 Provide an overview of the financial system

 Explain the nature financial services offered.

 Review the role of financial services in the
economy
 Capture the contemporary developments in the
financial sector
 Financial Services Industry :Largest in the world
 Has undergone turbulent times in the recent
years
 Banking ,Financial Services ,and Insurance (BFSI)
sectors play a greater role
 Real sector needs the services of FS sector;
contribution of services sector to the GDP of the
country is high
 Services: Hospitality, Tourism, Health Services,
Education, BFSI
 Financial services are intermediary services in the
financial market place.
 Financial services are provided by the banks and
financial institutions in the financial system
 Intangibility
 Inseparability
 Heterogeneity
 Perishability
 Marketing of financial services
 Techno savvy
Components of the Financial System
 Financial Institutions

 Financial Markets

 Financial Instruments

 Financial Services
 Financial Markets
Types
 Money Market – A market for short-term debt
instruments
 Capital Market – A market for long-term equity and debt
instruments

Segments
 Primary Market – A market for new issues
 Secondary Market – A market for trading outstanding
issues
 Financial Instruments
Types

Primary (Equity shares & debentures)

Secondary (Bank deposits, Mutual fund

units)
Characteristics of Financial instrument's:

1)Transferability
2)Differences in the risk profile
3)form
 Commercial Banks
 Insurance companies
 NBFCs
 Mutual Funds
 Housing Finance Companies
 Financial Institutions
 Regulators,FinancialMarkets,Financial
Instruments.
 Mobilizing Savings :from surplus sector to
saving sector
 Storing wealth
 Providing Liquidity: Easy conversion from
security to cash & vice versa
 Payment and settlement mechanism
 Credit provider
 Risk management
 Policy Implementation
 Information provider
 Financial Reforms
 Opening up of Insurance sector
 Growth of Capital market
 Changes in the NBFC sector
 Corporate Restructuring
 Regulatory reforms
 Financial reforms
 Financial crisis
 Financial engineering
 Financial convergence
 Financial Inclusion
 Financial reforms
Narasimham Committee
Banking, Financial Institutions,
Capital market,Money Market
As a result of the Committee’s recommendation: SEBI was
made a statutory body and the SEBI Act was passed in 1992.
The Capital Issues Control Act was repealed and a free
pricing era started SEBI issued guidelines for each of the
market intermediary and made the market micro structures
ready for a more transparent and orderly growth of the
market.
Global Depository receipts (GDRs) were launched in 1992 and
investment norms for NRIs and the Overseas Corporate Bodies
were also prescribed.
Foreign Institutional Investors (FIIs) were permitted to invest in
the Indian capital market.
Money Market Mutual Funds (MMMFs), new money market
instruments like Commercial papers (CPs), 14 day T-Bills, repos
were introduced.
 Creative application of financial technologies to
solve financial problems or to exploit financial
opportunities / to add value
 Introduction or design of new financial
instruments or structured finance solutions
 All under one roof model / financial super
market model / one stop finance Shoppe
 Example : Bank
 Ensuring access to financial services and
timely and adequate credit to vulnerable
sections of the society at affordable cost
 credit to all ‘bankable’ people; insurance to
all ‘insurable’ people
 Here objective is to bringing the poor & the
underprivileged sections of population under
the formal financial system.