PRESENTATION TOPIC

KINDS OF FINANCIAL SERVICES

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INTRODUCTION


Efficiency of emerging financial system largely depends upon the quality and variety of financial services provided by the banking and non-banking financial companies. The term Financial Services can be defined as activities, benefits and satisfactions connected with the sale of money that offer to the users and customers, financial related values .
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Banks & financial Institutions  Insurance Companies  Stock Exchanges  Leasing companies  Finance Companies

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Financial Services


Asset Based Financial Services

FEE BASED SERVICES:

Issue Management Portfolio Management Corporate Counseling Loan Syndication Capital Restructuring Credit Rating Stock Broking
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Equipment Leasing/Finance  Hire-Purchase  Bill Discounting  Venture capital  Housing Finance  Insurance Services  Factoring 2/16/2012


      

Equipment Leasing/Finance  Hire-Purchase and Consumer Credit  Bill Discounting  Venture capital  Housing Finance  Insurance Services  Factoring 2/16/2012


EQUIPMENT LEASING
Important source of intermediate and long term financing of corporate enterprises In India equipment leasing was introduced by first leasing company of India limited in 1973 only. .Leasing is an arrangement that provides a firm with the use and control over the asset without buying and owning the same. It is a form of renting assets .

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Since payment of lease rental is similar to the payment of interest of borrowings and lease financing is equivalent to debt financing. There is no exclusive law legislation to govern equipment lease financing. Leasing industry in India is a growing business activity in the country.

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2. HIRE-PURCHASE AND CONSUMER CREDIT



  

Hire purchase means a transaction where goods are purchased and sold on the terms that, a) payment will be made in installments, b) the possession of goods given to the buyer c) the ownership in the goods remain with the vendor till the last installment is paid, d) the seller can repossess the goods in case of default in payment of any installment and, e) each installment is treated as hire charges till the last installment is paid.
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CONSUMER CREDIT:


 

Consumer credit includes all assets based financing plan offered to individuals to help them acquire durable goods. In a consumer credit transaction the individual pays a part of the cash purchase price at the time of the delivery of the asset and pays the balance with interest over a specified period of time. The main providers are: Foreign Multinational banks, Commercial Banks and Financial Companies and cover items such as cars ,scooters,vcrs,tvs etc.
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3. BILL DISCOUNTING
Bill Discounting is an attractive fund based financial service provided by the finance companies. Discounting of bills is the most important form in which a bank lends without any collateral security. The seller draws a bill of exchange on the buyer of goods on credit. Such a bill may be either a clean bill or a documentary bill which is accompanied by documents of title of goods such as a railway receipt.

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The banks purchase the bill on demand and credit the customers account with the amount of bills less discount. At the maturity of the bills banks present the bills to its acceptor for payment. In case the bill discounted is dishonored for nonpayment, the bank recovers the full amount of bill from the customer along with expenses in that connection.

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4. VENTURE CAPITAL
The term venture capital represents financial investment in a highly risky project with the objective of earning a high rate of return. These venture capital companies provide the necessary risk capital to the entrepreneurs. In addition to providing capital these VCFs take an active interest in guiding the assisted firms. In addition to the venture capital companies the Government of India has been instrumental in setting up a number of new financial agencies to serve the increasing needs of the entrepreneurs in the area of venture capital.
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These include: Venture capital scheme of IDBI & ICICI Risk Capital and Technology Corporation Ltd Infrastructure Leasing and Financial Services Ltd The Credit Rating Information Services Ltd.
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5. HOUSING FINANCE
It emerged as a fund based financial service in the country with the setting up of National Housing Bank {NHB} by the RBI in 1988. NHB is an apex finance institution in the country and is fully owned subsidiary of the RBI. Till now a number of specialized financial institutions in the public, private and joint sectors have entered in the field of housing finance such as HDFC, SBIHF, Can fin Home, LIC housing finance, City Home, ICICI housing . These companies have designed suitable schemes for individuals, corporate, builders and 2/16/2012 promoters.

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6. INSURANCE SERVICES
Insurance is a contract where by the insurer agrees in consideration of a sum of money, to make good the loss suffered by the insured against a specified risk such as fire or compensate the beneficiaries on the happening of a specified event such as accident or death. The documents contain the terms of contract, in black and white between the insurer and insured is called policy. The property which is insured is the subject matter of insurance.

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The interest which the insured has in the subject matter of insurance is known as insurable interest. Depending upon the subject matter insurance services are divided into 1. LIFE - LIC 2. GENERAL.- GIC Others :_ HDFC Life Insurance, Prudential Life Insurance, SBI Life Insurance

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7. FACTORING
Another method of raising short term finance through account receivable credit offered by commercial banks and factors. A Factor is a financial institution which offers services relating to management and financing of debts arising out of credit sales. At present Factoring in India is rendered by only a few financial institutions on a resource basis. At present there are only two factoring organizations operating in the country namely, SBI Factors & Commercial Services Ltd CANBANL Factors Ltd.
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FEE BASED / ADVISORY SERVICES

MERCHANT BANKING Merchant bankers play an important role in the financial services sector.Grindlays Bank was the first one setup Merchant Banking division in 1969 in India with an objective of under taking management of public issue and financial consultancy. Financial services provided by these institutions includes Loan syndication, Portfolio management, corporate counseling ,acquisitions etc

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CREDIT RATING
Crediting Rating is the opinion of rating agency on the relative ability and willingness of the issuer of a debt instrument to meet the debt service obligations as and when they arise. As a Fee based financial advisory service Credit Rating is useful to investors, borrowers, banks and financial institutions. For the investors, it is an indicator expressing the under laying credit quality of a issue programme.

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In India there are mainly three major credit rating agencies namely, CRISIL {Credit Rating Information Services of India Ltd} ICRA {Investment Information and Credit Rating Agency of India Ltd} CARE {Credit Analysis and Research in Equities}
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. STOCK BROKING
Prior to the setting up of SEBI,Stock Exchanges were being supervised by the Ministry Of Finance under the Securities Contracts Regulation Act {SCRA}. SEBI was setup to ensure that stock exchanges perform their self regulatory role properly. Since then Stock Broking was emerged as a professional advisory service. Stock Broker is a member of a recognized stock exchange, who buys, sells or deals in shares/securities.
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It is mandatory for each stock broker to get him or herself registered with SEBI in order to act as a broker. SEBI is empowered to impose conditions while granting the certificate of registration. SEBI has taken rigorous steps to regulate the working of broker/sub brokers in terms of compulsory registration with SEBI, code of conduct, duty to investors, brokers general obligations and responsibilities, relationship with clients etc ..
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CORPORATE COUNSELLING
This service is usually provided free of charge to a corporate unit. Merchant bankers render advises to corporate enterprises from time to time in order to improve the performance and build better image among investors and to increase the market value of their equity shares. Counseling is provided in the form of opinions, suggestions and detailed analysis of corporate laws as applicable to the business unit.
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CAPITAL RESTRUCTURING SERVICES

Capital restructuring services are mainly provided by merchant banks to the corporate units depends upon the circumstances, a particular unit is facing. It may include the following services:Examination of the capital structure of corporate unit to decide the extend of capitalization. In case of bonus issue it helps the clients in preparing the memorandum for Controller of Capital Issue {CCI} and in obtaining his consent. Merchant bankers also render advice on mergers, takeovers and amalgamations and help in their implementation etc.
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PORTFOLIO MANAGEMENT
Financial institutions even undertake the function of purchase and sale of securities for their clients so as to provide them portfolio management services.

Services to Indian Nationals :  The sale and purchase of securities  Investing and purchasing of securities  Managing Fixed deposits  Safe custody of securities etc
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Services to Non-resident Indians :Advise on selection of investment Critical evaluation of investment portfolio Hold securities in safe custody Providing tax counseling and filling tax returns etc
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ISSUE MANAGEMENT
The financial institutions act as a sponsor of the issues. They obtain consent of the controller of capital issues now, and provide a number of other services to ensure success in the marketing of securities. The services provided by them includes:-

Preparation of Prospectus Preparation of plan and budget to estimate the total expenditure of the issue. Selection of institutional and broker underwriters Selection of issue house etc. 2/16/2012

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. LOAN/CREDIT SYNDICATION
Financial institutions provides specialized services in preparation of projects, loan applications for raising short term as well as long term credit from various banks for meeting the working capital requirements. Credit syndication does involve the following services:

Estimation of the total cost on the project Preparing a financial plan to meet the total cost of a project. Assisting the clients in the preparation of loan applications for financial assistance. Making selection of the institutions/banks for participation in financing etc. 2/16/2012

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CONCLUSION
Efficiency of emerging financial system largely depends upon the quality and variety of financial services provided by the banking and non-banking financial companies. Within the financial services industry the main sectors are banks, financial 2/16/2012 institutions and non-banking financial companies.

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The Financial Services sector continuous to grow in terms of turnover and profit and thus has a great impact on the various sectors of the economy. For these reasons the financial service organizations are adopting new marketing techniques and tools while rendering services.

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