A presentation on :-

Financial sectors

Presentation BY:
Navdeep Singh (Starex University)
 What is Financial sector ?
• The financial sector is a section of the economy made up of firms and institutions that
provide financial services to commercial and retail customers.
• The financial sector generates a good portion of its revenue from loans and mortgages
and thrives in a low-interest-rate environment.
• The sector is comprised of many different industries including :
banks, investment companies, insurance companies, and real estate firms.
• A strong financial sector is a sign of a healthy economy.
 Types of Financial Sector
1. Share Market
 A equity market is the aggregation of buyers and sellers of stocks(Shares).
 It represents the ownership claims on businesses.
 It can be Securities listed on stock exchange or which is privately traded to investors.
 It is divided into two parts:

1.NSC(National Stock Exchange)

2.BSC(Bombay Stock Exchange)

 Merits and D-merits of Share market
Merits  D-Merits
Diversification Easy buy and sell

Risk
Volatile
Stay ahead of inflation

Fraud
Ownership stake in
company
Lack of knowledge
Time consuming

Contribute to economic growth

 2. Mutual Funds
• A mutual fund is a professionally managed investment fund that pools many from many
investors to purchase securities.
• It consists of a portfolio of stocks, bonds, or other securities
• Mutual fund give chance to individual or small investor to invest.
• Mutual funds are divided into many categories,

representing the kind of securities they invest in, their investing objective and the type
of returns they seek for.
• Employer sponsored retirement plans commonly invest in mutual funds.
  Merits  D-Merits
1

1
• Fluctuating Returns
liquidity
2
2
• No control
Low cost
3
• Diversification
3

Transparency 4
• Cost

5
• Past performance
4

Flexibility 6
• Fund evaluation
5

Variety of scheme
6

Well regulated
 3.Real Estate
 To boost the residential industry in the country the central government established:
 The housing & urban development company in1970
 City & industrial development corporation in 1971
 National housing bank in 1988
 Real estate investing involves the purchase, management and sale or rental of real estate for
profit.
 Real estate investment trusts (REITs) are basically dividend paying stocks.
 Merits  D-Merits

Easy to understand Time consuming

Improvable Requires maintenance

Hedge against inflation High cost

High rate of retrn Iliquid

Saves income tax Property tax

Steady cash inflows Decline property rate

 4.Post office
• The post office savings bank is the oldest and by far the largest banking system in the country.
• Serving the investment need of both urban and rural clientele.
• These are offered as an agency service for the ministry of finance, government of india.
• It was started because of the reach of the post offices(more than bank branches).
  Merits
Low minimum amount High interest rates

Premature withdrawal Transferrable

Gives auto renew/credit facility

 D-Merits
No online facility Not for short term

Unfriendly post office

staff No control

Higher costs
 5.Insurance
• The insurance industry is made up of different types of players operating in different
spaces.
• Life insurance companies focus on legacy planning and replacing human capital value,
health insurers cover medical costs, and property, casualty, or accident insurance is
aimed at replacing the value of homes, cars, or valuables.
• Insurance companies can be structured either as a traditional stock company with
outside investors, or mutual companies where policyholders are the owners.
 1 Does not compensate all type of losses

2 Require more time

3 Complex process

4 System of collateral securities

 Merits 5 Fraud

1 Perfect for your family 6 Temporary and Termination

2 Shares Risks  D-Merits

3 Tax benefits
4 Financial support
5 Economic protection
6 Encourages savings
 6.Provident Fund
• Provident fund is a government-managed retirement savings scheme for employees who
can contribute a part of their pension fund every month.
• It is divided mainly into three parts:
 PPF (Public provident Fund):

For common people, 7.1% rate, 5years, tax saving by section 80(C) & 10(10)D

 EPF (Employer provident Fund)

For private employees, 8.1% rate, gets money after retirement, tax saving by section 80(C) & 10(10)D

 GPF (General provident Fund)

12% given by employee & 12% by company

  Merits  D-Merits
Guaranteed • Time consuming
returns Tax Savings 1

2 • Joint a/c not allowed

Everybody can 3
• No liquidity
Take loan from PF
invest in PF • Outsiders cannot invest
4

• Limited (1.5L)
Under stable 5

6
• Cannot close A/C before maturity
 7.Bank (Fd & RD)
• The banking industry is the foundation of the financial services group.
• It is most concerned with direct saving and lending, while the financial services sector incorporates
investments, insurance, the redistribution of risk, and other financial activities.
• Banking services are provided by large commercial banks, community banks, credit unions, and
other entities.
  Merits  D-Merits
1

Economic growth Time consuming

2
Low returns
Credit growth
3
Account fees
Low penetration
4

Global reach High risks

5
Assets Quality
Development of rural areas
6 Lack of cordination
Rate of interest can be higher
 8.Gold

• Due to some influencing factors such as high liquidity and inflation-beating capacity,
gold is one of the most preferred investments in India.
• Gold investment can be done in many forms like buying jewelry, coins, bars, gold
exchange-traded funds, Gold funds, sovereign gold bond scheme, etc.
• Gold: Gold ETFs (Exchanged Traded Funds)
No Demat account is needed: One needs a Demat account in order to invest
 Merits D-Merits

Value for longer Difficult to High risks

Less Risk store
period
Most High
desired
commodity
costs
Needs security
Tangible Low volatility and liqudity
insurance
Thank you