FINANCIAL

SERVICES

Presented By:
Swati. Jagtap
Roll No: 08
Scenario Prior To Liberalization

 Excessive Control In The Form Of

Regulation.
 Control over the prices of Securities.
 Non availability of Financial Instruments.
 Strict Regulations of the Foreign Exchange
Market.
 Lack of information about International
Developments.
MEANING OF FINANCIAL
SERVICES
 Typically, it means “mobilizing and
allocating SAVINGS”.
 It includes all activities involved in the
transformation of SAVINGS into
INVESTMENTS.
 Financial Services can also be called
“Financial Intermediation”.
FINANCIAL
INTERMEDIATION
 It is a process by which funds are mobilized
from a large number of savers and make
them available to those who are in need of it.
 Particularly to Corporate Customers.
FEATURES OF FINANCIAL
SERVICES
 Customer Oriented
 Intangibility
 Simultaneous Performance
 Dominance Of Human Elements
 Perishability
IMPORTANCE OF FINANCIAL
SERVICES
 Economic Growth
 Promotion of Savings
 Capital Formation
 Provision of Liquidity
 Financial Intermediation
 Contribution to GNP
 Creation of Employment Opportunities
CLASSIFICATION

1.CAPITAL MARKET:
 Term Lending Institutions
 Investing Institutions
 Long Term Funds
2. MONEY MARKET:
 Consists of Commercial banks, Co-
operative banks and other agencies.
 Short term funds.
SCOPE OF FINANCIAL SERVICES

A. TRADITIONAL ACTIVITIES
1. FUND BASED ACTIVITIES: includes
 Underwriting
 Dealing in secondary market activities
 Participating in money market instruments
 Leasing, hire-purchase, venture capital, etc.
2. FEE BASED ACTIVITIES: includes
 Managing the capital issues
 Arrangements for placement of capital and
debt instruments
 Arrangement of funds from financial
institutions
 Assisting in Government and other clearance
B. MORDERN ACTIVITIES
Few of them are:
1. Rendering project advisory services
2. Planning for Mergers and Acquisitions
3. Acting as trustees to the Debenture-holders
4. Hedging of risks
5. Managing the portfolio of large public
sector companies.
6. Undertaking risk management services.
SOURCES OF REVENUE

 FUND BASED INCOME:

Interest from:
1. Lease rentals
2. Investment in capital market and real estate
 FEE BASED INCOME:
FROM:
1. Merchant Banking
2. Advisory Services
3. Custodial Services
4. Loan Syndication
CAUSES FOR FINANCIAL
INNOVATION
 Low Profitability
 Keen Competition
 Economic Liberalization
 Improved Communication Technology
 Customer Services
 Global Impact
 Investors Awareness
FINANCIAL SERVICES AND PROMOTION OF
INDUSTRIES

 Industrial promotion through Merchant

Banking Services
 Working Capital Finance Through Factoring
Services
 Equipment Finance through Leasing
 Financial resources through Mutual Funds
 Long-term Risk Capital through Venture
Capital
 Risk Management through Derivatives
 Debenture issue through Credit rating
 Development Finance through Development
Banking Sector
 Industrial Development through Specialized
Services
NEW FINANCIAL PRODUCTS AND SERIVES

 Merchant Banking
 Loan Syndication
 Leasing
 Mutual Funds
 Factoring
 Venture Capital
 Custodial Services
Corporate Advisory Services
Securitization
Reverse Mortgage
Derivatives:
- Forward Contract
- Options
- Futures
- Swaps
FINANCIAL INSTRUMENTS

 Commercial Papers
 Treasury Bills
 Certificates of Deposit
 Inter-bank Participation(IBPs)
 Option Bonds
 Medium Term Maturity
 Equity with 100% Safety Net
 Convertible Bonds
 Flip-Flop Notes
 Loyalty Notes
 Convertible Bonds with a Premium Put
 Debentures with ‘Call’ and ‘Put’ features
 Easy Exit Bonds
CLASSIFICATION OF EQUITY
SHARES
 Blue Chip Shares
 Defensive Shares
 Growth Shares
 Cyclical v/s Non-cyclical Shares
 Turn Around Shares
 Active Shares
 Alpha Shares
 Sweat Shares
CHALLENGES FACED IN THE
FINANCIAL SECTOR
 Lack of qualified personnel
 Lack of investor awareness
 Lack of transparency
 Lack of specialization
 Lack of recent data
 Lack of efficient risk management system
PRESENT SCENARIO

 Conservatism to Dynamism
 Emergence of Primary Equity Market
 Concept of Credit Rating
 Process of Globalization
 Process of Liberalization
Thank you!