FINANCIAL

SERVICES
Presented By:
Swati. Jagtap
Roll No: 08

Scenario Prior To Liberalization

Excessive Control In The Form Of

Regulation.
Control over the prices of Securities.
Non availability of Financial Instruments.
Strict Regulations of the Foreign Exchange
Market.
Lack of information about International
Developments.

MEANING OF FINANCIAL
SERVICES
Typically, it means mobilizing and

allocating SAVINGS.
It includes all activities involved in the
transformation of SAVINGS into
INVESTMENTS.
Financial Services can also be called
Financial Intermediation.

FINANCIAL
INTERMEDIATION
It is a process by which funds are mobilized

from a large number of savers and make

them available to those who are in need of it.
Particularly to Corporate Customers.

FEATURES OF FINANCIAL
SERVICES
Customer Oriented
Intangibility
Simultaneous Performance
Dominance Of Human Elements
Perishability

IMPORTANCE OF FINANCIAL
SERVICES
Economic Growth
Promotion of Savings
Capital Formation
Provision of Liquidity
Financial Intermediation
Contribution to GNP
Creation of Employment Opportunities

CLASSIFICATION
CAPITAL MARKET:
Term Lending Institutions
Investing Institutions
Long Term Funds
1.

2. MONEY MARKET:
Consists of Commercial banks, Cooperative banks and other agencies.
Short term funds.

SCOPE OF FINANCIAL SERVICES

A. TRADITIONAL ACTIVITIES
1. FUND BASED ACTIVITIES: includes
Underwriting
Dealing in secondary market activities
Participating in money market instruments
Leasing, hire-purchase, venture capital, etc.

2. FEE BASED ACTIVITIES: includes

Managing the capital issues
Arrangements for placement of capital and
debt instruments
Arrangement of funds from financial
institutions
Assisting in Government and other clearance

B. MORDERN ACTIVITIES
Few of them are:
1. Rendering project advisory services
2. Planning for Mergers and Acquisitions
3. Acting as trustees to the Debenture-holders
4. Hedging of risks
5. Managing the portfolio of large public sector
companies.
6. Undertaking risk management services.

SOURCES OF REVENUE
FUND BASED INCOME:
Interest from:
1. Lease rentals
2. Investment in capital market and real estate


1.
2.
3.
4.

FEE BASED INCOME:

FROM:
Merchant Banking
Advisory Services
Custodial Services
Loan Syndication

CAUSES FOR FINANCIAL

INNOVATION
Low Profitability
Keen Competition
Economic Liberalization
Improved Communication Technology
Customer Services
Global Impact
Investors Awareness

FINANCIAL SERVICES AND PROMOTION OF

INDUSTRIES
Industrial promotion through Merchant

Banking Services
Working Capital Finance Through Factoring
Services
Equipment Finance through Leasing
Financial resources through Mutual Funds
Long-term Risk Capital through Venture
Capital

 Risk Management through Derivatives

Debenture issue through Credit rating
Development Finance through Development

Banking Sector
Industrial Development through Specialized
Services

NEW FINANCIAL PRODUCTS AND SERIVES

Merchant Banking
Loan Syndication
Leasing
Mutual Funds
Factoring
Venture Capital
Custodial Services

Corporate Advisory Services

Securitization
Reverse Mortgage
Derivatives:
- Forward Contract
- Options
- Futures
- Swaps

FINANCIAL INSTRUMENTS
Commercial Papers
Treasury Bills
Certificates of Deposit
Inter-bank Participation(IBPs)
Option Bonds
Medium Term Maturity
Equity with 100% Safety Net

 Convertible Bonds
Flip-Flop Notes
Loyalty Notes
Convertible Bonds with a Premium Put
Debentures with Call and Put features
Easy Exit Bonds

CLASSIFICATION OF EQUITY
SHARES

Blue Chip Shares

Defensive Shares
Growth Shares
Cyclical v/s Non-cyclical Shares
Turn Around Shares
Active Shares
Alpha Shares
Sweat Shares

CHALLENGES FACED IN THE

FINANCIAL SECTOR
Lack of qualified personnel
Lack of investor awareness
Lack of transparency
Lack of specialization
Lack of recent data
Lack of efficient risk management system

PRESENT SCENARIO
Conservatism to Dynamism
Emergence of Primary Equity Market
Concept of Credit Rating
Process of Globalization
Process of Liberalization

Thank you!