Page 38 - Banking Finance July 2022

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1988 as an apex institution to mobilize resources for the
housing sector and to promote housing finance institutions
both at regional and local levels

Stock Holding Corporation of India Ltd.
(SHCIL)
Recently in 1987 another institution viz., Stock Holding
Corporation of India Ltd. was set up to tone up the stock
and capital markets in India.

Mutual Funds Industry
Mutual funds refer to the funds raised by financial service
companies by pooling the savings of the public and investing
have created a monopolistic market structures in the
them in a diversified portfolio.
financial system.
Venture Capital Institutions
Dominance of Development Banks in
Venture capital is another method of financing in the form of
equity participation. A venture capitalist finances a project Industrial Financing
based on the potentialities of a new innovative project The development banks constitute the backbone of the
Indian financial system occupying an important place in the
Credit Rating Agencies capital market.
Of late, many credit rating agencies have been established
to help investors to make a decision of their investment in Inactive and Erratic Capital Market
various instruments and to protect them from risky ventures. The important function of any capital market is to promote
economic development through mobilization of savings and
Multiplicity of Financial Instruments their distribution to productive ventures.
The expansion in size and number of financial institutions
has consequently led to a considerable increase in the Imprudent Financial Practice
financial instruments also. The dominance of development banks has developed
imprudent financial practice among corporate customers.
Legislative Support
The Indian financial system has been well supported by Summary
suitable legislative measures taken by the Government then
A system that aim at establishing and providing a regular
and there for its proper growth and smooth functioning. smooth, efficient and cost effective linkage between depositors
and investors is known as financial system. A financial system
Weaknesses of Indian Financial System companies of financial institutions, financial services, financial
After the introduction of planning, rapid industrialization has markets and financial instruments. These constituents are
taken place. It has in turn led to the growth of the corporate closely related and work in conjunction with each other.
sector and the Government sector.
References
Lack of Co-ordination between different 1 V.Avadhani, Indian capital market, First Edition,
Financial Institutions Himalaya publishing Home.
2. H.R.Machiraju, Merchant banking, third Edition, New age
There are a large number of financial intermediaries. Most
international publishers.
of the vital financial institutions are owned by the
Government. 3. Ruddar Datt&K.P.M.Sundharam, Indian Economy, Fortieth
Revised Edition, S.Chand&Co.Ltd.,
Monopolistic Market Structures 4. M.Y.Khan, Indian financial system, Fourth Edition, Tata
In India some financial institutions are so large that they mcgraw Hill.

38 | 2022 | JULY | BANKING FINANCE