FINANCIAL SERVICES

MEANING & IMPORTANCE OF FINANCIAL SERVICES

Financial services constitute the important component of financial system Financial services through such network of elements such as financial institutions,

financial markets,& financial instruments serve the needs of corporates & individuals

MEANING
Services that are offered by financial services companies connote financial services Financial service as a part of Financial System provides various credit instruments,

financial products, and services.

Financial services companies includes

Asset management companies- leasing companies, mutual funds, merchant bankers &

issue/portfolio managers Liability management companies- bill discounting & acceptance houses

FINANCIAL INSTRUMENT
Cheques Bills Credit & Debit cards Shares Bonds Derivatives Fixed deposits/ Company deposits

FINANCIAL SERVICES
Leasing Factoring Hire

purchase Merchant banking Insurance Issue management/Portfolio management Housing finance Credit rating Underwriting Book building Credit cards

FINANCIAL SERVICES MARKET - CONSTITUENTS

Market players Instruments Specialised institutions

Regulatory bodies

MARKET PLAYERS
Banks Financial institutions Mutual funds Merchant bankers Stock brokers Consultants Underwriters FIIS

INSTRUMENTS
Equity instruments Debt instruments Hybrid instruments

SPECIALISED INSTITUTIONS
ACCEPTANCE HOUSES DISCOUNT HOUSES FACTORS DEPOSITORIES CREDIT CARD AGENCIES VENTURE CAPITAL INSTITUTIONS

REGULATORY BODIES
RBI SEBI IRDA MCA VARIOUS RULES & REGULAITONS

FINANCIAL SERVICES-OBJECTIVES/FUNCTIONS
FUNDS RAISING FUNDS DEPLOYMENT SPECIALISED SERVICES REGULATION ECONOMIC GROWTH

FUNDS RAISING
Financial services helps to raise the required funds from host of investors, individuals,

institutions & corporates

FUNDS DEPLOYMENT
An array of financial services are available in the financial market which help the

players to ensure effective deployment of funds raised It assist in deciding financing mix Services such as bill discounting, factoring, credit rating, securitization of debt ensures efficient fund management

SPECIALISED SERVICES
Besides banking and insurance financial services provides specialized services such as

credit rating, venture capital financing, lease financing, factoring, mutual funds, merchant banking, stock lending, depository, credit cards, housing finance, book building etc.

REGULATION
RBI SEBI MCA Department of Finance of GOI through a plethora of legislation regulate the functioning

of financial service institutions

ECONOMIC GROWTH
Financial services contribute in good measure to speed up the process of economic

growth & development Mobilization of savings & channelizing them into savings

FINANCIAL SERVICES-CHARACTERISTICS
INTANGIBILITY CUSTOMER ORIENTATION INSEPARABILTIY DYNAMISAM PERISHABILITY

INTANGIBILITY
Intangible in nature For financial services institution providing them must have good image & confidence of

its clients. Quality & innovativeness of services are for gaining confidence & success

CUSTOMER ORIENTATION
Strategies should be customer oriented Customer is the focal point

INSEPARABILTIY
The functions of producing & supplying the services are inseparable

DYNAMISAM It should be dynamic Constantly redefined and refined to the changes in economy Financial services institution must be proactive in nature Evolve new services visualizing the expectation of the market PERISHABILITY No storage of services Services should ensure a match between demand & supply

IMPORTANCE OF FINANCIAL SERVICES

PROMOTING INVESTMENTS The presence of financial services creates more demand for products It facilitate the investment activities (merchant banking, issue management) It facilitate production & acquisition of new technology (leasing & HP) PROMOTING SAVINGS Financial services provide ample opportunity foe savings Investors can choose investment options according to their choice MINIMISING RISKS Financial services such as insurance & portfolio management services help investors to reduce their risks MAXIMISING RETURNS Availability of credit at reasonable rate High liquidity in stock market, mutual funds, portfolio management, online trading, depositories, stock lending helps providing higher returns ECONOMIC GROWTH financial services helps in equal distribution of investments to all sectors, so a balance distribution is possible Financial services enable the consumers different type of product and services by which they can improve their standard of leaving

BENEFIT TO THE GOVERNMENT

Govt. can raise funds both shot term & ling term Govt. can accrue funds in money market with out giving security.

EXPANDS ACTIVITIES OF FINANCIAL INSTITUTIONS Financial services helps financial institutions not only raise finance but also to disburse their funds in profitable manner Mutual funds, factoring, credit cards, hire purchase are sum of activities financed by institutions

CROSS-SELLING Cross-selling is simply selling additional financial services to existing customers. Cross-selling is really cross-helping. It gives your customer-contact employees the satisfaction of recognizing customers'
needs and meeting those needs with a useful product or service. Customers benefit from cross-selling efforts because they receive the financial services they need and want. Suggestions and recommendations from their enterprise (Bank/insurer) expose them to products and services that otherwise they might not have known about. Successful cross-selling is the result of recognizing a customer need and meeting that need with a useful product or service.

Cross-selling helps your financial institution realize its objectives: Providing useful financial services, Retaining customers, Attracting new customers, and Staying competitive with other financial institutions. Cross selling allowed financial service institutions to offer a much wider range of
products than before.

The characteristics your customer-contact employees need to include Friendliness, an ability to listen, Genuine interest in your institution's products, and Pride and enthusiasm about their role.
TYPES OF INSURANCE
The insurance can be divided from two angles: From business point of view From the risk point of view

BUSINESS POINT OF VIEW

Life Insurance General Insurance, and Social Insurance