FINANCIAL SERVICES

 Financial service is part of financial system that

provides different types of finance through various
credit instruments, financial products and services.
●
cheques, bills, promissory notes,
Financial instruments
debt instruments, etc.

●
different types of mutual funds and investment
Financial products opportunities. In addition, there are also products
such as credit cards, debit cards, etc.

●
merchant banking, factoring, forfaiting etc.,
Financial services through which various types of assets can be
acquired either for ownership or on lease.
 CONT..
 Financial Services:
◦ All types of activities which are of financial nature
◦ All activities involved in transformation of savings into
investment - Mobilizing and Allocating Savings
◦ Cater to the requirements of both individual and corporate
customers
◦ Include not only provision of financial service but also sale of
financial product

 Can also be called as ‘Financial Intermediation’

 CLASSIFICATION
 Financial Intermediation:
◦ process – funds are mobilized from a large number of savers -
make them available to all those who are in need of it,
particularly to corporate customers

 Financial Intermediaries in India can be classified as:

◦ Capital Market Intermediaries:- consists of term lending
institutions and investing institutions – mainly provide long
term funds

◦ Money Market Intermediaries:- consists of commercial banks,

co-operative banks and other agencies – supply short term
funds
 SCOPE

Financial Services cover a wide range of activities,

classified as:

 Traditional Activities:

◦ Fund based activities

◦ Non-funds based activities

 Modern Activities
 FUND BASED ACTIVITIES
 Underwriting of or Investment new issues (primary
market activities)

 Dealing in secondary market activities

 Participating in money market instruments

 Involving in equipment leasing, hire purchase, venture

capital, seed capital etc.

 Dealing in foreign exchange market activities

 NON-FUND BASED ACTIVITIES
‘Fee based’ activities:
 Managing the capital issues (pre-issue and post-issue

activities)

 Making arrangements for the placement of capital and

debt instruments with investment institutions

 Arrangements of funds from financial institutions for

the project cost or working capital requirements

 Assisting in the process of getting all govt. and other

clearances
 MODERN ACTIVITIES
 Rendering Project Advisory Services – from preparation
of project report till raising of funds

 Planning and carrying out Mergers and Acquisitions

 Guiding corporate customers in Capital Restructuring

 Recommending changes in the management structure

and management style for better results

 Structuring financial collaborations/joint ventures –

identifying suitable JV partner and preparing
agreement
Cont..
 Rehabilitating and reconstructing sick companies

 Hedging exchange rate risk, interest rate risk,

economic risk and political risk by using swaps and
other derivative products

 Portfolio Management

 Undertaking risk management services (insurance etc.)

 Advising the clients about best source of funds -

determination of the optimum debt-equity mix

 Credit Rating
 Merchant Banking
 Mutual Fund
 Factoring
 Forfaiting
 Credit Rating
 IMPORTANCE
 Economic Growth

 Promotion of Savings

 Capital Formation

 Provision of Liquidity

 Contribution to National Income

 Creation of Employment Opportunities

THANKS