Professional Documents
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Financial Services
Financial Services
Financial Services
Financial services
Means Mobilizing and allocating savings Also called financial intermediation Mobilization of savings in to investments
Definition activities, benefits and satisfaction connected with the sale of money that offer to users and customers financial related value.
1. 2. 3.
2-counter share transfers, pledging of shares, mutual funds, factoring, discounting, venture capital and credit rating- modern services era
3-the setting up of new institutions and instruments The depositories, the stock lending schemes, online trading, paperless trading, dematerialization, book buildings are the services in this phasedepository era
Indian economy got liberalized during 1991, FERA was replaced by FEMAlegislative era financial services industry in India was dominated by commercial banks The economic liberalization has brought in a complete transformation in the Indian financial services industry . Divestment guidelines by SEBI . More FIIs FIIs Era
Financial system
Depository era
Legislative era FIIs era
Financial institutions
Finanacial Markets
Traditional activities: Traditionally, the financial intermediaries have been rendering a wide Range of services encompassing both capital & money market activities. A- fund based activities and B- non-fund based activities
A. Fund based activities: The traditional services which come under fund based activities are the Following: i. underwriting of or investment in shares,Debentures,bonds etc. of new issues (primary market activities) ii. dealing in secondary market activities
iii. participating in money market instrument like commercial papers, certificate of deposits, treasury bills, discounting of bills etc.
B. Non fund based activities: Financial intermediaries provide services on the basis of nonfund activities.
others clearances
Modern activities:
Non fund activities Modern products and services
Financial system
Financial system which supplies the necessary financial Inputs for the production of goods & services which is then promotes the well being & standard of living of the people
of a country
Functions of Financial System
i) ii) Provision of liquidity Mobilization of savings
FINANCIAL ASSETS
A financial asset is one which is used for production or consumption or for further creation of assets
Unorganized markets
In these markets, there are a number of money lenders, indigenous bankers, and traders etc. who lend money to the public. Indigenous bankers also collect deposits from the public. There are also finance companies, chit funds etc. whose activities are not controlled by the RBI. Recently the RBI has taken steps to bring private finance companies and chit funds under its strict control by issuing non-banking financial companies (Reserve Bank) Directions, 1998.
Organized Markets
In the organized markets, there are standardized rules and regulations governing their financial dealings. There is also a high degree of institutionalized and instrumentalisation. These markets are subject to strict supervision and control by the RBI or other regulatory bodies like IRDA, SEBI, MoF
Financial concepts
1- financial institution 2-financial markets
3-financial instruments
4- financial services
financial institution
FINANCIAL MARKETS
Wherever a financial transaction takes place, it is deemed to have taken place in the financial market. Hence financial markets are pervasive throughout the economic system. Financial markets can be referred to as those centre and arrangements which facilitate buying and selling of financial assets, claims and services. Classified as Capital Market Money Market
CAPITAL MARKET
Capital market is a market for financial assets which have a long or indefinite maturity. It deals with long-term securities which have a maturity period of above one year. Capital market may be further divided in to three; - Industrial Securities Market - Government Securities Market - Long-term Loans Market
It is a market where government securities are traded. It is otherwise called Gilt-edged securities market. In India, there are many kinds of government securities:-short-term and long-term. Long-term securities are traded in this market while short-term securities are traded in the money market
Development banks and commercial banks play a significant role in this market by supplying long-term loans to corporate customers. Long-term loans market can be classified into: Term loans Market Mortgages market Financial Guarantees Market
MONEY MARKET Money market is a market for dealing with financial assets and securities which have a maturity period of up to one year. It is a market for purely short-term funds. Money market can be divided in to four; Call money market Call money market is a market for extremely short period loans say 1 day to 14 days. Commercial Market It is a market for bills of exchange arising out of genuine trade transactions. Eg: cheque.
Treasury bills Market It is a market for treasury bills which have shortterm maturity. A treasury bill is a promissory note or a finance bill issued by the government. Maturity period is 3-12 months. Short-term loan Market Short-term loan market is a market where Short term loans are given to corporate customers for meeting their working capital requirements.
Financial instruments
Financial instruments refer to the documents which represent financial claims on assets. Financial assets refer to the claims to repayment of certain sum of money the end of a specified period together with interest of individual. Eg: Bill of exchange, promissory notes, Treasury bill, government bond, deposit receipt, share, debenture etc Financial instruments can also be called financial
securities.
Financial securities can be classified into 1. Primary securities There are securities directly inside by the ultimate investors to the ultimate savers Eg: Share and debentures inside directly to the public 2. Secondary securities There are the securities inside by some intermediaries called financial issue securities in the form of units to the public and the money pooled is invested in companies.
a. Short term securities Short term securities are those which mature with in a period of one year. Eg: Bill of exchange, Treasury bill etc b. Medium term securities Medium term securities are those which have a maturity period ranging between 1 to 5 years. c) Long term securities Long term securities are those which have a maturity period more than 5 years. Eg: Government bonds maturing after 10 years.
FINANCIAL SERVICES
Underwriting Portfolio management Hire purchasing Guaranteeing Leasing Factoring Forfaiting Depositories Custodial Credit rating