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Finance > Overview
The financial system or the financial sector of any country is a complex
matrix of Institutions, markets and financial instruments. It consists of
specialised and non-specialised financial institutions, of organised and
unorganised financial markets, of financial instruments and services. All
of these items have one thing in common. They facilitate transfer of
funds. These parts are not always mutually exclusive; Inter-relationships
between these are a part of the system e.g.. Financial Institutions
operate in financial markets and are, therefore, a part of such markets.
The
word system, in the term financial system, implies a set of
complex and closely connected or inter-linked Institutions, agents,
practices, markets, transactions, claims, and liabilities in the economy.
The financial system is concerned about money, credit and finance--the
three terms are intimately related yet are somewhat different from each
other. Money refers to the current medium of exchange or means
of payment. Credit or loans is a sum of money to be
returned, normally with interest; it refers to a debt of economic
unit. Finance is monetary resources comprising debt and ownership funds of
the state, company or person.
Indian
Financial sector, with Ministry of Finance at the helm as policy making
body, with two regulators RBI
and SEBI consists of
three principal segments i.e.