CSEET · Economic and Business Environment · Indian Financial Markets
In the structure of the Indian financial system, which of the following is best described as a financial intermediary rather than a financial market?
A non-banking financial company is a financial intermediary because it mobilises funds from savers and lends them to borrowers. The money, capital and foreign exchange markets are marketplaces for trading instruments or currencies, so they are classified as financial markets rather than intermediaries.
- AMoney market
- BCapital market
- CNon-banking financial companyCorrect
- DForeign exchange market
Explanation
Financial intermediaries are institutions such as banks and NBFCs that collect funds from savers and lend them to borrowers. The money market, capital market and foreign exchange market are markets where instruments or currencies are traded, not institutions that intermediate. Hence the NBFC is the intermediary.
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