Financial Services

(12MBAW-49)

Introduction
Financial Services

BY
SADDAM HUSSAIN

Unit I (Syllabus)
Introduction to Financial System and
Financial Markets, Instruments
Evolution of Indian Financial System
Financial Services: concepts, features,
constituents and types
Regulatory Framework for Financial
Services(NBFC)
Stock Exchanges of India; SEBI

Financial Services??

Financial Services
Services required for
mobilizing and
channelizing savings to
productive activities for
producing final goods &
services

Financial Services

Most significant
element of a financial
system interlinking
all other elements.

COMPONENTS OF INDIAN
FNANCIAL SYSTEM
Fourth
Elemen
t

Financial Services

Includes various services

created and delivered by
the financial system-not
only helps raise funds
but ensure their efficient
deployment.

Functions of Financial
Services

Mobilization of funds
Effective Deployment of funds
Provision of need based services
Provision of regulated service
Enhancement of Economic
Development

Categories of
Financial Services

Categories of Financial
Services
What is being
Managed??
Asset
Management
Companies
e.g: Leasing Cos.,
Mutual Fund Cos,
Merchant
Bankers

Liability
Management
Companies
e.g. Bill
discounting
houses,
Acceptance
houses,
Factoring,

Categories of Financial
Services.
Ownership
&
Utilization of Fund
FUND BASED
Fin. Services
Co.s
Own the fund by
directly raising it
from the market
Lend it to those
who need them

FEES BASED
Fin. Services Co.s
Help others raise
funds
Do not own the
fund raised
Provide advisory
services for
effective

Categories of Financial Services.

Fund Based services

firms raise equity, debts and
deposits and invests in securities
and lends to those who are in need
of capital
Caters to both short term and long
term need
E.g. Commercial banking, Term
lending, Bill discounting, Leasing,
Factoring, Forfaiting, Hire purchase,
VCF.

Categories of Financial Services.

Fees-Based Services
Enables the corporate sector &
others to raise capital from the
market or exchange financial
assets & risks with other
participants of the market..against
a FEES
E.g.-Merchant Banking, Stock
Broking, credit Rating, Mutual
Funds, Portfolio Mgt. services

A Glimpse of the
variety of
Financial Services

LEASING
Means for financing capital
equipments
Contractual agreement by
which a firm acquires the right
to use an asset for a definite
period by paying rentals

FACTORING
FS designed to manage the
receivables of a firm
An arrangement for obtaining
funds by selling receivables to
a specialized financing agency
(factor) .

BILL DISCOUNTING &

SECURITIZATION

Bill discounting is a practice

of
lending
against
the
commercial bills of a trader.
Securitization is a process of
pooling
&
packaging
homogenous illiquid asset
(receivables-long term) into

MUTUAL FUNDS
Are financial intermediaries
that collect the savings of
small investors and invests
them in a diversified
portfolio of securities to
minimize risk and maximize
returns for investors

MERCHANT BANKERS
Provide specialized
services as managing new
issues, underwriting,
portfolio mgt., financial
restructuring, advisory
services for M&A..

VENTURE CAPITAL
FINANCING
Provide a form of equity
financing designed
especially for funding high
risk and return projects
(new
products/inventions/innovations).

CREDIT RATING
A specialized form of
financial services involved
in the assessment of the
credit record, integrity, and
capability of a prospective
borrower to meet its debt
obligation.

Salient Features of Financial Services

Highly Customer Oriented

Intangibility
Inseparability
Perish ability
People-based service
Dynamism

Constituents of Financial
Services
CONSTITUNTS
CONSTITUNTS OF
OF FINANCIAL
FINANCIAL SERVICES
SERVICES

INSTRUMEN
TS
Debt
Equity
hybrid

MARKET
PLAYERS
-Banks, FIs,
MFs, MBs,
Brokers, .

SPECIALIZE
D
INSTITUTION
S
-Credit rating
agencies,
depositories
.

REGULATORY
BODIES
-RBI, SEBI, Dept.
of Banking &
Insurance, IRDA..

Financial Services Sector

A torchbearer throwing light on the

sources of funds
the quantum of funds that can be
mobilized from such sources
Providing solutions to problems
faced by various components of Fin.
System
Increasingly contribute to economic
growth & development

List of top 10 financial services

companies in India
SBI Capital Markets Limited:
This happens to be the oldest organizations in the sphere of capital markets in India. Established in 1986 in
the form of an ancillary of SBI, they have ranked second in Asia's Project Advisory services. The company is a
traiblazer in privatization and securitization. The subsidiaries of SBI Capital Markets are SBICAPs Ventures
Ltd., SBICAP Trustee Co.Ltd. and many others.
Bajaj Capital Limited:
One of the major financial services companies in India, Bajaj Capital offers best investment advisory and
financial planning services. The services are meted out to the institutional investors, NRIs, corporate houses,
individual investors, high network clients as well.
DSP Merrill Lynch Limited:
A major player in the equity and debt market in India, DSP Merrill Lynch offers financial advises to varied
corporations and institutions. With an array of wealth management and investor services, their services are
customized in a manner that they meet every investor requirement.
Birla Global Finance Limited:
The subsidiary of Aditya Birla Nuvo Ltd., this company has operations in the corporate finance and capital
market arena. An alliance with Sun Life Financial of Canada, they have given birth to Birla Sun Life Insurance
Co Ltd., Birla Sun Life Distribution Co. and alike.
Housing Development Finance Corporation:
A best financial solution for home loans, NRI loans, HDFC is the one stop destination for personal finance.
With overseas branches in Singapore, Kuwait, Qatar, Saudi Arabia and many others, HDFC has been going
great guns every year.

List of top 10 financial services

companies in India
PNB Housing Finance Limited:
This company offers premium solutions for relieving the borrower segment. The Home Loan Life
Insurance Plan of this has come in conjunction with TATA AIG, with the lowest premium when
compared to the peers.
ICICI Group:
Wide arena of financial products and services, ICICI Group has solutions like InstaBanking, Online
Trading, Insta Insure, ICICI Bank imobile etc. Providing high class financial services in all segments
of the society, ICICI Group deals with Mutual Fund, Private Equity, Securities, and Life Insurance
etc.
LIC Finance Limited:
It is the biggest Housing Finance Company in India, providing finance to individuals for repair or
construction or renovation of any old or new apartment or house.
L & T Finance Limited:
Established in 1994 by the Larsen and Turbo group, this has become a significant name in the
financial sector. Funds for automobiles, Agricultural Instruments, secured loans; they have all types
of loans for a long tenure.
Karvy Group:
With Mutual Funds Services, Depository Services, Debt Market Services, Investment Banking and
many others, Karvy Group has spanned across the domestic financial sector as well as abroad.