Financial Markets and Services Notes
Subject Overview
Financial Markets and Services is the second Finance elective — how India's financial system, markets, and services industry actually work. You'll cover the components of the financial system and money/
Subject at a glance
4
Units
27
Topics
6
Credits
4
Infographics
Unit-wise Syllabus
4 units — open any unit for detailed topic-wise notes, diagrams and important exam questions
- Components and key elements of the financial system
- the money market — instruments
- functioning and participants
- structure and functions of the Indian capital market
- meaning and types of financial services
Institutions
Banks, NBFCs, insurers, mutual funds
Markets
Money market and capital market
Instruments
T-bills, CPs, shares, bonds
Services
Leasing, merchant banking, rating
Regulators
RBI, SEBI, IRDAI, PFRDA
Study guide
This unit introduces the financial system, the money market and its instruments, participants and functioning, the Indian capital market and the meaning and types of financial services. Learn the main money market instruments such as treasury bills and commercial paper.
- Regulatory framework — SEBI and RBI
- primary market SEBI guidelines
- book building
- online IPOs
- green-shoe option
- secondary market — stock exchanges
- listing
- trading and settlement
- introduction to derivative markets
What happens
New securities issued
Existing securities traded
Money goes to
The company
The selling investor
Methods
IPO, FPO, rights, private placement
Trading on stock exchanges
Price set by
Issuer or book building
Demand and supply
Study guide
You study regulation and markets: SEBI and the RBI, primary market guidelines, book building, online IPOs, the green-shoe option, the secondary market (stock exchanges, listing, trading, settlement) and an introduction to derivative markets. Trace how an IPO works step by step.
- Leasing meaning
- features and types
- lease vs. buy vs. hire purchase
- mutual fund concept and schemes
- merchant banking scope and SEBI guidelines
- credit rating types and agencies
- venture capital and SEBI guidelines
Ownership
Stays with lessor
Passes to hirer after last instalment
Depreciation claimed by
Lessor
Hirer
Payments
Lease rentals
Instalments of price plus interest
Option to buy
Not always
Yes, built in
Study guide
You study financial services: leasing and its types, lease versus buy versus hire purchase, mutual funds, merchant banking, credit rating and venture capital with their SEBI guidelines. Compare leasing and hire purchase in a table.
- Factoring concept vs. bills discounting
- credit insurance and forfeiting
- depository meaning
- dematerialisation and rematerialisation process
- NSDL and CDSL
- depository participants and SEBI guidelines
- 1Investor opens a demat account
With a depository participant
- 2Submits share certificates
With a demat request form
- 3DP sends request to the company's registrar
- 4Registrar verifies
And cancels the certificates
- 5Depository credits shares
NSDL or CDSL
Study guide
You study factoring versus bills discounting, credit insurance, forfeiting and the depository system: dematerialisation and rematerialisation, NSDL and CDSL and depository participants. Know how shares move into a demat account.
Why Financial Markets and Services Matters
Financial markets are the engine of the economy and a major employer. This subject prepares you for roles in broking, banking, wealth management and fintech and for NISM and banking exams.
How to Prepare for Financial Markets and Services
- Follow the stock market and an upcoming IPO to see the concepts live.
- Learn the roles of SEBI and the RBI in a short comparison.
- Prepare a table of money market and capital market instruments.
Financial Markets and Services: Frequently Asked Questions
What is the difference between the primary and secondary market?
In the primary market companies issue new securities directly to investors, while in the secondary market existing securities are traded among investors.
What is dematerialisation?
Dematerialisation is the conversion of physical share certificates into electronic form held in a demat account.