Page 34 - Banking Finance July 2022
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ARTICLE








          FINANCIAL






          SYSTEMS AND





          MARKETS IN





          INDIA










                                                       Abstract
           A system that aims at establishing and providing a regular, smooth, efficient and cost effective linkage between depositors
           and investors is known as financial system. The functions of financial system are to channelize the funds from the surplus
           units to the deficit units. Financial system is one of the industries in an economy. It is a particularly important industry
           that frequently has a far reaching impact on society and the economy. But if its occult trappings are stripped it is like
           any industry, a group of firms that combine factors of production (land, labour and capital) under the general direction
           of a management team and produce a product or cluster of products for sale in financial market. The product of the
           financial industry is not tangible rather it is an intangible service. Financial industry as a whole, produces a wide range
           of services but all these services are related directly or indirectly to assets and liabilities, that is, claims on people,
           organization, institutions, companies and government. This is the process of diversion of the productive capacity of the
           economy to the making of capital goods which increase future productive capacity. Process of capital formation involve
           three distinct but inter-dependent activities: savings, finance and investment. The financial system in process of capital
           formation has to decide as to how capital is to be used. Poor choice in deciding which economic projects are to be
           embarked upon, leads to wastage of resources. The better the quality of judgment exercised in allocation, the more
           rapid economic progress.


                                                              Financial Concepts
                              About the author
                                                              An  understanding of  the  financial system  requires  an
           Dr. Morusu Siva Sankar                             understanding of the following concepts:
           M.Sc.,  (IT)  MBA  M Tech  (CS) M.Com.,
                                                                 Financial assets
           Ph.D., PDF (Post-Doctoral Fellow UGC)
                                                                 Financial intermediaries
           Academic Consultant, Dept. of
           commerce, S.V. University, Tirupati
                                                                 Financial markets
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