Indian Financial System-The Indian Capital Market

 Indian Financial System-The Indian Capital Market

The capital market remains a market aimed at both equity and debt securities in India. Business enterprises, governments, including companies are included in this market.


Capital market is the common term in which business enterprises, companies, and governments all have involvement which can raise the long-term funds and in which both equity and debt securities are the major parts of the financial system. Here the buyers and sellers all are involved and all the financial securities such as bonds, stocks everything is a part of the Capital market. It is mostly to maintain the long-term investment and individual or community any department can be responsible for the improvement of decreasing the market rate. Indian capital markets refresh the long-term funds from the market which also deals with the short-term capital funds.

Capital market of India: Overview

The Indian economy is growing fast. Various reforms need to be applied to reduce the major aspects that have been shown in recent times in the Indian economy. India got the fourth position in the economic sector all over the world. Yet, faces several challenges in the economic sector and its effect also falls on the capital market. 

Classification of Capital market 

Stock market: An equity market or share market in which derivatives and shares are traded with the public on an agreed price. Bombay-Stock-Exchange, a well-known oldest as well as senior stock exchanges and got the fourth position in this sector in Asia. 

Bond market: It is well-known as the credit capital market. It is also fixed and a part of the share market in which debt securities have been bought and traded through the depositors. The securities here are sold in bond form. 

Primary market: Primary market is main section of stock market where new bonds or stocks are launched through IPO by all the companies and have a chance to raise the capital market. 

Secondary market: In stock market Secondary market is another part where already the share has been launched or remaining shares or bonds are sold among the investors and in the traders either cross counter or security exchange.

Challenges faced by the Capital market in India

Inflation: Increased amount of inflation indicates the purchasing supremacy is falling of the Indian people and the high price rate is the main issue that turns the trading service rate down. Majority of the monetary policies, as well as regulatory policies that have been released through the reserve bank, is one of the biggest challenges for developing the capital market of India. 

Lowering of GDP: GDP (Gross Domestic Product) has shown another major issue in the development or growth of the capital market in India. The Indian economy now is extremely disappointing and its downward movement has become a more challenging factor for the Indian government also, in this pandemic condition India is suffering more due to this reason.

Education and Unemployment: The huge population in India is another aspect that diversifies the economic rate down as compared with other states. Undeveloped and improper education systems are mainly responsible for those and late unemployment stops the economic growth due to insufficient product creation and delivery rate. The literacy rate continuously increases and increments become low. 

Non-Uniform Tax reforms: In Indian non-uniformity, the tax system is running and it creates difficulties for the business organisation to carry out their trading system to maintain a long-term policy. The different tax rate differs in different states in India and for that the trading system cannot run smoothly according to the plan and they are facing several challenges. 


The Indian economy is the fastest-growing as well as largest economies all over the world. Various reforms need to be applied to reduce the major aspects that have been shown in recent times in the Indian economy. The capital market remains also aimed at both equity and debt securities in India. In this pandemic condition, the Indian economy and the capital market faces several challenges in GDP, with undeveloped infrastructure in the education and employment sector, low trading, and productivity rate. Moreover, new opportunities are missing from the Indian economic culture and for that, the Indian capital market continuously goes down.