BASIC CONCEPT OF INDIAN FINANCIAL MARKET

The growth of an economy is mainly dependent on the efficient financial system of the country.Financial system means system by which resources are movalised from household to capital formation of the country.To organised this function,financial system is classified into different financial market. The Indian financial market is divided into various categories depending upon different criteria.

Classification of Indian financial market:

                                                                         On the basis of period of investment financial market is divided into two broad categories which are known as capital market and money market. Capital market is a market place where long term instrument are traded. Long term financial instrument means instrument whose term of investment is more than one year. On the other hand money market instruments are short term financial instrument.

                                                                           On the basis of regulatory framework Indian financial market is classified in the following category:

  Banking sector regulated by Reserve Bank of India.

  Security market governed by SEBI.

  Commodities market regulated by Forward Market Commission.

  Insurance sector regulated by IRDA.

These all the category of financial markets are regulated by their specific Act. Efficient financial system is indispensable for speedy economic development. A financial system is efficient when it helps the country to form its capital speedily. The growth of an economy usually depends on its effectiveness of financial market. Effectiveness of a financial market is basically dependent on the faith of investor. So Indian financial market should be more regulated and investor friendly.