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It means that, the financial system comprises of different markets, institutions,, instruments, services and mechanisms. The financial system facilitates in generating, savings, investment, capital formation and their growth. The basic and most primary, function of the financial system is the mobilisation of savings, their distribution for, industrial investment and influencing capital formation to speed up the process of, economic growth., 1.3 The Concept of Financial System:, Generally financial institutions, markets, instruments and services are involved in the, process of savings, financing and providing investment. In this connection, the proper, supervision, control and regulation are equally necessary and important. In this way the, financial management proves as an essential, decisive and integral part of the financial, system. The inter-relationship between different segments of the economy relates to, economic growth, goal, financial system, financial institutions system, financial markets,, and financial instruments., 1.4 Importance of Financial System:, A financial system provides services that are vital and important in a modern economy., The stable and widely accepted means of exchange not only facilitates trade but also, reduce the cost of transaction as a result of which specialization in production can be seen, with more productivity. The financial assets with attractive yield, liquidity and risk factor, encourage savings in financial form. Financial intermediaries always try to increase the, efficiency of resources used by evaluating alternative investments and monitoring the, activities of borrowers. Access to a variety of financial instruments enables an economic, agent to pool, price and exchange risks in the markets. The efficient use of resources,, saving and risk-taking are the cornerstones of a developing economy. In fact, the country, could make this feasible with the active support of the financial system. The financial, system has been identified as the most transforming agent for growth, progress of the, economy and making it one of the chief contributor and key inputs of development., 3.