analysis of indian financial sector

7/30/2019 Analysis of Indian Financial Sector

1/6

Analysis of Indian Financial Sector

Analysis of Indian Financial Sector reveals that it is at present going through a phase of stable

growth rate which is experiencing a upward swing. The rise can be maintained over a longperiod by keeping the inflation down.

The financial sector in India has experienced a growth rate of 8.5% per annum. The rise in the

growth rate suggests the growth of the economy. The financial policies and the monetary policies

are able to sustain a stable growth rate. The reforms pertaining to the monetary policies and the

macro economic policies over the last few years has influenced the Indian economy to the core.

The major step towards opening up of the financial market further was the nullification of the

regulations restricting the growth in the financial sector. To maintain such a growth for a long

term the inflation has to come down further. The analysis of Indian financial sector shows thegrowth of the sector was the result of the individual development of the divisions under the

sector.

The analysis of Indian financial sector

Analysis of the Indian Capital market

The ratio of the transaction was increased with the share ratio and deposit system The removal of the pliable but ill-used forward trading mechanism The introduction of infotech systems in the National Stock Exchange (NSE) in order to

cater to the various investors in different locations

Privatization of stock exchanges


2/6

Analysis of the Indian Venture Capital market

The venture capital sector in India is one of the most active in the financial sector inspiteof the hindrances by the external set up.

Presently in India there are around 34 national and 2 international SEBI registered venturecapital funds.

Analysis of the Indian Banking sector

The banking system in India is the most extensive. The total asset value of the entirebanking sector in India is nearly US$ 270 billion. The total deposits is nearly US$ 220

billion. Banking sector in India has been transformed completely. Presently the latest

inclusions such as Internet banking and Core banking have made banking operations more

user friendly and easy.

Analysis of the Indian Insurance sector

With the opening of the market, foreign and private Indian players are keen to convertuntapped market potential into opportunities by providing tailor-made products.

The insurance market is filled up with new players which has led to the introduction ofseveral innovative insurance based products, value add-ons, and services. Many foreign

companies have also entered the arena such as Tokio Marine, Aviva, Allianz, Lombard

General, AMP, New York Life, Standard Life, AIG, and Sun Life.

The competition among the companies has led to aggressive marketing, and distributiontechniques.

The active part of the Insurance Regulatory and Development Authority (IRDA) as aregulatory body has provided to the development of the sector.


3/6

Opportunities for the financial sector of India

The distributed financial gain of the venture capital funds is not taxed. The financial gainsare taxed after the investors receive as income.

The have more insurance and banking products introduced into the market to broaden thespectrum which in turn would boost the growth of the sector.

Further nullification of the regulations have to take place in order to increase thecompetition and boost the growth of the financial sector to reach the US$ 51 billion mark.

Bond Market in India

The Bond Market in India with the liberalization has been transformed completely. The

opening up of the financial market at present has influenced several foreign investors holding

upto 30% of the financial in form of fixed income to invest in the bond market in India.

The bond market in India has diversified to a large extent and that is a huge contributor to the

stable growth of the economy. The bond market has immense potential in raising funds to

support the infrastructural development undertaken by the government and expansion plans of

the companies.

Sometimes the unavailability of funds become one of the major problems for the large

organization. The bond market in India plays an important role in fund raising for developmental

ventures. Bonds are issued and sold to the public for funds.

Bonds are interest bearing debt certificates. Bonds under the bond market in India may be issued

by the large private organizations and government company. The bond market in India has huge

opportunities for the market is still quite shallow. The equity market is more popular than the

bond market in India. At present the bond market has emerged into an important financial sector.

The different types of bond market in India


4/6

Corporate Bond Market Municipal Bond Market Government and Agency Bond Market Funding Bond Market Mortgage Backed and Collateral Debt Obligation Bond Market

The major reforms in the bond market in India

The system of auction introduced to sell the government securities. The introduction of delivery versus payment (DvP) system by the Reserve Bank of India

to nullify the risk of settlement in securities and assure the smooth functioning of the

securities delivery and payment.

The computerization of the SGL. The launch of innovative products such as capital indexed bonds and zero coupon bonds

to attract more and more investors from the wider spectrum of the populace.

Sophistication of the markets for bonds such as inflation indexed bonds. The development of the more and more primary dealers as creators of the Government of

India bonds market.

The establishment of the a powerful regulatory system called the trade for trade system bythe Reserve Bank of India which stated that all deals are to be settled with bonds and

funds.

A new segment called the Wholesale Debt Market (WDM) was established at the NSE toreport the trading volume of the Government of India bonds market.

Issue of ad hoc treasury bills by the Government of India as a funding instrument wasabolished with the introduction of the Ways And Means agreement.

Stock Market in India

The Stock Market in India like other stock markets across the world provide for the trade of

equity shares, and commodities pertaining to public companies in India as well as of the world.

The shares actually provide information about the performance of the company. Higher the value


5/6

of the share means that the company is making profit. The Stock Market in India is an important

part of the Indian economy and the yardstick for the growth of the economy of the country.

The Mumbai (Bombay) Stock Exchange is the oldest stock exchange pertaining to the stock

market in India. It was set up in the year 1875. There are around 6000 companies shares listed

under the Mumbai (Bombay) Stock Exchange.

Presently there are about 22 stock exchanges in the stock market in India. There are other stock

exchanges in the stock market in India such as Calcutta, Bangalore, Chennai, Ahmedabad, Delhi,

etc. The stock market in India also has a National Stock Exchange (NSE) situated in Mumbai.

The stock market in India comprises of an Over The Counter Exchange of India (OTCEI) for the

listing of the medium sized and small sized organizations. The Securities and Exchange Board of

India (SEBI), which is a regulatory organization overseeing the working of the stock exchanges

in India.

The National Stock Exchange can be contacted at:

National Stock Exchange

Mahindra Towers "A" Wing, 1st Floor,

Worli, Mumbai.

Tel : 022-4960525, 4932555.

Fax : 022-4935631

The Stock Market in India serves as a platform for infrastructural development and expansion

plans of the new companies. The companies may raise funds through the distribution of their

equity shares to the public. Transparency is a very important factor for a company to trade in the

stock market. The major fundamentals of the company which influences the investors are

income, liabilities, revenues, assets, infrastructure, etc and the company has to be very

transparent about these facts.

Opportunities for foreign investors in Stock markets in India


6/6

Direct Investment opportunities for foreign investors in Stock markets in India: The stockmarket in India now allow the foreign companies to hold majority shares of the India

companies apart from some restricted companies. Some companies the foreign stake may

be 100%.

Investment through Stock Exchanges in Stock markets in India: The Foreign InstitutionalInvestors (FII) may operate in the Stock markets in India being registered with the

Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI)

analysis of indian financial sector

Documents