Financial services

Pratik.R.Kahar
Tybms
21251010
 Introduction

The Indian financial services industry has undergone a

metamorphosis since1990. Before its emergence the
commercial banks and other financial institutions dominated
the field and they met the financial needs of the Indian
industry. It was only after the economic liberalisations that the
financial service sector gained some prominence. Now this
sector has developed into an industry. In fact, one of the
world’s largest industries today is the financial services
industry.
Financial services

Financial services are the economic

services provided by the finance
industry, which encompasses a
broad range of businesses that
manage money, including credit
unions, banks, credit-card
companies, insurance companies,
accountancy companies, consumer- Financial Services Authority
finance companies, stock brokerages, Seychelles logo on building
investment funds, individual asset
managers, and some government-
sponsored enterprises
Function of financial service

u Mobilization of funds: A financial service helps in mobilizing fund from

investors, individual, institutions and corporate entities. These funds are
mobilized through different financial instruments like equity shares,
bonds, mutual funds etc.
u Effective utilization of funds: These financial services also help in
effective utilization of mobilized funds. Financial services helps in this
regard through services like factoring, securitization, credit rating etc.
Services of Credit Rating Company enables investors to make wise and
informed decisions related to investment. Similarly merchant banking
services helps companies in mergers and acquisitions.
u Transforming risk: Financial services like insurance helps in reduction of
risk by transferring risk to those who are more willing to bear it.
u Enhancement of economic development: A financial service helps in
economic development of the country by mobilization and
deployment of funds. Ideal savings of individuals are channelized into
productive investment through financial services.
u Provision of liquidity: The financial service industry promotes
liquidity in the financial system by allocating and reallocating savings
and investment into various avenues of economic activity. It
facilitates easy conversion of financial assets into liquid cash.
u Creation of employment opportunities: The financial service industry
creates and provides employment opportunities to millions of people
all over the world.
Characteristics of Financial
Services
u Customer-centric
u Intangibility
u Concomitant
u Perishable in nature
u Domiance of human element
u Advisory
u Heterogeneity
u Information base
Importance of financial
services
u Economic growth: The financial service industry mobilises the
savings of the people, and channels them into productive
investments by providing various services to people in general and
corporate enterprises in particular. In short, the economic growth
of any country depends upon these savings and investments.
u Promotion of savings: The financial service industry mobilise the
savings of the people by providing transformation services. It
provides liability, asset and size transformation service by
providing huge loan from small deposits collected from a large
number of people. In this way financial service industry promotes
savings.
u Capital formation: Financial service industry facilitates capital
formation by rendering various capital market intermediary
services. Capital formation is the very basis for economic growth.
u Creation of employment opportunities: The financial service
industry creates and provides employment opportunities to
millions of people all over the world.
u Contribution to GNP: Recently the contribution of financial
services to GNP has been increasing year after year in almost
countries.
u Provision of liquidity: The financial service industry promotes
liquidity in the financial system by allocating and reallocating
savings and investment into various avenues of economic
activity. It facilitates easy conversion of financial assets into
liquid cash.
Thank you