Course Instructor: Prof.

Jasbir Singh Matharu

Email: jsmatharu@imtnag.ac.in Phone Ext: 152

Overview of the financial services in India Stock Exchanges: Stock Broking, Depository services, Custodial services Wealth Management and Portfolio Management Services Mutual Funds and Hedge Funds Insurance Factoring including Cost Benefit Analysis

Merchant Banking Activities Venture Capital Funds, Angels and Private Equity NBFCs & Leasing Credit Rating Services Asset Reconstruction Companies Securitization

End term examination Mid term examination Group Assignments Group Presentations

40% 20% 20% 20%

Khan, M.Y., Financial Services, Tata McGraw Hill

Shah, Thomas and Gorham, Indias Financial Markets, Elsevier Gomez, C., Financial Markets, Institutions and Financial Services, PHI, 2008 Gurusamy, S., Financial Services, Tata McGraw Hill Pathak, B.V., The Indian Financial System, Pearson Shanmugham, R., Financial Services, Wiley India Siddaiah, T., Financial Services, Pearson

Financial Markets
Capital, Money, Derivatives, Forex

Financial Institutions:
DFIs, Commercial Banks, NBFCs, Stock Exchanges, Mutual Funds, Insurance companies etc

Financial Instruments:
Equity, Debt, Preference, Government Securities, Certificate of Deposits etc

Financial Services Regulators

Includes all activities connected with the transformation of savings into investment. Concerned with the design and delivery of advice and financial products to individuals and businesses Refer to services rendered by banks, insurance companies, and other financial intermediaries in the financial markets

Services 56% (not including construction) Financing, insurance, real estate, and business services:16.6% Share of Banking and Insurance: 5.8%

Classification by Central Statistical Organisation Source: Economic Survey 2012-13

Rising personal incomes Growth of a more consumer-oriented culture Growth of credit-oriented culture Corporate restructuring Financial sector reforms
Opening up of insurance sector Growth of capital market Regulatory changes

Financial Convergence Financial Engineering Financial Inclusion

FUND BASED /ASSET BASED SERVICES FEE BASED

Equipment leasing / Lease financing Consumer credit Factoring Venture capital financing Housing finance Bills discounting

Merchant banking Stock broking Depository services Credit rating

Securities and Exchange Board of India (SEBI)

Mutual Funds, Venture capital, Credit Rating, Stock broking, Merchant Banking, Depositories

Reserve Bank of India (RBI)

Banks; Currency markets; Bond markets; NBFCs (factoring, leasing, consumer finance)

Insurance Regulatory and Development Agency (IRDA)

Insurance companies

National Housing Bank

Housing finance companies

Pension Fund Regulatory and Development Agency (PFRDA)

Pension Funds

Forward Markets Commission (FMC)

Commodity Exchanges and Brokers

Government

National Bank for Agriculture and Rural Development (NABARD)

Regional Rural Banks

Ministry of Corporate Affairs, Ministry of Finance

Small Industries Development Bank of India (SIDBI) Self regulation

State Finance Corporations Wealth management companies, Stock Exchanges, Mutual funds (AMFI), Merchant /Investment Banks (AIBI)

Financial Stability and Development Council (FSDC)

Coordination among regulators Regulation of financial conglomerates

Complexity Entity based regulation Conflict of interest - RBI Multiple regulators with overlapping
Cases of overlapping
SEBI vs IRDA

Single regulator?

The Financial Sector Legislative Reforms Committee (FSLRC) set up to rewrite and review financial sector laws that have become outdated The Committee has recommended various proposals to protect consumers against misselling and fraud.

It also suggested proposals for development of the financial sector in India.

Indian Financial Code Bill 2013 - a single framework for regulatory governance across all agencies. Create a Unified Financial Authority (UFA): SEBI, IRDA, PFRDA, and the FMC be merged under one regulatorUFA. RBI will continue to be the banking regulator

A single Financial Data Management Centre: All financial firms will submit regular information filings electronically to this single facility A unified Financial Sector Appellate Tribunal (FSAT) that would hear all appeals A single unified Financial Redress Agency (FRA) which would serve any aggrieved consumer, across all sectors. Micro-prudential regulation: the task of constraining the behaviour of financial firms so as to reduce the probability of failure

A Resolution Corporation: would watch all financial firms and intervene when the net worth of the firm is near zero. It would force the closure or sale of the financial firm, and protect small consumers either by transferring them to a solvent firm or by paying them.