Credit system – a set of credit relations and institutions that organize these relations.
Credit relations are formed in connection with the mobilization of temporarily free funds of the enterprise, organizations, budget, and population. The use of these funds is on the terms of return to meet economic and social needs.
The main conductor of credit relations in society is banks that act simultaneously as buyers and sellers of temporarily free cash in society. Buying and raising temporarily free cash is called passive operations of banks and sales and investment – active operations.
The bank carries out active and passive operations under certain principles using certain tools, methods of forms, and other tools.
The main type of active operation of commercial banks is lending.
Credit relations between banks and customers are built based on loan agreements, which define the parties’ mutual obligations and economic responsibility.
Depending on the method of lending, there are different forms of loan accounts. These accounts calculate the provision of loans, their repayment, and the balance of the debt. They are opened in the bank’s institutions for each enterprise that uses the loan, and one enterprise may have several accounts if it uses loans for different purposes. In the practice of lending, a simple loan account is used.
Non-bank financial and credit institute
Non-bank financial and credit institutions include:
- Financial companies
- Pension funds
- Mutual assistance funds
The credit system of India is just a little aspect of the big financial system of India. India has witnessed a huge increase in mergers and acquisitions (M&A) activity over the past few years. Total M&A in India grew by 53.3% to $ 77.6 billion in 2017. In addition, India’s leading stock exchange is
Bombay Stock Exchange (BSE) – Forms a joint venture with Ebix Inc to provide a reliable insurance distribution network in the country through a new exchange platform. Investment: Global Payment Solutions Giant
Mastercard launched its first technological laboratory in Pune that will enable India to move towards a digital economy and financial inclusion. The four metros in Delhi, Mumbai, Bangalore, and Chennai will benefit from $ 7.2 billion annually through increased digital payments. BankBazaar, a financial market startup in India, raised $ 30 million in a funding round led by Experian Plc, a UK-based credit rating agency. According to data provided by Venture Intelligence, private equity investment in India increased 59% to $ 24.4 billion in 2017, with an average deal size of $ 42.8 million.
Another important component of India’s financial industry is the insurance industry. The insurance industry is growing rapidly. The total amount of life insurance premiums in the first year increased by 17.35% compared to the same period in 2016 and reached USD 25.44 billion from April 2017 to February 2018 . 2017 Government Initiatives: In 2017, the Indian Ministry of Finance launched the Operation Clean Money Portal to create a transparent tax administration. In 2018, the Indian government was likely to allow 100% foreign direct investment (FDI) through banks and ATMs. This transaction does not affect the provisions of the Private Securities Agencies Regulations Act (PSARA) … The Securities Exchange Board of India (SEBI) authorized exchanges to launch options contracts in the commodity market, which would provide a new hedging profitability instrument for farmers and other market participants . SEBI Council also relaxed regulations for registered foreign portfolio investors in India, allowing them to operate through the International Financial Services Center (IFSC) without submitting any additional documentation or prior approval. SEBI Council plans to provide investors with the ability to transact in soldered investments of up to Rs 50,000 (USD 750) per month through digital wallets as part of its efforts to digitize distribution processes for all financial products.
The Indian government has implemented many reforms to liberalize, strengthen regulation, and strengthen the financial industry in recent years. The government and the Reserve Bank of India have taken various measures to facilitate finance for Micro, Small, and Medium Enterprises (MSMEs). These measures include launching a Credit Guarantee Fund Scheme for Micro and Small Enterprises, advising banks on collateral requirements, and setting up a Micro Units Development and Refinance Agency (MUDRA).