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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

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

Economic Growth Promotion of Savings Capital Formation Provision of Liquidity Financial Intermediation Contribution to GNP Creation of Employment Opportunities

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


Traditional activities 1.FUND BASED ACTIVITIES: includes Underwriting Dealing in secondary market activities Participating in money market instruments Leasing, hire-purchase, venture capital, etc

Fees 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

Modern base activities: Rendering project advisory services Planning for Mergers and Acquisitions Acting as trustees to the Debenture-holders Hedging of risks Managing the portfolio of large public sector companies. Undertaking risk management services

FUND BASED INCOME :Interest from: Lease rentals Investment in capital market and real estate Fees based income: Merchant Banking Advisory Services Custodial Services Loan Syndication


Low Profitability Keen Competition Economic Liberalization Improved Communication Technology Customer Services Global Impact

Investors Awareness


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.


Merchant Banking Loan Syndication Leasing Mutual Funds Factoring Venture Capital Custodial Services

Corporate Advisory Services Securitization

Financial services
Financial services are the economic services

provided by the finance industry, which encompasses a broad range of organizations that manage money, including credit unions, banks, credit card companies, insurance companies, consumer finance companies, stock brokerages, investment funds and some government sponsored enterprises.

Nature of financial services

Financial services can also be called 'financial

intermediation'. Financial intermediation is a process by mediation'. Financial intermediation is a process by which funds are mobilizing from a large number of savers and make them available to all those who are in need of and particularly to , corporate customers.

In general, all types of activities, which are of

a financial nature be brought under the term 'financial services'. The term financial services in a broad, sense means "mobilizing and allocating savings". Thus it and allocating savings". Thus it includes all activities involved in in the transformation of savings in in to investment.

History of financial services

The term "financial services" became more prevalent in

the United States partly as a result of the Gramm-LeachBliley Act of the late 1990s, which enabled different types of companies operating in the U.S. financial services industry at that time to merge. Companies usually have two distinct approaches to this new type of business. One approach would be a bank which simply buys an insurance company or an investment bank, keeps the original brands of the acquired firm, and adds the acquisition to its holding company simply to diversify its earnings. Outside the U.S. (e.g., in Japan), non-financial services companies are permitted within the holding company

. In this scenario, each company still looks

independent, and has its own customers, etc. In the other style, a bank would simply create its own brokerage division or insurance division and attempt to sell those products to its own existing customers, with incentives for combining all things with one company.

A "commercial bank" is what is commonly

referred to as simply a "bank". The term "commercial" is used to distinguish it from an "investment bank," a type of financial services entity which, instead of lending money directly to a business, helps businesses raise money from other firms in the form of bonds (debt) or stock (equity).

Banking services
The primary operations of banks include: Keeping money safe while also allowing withdrawals when needed Issuance of checkbooks so that bills can be paid and other kinds of payments can be delivered by post Provide personal loans, commercial loans, and mortgage loans (typically loans to purchase a home, property or business)

Issuance of credit cards and processing of

credit card transactions and billing Issuance of debit cards for use as a substitute for checks Allow financial transactions at branches or by using Automatic Teller Machines (ATMs) Provide wire transfers of funds and Electronic fund transfers between banks Facilitation of standing orders and direct debits, so payments for bills can be made automatically

Provide overdraft agreements for the temporary advancement of the Bank's own money to meet monthly spending commitments of a customer in their current account. Provide internet banking system to facilitate the customers to view and operate their respective accounts through internet. Provide Charge card advances of the Bank's own money for customers wishing to settle credit advances monthly. Provide a check guaranteed by the Bank itself and prepaid by the customer, such as a cashier's check or certified check. Notary service for financial and other documents Accepting the deposits from customer and provide the credit facilities to them.

Foreign exchange services

Foreign exchange services are provided by many banks around the world. Foreign exchange services include: Currency exchange - where clients can purchase and sell foreign currency banknotes. Foreign Currency Banking - banking transactions are done in foreign currency. Wire transfer - where clients can send funds to international banks abroad.

Investment services

Asset management - the term usually given to describe companies which run collective investment funds. Also refers to services provided by others, generally registered with the Securities and Exchange Commission as Registered Investment Advisors. Hedge fund management - Hedge funds often employ the services of "prime brokerage" divisions at major investment banks to execute their trades. Custody services - the safe-keeping and processing of the world's securities trades and servicing the associated portfolios. Assets under custody in the world are approximately US$100 trillion.


Insurance brokerage - Insurance brokers shop for insurance (generally corporate property and casualty insurance) on behalf of customers. Recently a number of websites have been created to give consumers basic price comparisons for services such as insurance, causing controversy within the industry. Insurance underwriting - Personal lines insurance underwriters actually underwrite insurance for individuals, a service still offered primarily through agents, insurance brokers, and stock brokers. Underwriters may also offer similar commercial lines of coverage for businesses. Activities include insurance and annuities, life insurance, retirement insurance, health insurance, and property & casualty insurance. Reinsurance - Reinsurance is insurance sold to insurers themselves, to protect them from catastrophic losses.

Classification of Financial Services Industry Services Industry

The financial intermediaries in India can be classified into two : Capital Market intermediaries and Money market intermediaries.



The basic characteristics of financial services are that they are intangible in nature. For financial services to be successfully created and marketed, the institutions providing them must have a good image and the confidence of its clients. Quality and innovativeness of services are the focal points for building credibility and gaining the trust of the clients.


ORIENTATION: The institutions providing financial services study the needs of the customers in detail. Based On the results of the study, they come out with innovative financial strategies that give due regard to costs, liquidity, and maturity considerations for various financial products. This way, financial services are customer - oriented


financial services must be dynamic. They have to be constantly redefined and refined. On the basis of socio-economic changes occurring in the economy, such as disposable income, standard of living, level of education, etc. Financial services institutions must be proactive in nature and evolve new services by visualizing the expectations of the market