A

Presentation
On
Financial market structure

Presented by:
Hanmesh(06/MBA/37)
Sandeep(06/MBA/38)
Sneha(06/MBA/39)
Financial market structure

It mainly consists of:

Credit market
Foreign market
Debt market
Derivatives market
Bank assurance
Credit market

It mainly consists of:

Banks
Financial institutions
Non-banking financial companies
Housing finance company
Banking system in India

At the time of independence Indian

banking system was not sound. So,
in 1949 three important structural
reform taken place:
1) Banking regulation act
2) Nationalization of banks
3) Establishment of Deposit
insurance cooperation
 Banks in India

RBI

Scheduled None scheduled

banks banks
Scheduled commercial Scheduled co-operative
banks banks

Public sector banks (27)

Urban co-operative
Private sector banks (30) banks (52)

Foreign banks (40)

State co-operative
banks (16)
Regional rural banks (196)
Commercial banks

It mainly consists of:

public sector bank
Regional rural bank
Private sector bank
Foreign bank
Public sector banks

Public sector banks

Nationalized SBI and its

banks (19) associates (8)
 Cont……
Public sector banks accounts for more than
75% of the entire banking process and their
asset in 2004 were 74.5% of total banking
assets.

SBI and its associates had 13533 branches.

19 nationalized banks had 33211 branches.

 SBI and its associates
The imperial bank of India was converted
into SBI on July, 1955.
In 1959 SBI act was passed for creating SBI
group which consists of followings:
1) State bank of Hyderabad
2) State bank of Bikaner & Jaipur
3) State bank of Indor
4) State bank of Mysore
5) State bank of Patiala
6) State bank of Saurastra
7) State bank of Tranvancore
Nationalized banks
On July , 1969 fourteen private banks
were nationalized and each has deposit of
Rs. 50 crore or more than that.
On April, 1980 six more bank were
nationalized.
By nationalizing these banks aggregate
bank deposits was raised from Rs.4605
crore in 1969 to Rs.150416 crore in 2004.
 Private sector banks

Private sector banks accounts for

less than 15% of both bank
deposits and aggregate advances
and accounts for 12.49% of total
banking assets.
 Regional rural banks

As nationalized banks could not do

much to solve the problem of rural
indebtedness ,the new type of
banking institution called regional
rural bank conceived in 1976.
 Foreign banks

They account for 6.9% of total

banking assets.
 Co-operative banks

There are basically three types of

co-operative banks in India:
1) Central co-operative bank
2) State co-operative bank
3) Urban co-operative bank
 Central co-operative bank
There are basically 2 types of bank:
1) Pure means it only confines its
membership to co-operative
organization only.
2) Mixed means it confines its
membership to co-operative
organization as well as to
individuals.
There are 361 central co-operative
banks in india.
 Functions of central
co-operative banks
1) They finance the primary credit
societies.
2) They accept deposits from public.
3) They grant credit to their
customers on security of gold etc.
4) They act as ‘balancing centers’
by shifting funds of a surplus of
primary society to deficit ones.
 State co-operative banks
SCB raises their funds by way of
share capital (subscribed by the
affiliated CCBs), deposit from the
public, surplus funds of affiliated
CCBs, reserve fund loans from SBI
and the other commercial banks.
There are 28 SCBs in india.
 Functions of SCB
1) They furnish loans to the CCBs in
order to enable the CCB to help in
promoting the lending activities
of the primary credit societies.
2) They act as ‘balancing centers’ by
balancing the excesses and
deficiencies in resources of CCBs.
3) They have no power to supervise
or control the activities of CCBs.
 Urban co-operative banks
They are also known as primary co-
operative banks.
According to RBI UCB is defined as “small
sized, co-operatively organized banking
units which operate in metropolitan,
urban and semi-urban centers to cater
mainly the needs of small borrowers, Viz.
owners of small scale industrial units,
retail traders, professionals and salaried
classes.
There are 1431 UCBs in India including 91
salary earner’s societies.
 Financial institutions
In 1948, to provide medium and long-
term credit to industrial concerns
including co-operatives, Industrial
finance cooperation of India (IFCI)
was established.
than the state level development
finance institutions were established
and now they are known as state
finance cooperation (SFC).
 Cont…….
Due to the failure of both IFCI and
SFC, other dynamic institutions were
established.
National Industrial development
cooperation (NIDC) was established
in 1954.
Industrial credit and investment
cooperation of India (ICICI) was
established in 1955.
Refinance cooperation for industry
(RCI) was established in 1958.
 Classification of FI
There are mainly six types of FI:
1) All India development finance
institutions (DFIs)
2) Special financial institutions
3) Investment institutions
4) Refinance institutions
5) State level institutions
6) Others
All India finance institutions (DFIs)
They mainly consists of followings:
1) Industrial finance cooperation of
India Ltd. (IFCI)
2) Industrial development bank of
India (IDBI)
3) Small industries development
bank of India (SIDBI)
4) Industrial investment bank of
India (IIBI)
5) Industrial credit and investment
cooperation OF India Ltd. (ICICI)
 Special financial institutions
They mainly consists of followings:
1) Export-import bank (EXIM bank)
2) IFCI venture capital fund
3) ICICI venture Ltd.
4) Tourism finance cooperation of
India Ltd. (TFCI)
5) Infrastructure development finance
company Ltd. (IDFC)
 Investment institutions
They mainly consists of followings:
1) Life insurance cooperation of
India (LIC)
2) Unit trust of India (UTI)
3) General insurance cooperation of
India (GIC)
 Refinance institutions
They mainly consists of followings:
1) National housing bank (NHB)
2) National bank for agriculture and
rural development (NABARD)
 State level institutions

They mainly consists of followings:

1) State finance cooperation (SFC)
2) State industrial development
cooperation (SIDC)
 Other financial institutions

They mainly consists of followings:

1) Export credit and guarantee
cooperation of India Ltd. (ECFC)
2) Deposit insurance and credit
guarantee cooperation (DICGC)
Industrial finance cooperation of
India Ltd.(IFCI)
It was set up in 1948.
It guarantee loans and advances in rupees
and foreign currency repayable within 25
years for industrial concern.
It guaranteeing
a) Deferred payment in respect of import
of machinery.
b) Foreign currency raised from foreign
institutions.
c) Rupee loans raised from scheduled
banks.
Industrial credit and investment
cooperation of India Ltd. (ICICI)
It was setup in 1955.
It gives long and medium-term loans.
It renders consulting service to Indian
industry in the form of managerial and
technical advise.
It guaranteeing loans from other
private investment sources etc.
Industrial development bank of
India (IDBI)
It was setup in 1964 as subsidiary of
RBI and in 1976 its ownership passed
from RBI to the government of India.
Its main source of funds are share
capital, reserve, bonds and debenture
issues, deposit from companies and
certificate of deposits and borrowing
from RBI and government of India.
 Small industrial development
bank of India (SIDBI)
It was setup in 1990.
It refinance the loans and advances.
It provide services like factoring and
leasing etc.
It discounts and re-discounts the bills.
Industrial investment bank of
India (IIBI)
During 1960’s there were number of
sick industrial units and government
did not want to shut down these sick
units so in 1971 government had
established Industrial reconstruction
cooperation of India (IRCI) to provide
financial as well as managerial and
technical assistance which now
known as IIBI.
Life insurance corporation of
India (LIC)
It was setup in 1956.
LIC has central office at Mumbai and
zonal offices in Mumbai, Calcutta,
Delhi, Chennai, Hyderabad, Kanpur
and Bhopal.
LIC is operating through 100
divisional offices in important cities
and 2048 branch offices and has 7.5
lakh agents.
 Functions of LIC
It provides term loans.
It provides underwriting and direct
subscription in the form of
a) Equity and preference shares
b) Debentures
c) Resource support to financial
institutions
General insurance corporation
of India (GIC)
It was setup in 1972.
In GIC 107 Indian and foreign insurers
were grouped in 4 operating
companies named as
1) National insurance company Ltd.
2) New India assurance Ltd.
3) Oriental insurance company Ltd.
4) United India insurance company
Ltd.