Financial services are economic services

provided by the finance industry. These services are

Provided by –
Deposit-taking Firms
 Commercial banks
 Credit unions
 Finance companies
 Property and casualty insurance companies
 Pension funds
 Investment companies
 Mutual Funds
 Professional asset management companies
 Institutional investors
 Securities Firms
 Investment banks
 Brokers and dealers
 Mortgage banks
CHARACTERISTICS OF FINANCIAL SERVICES

1.INTANGIBILITY
2.CUSTOMER ORIENTATION
3.INSEPERABILITY
4.PERISHABILITY
5.DYNAMISM
1. FUND RAISING – it helps in raising required funds from
investors, individuals, institutions and corporates
2. FUNDS DEPLOYMENT – ensures efficient management of
funds.
3. SPECIALIZED SERVICES – examples are credit rating,
venture capital financing, leasing, factoring,Mutual funds,
merchant banking, stock lending, depository, credit cards,
book building etc (banking And insurance services)
4. REGULATION – agencies involved in regulation are – RBI,
SEBI (Securities Exchange Board of India),Government of
India – department of banking and insurance.
5. ECONOMIC GROWTH – mobilization of savings in to
investment makes economic growth.
1. Market players – are host institutions and agencies
that understand the requirements Of many customers.
Examples are banks, financial institutions, mutual funds,
merchant Bankers, stockbrokers, consultants,
underwriters, FIIs, venture capital funds and corporate
Bodies.
2. Instruments – equity instruments, debt instruments,
hybrid instruments.
3. Specialized institutions- formed particularly for specific
things. They are discount houses, Factors, depositories,
credit rating agencies, venture capital institutions.
3. Regulatory bodies – RBI, SEBI etc.
Financial service sector problems
1.Lack of expertise
2.Inadequate accommodations in
central locations in India eg.mumbai
2. Inadequate technology
3.Inadequate quality service
4.Captive organizations( parent- subsidiary)
5.Restricted scope of operations
6.Limited innovation
7.Lack of sound institutional mechanism
8.Other problems in financial system.
 Employment &
unemployment
Global
Inflation and
portfolio
deflation
preferences

competition Trade cycles

Financial
services
environment
Technological
stagflation
changes

Deregulatory Economic
measurements growth
Exchange rate
and balance of
payment
Players in financial markets

households

External agencies

firms

government
External
agencies
 Players in financial market
1.HOUSEHOLD
Household are the people that include wage earners,
individuals and others
2. FIRMS
Firms meet funding requirements either through borrowings or
through their own Accumulated savings. They will provide
financial services too.
3. GOVERNMENTS
Government such as central,state, local bodies take part in
financial market
4.EXTERNAL AGENCIES
Its called “international borrowing and lending”
Interest rate determination
Growth of financial services in india
1.MERCHANT BANKING ERA
2.INVESTMENT COMPANIES ERA
3.MODERN SERVICES ERA
4.DEPOSITORY ERA
5.LEGISLATIVE ERA
6.FOREIGN INSTITUTIONAL INVESTORS(FII) ERA
1.MERCHANT BANKING ERA ( 1960-1980)
During this period, financial services such as merchant
banking, insurance and leasing
Services began to grow.
2.INVESTMENT COMPANIES ERA
The era marked setting up of various investment
institutions such as Unit trust of india ( mutual fund ),LIC
( life insurance) and banks in india
3. MODERN SERVICES ERA
This stage marked launch of various financial products and
services. This includes over the counter services, pledging
shares, mutual funds, factoring, discounting, venture capital
and credit rating.
4.DEPOSITORY ERA
In order to integrate Indian financial sector with global financial
services industry, depositories were set up. Depository system
was introduced with a view to promoting the concept of
paperless trading through the dematerialization of shares and
bonds.
5. LEGISLATIVE ERA
Foreign Exchange Management Act (FEMA) was formulated and
amendments in Indian companies act and income tax act.
6. FOREIGN INSTITUIONAL INVESTORS (FII) ERA
Disinvestment provided FIIs to operate in Indian capital market as
a part of economic reforms took place in early 1990s.
1.REAL SECTOR POLICIES
Real sector policies are guided by the objective of
boosting domestic investment demand By
expanding the participation of private enterprise
and by promoting foreign investment.
2.FISCAL POLICIES
fiscal policy is the use of government revenue
collection(mainly taxes) and expenditure (spending)
to influence the economy.
3.AGRICULTURE POLICY
Agriculture policy aims at initiating measures for the
development of the agricultural sector.
4.POLICY ON MANUFACTURING, INFRASTRUCTURE AND SERVICES
Policies taken under the economic liberalization
5. TRADE POLICIES
Trade policy refers to the regulations and agreements that control
imports and exports to foreign countries.
6.EXPORT IMPORT (EXIM )POLICY
India's Export Import Policy also known as Foreign Trade Policy, in
general, aims at developing export potential,
improvingexport performance, encouraging foreign trade and
creating favorable balance of payments position.
Monetary policy is the macroeconomic policy laid down by the
central bank. It involves management of money supply and interest
rate, inflation, consumption, growth and liquidity.