Page 55 - DCOM304_INDIAN_FINANCIAL_SYSTEM

Indian Financial System Rupesh Roshan Singh, Lovely Professional University

Notes Unit 4: Indian Capital Market

CONTENTS
Objectives
Introduction

4.1 Evolution
4.2 Broad Structure in the Indian Capital Markets
4.3 Functions and Role of Indian Capital Market

4.4 Participants in the Securities Market
4.5 Exchange Platform
4.6 Regulatory Authority
4.7 Instruments in Indian Capital Market
4.8 Summary

4.9 Keywords
4.10 Review Questions
4.11 Further Readings

Objectives

After studying this unit, you should be able to:
 Learn the concept of Indian capital market;
 Explain the role of Indian capital market;

 Discuss the structure and functions of Indian capital market;
 Discuss various participants in the securities market;
 Explain Exchange platforms.

Introduction

Capital market – an important segment of financial market of a country - is the market for long-
term finance, concerned with funneling long-term funds from Surplus Spending Units (SSUs) to
Deficit Spending Units (DSUs) through long-term financial instruments like stocks and bonds.
In it, investors hand over funds today in exchange for promises of money far in the future. The
long delay in repayment involves two basic problems of lending, viz., increase in risk and
decrease in liquidity. The entire discussion on today's capital market centers around these two
problems.
There has been a tectonic change in recent years in strategies, structures and role of institutions
and instruments associated with capital market across the globe. While financial market boomed
dramatically in the 1990s, those in South East Asia, South America and Russia plummeted. More
recently, in the early 2000s, Argentina's economic and financial system collapsed and its currency
nosedived to more than 30 per cent in value relative to the US dollar.

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