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A country’s development can be achieved only through economic growth which is dependent on the prevailing financial system. The role played by the adopted ‘Financial System’ is crucial and it intermediates between the flow of funds belonging to those who save a part of their income and those who invest in productive assets. The major function of the financial system is the provision of money and monetary assets for the production of goods and services.
A strong financial system is crucial to fulfilling the objective of strengthening the real economy and for its healthy and orderly growth. The financial system is a complex, well-integrated set of sub-systems of
Financial Institutions, Markets, Instruments, and Services which facilitates the transfer and allocation of funds, efficiently and effectively. The formal financial the system consists of four segments or components namely –
(1) Financial Institutions, (2) Financial Markets, (3) Financial Instruments and (4) Financial Services.
These constitute the financial system and act as a conduit for the transfer of financial resources from net savers to net borrowers i.e. from those who spend less than they earn to those who earn more than they spent
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