Monday, May 20, 2019
Capital Market Essay
keen market is the market for leading and acceptance of long suit and long term cash in hand. The demand for long-term funds comes from industry, trade, agriculture and government (central and state). The supply for funds comes from individual savers, incorporate savings, banks, insurance companies, specialized financial institutions and government.*SIGNIFICANCE A sound and efficient not bad(p) market is extremely vital for the stinting outgrowth of a nation. So, the signifi assholece of capital market has increased. The adjacent points clearly bring out the role and significance of capital market in India.i)CAPITAL FORMATION Capital market encourages capital formation as it ensures speedy economic development. The process of capital formation includes accruement of saving effective mobilization of these savings for productive investment. Thus three distinctive inter-related activities i.e. collection of savings, mobilisation of savings and investment lead to capital f ormation in the country. The volume of capital formation account s on the efficiency and intensity with which these activities are carried on.ii) ECONOMIC GROWTH Capital market plays a vital role in the growth and development of an economy by channelising funds in developmental and productive investments. The financial intermediaries channel funds into those investments that are more important for economic development.iii) INDUSTRIAL growing Capital market promotes industrial development and motivates industrial entrepreneurship. It offer ups cheap, adequate and diversified funds for industrial purposes much(prenominal) as expansion, modernisation, technological upgradation, establishment of new units, etc. It also provides run like provision of underwriting facilities, federation in equity capital, credit-rating, consultancy services, etc.vi) MODERNISATION AND REHABILITATION OF INDUSTRIES Capital markets also contribute towards modernisation and reformation of industries . Developmental financial institutions like IDBI, IFCI, ICICI,etc provide finance to industries to adopt modern techniques and new upgraded machinery. They also embark in the equity capital of industries.v) RIVIVAL OF SICK UNITS Commercial and financial institutions provide adequate funds to operable sick unit to overcome their industrial sickness. Bank and FIs may also write off a part of the loan or re-schedule the loan to offer payment flexibility to weak units.vi) TECHNICAL assistance The financial intermediaries in the capital market stimulate industrial entrepreneurship by providing technical and advisory services like preparation of feasibility reports, identifying growth potential, and training entrepreneurs in project management. This promotes industrial investment and leads to economic development.vii) DEVELOPMENT OF BACKWARD AREAS Capital markets provide funds for projects in backward area and facilitate their economic development. Long-term funds are also provide d for development projects in backward / rural areas.viii) EMPLOYMENT genesis Capital markets provide Direct Employment in capital market related activities like monetary fund markets, banks and financial institutions. In point Employment is provided in all the sectors of the economy through various funds disbursed for developmental projects.ix) FOREIGN CAPITAL Capital markets make it possible to generate foreign capital by enabling Indian firms to raise capital from overseas market through bonds and other securities. Such foreign step in funds have a great impact on the economic development of the nation. Moreover, foreign direct investments (FDIs) also bring in foreign capital as well as foreign engineering that leads to greater economic development.x) DEVELOPMENT OF STOCK MARKETS Capital markets lead to development of ocellus markets by supporting(a) investors to invest in shares and debentures and to trade in stocks. FIIs are also allowed to deal in Indian stock exchan ge.xi) FINANCIAL INSTITUTIONS Financial institutions play a major role in capital markets. They provide medium / long term loan to industrial and other sectors and also undertake project feasibility studies and surveys. They refinance commercial banks and rediscount their bills of exchange. They provide merchant banking services. They subscribe to equity capital of the firms.xii) INVESTMENT OPPORTUNITY Capital markets provide various alternative sources of investment to the people. People can invest in shares and debentures of public companies and earn acceptable returns.xiii) INVESTMENT IN INDUSTRIAL SECURITIES Secondary market in securities encourage investors to invest in industrial securities by providing facilities for continuous, regular and ready buying and selling of these securities. This facilitates industries to raise substantial funds from various sectors of the economy.xiv) authorized GUIDE TO PERFORMANCE Capital market serves as a reliable guide to the performan ce of corporate institutions. It values companies accurately and thus promotes efficiency. This leads to efficient resource allocation and economic development.*CONCLUSION Thus we can say that capital markets play a crucial role in the economic development of a nation. A sound and efficient capital market is one of the most instrumental factors in the development of a nation.