The

Financial institutions in India

are divided in two categories. The first type refers to the regulatory institutions and the second type refers to the intermediaries.

The regulators are assigned with the job of governing all the divisions of the Indian financial system. These regulatory institutions are responsible for maintaining the transparency and the national interest in the operations of the institutions under their supervision. The regulatory bodies of the

financial institutions in India

are as follows:

Reserve Bank of India (RBI) Securities and Exchange Board of India (SEBI) Central Board of Direct Taxes (CBDT) Central Board of Excise & Customs

Apart from the Regulatory bodies, there are the Intermediaries that include the banking and non-banking financial institutions. Some of the specialized

financial institutions in India

are as follows:

Unit Trust of India (UTI) Securities Trading Corporation of India Ltd. (STCI) Industrial Development Bank of India (IDBI) Industrial Reconstruction Bank of India (IRBI), now (Industrial Investment Bank of India) Export - Import Bank of India (EXIM Bank) Small Industries Development Bank of India (SIDBI) National Bank for Agriculture and Rural Development (NABARD) Life Insurance Corporation of India (LIC) General Insurance Corporation of India (GIC) Shipping Credit and Investment Company of India Ltd. (SCICI) Housing and Urban Development Corporation Ltd. (HUDCO) National Housing Bank (NHB)

The banking institutions of India play a major role in the economy of the country. The banking institutions are the providers of depository and transaction services. These activities are the major sources of creating money. The banking institutions are the major sources of providing loans and other credit facilities to the clients. Apart from the banking financial institutions, there are a number of specialized

financial institutions in India

that have been incorporated for a definite purpose. These institutions include the insurance companies, the housing finance companies, mutual funds, merchant banks, credit reporting and debt collection companies and many more. Apart from these, there are several other financial institutions that are existing in the country. These are the stock brokers and sub-brokers, portfolio managers, investment advisors, underwriters, foreign institutional investors and many more.

Financial instruments
Financial instruments are the documents that has a monetary value or evidences. Several financial instruments are available in the Indian money market. These are government securities, or G-sec, preference shares, commercial papers, equity shares, certificate of deposits, call money market and industrial securities. These are discussed below. Government Securities: In India, mainly the institutional investors buy the government securities. The government, both State and Central, and the government authorities, for example, state electricity boards, municipalities etc issue it. Commercial banks are the biggest investors who buy the G-secs. The government collects money through the Gsecs to finance its several new infrastructure development projects or to meet its present needs. The government itself issues the risk of default for G-sec, for it. Preference Shares: These carry a fixed dividend rate and a special right to dividends over the private equity holders. Currently, all the preference shares in the Indian market are `redeemable, that is, they have a fixed period of maturity. Therefore, sometimes they are termed as `hybrid variety Commercial Papers (CP): These are issued mainly by the corporate businessmen to fund their working capital needs. Commercial Papers are issued generally for short-term maturities. Commercial papers are not secure and subject to market risks, so those

corporate bodies that have a good credit history will only be able to use this financial instrument. Equity Shares:It is a "high return risk" instrument. Equity shares don't have any fixed return rate and thereby, no period of maturity. Certificate of Deposits (CD):These are very similar to the Commercial papers. But the CDs are issued mainly by the commercial banks. Call Money Market:The loans made in the call money market are mainly short term in nature. Call money market mainly deals with the interbank markets. Those banks that are suffering from a short-term cash deficit borrow cap from the call money market. The interest rate varies with the market rate and depends upon the banking system. Industrial Securities: Normally the big corporate bodies are used to issue this to fulfill their long-term requirements regarding working capital. The debentures, equity shares fall under this category.