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FINANCIAL INSTITUTIONS

Def An establishment that focuses on dealing with financial transactions, such as investments, loans and deposits. Long-term financial institutions Primary financial institutions:- rise the bulk of there resources from the original savers e.g. household ,business Secondary financial institutions:- depend mainly on the primary institutions, the central bank and government e.g. Industrial financial corporations (IFCI)

FINANCIAL INTERMEDIARIES
Financial intermediaries can be defined as all economic units whose main function is holding of and trading in financial assets. They issue one kind of securities and purchase another kind(deal and hold securities) Divided into Bank or monetary financial intermediaries: Banks intervene in the flow of funds from RBI to non financial lenders . Non bank financial intermediaries: Create non monetary financial claims by issuing securities such as equities.

CLASSIFICATION OF FINANCIAL MARKETS

Organised Market

Unorganised Market

Capital Market

Money Market

Industrial Govt. Long term Call Commercial Money Bill Securities Securities Loans Market Market Market Market Market

Treasury Short Bill Term Loan Market Market

Primary Market

Secondary Market

Term Loan Market

Market Market for for Money Lenders, Mortgages Financial Indigenous Guarantees Bankers etc.

MEANING OF CAPITAL MARKET


Market for securities (debt or equity),where business enterprises (companies) and governments can raise long-term funds Important institutions are stock exchanges and nonbanking institutions, such as insurance companies, mortgage banks, building ,societies, etc The risk is greater in capital market it varies both in degree and nature throughout the capital market Capital market in USA is famous with New York stock exchange and stock regulator is Security exchange commission (SEC) &In India SEBI

MEANING OF MONEY MARKET


Maturity period of up to one year Purely short term funds

TYPES OF MONEY MARKET


Call Money Market:
Extremely short period loans (1-14 days) Repayable on demand(either lender or borrower)

Commercial Bills Market


Market for Bills of Exchange Drawn for a short period ranging between 3 months and 6 months.

Treasury Bills Market


Promissory note or a finance bill issued by the Government Maturity period of 91 days or 182 days or 364 days

Short Term Loan Market


Loans given to corporate customers for meeting their working capital requirements

FINANCIAL INSTRUMENTS
A financial instrument is a tradable asset of any kind; either cash, evidence of an ownership interest in an entity, or a contractual right to receive or deliver cash or another financial instrument. Financial instruments refer to those document which represent financial claim on assets. Financial instruments can also be called Financial securities.
Financial Instruments

Financial Securities

Term

Primary Securities

Secondary Securities

Short Term

Medium Term

Long term