Financial Services

What is a Financial System?

Financial system acts as an intermediary and

facilitates the flow of fund from the area of
surplus to the areas of deficit.

Set of complex and closely interlinked financial

institutions, financial markets, financial
instruments and services which facilitate the
transformation of savings into investment.

2.
 Financial Dualism

Formal System
Organized, Institutional, Regulated
Banks, Insurance firms, Finance companies

Informal System
Un-organized non-institutional and non-regulated
Ex Moneylenders, Chit funds, Pawn brokers etc.

3.
 Flow of Funds

4.
 Components of Financial System
Financial Market:
Arrangement where facilitates buying and selling of
financial assets, claims and services

Classification based on:

Structure

Type of Claims

Maturity or Seasoning of Claims

Timing of Delivery

5.
 Components of Financial System

Financial Institutions:
Financial intermediaries that mobilises savings and as
purveyors of credit or finance

Financial Institutions provides transformation services

Liability, asset and size transformation

Maturity transformation

Risk transformation

6.
 Components of Financial System

Financial Instruments:
Also known as financial assets, securities, claims etc.
through which finance is raised

Classified on the basis of:

Transferable/Tradable vs. Non-transferable/Non-
tradable

Capital vs. Money Market instruments

Primary vs. Secondary Market instruments

7.
 Components of Financial System
Financial Services:
Product and services offered by different financial
intermediaries for the facilitation of various financial
transactions
Provisioning of Funds, Managing funds, Risk
Management, Advisory services, Market Operations,
Research & Development,
Fees based vis--vis Fund (Asset) based services

Financial Regulations:
Ministry of Finance, RBI, SEBI, IRDA
8.
 Components of Financial System

9.
 Role & Functions of Financial System

Capital Formation: Pooling of funds for undertaking

investment activities

Facilitates Payment & transfer of economic

resources: Quick and easy transactions across the
geographic locations

Provides liquidity & lowers transaction costs:

Provide investors the opportunity to convert their
investments into cash
10.
 Role & Functions of Financial System
Manage uncertainty and risk: Through different
instruments and insurance products

Provide information for better decision making:

Reduce the information asymmetries in the market

Monitor the corporate performance: induces

efficient utilization of resources

Financial system contributes to the acceleration

11. of economic development
 Some recent happenings

Global Recession & its impact on Indian

Economy
Issues related to Banks - NPAs, Mergers, Re-
capitalization, Bankruptcy Code Basel III etc.
Introduction of GST
Debate on Inflation targeting vs. Growth Role of
Monetary Policy Committee and Finance Bill 2016
FinTech & Digital Banking Major disruptions
Reforms in Financial Sector Regulation FSLRC
recommendations
12.
 Key Macro Indicators
GDP/ GDP Growth Rate/ Sector-wise GDP
Inflation Rate
Interest Rate/ CRR/ SLR / Interbank Rate
Exchange Rate/ Forex Reserves
SENSEX/Nifty
Per Capita Income/ Unemployment Rate
Budget Planned / Unplanned / Fiscal/ Revenue Deficit/
Current Account Deficit / Balance of Trade
FDI/ FII
Important Indices Human Development Index/ Ease of
Doing Business, Competitiveness Index, Innovation Index,
Corruption Index, Intellectual Property etc.
13.
 Thank You

14.