Concept of Financial Products and Services Distinction between financial products and services Features of financial services Financial Services Market-Players Banking Products Deposit & Loan products, CIBIL Banking Services Safe deposit vaults, ATM, remittance of funds, clearing of cheques, currency exchange, bank guarantee and L/C RBI and its role Non-banking Products Mutual Funds Insurance: Life and Non-life Insurance Reinsurance Bancassurance Non-banking Services Leasing Hire-purchase Factoring Forfaiting Securitization Investment Banking Merchant Banking Depository and Custodial Services Credit Rating Introduction to Financial Services Financial Products • Securities and investments created to provide buyers and sellers with short term or long term financial gains • Instruments that help you save, invest, get insurance or get a mortgage • Enable risks to be spread, and liquidity to circulate around an economy • Issued by various banks, financial institutions, stock brokerages, insurance providers, credit card agencies and government sponsored entities • Many of the financial products are in the form of contracts that you can negotiate on financial markets. The contracts stipulate cash movement at present and in future, depending on conditions stated Financial Services • A part of financial system that provides different types of finance through various credit instruments, financial products and services • Financial services offered by the finance companies, encompassing both asset management and liability management companies • Serve the needs of individuals, institutions and corporates • The process by which a consumer or business acquires a financial good • Financial services enable the user to obtain any asset on credit, according to his convenience and at a reasonable interest rate Difference between Financial Products & Services • Tangibility • Inseparability of production and consumption • Perishability • Dynamism • Orientation Types of Financial Services • Banking Services • Safe deposit vaults, remittance, payment and collection services, ATMs, currency exchange, Letter of Credit and Bank Guarantee • Non-Banking Services • Fee based Services • Merchant banking, stock broking, credit rating, portfolio management services, underwriting • Fund based Services • Factoring & forfeiting, leasing & hire-purchase, venture capital, housing finance, bill-discounting Constituents • Market Players • Banks, financing institutions, mutual funds, merchant bankers, stock brokers, underwriters • Instruments • Equity, debt, hybrid and exotic instruments • Specialized Institutions • Acceptance houses, discount houses, factors, depositories, credit rating agencies, venture capital institutions • Regulatory Bodies • Department of Banking and Insurance • RBI • SEBI • BIFR Evolution & Growth of Financial Services • Merchant Banking Era • Investment Companies Era • Modern Services Era • Depositories Era • Legislative Era • FIIs Era Importance of Financial Services • Vibrant Capital Market • Expands activities of financial markets • Benefits of Government • Economic Development • Economic Growth • Ensures Greater Yield • Maximizes Returns • Minimizes Risks • Promotes Savings • Promotes Investments • Balanced Regional Development • Promotion of Domestic & Foreign Trade