Finance in India

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The Indian financial system is essentially strong, operationally wide and has always exhibited utmost efficiency and flexibility. This has driven the Indian economy towards a more market-driven and productive one. Finance in India stands so strong that the system has always supported and induced high levels of investment, thereby promoting growth and wide economic coverage.

Overview of the Financial sector in India


The Financial sector in India comprises of varied elements – financial institutions, financial markets, financial instruments and financial services. Broadly the Indian financial system can be categorized into two segments – the organized sector and the informal credit market (unorganized). The financial institutions in India are responsible for all the financial intermediation in the organized sector.

The Reserve Bank of India (RBI) acts as the main credit regulator and is the apex institution in the Indian financial system. The other important financial institutions are the commercial banks (both public and private sector), cooperative banks, regional rural banks and development banks. Non banking financial companies (NBFCs) comprise of finance and leasing companies and institutions like LIC, GIC, UTI, Mutual funds, Provident Funds, Post Office Banks etc. the dominant segment of the Indian financial sector is the banking industry as they manage more than 80% of the funds in the economy.

Broadly one can say that Indian finance is just the management of funds. With the general areas of financial services in India being business finance, personal finance, and public finance, finance in India is really comprehensive. Concepts of time, money and risk are all inter-related in the financial services sector in India, thus one should have an idea about how money should be spent and budgeted.

Financial services in India

The different segments of the financial services in India are:

1.Corporate finance

Corporate finance is that segment in Indian financial services where financial decisions are arrived at by business enterprises and accordingly the business strategies are made. Maximizing the corporate value is the main aim of corporate finance, thereby minimizing the corporate risk. The sub categories of corporate finance deal with the following:

  • Structured finance
  • Capital budgeting
  • Financial risk management
  • Mergers and Acquisitions
  • Accounting
  • Financial Statements
  • Auditing
  • Credit rating agency
  • Leveraged buyout
  • Venture capital

2.Personal finance

Personal finance is entirely related to the application of finance principles, thereby helping an individual to make necessary monetary decisions. Individuals or families through this, obtain, budget, save, and spend resources (entirely monetary) taking into consideration the associated financial risks and time period. The personal finance apparatus includes savings accounts, credit cards and consumer loans, stock market investments, retirement plans, social security benefits, insurance policies, and income tax administration. Sub categories of personal finance are:

  • Credit and Debt
  • Employment contract
  • Retirement
  • Financial planning

3.Public finance

Public finance is entirely an economy related concept whereby it is related with paying for governmental activities. This field helps the entire economy to have an idea about what the government is doing, how much has been its collections and from whom have they been collecting these resources. Sub categories of public finance are:

  • Tax
  • Government debt
  • Deficit spending
  • Warrant (of payment)


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