FINANCIAL SERVICES IN INDIA

1.1 Introduction

Financial services are those offered by the finance industry. The financial services
industry encompasses a wide range of organizations that deal with money
management. Financial services organizations include banks, insurance companies,
credit card companies, consumer finance companies, financial planners and advisers,
stock brokerages, merchant bankers, investment funds, venture capital, hedge funds,
and mutual funds. Financial services are concerned with the creation and distribution
of financial products to individuals and businesses

The Indian financial sector has undergone significant changes in the last few
decades with the liberalization of the economy and the introduction of new financial
services. However, despite these developments, there is still a lack of awareness
amongst the general population, particularly amongst commerce undergraduates,
about the availability of financial services in India. This study aims to investigate the
level of awareness amongst commerce undergraduates about the availability of
financial services in India, and the factors that influence their awareness.

The study will focus on the various types of financial services available in India,
including banking, insurance, and investment options. It will also examine the role of
educational institutions in promoting financial literacy and the factors that influence
the awareness of financial services amongst commerce undergraduates.

The results of this study will provide valuable insights into the current level of
awareness about financial services amongst commerce undergraduates in India and the
factors that influence their awareness. The findings of the study will also be useful for
financial institutions, and educational institutions in developing strategies to promote
financial literacy and increase awareness about financial services amongst commerce
undergraduates.

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1.2 Definition
According to Section 65(10) of the Finance Act of 1994, "banking and financial
services" include the following services offered by a banking company or a
financial institution, including a non-banking financial company:
i. financial leasing services including equipment leasing and hire purchase by a
body corporate
ii. credit card services
iii. merchant banking services
iv. securities and foreign banking services
v. asset management including portfolio management, all forms of fund
management, pension fund management, custodial depository and trust
services, but does not include cash management,
vi. advisory and other auxiliary financial services including investment and
portfolio research and advice.

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1.3 Characteristics

Financial services include a broad range of economic operations including the

management of money and other assets. Some key characteristics of financial
services include:

i. Intangibility:

Financial services are intangible. As a result, they cannot be standardized

or recreated in the same way. The institutions that provide financial services
should have a better image and client confidence. They may not be successful
otherwise. They must prioritize service quality and innovation. Only then can
they build reputation and acquire customer trust.

ii. Inseparability:

Production of financial services and supply of these services have to be

inseparable. Both functions, i.e. the creation of new and innovative financial
services and their provision, must be carried out simultaneously. It is created
when a consumer requires such services.

iii. Tendency of Perish:

Financial services, unlike any other service, expire and so cannot be kept.
Customers must be given with what they require. As a result, financial
institutions must maintain an appropriate balance between demand and supply.

iv. Information Based:

The financial services sector is based on information. It involves the

creation, distribution, and utilization of information. Information is a critical
component in the development of financial services.

v. Variability:

Financial service organizations must provide a wide range of goods and

services in order to meet the financial demands of various consumers in various
places. This means that financial services must be customized to match the
needs of clients. To build their own character, service institutions differentiate
their services.

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 Fund
Base
Fee
Others
Based

Types

Insurance Banking
Sec.
Related
Services

1.4 Various Financial Services

Financial services provide a wide variety of products and continue to expand

their arsenal. It is essential to keep expanding, and development and function of
financial services enhances economic development.

1.4.1 Fund Based Financial Services

Simply put, fund-based financial services are those in which financial

institutions deploy capital to make profits. There is a risk of default in fund-based
financial services:

i. Equipment Leasing

A lease is a contractual agreement in which the owner of the equipment (Lessor)

enables the user (Lessee) to use the equipment for a set amount of time agreed upon
by both parties. In exchange for periodic payments, the equipment is returned to the
lessor at the end of the agreed upon period. The nature of the lease, the description
of the equipment, lease renewals, the delivery and redelivery term, rental payment,
the remedies in the event of any form of default, and so on must all be included in
the leasing contract.

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ii. Hire Purchase
Hire purchase is a type of financial service in which products are offered
today and payment is paid at regular intervals known as the Hire charge. In this
agreement, the seller provides goods on rent to the hirer with the possibility of
purchasing the goods after payment of all instalments. If the hirer fails to pay
the hire charge, the seller can reclaim the goods.