Financial Services

The primary operations of banks include:
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Keeping money safe while also allowing withdrawals when needed Issuance of checkbooks so that bills can be paid and other kinds of payments can be delivered by post Provision of loans and mortgage loans (typically loans to purchase a home, property or business) Issuance of credit cards Allow financial transactions at branches or by using Automatic Teller Machines (ATMs)

 .Facilitation of standing orders and direct debits. so payments for bills can be made automatically  Provide overdraft agreements for the temporary advancement of the Bank's own money to meet monthly spending commitments of a customer in their current account.

 Services offered by banking & financial companies are called FS. . Since 1990 there has been an upsurge in the financial services provided by banks & FIs.  Efficiency of financial system largely depends upon quality & variety of FS.

Leasing Companies. MFs.(SBI DFHI) .  LMC-BILL Discounting & Acceptance Houses.Management of Financial Services  Banking  AMC- & financial companies include both AMCs & LMCs. Merchant Bankers. Issue/Portfolio Managers.

Meaning of Financial Services   The term “Financial Services” in a broad sense means “mobilizing and allocating savings”. The „financial service‟ can also be called „financial intermediation‟ Financial intermediation is a process by which funds are mobilized from a large number of savers and make them available to all those who are in need of it and particularly to corporate customers . it includes all activities involved in the transformation of saving into investment . Thus.

Regulation: SEBI. MF. RBI. Dept. Funds Deployment: Finance Mix (Bills Discounting. GOI. Credit cards. of Banking & Insurance Economic growth: Mobilizing Savings & productive use . VC Financing. factoring of debtors.Objective/Functions of Financial Services      Fund Raising: Through various Financial Instrument. Lease financing. Housing finance. short -term money market fund) Specialized services: Credit rating.

CLASSIFICATION OF FINANCIAL SERVICES INDUSTRY    The financial intermediaries in India can be traditionally classified into two : Capital Market intermediaries and Money market intermediaries . .

The financial intermediaries have been rendering a wide range of services encompassing both capital and money market activities. .SCOPE OF FINANCIAL SERVICES  Financial services cover a wide range of activities. They can be grouped under two heads   Fund based activities and Non-fund based activities .

treasury bills. venture capital. bonds etc. seed capital etc. hire purchase. Participating in money market instruments like commercial papers.Fund based activities      Underwriting of or investment in shares. Dealing in foreign exchange market activities. discounting of bills etc. debentures. of new issues (Primary market activities) Dealing in secondary market activities . Involving in equipment leasing. certificate of deposits. .

Arrangement of funds from financial institutions for the clients project cost or his working capital requirements . Assisting in the process of getting all Government and other clearances . Making arrangements for the placement of capital and debt instruments with investment institutions .Non-fund based activities     Managing the capital issues. . management of pre-issue and post issue activities relating to the capital issue in accordance with the SEBI guidelines and thus enabling the promoters to market their issues .e. i.

       Corporate Counseling Project Management Loans Indication Management of Capital Issue Portfolio Management Leasing Acting as Trustees to the debentureholders .

Guiding corporate customers in capital restructuring    Merger and Acquisition Structuring the financial collaboration/joint ventures Rehabilitating and reconstructing sick companies .

Collection of income on securities . Safe-custody of securities. Registration and transfers. Undertaking services relating to the capital market such as     Clearing Services.

CAUSES FOR FINANCIAL INNOVATION        Low Profitability Keen competition Economic liberalization Improved Communication technology Customer Service Global impact Investor awareness .

Characteristics of Financial Services Intangibility  Customer Orientation  Inseparability  Perish ability  Dynamism  .

 .GIC 1970 LIC Nationalized. leasing companies began their journey.  Investment Companies Era: Various investment institutions & banks established. UTI.  called Insurance.LIC.Growth of Financial Services in india  Merchant banking Era: 1960-80 MB era.

 Online trading introduced by BSE. In 1997-98 budget separate segment to deal with trading of gilts.Continued….  Computerization of NSE.  Introduction of Book-building.  Depository Era: Promoting the concept of paperless trading of shares & bonds.  .

 Funds are flowed to India through GDR & ADR.Continued….   Foreign Institutional Investor(FIIs) Era: FIIs are permitted to operate in Indian Capital market.  . Income tax act.  Amendment in Indian Companies Act.  Legislative Era: FERA has been replaced by FEMA.

 Limited Innovation.  Captive Organization. (venture capital).  Inadequate Quality Service: More fees.Financial Services SectorProblems Lack of Expertise :  Inadequate Accommodation :  Inadequate Technology: Lack of networking facility.  .-(subsidiary of large CB)  Restricted scope for operation.

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