Capital Market

Capital market is the market for medium and long-term funds. It refers to all the facilities and the institutional arrangements for borrowing and lending term funds (medium-term and long-term funds). Capital market includes Development Financial Institutions (DFIs) such as IFCI, SFC, LIC, IDBI, UTI, ICICI, etc. They provide medium-term and long-term funds for business enterprises and public authorities.

Types of Capital Market: The Indian Capital Market is broadly divided into two categories:

1. Gilt- Edged Market: Gilt-edged market is also known as the government securities market. As the securities are risk free, they are known as gilt-edged i.e. the best quality securities. The investors in the gilt-edged market are predominantly institutions. They are required by law to invest a certain portion of their funds in these securities. These institutions include commercial banks, LIC, GIC, and the provident funds.
2. The Industrial Securities Market: It is a market of shares, debentures and bonds which can be bought and sold freely. This market is divided into two categories: Primary Market and Secondary Market.

1. Primary Market: The new issue market called the primary market and the new issue market is concerned with the raising of new capital in the form of shares, bonds and debentures. Many public limited companies often raise capital through the primary market for expanding their business.
2. Secondary Market: The stock exchange market or the secondary market is a market of the purchase and sale of quoted or listed securities. It is a highly organized market for regulating and controlling business in buying, selling and dealing in securities.