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Overview of Indian Financial Ecosystem notes-CSEET

Overview of Indian Financial Ecosystem notes-CSEET

Overview of Indian Financial Ecosystem:

ICSI CSEET: The Council of the ICSI has released a notice regarding CSEET on the day of the inauguration of ICSI Golden Jubilee Celebrations on 4th Oct 2017.

The Gazette Notification on the Company Secretaries (Amendment) Regulations, 2020 has been published on 3rd February 2020 in the Official Gazette of India and the same shall be applicable from the said date of publication.

Now ICSI Published a notice regarding CSEET Test which going to start from 2020 May.

We are now going to discuss the details of CSEET Paper-3 Economics and Business Environment notes – Overview of Indian Financial Ecosystem

Overview of Indian Financial Ecosystem

Overview of Indian Financial Ecosystem

Overview of Indian Financial Ecosystem notes:

The financial system of an economy is a crucial element for its economic development. It facilitates the flow of funds from the households (savers) to business organisations (investors), thereby assisting in creation of wealth for the nation. Mainly, the financial system of a country is concerned with the following:

(a)   Allocation and mobilisation of savings.

(b)   Provision of funds.

(c)   Facilitating the financial transactions.

(d)   Developing financial markets.

(e)   Provision of legal financial structure.

(f)    Provision of financial and advisory services.

The important features of a financial are-

(i)    It plays an important role in economic development of a country.

(ii)   It encourages both savings and investment

(iii)   It links savers and investors.

(iv)  It assists in capital formation.

(v)   It facilitates expansion of financial markets.

India has a diversified financial sector undergoing rapid expansion, both in terms of strong growth of existing financial services firms and new entities entering the market. The sector comprises commercial banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds and other smaller financial entities. The banking regulator has allowed new entities such as payments banks to be created recently thereby adding to the types of entities operating in the sector.

In other words, financial services sector consists of the capital markets, insurance sector and non­banking financial companies (NBFCs). India’s gross national savings (GDS) as a percentage of Gross Domestic Product (GDP) stood at 30.50 per cent in 2019. The total amount of Initial Public Offerings increased to Rs 84,357 crore (US$ 13,089 million) by the end of FY18. IPO’s reached to US$ 1.94 billion in FY19 (up to Feb 2019). Ultra High Net Worth Individual (UHNWI) increased to 2,697 in 2018 and the population of UHNWI has grew by 118 per cent from 2013 to 2018.

Noteworthy developments in Indian Financial Ecosystem

—    Rising incomes are driving the demand for financial services across income brackets.

—    Financial inclusion drive from RBI has expanded the target market to semi-urban and rural areas.

—    Investment corpus in Indian insurance sector can rise to US$ 1 trillion by 2025.

—    Credit, insurance and investment penetration is rising in rural areas.

—    HNWI (High Networth Individual) participation is growing in the wealth management segment.

—    Lower mutual fund penetration of 5-6 per cent reflects latent growth opportunities.

—    The Government of India launched India Post Payments Bank (IPPB), to provide every district with one branch which will help increase rural penetration.

—    India benefits from a large cross-utilisation of channels to expand reach of financial services.

—    Maharashtra has launched its mobile wallet facility allowing transferring of funds from other mobile wallets. Maharashtra is the first state to launch it.

—    As of October 2018, the Financial Inclusion Lab has selected 11 fintech innovators with an investment of US$ 9.5 million promoted by the IIM-Ahmedabad’s Bharat Inclusion Initiative (BII) along with JP Morgan, Michael and Susan Dell Foundation, and the Bill and Melinda Gates Foundation.

—    Government has approved new banking licenses and increased the FDI limit in the insurance sector.

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