School of Law
III Internals
SUBMITTED TO : AWADHESH PATHAK SIR
SUBMITTED BY : ISHA VERMA (2020/16)
CAPITAL MARKET : ITS
MEANING , FUNCTIONS ,
ROLE AND IMPORTANCE
Structure of
capital
market :
A market for dealing in the medium and long
term sources of funds is known as Capital
Market .
1. Suppliers of long term funds ( Example :
Individuals, corporates , Institutional
investors , Government )
MEANING OF 2. Borrowers of long term funds ( Example :
CAPITAL Agriculture , Industries ,Trade , Government )
MARKET 3. Intermediaries ( ,Middle chain between
supplier and borrower )
Capital market deals in both new issue as well
as existing issue .
IIt is governed by Stock Exchange Board of
India ( SEBI )
Capital market is part of financial system which
is concerned with raising capital funds by
dealing in Shares , Bonds , and other long term
investments .
The market where Investment instruments like
bonds ,equities and mortgages are traded is
known as the capital market .
CONTINUE … The different types of financial instruments that
are traded in the capital markets are :
1. equity instruments
2. credit market instruments
3. insurance instruments
4. foreign exchange instruments
5. hybrid instruments
Promotion of industrial growth : Capital market
encourages the public to invest in corporate
securities . Thus surplus funds are transferred to
the industrial sector which helps stimulating
industrial growth and economic development .
Mobilisation of savings and Acceleration of
Role or capital formation : By mobilising small savings
of households and investors ,Capital market
Importance of plays a great role in the Acceleration of capital
in the economy .
Capital Market :
Raising long term capital : Primary market and
secondary market are part of capital market .
Companies can raise long term capital by
issuing shares and debentures in stock
exchanges .
Capital market finance the five year plans :
Capital market is also supportive in fulfilling
government requirements for funds to finance
various public sector projects .
Availability of ready market : Many number of
Role or buyers and sellers are available in stock
exchanges all the time. Thus it plays a great role
Importance of in maintaining the liquidity in the stock market .
Capital Market : Creates opportunities : The activities of capital
market determine the rate of capital formation in
an economy . Capital market offers attractive
opportunities to those who have surplus funds
so that they invest more and more in capital
market.
Major suppliers of funds in the Capital Market:
COMMERCIAL INSURANCE BUSINESS RETREMENT
BANKS COMPANIES CORPORATIONS FUNDS
Major borrowers 1. Treasury departments
in the Capital 2. Corporations
Market: 3. Securities dealers
Types of capital market :
SECONDARY MARKET : The secondary
PRIMARY MARKET : It is that market in
market is that market in which the buying
which shares , debentures and other
and selling of the previously issued
securities are sold for the first time for
securities is done .The transactions of the
collecting long term capital . This market is
secondary market are generally done
concerned with new issues . Therefore , the
through the medium of stock exchange .
primary market is also called NEW ISSUE
The chief purpose of the secondary market
MARKET .
is to create liquidity in securities .
Establishment of Creditors Rating Agencies :
three creditors rating agencies were set up
1. The Credit Ratings Information Services of
India Limited (CRISIL - 1988),
2. The Investment Information and Credit Agency
Major Reforms in of India Limited ( ICRA – 1991 ) ,
Indian Capital 3. Credit Analysis and Research Limited
( CARE )
Market : These agencies assess the financial health of
different financial institutions and agencies related
to the stock market activities . It is a guide for the
investors also in evaluating the risk of their
investments .
Rising Electronic Transactions : Technological
development in the last few years has reduced
the paper work . Now paperless transactions are
increasing at a rapid rate . It saves money , time
and energy of investors . Thus encouraging
more people to join the capital market .
Major Reforms in
Growing Stock Exchanges : The numbers of
Indian Capital various Stock Exchanges in India are
Market : increasing .
BSE ( Bombay Stock Exchange )
NSE ( National Stock Exchange )
OTCEI ( Over the Counter Exchange of India ) are
the major stock exchanges in India .
Investors Protection : One of the another major
reform in capital market is the establishment of
Major Reforms in IEPF . Under the purview of the SEBI the
Central government of India has set up the
Indian Capital Investors Education and Protection Fund
Market: (IEPF) in 2001. it works in educating and
guiding investors ,it protects the small investors
from frauds .
CAPITAL MARKET PLAYS AN IMPORTANT
ROLE IN ENSURING THE EMERGENCE OF A
VIGOROUS AND EFFICIENT ECONOMY .
IT FACILITATES THE
INTERNATIONALIZATION OF AN ECONOMY
BY LINKING IT WITH THE REST OF THE
Conclusion : WORLD .
THE LACK OF AN ADVANCED AND VIBRANT
CAPITAL MARKET CAN LEAD TO
UNDERUTILIZATION OF FINANCIAL
RESOURCES .
THE DEVELOPED CAPITAL MARKET ALSO
PROVIDES ACCESS TO THE FOREIGN
CAPITAL FOR DOMESTIC INDUSTRY.
THANKYOU
