Importance or Functions of Capital Market: It does not include the instruments or institutions which provide finance for short period up to one year. It includes all the organizations, institutions and instruments that provide long term and medium term funds. The savers are lenders of funds while investors are borrowers of funds.
Also, it is not the only such model: The borrowers issue primary securities which are purchased by lenders either directly or indirectly through financial institutions. During the last 60 years, there is a whole lot of non-banking financial companies who raise funds from the general public but who are generally outside the control and supervision of RBI 2.
It is a market for overnight to short term funds and instruments having a maturity of one year or less than one year. Must allocate capital productively. It supplies industry with fixed and working capital and finances medium-term and long-term borrowings of the central, state and local governments.
Funds flow into the capital market from individuals and financial intermediaries which are absorbed by commerce, industry and government.
Capital market provides funds for long and medium term. It improves the efficiency of capital allocation through competitive pricing mechanism What are features of Indian money market? They do so by converting financial assets into productive physical assets.
Another major defect of the Indian money market was the absence of a well-organized banking system. Determinant of Capital Formation: The demand for funds comes from joint stock companies for working and fixed capital assets and inventories and from local, state and central governments, improvement trusts, port trusts, etc.
How do you explain money market and capital market? Diversity in Money Rates of Interest: Availability of credit instruments: It does not deal with channelising saving for less than one year.
Capital market offers attractive opportunities to those who have surplus funds so that they invest more and more in capital market and are encouraged to save more for profitable opportunities.
Where finance is available at reasonable cost. Thus it leads to capital formation. Bond Market - the market for debt instrument of any kind. The extreme sluggishness in the movement of funds and the existence of different interest rates are the result of slow branch banking in the country.
RBI attempts to moderate the fluctuations through supporting the market with additional funds when there is short supply to funds and high call rates and absorbing the additional funds when the call market has large surplus funds.
The basic reason for the existence of so many rates of interest simultaneously is the immobility of funds from one section of the money market to another. All firms have the same cost function. It is not only a market for old securities and shares but also for new issues shares and securities. In general, however, RBI has failed to check the high volatility of the call money market in India in certain period.
It thus facilitates the movement of stream of capital to be used more productively and profitability to increases the national income.But in general the capital market is the market for securities where either companies or the government can raise long term funds What is the money market?
Basically the money market is the global financial market for short-term borrowing and lending and provides short term liquid funding for the global financial system.
Features of Capital Market Vinish Parikh. In capital markets variety of instruments are available and hence there is lot of flexibility so as an investor one can invest in bonds, debenture, equity stock, futures and options and many more depending on his or her risk taking capacity and future planning and as an company looking to raise.
Meaning and Features: The capital market is a market which deals in long-term loans. It supplies industry with fixed and working capital and finances medium-term and long-term borrowings of the central, state and local governments. Features of Rural Markets. Features of Indian Rural Markets *Large and Scattered market: The rural market of India is large and scattered in the sense that it consists of over 63 crore consumers from 5,70, villages spread throughout the country.
*Major income from agriculture: Nearly 60 % of the rural income is from agriculture. The Features of Money Market in India have been briefly discussed below: The Major defect of the Indian money Market has always been the existence of the indigenous bankers who do not distinguish between short-term and long-term finance.
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Disclaimer: Characteristics and features. To sum up, corporate bond the market in India suffers from deficiencies of participants, products and a comprehensive institutional framework.Download