ECONOMIC & SOCIAL
ENVIRONMENT (III)
MONETARY & FISCAL SYSTEM
CREDIT STRUCTURE OF
INDIAN ECONOMY
R B I
O r g a n i z e d S e c t o r U n o r g a n i z e d S e c t o
N o n - b a n k i n g B a n k i n Mg o n e yI n d i g e n o u s
i n s t i t u t i o n s i n s t i t u t i ol e n n s d e r s b a n k e r s
L I C G I C U T I P v t . F i n a n c i a l B a n k s
f i n . I n s t i t u t i o n s
c o s .
S F C s N A B A R I DD B I I C I C I I R B I E X I M C o m m e R r ce i g a i l o n aC l o o p
B a n k B a n k s R u r a l B a n k
B a n k s
P u b l i c P r i v a t e S t a t
S e c t o r S e c t o r l e v e
C o o p
I n d i a n F o r e i gC n e n t r a
P r im
C r e d
S o c i e
• Quantitative Credit Control
• Qualitative Credit Control
FINANCIAL INSTITUTIONS
• Commercial banks
• Development banks
• Cooperative banks
• Regional banks
• Specialized financial institutions
INDUSTRIAL FINANCE
CORPORATION OF INDIA
• Granting of loans in Indian
& foreign currencies
• Underwriting of
shares/debentures of public
limited companies
• Guaranteeing of deferred
payment for machinery
imported from abroad or
purchased from within the
country or loans from
banks
INDUSTRIAL CREDIT &
INVESTMENT CORP. OF
INDIA
– To encourage &
assist industrial
investment in the
private sector
– To provide the
scarce foreign
currency loans
– To develop
underwriting
facilities in India
INDUSTRIAL
DEVELOPMENT BANK OF
INDIA
• Direct assistance to
industrial concerns
• Indirect assistance
through refinancing,
rediscounting of
bills, etc.
• Promotional
assistance
EXPORT-IMPORT BANK OF
INDIA
• Providing financial
assistance to
exporters &
importers
• Coordinating the
working of
institutions engaged
in financing export &
import of goods &
services
NATIONAL BANK FOR AGRI.
& RURAL DEVELOPMENT
• Providing short-term
refinance assistance
to state cooperative
banks, regional rural
banks, & other
approved financial
institutions
• Providing long-term
loans to regional
rural banks
INDUSTRIAL
RECONSTRUCTION BANK OF
INDIA
• Acts as a principal
credit &
reconstruction
agency for revival
of sick industrial
units
FISCAL SYSTEM
• Public revenue, i.e., sources of revenue for
the State
– Taxation
– Public debt
– Creation of additional currency
– Market borrowings
– Income from public undertakings
– Sale of public assets
• Public expenditure, i.e., expenses incurred
by the Government
– for its own maintenance
– for the maintenance of society as a whole
• Public budget
– Financial plan which describes in detail the
estimated receipts and proposed expenditure
under various heads
• Public debt
– Short-term debt
– Floating debt
– Permanent or funded debt
• Burden of public debt = P/Y
where
– P is the total public debt
– Y is the total national income
FEDERAL FINANCE
• The Constitution of India has made a
number of provisions for distribution of
certain revenues between the Centre & the
States.
• Finance Commissions
– A Finance Commission is appointed by the
President of India every 5 years, the main
function of which is to make recommendations
regarding
• Distribution of net tax proceeds between the
Centre & States
• Grants-in-aid given by the Centre to the States
