Characteristics of Indian Capital Market in English...

What are the characteristics of Indian capital market? Or What are the salient features of the Indian capital market?

Contents

Characteristics of Indian Capital Market

In our country, business concerns can arrange funds through various sources. Short-term funds can be arranged by taking debt and long-term debts are arranged either by issuing securities or by receiving loan from financial institutions.

Capital market makes available capital to such companies who seek capital. Thus capital market deals in capital. Here most investments are made directly.

Following are the main features of Indian capital market:

1. Existence of Financial Institutions and Security Markets in the Structure of the Capital Market: Various financial institutions like Industrial Development Bank of India (IDBI), Industrial Finance Corporation of India (IFCI), Life Insurance Corporation of India (LIC), State Financial Corporations (SFCs) etc. make available long-term and short-term finance in the structure of Indian capital market.

Following types of capital market are included in capital market structure and they deal in securities :

(i) Government security market, (ii) Corporate security market.

2. Inter-dependence of Money and Capital Market: A close inter dependence is available between capital market and money market. Commercial banks are active in money market and financial institutions are active in capital market. Overlapping is found in the functions of financial institutions. It is difficult to decide that which concern is concerned with money market and which is concerned with capital market.

3. Growth in Mutual Funds: In the present time mutual finds are developing fastly in capital market. Many corporations of public sector have commenced mutual funds.

4. Various Types of Instruments: In the capital market of our country equity shares, preference shares, debentures, bonds, innovative debt instruments, convertible instruments, zero interest bonds, convertible rate bonds, forward contracts, futures etc. are popular.

5. Inadequate Investors Services: Capital market provides inadequate and insufficient investors services and in our country there is found lack of equity culture. Investors do not find sufficient and independent. information.