UNIT-1: Indian Financial System
Introduction to Financial System A financial system is a network of institutions, markets, instruments, and services that facilitate the flow of funds in an economy. It acts as a link between savers (those who have surplus funds) and borrowers (those who need funds) . The primary goal of a financial system is to ensure that savings are efficiently mobilized and allocated to the most productive uses. A well-functioning financial system is critical for economic growth, as it supports investment, consumption, and public policy by ensuring smooth and secure financial transactions. Example: When a person deposits money in a bank, and the bank lends that money to a business for expansion, the financial system has performed its function. Functions of a Financial System A financial system performs several key functions that contribute to the growth and stability of an economy: a) Mobilization of Savings It encourages individuals and institutions to save by providing safe ...