12. Financial support Refinance Direct finance to project undertaken by public housing agencies Repayment of bonds Guaranteeing the repayment Acting as Special purpose vehicle
- 13. Promotion and development Facilitator in promoting finance institutions Equity in housing finance HFC , scheduled commercial/cooperative banks to finance Training
- 14. The NHB RESIDEX NHB, in July 2007, created the NHB RESIDEX, which is the first official housing price index in response to the Ministry of Finance, Government of India Directives. Since 2007, the NHB RESIDEX went through regular updates until 2015. In these years, the main housing price index expanded over 26 cities present in the country. The NHB RESIDEX witnessed the most recent development in April 2018.
- 15. Insurance Regulatory and Development Authority of India-IRDAI IRDA is the body that governs the functioning of various General Insurance and Life insurance companies of the nation. IRDA is the supervisory body in India that regulates and commands all the insurance companies in the country, both Life Insurances and General Insurance companies.(1999)
- 16. Duties, powers and functions of IRDAI COR to insurance company To protect the interest of policy holder Code of conduct and training requirement of agents Call for information Code of conduct for surveyors and loss assessors To adjudicate disputes between insurers and intermediaries To regulate investments of funds by insurance company
- 17. PFRDA- Pension Fund Regulatory and Development Authority Act was passed on 19th September, 2013 Same was notified on 1st February 2014 Promotes old age income security Subscribers
- 18. Duties, powers and functions of PFRDA Regulating national pension scheme (NPS) &pension scheme Approving –Schemes , Norms , Guide lines Registering and regulating intermediaries Issuing –intermediary, COR ,renewing ,modifying ,withdrawing ,suspending or cancellation Ensuring safety for subscribers Redresses grievance
- 19. Continued Adjudicate disputes Collecting data Educating subscribers Regulation to maintain book of account
- 20. NABARD-National Bank for Agriculture and Rural Development(apex body ) NABARD is instrumental in the development and efficiency of the current rural credit system. Over half the credit in the rural region comes from Co-operative banks and Regional Rural Banks. NABARD is responsible for regulating and supervising the functioning of such banks. Over the years NABARD has been pushing for development in the credit schemes for rural populations to meet their new credit requirements.
- 21. Roles and functions of NABARD 1) Credit functions 2) Development functions 3) Supervisory function
- 22. Credit functions Policy and guidelines Credit facilities Monitoring credit flows Credit plans
- 23. Development functions Monitoring action plans Financial support for training institution
- 24. Supervisory function Inspection of regional rural banks Recommendation on issue of license to cooperative banks by RBI
- 25. Non-banking financial companies (NBFC) 1) NBFC cannot accept demand deposits; 2) NBFCs do not form part of the payment and settlement system and cannot issue cheque drawn on itself ; 3) The deposit insurance facility of deposit insurance and credit guarantee corporation is not available to depositors of NBFC’s unlike incase of banks
- 26. No NBF can carry a business of NBFC without 1) COR net owned funds 2 cr from April 1999 2) avoiding dual regulation for merchant bankers. Sub brokers ,brokers …
- 27. Foreign investment in India The routes under foreign investment can be made as under 1) Automatic Route 2) Governement Route
- 28. Direct Foreign Investment 1) ESOP- employee stock ownership plan 2) Sweat equity 3) Bonus 4) Rights 5) Swap of shares 6) On mergers 7) Funds payable to a person resident outside India
- 29. Foreign portfolio investment Foreign portfolio investment by NRI(5%,10% & 24%),FPI (by 10% by individual & 24%) Investment in other securities (long term invest ) Foreign venture capital investment Investment in investment vehicle (infrastructure ) governed by SEBI
- 30. FINANCIAL MARKET FINANCIAL MARKET AND SUB MARKETS A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial markets as commodities.
- 32. Money market –participants and instruments Instruments 1) Treasury Bills (T-Bills) 2) Commercial Paper 3) Call Money 4) Certificate of Deposit 5) Commercial Bill
- 33. Participants Participants in the Money Market: Central Government State Government Public Sector Undertakings Scheduled Commercial Banks (SCBs) Private Sector Companies Provident Funds General Insurance Companies Life Insurance Companies
- 34. Different types of interest rate quotation 1) Fixed rate of interest 2) Floating rate of interest 3) Yield a) Nominal yield b) Current yield c) Yield to maturity 4) Count conventions 5) Premium and discount
- 35. Debt market A market where fixed income securities of various types and features are issued and traded is known as debt market. ISSUERS PROFILE :Can be issued by almost by any legal entity Central & state government ,PSU –Bonds Private corporate sector – Debentures
- 36. Risk associated with debt securities 1)Interest rate risk 2) Counter party risk 3) Liquidity risk
- 37. Types of instruments in debt market Non convertible debentures Partly convertible debentures Fully convertible debentures Optionally convertible debentures Deep discount bonds
- 38. Secondary debt market Wholesale debt market Retail debt market
- 39. Foreign exchange market A market for the purchase and sale of foreign currencies is called foreign exchange market. The trading is done through the worldwide interbank market. The trading is done by telephone , telex or the SWIFT (society for worldwide interbank financial telecommunications) system Interbank through which most currency transactions are channeled , used for trading amongst bankers. There are three markets 1) spot market 2)forward market 3)Swap market
- 40. Participants Central bank Commercial bank Investment funds
- 41. Exchange rate quotation American term and European term Direct and indirect quotes Bid, offer and spread Cross rates
- 42. Mutual funds A mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. Registered under SEBI regulation 1996
- 43. Insurance Life insurance: Life insurance is a financial cover for an individual and his/her cover for contingency linked with human life. Life insurance is need for the following reasons: 1) Financial support for dependents 2) Saving plans for future 3) Provides financial contingencies
- 44. Thank you