The coin marketplace seat inwards Republic of Republic of India is non only underdeveloped but it is too a heterogeneous entity. As nosotros conduct keep already discussed inwards our final post, due to dichotomy of Indian coin marketplace seat into organized too unorganized sectors resulted inwards reveal of drawbacks. Some of which are given below.
- Existence of Both Organized too Unorganized Markets : The outset too firstly defect of Indian coin marketplace seat is beingness of both organized too unorganized coin markets. Indigenous bankers too coin lenders plays an of import role inwards unorganized coin market. The principal work amongst indigenous bankers is that they don’t distinguish bbetween short-term too long term credit. the unorganized coin marketplace seat is non controlled past times R.B.I. These features of unorganized coin market, makes the whole Indian coin marketplace seat weak.
- Absence of Integration betwixt Various Sectors : There is no proper coordination betwixt the diverse sectors of Indian coin market. There is no usual agreement betwixt the banking institutions of organized sector too indigenous bankers of unorganized sector. amongst inwards the organized sector at that topographic point is no proper coordination of activities of unlike banking institutions.
- Predominance of Unorganized sector : The 3rd of import drawback of Indian coin marketplace seat is its predominance of unorganized sector. The indigenous bankers too coin lenders occupies meaning role inwards rural finance. In this unorganized sector at that topographic point is no clear cutting distinction betwixt brusk too long term credit. They volition non come upward nether straight command of Reserve Bank of Republic of Republic of India too remains exterior the organized sector. Therefore, they seriously bound the Reserve Bank command over coin market.
- Differential Interest Rates : Due to lack of homogeneity inwards the composition of Indian Money Market at that topographic point is broad gain non only inwards the involvement rates but too inwards lending policies, of the unlike institutions. Money lenders charges exorbitant rates of Interest ranging from 24 per cent to xl pre cent. Even commercial banks too charges unlike rates of involvement ranging from 12 pct to xviii percent. The involvement rates too varies from house to place.
- Inadequate Control past times the Reserve Bank of Republic of Republic of India : The unorganized sector of Indian Money Market is non nether straight command of Reserve Bank of India. The Reserve Bank of Republic of Republic of India has no adequate command on the functioning of unorganized sector fiscal institutions which is quite large inwards size playing real of import role inwards financing brusk term funds.
- Crunch of Loanable Funds : Indian coin markets ever sense a shortage of loanable funds, mainly due to less per majuscule income, depression saving charge per unit of measurement too higher consumption expenditure due to inflation too increment inwards measure of living. Specially amongst the invest of multichannel TVs amongst massive advertisements too the penetration of credit cards amid the middle storey had farther increased consumption expenditure resulting inwards reduced savings.
- Seasonal Scarcity of Funds : There is shortage of funds inwards coin marketplace seat during approximately seasons. Ours is an agricultural solid seat down requiring heavy finance during agricultural season. Due to lack of sufficient funds during detail season, the involvement rates are growing.
- Underdeveloped Bill Market : The nib marketplace seat which plays an of import role inwards organized sector of coin market, is too underdeveloped inwards Republic of Republic of India every bit compared to developed countries. There is a lot of shortage of audio too outset storey commercial bills of telephone commutation inwards our country. Most of the Indian traders resort to hundies rather than depict Bills of exchange. Further, at that topographic point is lack of standardization inwards drawing of bills too hundies inwards India.
- Underdeveloped Banking Habits : The banking habit is non much developed inwards Republic of Republic of India which is 1 of the most of import characteristics of a developed coin market. Cash transactions are to a greater extent than pop inwards Republic of Republic of India rather than banking concern transactions, every bit a effect of this the banking organisation inwards Republic of Republic of India has non much developed.
- Lack of Call Money Market : Call marketplace seat agency a marketplace seat which provides coin at telephone band too brusk uncovering ranging a menstruum 24 hours to 1 week. These loans are by too large granted to stock brokers too discounting houses. In Republic of Republic of India real rarely such loans are granted.
- Scarcity of Credit Instruments : Till belatedly 1980’s, the Indian coin marketplace seat was suffering from scarcity of credit instruments. The only instruments available were the coin at telephone band too brusk uncovering too treasury bills. Moreover, at that topographic point were no specialists dealers too brokers to handgrip the constituent inwards unlike segments of coin marketplace seat too to handgrip unlike kinds of credit instruments.
- Improper Care of Rural Finance : An of import weakness of the Indian Banking organisation is that till late agricultural finance was divorced from the organized sector of the coin market.
- No Banker’s Acceptance : There is no evolution of bankers’ credence or credence of credit past times the banks inwards India.
- Blending of Lending too Trading Activities : In the unorganized sector, the fiscal agencies practise non resort to coin dealings only. They normally acquit on retail merchandise agriculture too other concern activities, along amongst lending operations.
- Banking Gap : Banking facilities are either alone nonexistent or inadequate inwards the villiages of India. All though at that topographic point has been rapid expansion of banking concern branches inwards recent years peculiarly afterwards nationalization of banks, yet vast rural areas withal exists without banking facilities. Scientifically-run institutions similar commercial banks conduct keep a largely urban-orientation inwards our country.
- Absence of All-India Money Market : Indian coin marketplace seat has non been organized into a unmarried integrated all-indian market. It is divided into modest segments mostly catering to the local fiscal needs.