1. Financial System in India
Samir K Mahajan

2. Finance
Finance refers to funds /monetary resources supplied (lent/provided) and demanded (borrowed/raised).
Finance includes monetary resources comprising of debt and ownership of funds of the state, company and individuals or persons.
Samir K Mahajan

3. FINANCIAL SYSTEM
Financial system refers to the demand and supply of funds and finances.
Financial Dualism : Financial system of developing countries is characterized by co-existence between
formal financial sector
informal financial sectors
Samir K Mahajan

4. Informal Financial System/Sectors
Informal financial system/sectors are non-institutional and unorganized and unregulated. It exists in rural and traditional sectors of the economy.
Supplier of fund includes individuals such as money lender, relatives, trader, store owners, commission agents, landlords, group of persons appearing as associations, saving club, partnership farms, pawn-broker, and non-banking financial companies such as: chit fund, investment companies.
Borrower of funds includes farmers, rural entrepreneurs, artisans, petty businessman etc.
Rate of interest is exorbitantly high.
Role of informal sector is falling due to growth of formal institution system specially banking activities.
Samir K Mahajan

5. Formal Financial System/Sectors
Formal Financial System/Sector is institutionalized, organized and regulated. Predominantly urban-centric. Financial system is concerned with formal sectors.
Components of Formal Financial Sectors with reference to India
Financial Intermediaries/Institutions
Financial Markets
Financial Instruments
Financial services
Samir K Mahajan