Financial Services

• Priyanka Choradia

• Meghna Lalwani• Sajal Maheshwari • Deeksha Grover• Samridhi

singhania• Tanvi • Tanya• Roopali • Chahak Sharma• Simple Sharma• Raksha Dhingra• Khushbu

Group Mates

• Financial services refer to services

provided by the finance industry.

• In a broad sense it means “mobilizing

and allocating savings”.

• The finance industry encompasses a

broad range of organizations that deal

with the management of money.

• Example:- banks, credit card

companies, insurance companies,

consumer finance companies, stock

brokerages, some government

sponsored enterprises.

INTRODUCTION

Functions

Customer-Specific

Intangibility

Tendency to Perish

Concomitant

People based services

CharacteristicsIntangibility:- Not visible in nature

Inseparability:- Unique feature of service

Heterogeneity:- Can’t be uniform for all

Perishability:- can not be stored

Advisory

Labour Intensive

Fluctuation in demand as per economic activity

Role of FINANCIAL SERVICES in

Economic Growth

India's services sector has always served the Indian economy well, accounting for nearly 57 per cent of the gross domestic product (GDP). Here, the financial services segment has been a significant contributor.

Instruments for growth & development• Mobilize resources for efficient

allocation for productive investment, including through risk diversification and risk management (“maturity transformation”).

• Facilitate the exchange of goods and services by reducing transaction costs, including by providing insurance against low probability but high- cost events.

• Improve capital allocation through the production of ex ante information about investment opportunities.

• Increase investors willingness to finance new projects through ex post monitoring and corporate governance.

Major Financial Services Exporters

(2010)Share in top 10 Export Growth Rate (%) 2010 2005-09 2010 • European Union (27) 53.0 8 1 • United States 23.9 9 5 • Switzerland 23.6 4 -2 • China 6.4 1 6 12 • Singapore 5.1 20 31 • Japan 4.9 -1 -25 • India 1.5 34 64 • Canada 2.4 7 31

Scope Of Financial Services

Covers a wide range of activities which can be broadly classified into two types:

Traditional Activities

Modern Activities

Traditional Activities

o Renders a wide range of services

encompassing both capital and money

market.

o It can be grouped under two heads: -

i. Fund Based Activities

ii.Non-Fund Based Activities

Fund Based Activities

Non-Fund Based

Activities

Includes underwriting or investment in

shares, debentures, bonds etc.

Managing die capital issue

Dealing in security market activities etc.

Arrangement of funds from financial inst.

etc.

Modern Activitieso Besides traditional services some modern

services are also provided by them most of

which in the nature of non-fund based

activities. Some of modern services provided by

them are:-

i. Rendering project advisory services

ii. Planning of M&A and assisting for their smooth

carry out

iii. Guiding corporate customers in capital

restructuring

iv. Acting as trustee to the debenture holders etc.

Some Key Financial Services:-

• MUTUAL FUNDIn the public & private sector have been garnering savings for investment in the primary secondary & debt market.

• LONG TERM FINANCEIt is for the period of more than 10 year. Smaller & less well established enterprises fund leasing an attractive source.

• HOUSING FINANCEThis finance raises the welfare of the household that live in it. It is temporary start up financing in the form of equity capital or loans with return linked to profit & managerial control.

• DEPOSITIRIESIt is a bank for securities ,which are maintained in electronic data from instead of physical paper certificate.

• FORFEITINGIt is an alternative source of trade finance mainly for exporters . The delay in receiving payments from importers act as a hurdle for exporters in expanding their business.

• SBI capital markets limited• ICICI group• PNB housing finance limited• Bajaj capital limited• Birla global finance limited

Various Financial Services Companies are :-

SBI Capital Market Limited

This happens to be the oldest organizations in the sphere of capital markets in India.

Established in 1986 in the form of an ancillary of SBI, they have ranked second in Asia's Project Advisory services.

The company is a trailblazer in privatization and securitization.

The subsidiaries of SBI Capital Markets are SBICAPs Ventures Ltd., SBICAP Trustee Co.Ltd. and many others.

ICICI GroupIt is the wide arena of financial

products and services.

ICICI Group has solutions like Insta Insure, ICICI Bank immobile etc. providing high class financial services in all segments of the society.

ICICI Group deals with Mutual Fund, Private Equity, Securities, and Life Insurance Insta Banking, online trading , etc.

PNB Housing Finance Ltd.This company offers premium

solutions for relieving the borrower segment.

The Home Loan Life Insurance Plan of this has come in conjunction with TATA AIG, with the lowest premium when compared to the peers.

Bajaj Capital LimitedIt is one of the major financial services

companies in India.

Bajaj Capital offers best investment advisory and financial planning services.

The services are meted out to the institutional investors, NRIs, corporate houses, individual investors, high network clients as well.

Birla Global Finance Limited

This is the subsidiary of Aditya Birla Nuvo Ltd.

This company has operations in the corporate finance and capital market arena.

An alliance with Sun Life Financial of Canada, they have given birth to Birla Sun Life Insurance Co Ltd., Birla Sun Life Distribution Co. and alike.

These are economic services provided by the finance industry which comprises of : Deposits – taking firms

o Commercial banks o Credit Unionso Mutual funds o Pension Funds o Investment Companies

Professional Asset Management company Institutional Investors Securities firm

o Investment Banks o Brokers and delays o Mortgage banks

Financial Services Industry

Commercial banks are like other financial institutions which are in the business of lending and borrowing of money or credit.

FUNCTIONS :-

Commercial Banks

Accepting Deposits

Advancing Loans

Discounting bills of exchange

Agency Services

General Services

Demand or current deposits: A depositor can withdraw it in part or in full at any time he likes without notice. It carries no interest.

• This is the most important means of earnings for the banks

• Giving loans to businessman

• But it keeps a fine balance between deposits and loans

• Banks profitability depends on this as well.

Accepting Deposits

Advancing Loans

Discounting Bills of Exchange

• Collection of bills, cheques

• Collection of dividends, interest,

premium

• Purchase & sale of shares and

debentures

• Payment of insurance premiums

• Acts as trustee when nominated

Agency Services

• Traveller’s cheques. bank draft

• Safe vaults for valuables

• Supplying trade information

• Economic surveys

• Projects report preparation

General Services

Latest News- Financial Services

• Bandhan Financial Services to begin banking with

600 branches.

• Edelweiss Financial Services acquires Forefront

Capital Management

• IBM enters into a six-year agreement with

Janalakshmi Financial Services

• Poverty definition immaterial for financial services:

Raghu ram Rajan

Factors Affecting

the supply of Financial Services

• Type of Economy- Different economies with particular biases and factor endowments tend to put different demands on their financial sectors and thus affect their structure.

• Macroeconomic Shocks- Shocks, which seriously affect an economy’s fundamentals, can come in various forms which can wipe out savings etc.

• Political Pressures-This has brought forth a welter of proposals on capital regulation, liquidity and leverage controls, governance, and remuneration issues.

• Legal and Regulatory Constraints- Generate conflict if the need to build capital buffers clashes with the need to provide credit during periods of economic stress.

• Individuals-There can be little doubt that individuals can influence financial development significantly, although care must be taken to distinguish between those whose reputations stand out.