Merchant Banking and

Financial Services
Why MBFS?
 Overview of the Course
Portions Covered
• Merchant Banking
• Financial Services –
1. Fee based
2. Fund based
1. Unit 1,2 – Theory
2. Unit 3 & 5 – Both theory and Problems
3. Unit 4 – Problems
Time of Delivery
4. 45 Minutes Syllabus
5. 15 Minutes BPR
 Workbook
• Each unit contains diagrams to be filled during
classes
• The unit which has problems are listed in the
workbook.
• Each unit has article and Banking Interview
which has to be read to enhance the
knowledge of the subjects.
 Chapter 1
Financial Services and
An Overview of Indian Financial
System
 Learning outcomes
By the end of this Session,
• Understand the importance of financial
services
• Understand the Indian financial system
• Be able to identify the job opportunities in
financial sector
 Lecture structure
• What are financial services?
• Nature of financial services
• Indian financial system
• Functions of Financial system
 Financial Services : Concept
• The economy is divided into agriculture,
industry and services.
• Financial services refers to those services
rendered by banks, FIs, Insurance compnaires
and other intermediaries.
 Nature of Financial services
• Intangibility
• Inseparability
• Heterogeneity
• Perishability
• Advisory
• Marketing of financial services
 Indian Financial System
Financial system

Financial Financial Market Financial Services Regulators

Institutions
 Financial system

Financial market Financial services Regulators

Financial institutions

Depositories
Bankin Insurance and HFC Non Mutu Capital market Money market
g banking al
institutions fund Stock exchanges

Scheduled NBFCs
commercial banks Equity Debt
Venture capital
DFIs
Securitization
Primary Secondary Derivativ
Public Private
e Corporate
sector sector
debt
Merchant
Indian banking
banks IPO Stock Future Governmen Credit rating
exchanges s& t securities agencies
option
Foreign Private s
equity Factoring
banks

Co-operative Custodial
banks services

Portfolio
management
 Financial Intermediaries in India –
Activities Performed
S.No Banks Development Insurance Non
Financial companies Banking
Institutions Finance
Companies
1 Accepting Deposits Accepting Deposits Selling risk Accepting
protection Deposits
services
2 Short term lending Long term lending Investing Leasing
3 Bill discounting Project financing Hire Purchase
4 Export financing Leasing credit Merchant
banking
5 Safe deposit Facilities MB Portfolio
management
6 Charge Mortgage
 Functions of the Financial System
• Mechanism for mobilizing savings
• Mechanism for storing wealth
• Liquidity
• Credit mechanism
• Payment system risk management
• Policy implementation
• Information provider
 Financial services

Consumers Business
customers

Current or cheque Loans: secured Card services: Insurance: life Advisory

account unsecured credit debit and general services:
pensions,
wills, funeral
plans

Share dealing
services, savings Foreign exchange
& investment services, offshore

Corporate finance: Pensions schemes Risk management Not for profit Cash management
loans for companies finance
 Financial Services Industry in India
• The following factors are responsible for the
growth of financial service sector:
1. Opening up of insurance sector
2. Growth of capital market
3. Regulatory change
4. Strategic changes in corporate sector
5. Reforms & NBFCs
 Recent trends in financial sector
• Financial reforms
• Financial crisis
• Financial convergence
• Financial engineering
• Financial inclusion