FINANCIAL SERVICES

 Services that are financial in nature.

 Part of financial system consisting of

financial institutions, markets,
instruments etc.

 The “Financial Services” can also be

called “Financial Intermediation”.

 Financial Intermediation is a process by

which funds are mobilized from a large no
of savers and make them available to
those who are in need of it and
particularly to corporate customers.
FEATURES OF FINANCIAL
SERVICES
 Intangible in nature.

 Inseparable from the provider.

 Customer centric.

 Dynamic in nature

 Credibility of partners is very important

in them.
 Functions of Financial Services
1. Mobilization of Funds.

2. Effective employment of funds.

3. Provision of need based services

4. Provision of regulated services

5. Enhancement of economic
development.
 TYPES OF FINANCIAL
SERVICES

Financial Services

Fund or Assets Fee-Based Advisory

Based services Services
5
FUND BASED FINANCIAL
SERVICES
 Lease financing
 Hire purchase finance & customer
Credit
 Factoring and Forfeiting
 Bill Discounting
 Housing Finance
 Insurance Services
 Venture Capital Financing

6
 FEE-BASED FINANCIAL
SERVICES
 Merchant Banking
 Credit Rating

 Stock Brokerage

 Portfolio Management

7
 INDIA & THE FINANCIAL
SERVICES SECTOR
 Fast growing economy
 Large population & young demographics
 Fast growing aspirations
 High rate of savings
 FINANCIAL SIMPLETON
safety over returns
seeking reassurance from a Trusted face

 LOW PENETRATION
 55% of savings lying in bank deposits
 Household penetration in Mutual Funds < 5%, Life Insurance <
15%
The Indian Financial Services sector has yet to tap India’s
true potential
 MARKET SHARE
 The financial services industry constitutes
the largest group of companies in the
world in terms of earnings and equity
market cap.
 However it is not the largest category in
terms of revenue or number of
employees.
 It is also a slow growing and extremely
fragmented industry,
 with the LARGEST COMPANY
(CITIGROUP), only having a 3 % US
Market share.
CONSTITUENTS OF FINANCIAL
SERVICE SECTOR
 MARKET PARTICIPANTS
– Individuals, corporate entities, banks, financial
institutions, mutual fund and merchant bankers.

 FINANCIAL SERVICE PROVIDERS

– Financial institutions, banks, non-banking financial
institutions, insurance, leasing and factoring
companies and mutual funds.

 REGULATORY BODIES
– RBI, SEBI, Department of Finance, Department of
Banking and Insurance of the Central Government
etc.
 TYPES OF FINANCIAL
SERVICES
FINANCIAL
SERVICES

INVESTMENT ADVISORY
BANKS INSURANCE
SERVICES SERVICES

• Private • Mutual Fund • Insurance • Stock brokers

(private
banking Brokerage
• Asset client
• Investment Management services) and
discount
Banking brokers
• Merchant
Banking
 BANKS
 A bank is a financial institution that
accepts deposits and channels those
deposits into lending activities. Banks
primarily provide financial services to
customers while enriching investors.
Banks are important players in
financial markets and offer services
such as investment funds and loans.
 BANKING CHANNELS
Banks offer many different channels
to access their banking and other
services:

 Branch
 ATM

 Telephone banking

 Online banking

 Mobile banking

 Video banking
 TYPES OF BANKS

On the basis of functions they can be

divided as :
1) Central Bank ( which is the RBI in
India)
2) Commercial banks
 Public Sector

 Private Sector
 CENTRAL BANK
 Alltypes of Banks in India are
regulated and the activities monitored
by a standard bank called the Reserve
Bank of India that stands at the apex
of the banking structure. It is also
called the Central Bank, as major
banking decisions are taken at this
level. The other types of banks in
India are placed below this bank in
the hierarchy.
 COMMERCIAL BANKS

A commercial bank is a type of financial

intermediary that provides savings accounts,
and money market accounts and that
accepts time deposits.

A commercial bank is one that will work with

businesses.  Commercial banks will handle
the banking needs for large and small
businesses.
 The COMMERCIAL ROLE of
banks is not limited to
banking, and includes:

 issue of banknotes.
 internet banking

 issuing bank drafts and bank cheques

 accepting money on term deposit

 lending money by way of overdraft, installment

loan or otherwise
 acting as a 'financial supermarket' for the sale,
distribution or brokerage
 Undertaking safe custody of valuables
 Providing customers with facilities of foreign
exchange dealings
 Transferring money from one account to
another; and from one branch to another
branch of the bank.
 Providing reports on the credit worthiness
of customers.
 Providing consumer finance for individuals
by way of loans
 Educational loans to students
 PRIVATE BANKING
 Private banking is a term for banking,
investment and other financial services provided
by banks to private individuals investing sizable
assets.
 The term "private" refers to the customer
service being rendered on a more personal basis
than in mass-market retail banking, usually via
dedicated bank advisers.
 The objective of private bankers is to provide a
more personalized level of service to wealthy
clients than is available to typical customers at a
commercial bank.
 PUBLIC SECTOR BANKS
 Allgovernment owned banks fall in
this variety. Besides the Reserve
Bank of India, the State Bank of
India and its associate banks and
about 20 nationalized banks, all
comprises of the public sector banks.
Many of the regional rural banks that
are funded by the government banks
can also be clubbed in this.
 The commercial role of banks is not
limited to banking, and includes:
 issue of banknotes
 processing of payments by way of internet
banking or other means.
 issuing bank drafts and bank cheques

 accepting money on term deposit

 lending money by way of overdraft, installment

loan or otherwise
 acting as a 'financial supermarket' for the sale,
distribution or brokerage, with or without advice,
of insurance, unit trusts and similar financial
products.
 FOREIGN EXCHANGE
SERVICES
Foreign exchange services are provided by
many banks around the world.
 CURRENCY EXCHANGE - where clients can
purchase and sell foreign currency banknotes

 WIRE TRANSFER - where clients can send

funds to international banks abroad

 FOREIGN CURRENCY BANKING - banking

transactions are done in foreign currency
 INVESTMENT BANK
 Investment banking is a particular form of
banking which finances capital
requirements of enterprises. Investment
banking assists as it performs IPOs, acts
as broker and carries through mergers and
acquisitions.

 Investment banks offer security to both

corporations issuing securities and
investors buying securities.
 FUNCTIONS OF
INVESTMENT BANKING:
Investment banks have multilateral functions
to perform.
 Issuing securities in the primary market.
 Selling and foreign exchange management.
 Acting as intermediaries in trading for clients.
 Providing financial advice
 Investment banking differ from commercial
banking in the sense that they don't accept
deposits and grant retail loans.
 MERCHANT BANKING
 It is a financial institution primarily engaged in
offering financial services and advice to corporations
and to wealthy individuals.

 The Chief Distinction between an investment bank

and a merchant bank is that a merchant bank
invests its own capital in a client company whereas
an investment bank purely distributes (and trades)
the securities of that company in its capital raising
role.

 Both merchant banks and investment banks provide

fee based corporate advisory services, including in
relation to mergers and acquisitions.
 MUTUAL FUNDS
 A Mutual Fund is a trust that pools the savings of a
number of investors who share a common financial
goal. The money thus collected is then invested in
capital market instruments such as shares,
debentures an other securities.

 Thus a Mutual Fund is the most suitable investment

for the common man as it offers an opportunity to
invest in a diversified, professionally managed
basket of securities at a relatively low cost.
 The income earned through these investments and
the capital appreciation realized are shared by its
units holder in proportion to the number of units
hold by them.
THE FLOW CHART BELOW DESCRIBES
BROADLY THE WORKING OF A MUTUAL
FUND:
 MUTUAL FUNDS INDUSTRY
IN INDIA
FIRST PHASE - 1964-87
Unit Trust of India (UTI) was established on 1963 by
an Act of Parliament. It was set up by the Reserve
Bank of India.
 In 1978 UTI was de-linked from the RBI and the
Industrial Development Bank of India (IDBI) took
over the regulatory and administrative control in
place of RBI.
 The first scheme launched by UTI was Unit Scheme
1964.
Second Phase - 1987-1993 (Entry of Public Sector
Funds)

Entry of non-UTI mutual funds.

 SBI Mutual Fund was the first followed by Canbank Mutual Fund
(Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian
Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of
Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990.
 The end of 1993 marked Rs.47,004 as assets under
management.

Third Phase - 1993-2003

Entry of Private Sector Funds
 With the entry of private sector funds in 1993, a new era started
in the Indian mutual fund industry, giving the Indian investors a
wider choice of fund families.
 Also, 1993 was the year in which the first Mutual Fund
Regulations came into being, under which all mutual funds,
except UTI were to be registered and governed.
 The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual
fund registered in July 1993.

 The industry now functions under the SEBI (Mutual

Fund) Regulations 1996.

Fourth Phase - since February 2003

 UTI was bifurcated into two separate entities. One is the

Specified Undertaking of the Unit Trust of India with
AUM of Rs.29,835 crores (as on January 2003).

 The second is the UTI Mutual Fund Ltd, sponsored by

SBI, PNB, BOB and LIC.
 GROWTH IN ASSETS UNDER
MANAGEMENT

Source: indiamart.com
 MUTUAL FUNDS
COMPANIES IN INDIA
 ABN AMRO Mutual fund
 Birla Sun Life Insurance Fund

 Bank of Baroda Mutual Fund

 HDFC Mutual fund

 HSBC Mutual Fund

 INSURANCE
 Insurance, in law and economics, is a form of risk
management primarily used to hedge against the
risk of a contingent loss.

 Insurance in India has its history dating back until

1818, when Oriental Life Insurance Company
was started in Kolkata to cater to the needs of
European community loss.

 In the year 1912, the Life Insurance Companies

Act and the Provident Fund Act were passed to
regulate the insurance business.
 The General Insurance Business Act of 1972 was
enacted. All the companies were amalgamated into
National Insurance, New India Assurance,
Oriental Insurance and United India Insurance,
which were headquartered in each of the four
metropolitan cities

 Insurance Regulatory and Development Authority

Act in 1999, de-regulating the insurance sector and
allowing private companies

 Since 1999, then government has also allowed FDI up

to 26%, making the insurance sector a booming
market. However, the largest life-insurance company in
India is still owned by the government.
 TYPES OF INSURANCE
LIFE INSURANCE:
 Life insurance or life assurance is a contract between
the policy owner and the insurer, where the insurer
agrees to pay a designated beneficiary a sum of money
upon the occurrence of the insured individual's death or
other event, such as terminal illness or critical illness.
 Some of the famous life insurance companies in
India are:
 Life Insurance Corporation of India

 Bajaj Allianz Life Insurance Company Limited

 Birla Sun Life Insurance Co. Ltd

 HDFC Standard life Insurance Co. Ltd

 ICICI Prudential Life Insurance Co. Lt.

 Aviva Life Insurance Co. India Pvt. Ltd...and many

others.
 GENERAL INSURANCE:
It is a non-life insurance mainly concerned with protecting the
policyholder from loss or damage caused by specific risks

This insurance type involves insuring the risks associated

with the general life such as automobiles, business related,
natural incidents, commercial and residential properties, etc.

 SOME OF THE FAMOUS COMPANIES ARE:

 TATA AIG General Insurance Co. ltd

 IFFCO TOKIO General Insurance Co. Ltd.
 Reliance General Insurance Co. Ltd.
 Future Generali India Insurance Company Limited
 Bajaj Allianz General Insurance Co. Ltd.
 ICICI Lombard General Insurance Co. Ltd.
INVESTMENT SERVICES
 Asset management

 Hedge fund management

 INVESTMENT MANAGEMENT is the professional
management of various securities (shares, bonds and other
securities) and assets (e.g., real estate), to meet specified
investment goals for the benefit of the investors. Investors
may be institutions (insurance companies, pension funds,
corporations etc.) or private investors (both directly via
investment contracts and more commonly via
collective investment schemes e.g. mutual funds or
exchange-traded funds) .
 The term ASSET MANAGEMENT is often used to refer to the
investment management of collective investments, (not
necessarily) whilst the more generic fund management may
refer to all forms of institutional investment as well as
investment management for private investors. Investment
managers who specialize in advisory or discretionary
management on behalf of (normally wealthy) private investors
may often refer to their services as wealth management or
portfolio management often within the context of so-called
PRIVATE BANKING“.
 .
 The provision of 'investment management services'
includes elements of financial statement analysis,
asset selection, stock selection, plan implementation
and ongoing monitoring of investments. Investment
management is a large and important global
industry in its own right responsible for caretaking of
trillions of dollars, euro, pounds and yen. Coming
under the remit of financial services many of the
world's largest companies are at least in part
investment managers and employ millions of staff
and create billions in revenue.

 Fund manager (or investment adviser in the United

States) refers to both a firm that provides
investment management services and an individual
who directs fund management decisions.
 A HEDGE FUND is an investment fund open to a limited range
of investors that undertakes a wider range of investment and
trading activities than long-only investment funds, and that, in
general, pays a performance fee to its investment manager.
Every hedge fund has its own investment strategy that
determines the type of investments and the methods of
investment it undertakes. Hedge funds, as a class, invest in a
broad range of investments including shares, debt and
commodities. Many people consider the fund created in 1949 by
Alfred Winslow Jones to be the first hedge fund.

 As the name implies, hedge funds often seek to hedge some of

the risks inherent in their investments using a variety of
methods, most notably short selling and derivatives. However,
the term "hedge fund" has also come to be applied to certain
funds that do not hedge their investments, and in particular to
funds using short selling and other "hedging" methods to
increase rather than reduce risk, with the expectation of
increasing the return on their investment.
 In most jurisdictions hedge funds are open only to a
limited range of professional or wealthy investors that
meet certain criteria set by regulators, but in
exchange are exempt from many regulations that
govern ordinary investment funds. These regulations
typically include restrictions on short selling, the use
of derivatives and leverage, fee structures, and on the
liquidity of interests in the fund. Light regulation along
with the performance fees are the distinctive
characteristics of hedge funds.

 The NET ASSET VALUE of a hedge fund can run into

many billions of dollars, and the gross assets of the
fund will usually be higher still due to leverage. Hedge
funds dominate certain specialty markets such as
trading within derivatives with high-yield ratings and
distressed debt.
 CONCEPT OF HEDGE
FUND

 “Ahedge fund is a fund which

invest in almost any opportunity
in any market where it foresees
impressive gains at reduced risk”
 STRATEGIES OF HEDGE
FUND
 SHORT-SELLING: Sale of a security that you do not
own, with the anticipation of purchasing it in the future,
at a reduced cost.

 ARBITRAGE: Simultaneous buying and selling of a

financial instrument in different markets to profit from
the difference between the prices

 Investing In Anticipation Of A Specific Event -

merger transaction, hostile takeover, spin-off, exiting of
bankruptcy proceedings, etc.

 LEVERAGE: Borrowing money for investment purposes.

 STRATEGIES OF HEDGE
FUND CONT.
 Investing In Deeply Discounted Securities -
of companies about to enter or exit financial
distress or bankruptcy, often below liquidation
value.

 Many of the strategies used by hedge

funds- benefit from being non-correlated to the
direction of equity markets

 HEDGING: Buying/selling a security to offset a

potential loss on an investment
 INVESTORS CLASS IN
HEDGE FUND
 Pension fund
 Endowment

 Insurance companies

 Private companies

 High net-worth individual

 individual
BENEFITS OF A HEDGE FUND
Provides an investment portfolio with lower
levels of risk and can deliver returns
uncorrelated with the performance of the stock
market.

Delivers more stable returns under most market

conditions due to the fund-of-fund manager’s
ability and understanding of the various hedge
strategies.

Significantly reduces individual fund and

manager risk.

Eliminates the need for time-consuming due

diligence otherwise required for making hedge
fund investment decisions.
Benefits of a Hedge Fund of
Funds contd….
Allows for easier administration of widely
diversified investments across a large
variety of hedge funds.
Allows access to a broader spectrum of
leading hedge funds that may otherwise be
unavailable due to high minimum
investment requirements.
Is an ideal way to gain access to a wide
variety of hedge fund strategies, managed
by many of the world’s premier investment
professionals, for a relatively modest
investment.
 MAJOR PLAYERS
GLOBAL INDIAN
– JP Morgan Chase – SBI
– Bank of America – ICICI
– HSBC
– PNB
– Citigroup
– HDFC
– Deutsche Bank
– Goldman Sachs
– Bank of Baroda
– Morgan Stanley – Corporation Bank
– Merrill Lynch – IDBI
– BNP Paribas – UTI
 STOCK BROKERAGES
A brokerage is a firm that acts as an
intermediary between a purchaser and a
seller. To broker a deal is to communicate
with both the buyer and seller as to
acceptable price on anything sold or
purchased.
A broker, a single person, or the brokerage
firm completes any necessary legal
paperwork, obtains the appropriate
signatures, and collects money from the
purchaser to give to the seller.
 THE HISTORY OF STOCK
BROKERAGE FIRMS

 Stock brokerage firms began back in

the 11th century with French and
Chinese trading markets.

 Early American stock brokerage firms

were started by companies like Merrill
Lynch, Smith Barney and Morgan
Stanley.
TYPES
There are primarily two types of
stock brokerage firms, based on
their mode of operation –

• Online Stock Brokerage Firms

• Off Line stock brokerage firms.
 STOCK BROKERAGE FIRMS
PROCEDURES
There are certain steps, that an investor needs to
follow before enlisting the services of a particular
stock brokerage firm. It is not advisable to trust a
stock brokerage without having done some research
on them beforehand.

The investors need to thoroughly go through the

website of the stock brokerage firm they are looking
to do business with. They may also read the
testimonials of satisfied customers of that particular
stock brokerage firm. Normally these testimonials are
available on the websites of these companies.
 THE FOLLOWING IS THE LIST
OF STOCK BROKER FIRMS IN
INDIA
ICICI Direct Share khan

India bulls Religare

Motilal Oswal Securities HDFC Securities
Reliance Money Geojit
Networth Stock Broking Kotak Securities
Limited (NSBL)
Angel Trade UTI Securities Ltd
(UTISEL)
•Brokerage firm stocks have changed
character greatly in the last 30 years
as trading barriers like the Glass
Steagel Act have fallen and emphasis
on trading profits has risen.

•Brokerage firm stock trades in three

subsets: the major brokerage firms,
regional firms, and money
management and private equity
firms.
STOCK BROKERAGE FIRMS PROCEDURES
There are certain steps, that an investor needs
to follow before enlisting the services of a
particular stock brokerage firm. It is not
advisable to trust a stock brokerage without
having done some research on them
beforehand.

The investors need to thoroughly go through

the website of the stock brokerage firm they
are looking to do business with. They may also
read the testimonials of satisfied customers of
that particular stock brokerage firm. Normally
these testimonials are available on the
websites of these companies.
Some Companies which come to
our college for Placement
ORIENTAL BANK OF COMMERCE
•Oriental Bank of Commerce, established on 19
February, 1943, in Lahore, is one of the public sector
banks in India.
•The bank was nationalized on 15th April, 1980. At
that time total working of the bank was Rs.483 crores
having 19th position among the 20 nationalised
banks.
•Within a decade the bank turned into one of the most
efficient and best performing banks of India.
•The bank has progressed on several fronts, such as
crossing the Business Mix mark of Rs.1.50 lacs crores,
reorienting of lending strategy through Large & Mid
Corporates and establishment of new wings viz., Rural
Development and Retail & Priority Sector.
•Highest productivity in the Indian banking
industry.
•Banks enjoys good reputation among customers
due to its prompt and customer friendly services in
comparison to other nationalised banks.

PROFILE: The bank generally offers a profile of

Manager Marketing.
SALARY: 4.60 lacs
SPECIALIZATION: Marketing, Finance.
 BLEND FINANCIAL
SERVICES LTD.
"Smooth journey of a fine blend"

•Blend Financial Services Ltd. is amongst the leading

and fastest growing financial services company in
India, with the prime objective of providing
personalized and customized solutions to the various
financing and investment requirements of clients.

•Company’s full-fledged service approach enables to

fulfill the clients' financing needs and requirements at
different stages of their dynamic business lifecycle.
PROFILE: Company generally offers the profile of
Assistant manager Corp Finance
PROCEDURE: Interview
SALARY: 3.5 lacs
SPECIALIZATION: Marketing, Finance, HR.
S. Name of Profile Procedure Salary Specialization
No. the Co.
1. Capital IQ Research Written 3.6 Marketing
Asscoiate Test, PPT, Lacs Finance
Interview CTC

2. Select City Management GD, 2.5- Finance

Walk Trainee Interview 3lacs Marketing

3. Pricewater Management Cv's 3 Lac Finance

coopers trainee Screening, CTC Students with
WT & the knowledge
Interview of Transfer
Prising.
4. GoldPlus Management Interview 2.4lacs Finance
trainee CTC Marketing

5. Reliance Management GD, 3.83 Finance

capital Ltd trainee Interview lacs Marketing
Ankita Bhatia
Shweta
Devgun
Nidhi Kumar
Ashish