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 services2. Planning for Mergers and Acquisitions3. Acting as trustees to the Debenture-holders4. Hedging of risks5. 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!