Components & Functions of Capital Market in India

Components & Functions of Capital Market in India

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One of the most significant parts of the Indian financial system is the capital market. It is the market accessible to the organizations for meeting their prerequisites of the funds that are long-term. It refers to all facilities and institutional borrowing and lending arrangements. This indicates that it is concerned with obtaining capital for long-term investments. The market is made up of a few people and some organizations, like the government, that help to channel the supply and demand for long-term capital. The interest for long haul capital comes predominately from private area producing ventures, horticulture area, exchange and the public authority organizations, while the inventory of assets for the capital market comes generally from individual and corporate reserve funds, protection investment funds, banks, particular supporting offices and the overflow of legislatures.

The Indian financial market's components are:

• The commodity market - It is a market for raw materials rather than finished goods. The agricultural products known as soft commodities include wheat and coffee. Sugar. Cocoa. Hard commodities like oil, gold, silver, and rubber are mined.

• Market for Capital - markets for the purchase and sale of debt and equity instruments. Savings and investments are channeled through capital markets between users of capital, such as governments, businesses, and individuals, and suppliers of capital, such as retail investors and institutional investors.

• Capital Market - It is utilized by a wide range of parties, including an investor purchasing CDs as a safe place to store short-term funds and a business raising capital by selling commercial paper into the market.

• The Insurance Sector - In the insurance market, the fair transfer of loss risk from one entity to another in exchange for payment. It is a type of risk management primarily used to protect against the possibility of an unknowable, contingent loss.

• Market for Derivatives - It is the financial market for financial instruments that are derived from other types of assets, such as future contracts or options.

• Market for Foreign Exchange - A global decentralized market for currency trading is the foreign exchange market. The larger international banks are the main players in this market.

The Securities Exchange Board of India (SEBI) is a regulatory body created by the SEBI Act of 1992 to safeguard investors' interests in securities and encourage the growth of the capital market. It entails enforcing the prohibition of unfair trade practices in the securities market and regulating the business in the stock exchanges by supervising the operations of stock brokers, share transfer agents, underwriters, and merchant bankers.

SEBI's functions:

1. To encourage and oversee self-regulating organizations.

2. To disallow insider exchanging protections market.

3. To manage the matter of the financial exchange and different protections market.

4. to restrict unfair and fraudulent business practices in the securities market.

5. to control massive share purchases and take over businesses.

6. to raise investors' awareness of market safety and educate intermediaries about it.