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# "finance" in our simple understanding it is perceived as equivalent to 'Money'. We read about Money in Economics.
But finance exactly is not money, it is the source of providing funds for a particular activity
INDIAN FINANCIAL SYSTEM
There are areas or people with surplus funds and there are those with a deficit. A financial system or financial sector functions as an intermediary and facilitates the flow of funds from the areas of surplus to the areas of deficit.
The basic structure of Indian Financial System is divided into four components which are:
• Financial Services
• Financial Markets
• Financial Instruments
• Financial Institutions
Financial service is part of financial system that provides different types of finance through various credit instruments, financial products and services.
& these financial Services and products provided to consumers and businesses by financial institutions such as banks, insurance companies, brokerage firms, consumer finance companies, and investment companies .
These services generally include the banking services, Foreign exchange services, investment services, insurance services , advisory services, venture capital, angel investment etc.
A financial market is a broad term describing any marketplace where buyers and sellers participate in the trade of assets such as equities, bonds, currencies and derivatives. e.g., a stock exchange or commodity exchange.
1) Capital Market
2) Commodity Market
3) Money Market
4) Derivative Market
5) Insurance Market
6) Futures Market
7) Foreign Exchange Market
Financial instruments are assets that can be traded. Most types of financial instruments provide an efficient flow and transfer of capital all throughout the world's investors.
Money Market Instruments
The money market can be defined as a market for short-term period or a period upto one year
1. Call/Notice Money
2. Treasury Bills
3. Term Money
4. Certificate of Deposit
5. Commercial Papers
Capital Market Instruments
The capital market generally consists of the following long term period i.e., more than one year period.
financial instruments; In the equity segment Equity shares, preference shares, convertible preference shares, non-convertible preference shares etc and
in the debt segment debentures, zero coupon bonds, deep discount bonds etc.
Hybrid instruments have both the features of equity and debenture.
What is a 'Financial Intermediary'
A financial intermediary is an entity that acts as the middleman between two parties in a financial transaction, such as a commercial bank, investment banks, mutual funds and pension funds.
Financial intermediation connects borrowers with savers; these intermediates help channel funds from one person, or entity, to another.