The financial system of India is a system of borrowing and lending of funds or the demand for and the supply of funds of all individuals, institutions, and companies and of the government.

Role or Function of Indian Financial System

All the functions of Indian Financial System comes under 3 main functions which are given below

1) Increase the savings

-> It provides a measures for managing and controlling the risk involved in mobilizing savings and allocating credit.

-> It promotes the process of capital formation by bringing together the supply of saving and the demand for investible funds.

-> It helps in lowering the cost of transaction and increase returns.

2) Mobilization of savings

->It is a link between savers and investors. It utilizes mobilized savings of savers ( who are not organized / scattered )in more efficient and effective manner.

->It provides payment mechanism for exchange of goods and services.

-> It facilitate for the transfer of resources across geographic boundaries.

-> It provides detailed information to the operators/ players in the market such as individuals, business houses, Governments etc.

3) Proper Investment

->It assists in the selection of the projects to be financed and also reviews the performance of such projects time to time .

->It channelises flow of saving into productive investment.