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Unit-5 Monetary and Financial Resources

This unit discusses these aspects which have a crucial bearing on the flow of monetary and financial resources needed for the development of the economy.

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Mention in brief the deficiencies in the Indian capital market.

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Learning Pundits Content Team

Written on Jun 26, 2019 3:40:38 PM

Important deficiencies in the Indian capital market are identified as follows:

i) lack of diversity in the financial instruments.

ii) lack of control over the disclosure of financial information.

iii) under development of secondary market.

iv) prevalence of insider trading and front running leading to manipulation of security prices.

v) existence of unofficial trade in the primary market, prior to the issue coming into the market.

vi) absence of proper control over brokers and sub-brokers.

vii) ‘wholesale’ nature of the market which makes it more suitable for institutional investors and high worth individuals than for the numerically large small investor class.

viii) passive role of public financial institutions in checking the malpractice.

ix) high cost of transactions and intermediation, which is mainly due to the absence of well-defined norms for institutional investment.