Abstract
The financial system aims at establishing and providing a regular, smooth, efficient cost-efficient, and cost-effective linkage between depositors and investors. A well-developed financial system allows for the transfer of resources from surplus spending units and thus plays a crucial role in the functioning of the economy. Therefore, a financial system is generally defined as one engaged in the creation of different types of assets that creditors which to hold, and financial liabilities that debtors are willing to incur. The financial system allocates savings efficiently in an economy to ultimate users; either for investment allocates savings efficiently in an economy to ultimate users, either for investment in real assets or for consumption. Thus, the financial system as a sector of the economy utilizes productive resources to facilitate capital formation through the provision of a wide range of financial instruments to meet the different requirements of borrowers and lenders. The financial system mobilizes and intermediates savings and ensures that resources are allocated efficiently to productive sectors.
Keywords: Meaning; Components, Financial Institutions, Functions, structure, Recent Development.
References
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