Sunitha.S Assistant Professor School of Management Studies, National Institute of Technology (NIT) Calicut MONETARY ECONOMICS: Financial System

2 Monetary Economics studies about…… Banks Money market Capital Market Non Bank Financial Intermediaries Unregulated Credit Markets

3 And aspects of stock market like……….  Stock Exchanges  BSE  NSE  NIFTY  SENSEX  OTCI  Bulls &Bears

4 Some basic stuff Credit Liquidity Inflation Monetary Policy Fiscal Policy

5 “Inflation is too much money chasing too few goods” Demand pull or cost push inflation

6 Banking Central Bank Commercial Banks Development Banks Cooperative banks

7 PRIMARY FUNCTIONS 1. Accepting of deposits  Current deposit Account - withdraw money at any time – no interest  Fixed deposit - money deposited in the account is for very short period. – high rate of interest – term deposit – matures at a definite period.  Savings deposit Account – some restrictions. – minimum amount of money – interest rate is low. 2. Granting of loans and advances  Loans - Overdraft – draft in excess of credit balance – for the reliable customer.

8 Reserve Bank of India Currency Authority Banker to Govt Bankers’ Bank Controller of money supply & credit Exchange Management & control

9 Non Bank Financial Intermediaries (NBFIs)  Mutual Funds (UTI)  Insurance companies (LIC & GIC)  Provident/Pension Funds  Post Offices Savings  Other NBFIs Money Lenders Chit funds Hire Purchase/Leasing companies Regulated Unregulated

Financial System

11 Financial System Financial institutions  Commercial banks, RBI, NBFIs, companies Financial Assets  Currency, deposits, cheques, bills, bonds, shares,  Equities, debentures, T-bills, certificates of deposits, commercial papers Financial markets  Money market (short term funds)  Capital market (medium & long term funds) Primary Market (New Issue Market) Secondary Market (Stock Market)

12 Thank You