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Unit – 1 : Indian Financial System
- NBFC are allowed to raise money from the public and lend monies through various instruments for ex leasing, hire purchase and bill discounting.
- Primary dealers deal in government securities, primary as well as secondary markets.
- FI are financial institutions which provide long term funds for industry and agriculture.
- Co-operative banks are allowed to raise deposits and give advances from/to public.
- Urban co-operative banks are controlled by State government and RBI.
- Other co-operative banks are controlled by State Government and NABARD.
- CRR is a percentage of demand and time liabilities of a bank which is deposits held by the bank.
- SLR is a percentage of demand and time liabilities of a bank which is held in prescribed government securities by the bank.
- Bonds and debentures are examples of corporate securities and can be used to raise debts.
- Debts, equities and derivatives are examples of securities.
- SEBI is the capital market regulator.
- Merchant bankers aka Investment bankers are licensed by SEBI and they issue stocks, raise fund and manage them.
- FII are authorized by SEBI to invest in Indian equity and debt market through stock exchanges.
- Depositories held securities in demat form (not physical).
- Mutual fund pools money from investors and invests in stocks, debt and other securities.
- The three regulatory authorities are:
- RBI – for banks
- SEBI – for capital markets and
- IRDA – for insurance sectors
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