SHARATH CHANDRA.M.S.

VINOTH BABU
VINOTH ARUMUGAM
AVUDAIPAN RAMIAH
DINESH MUTHU

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AGENDA

 FS-MEANING
 CONCEPT
 FUNCTIONS
 FS ENVIRONMENT
 SCOPE OF FS
 GROWTH OF FS IN INDIA
 FS SECTOR –PROBLEMS

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MEANING

 Services offered by banking & financial

companies.

 "mobilizing and allocating savings".

 Thus it includes all activities involved in the

transformation of savings into investment.

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CONCEPT-FINANCIAL SERVICES

LEASING CO,
MUTUAL FUNDS,
ASSET MGT MERCHANT BANKERS
CO PORTFOLIO MGT.
BANKING &
FINANCIAL CO
LIABILITY
MGT CO BILL DISCOUNTING
ACCEPTANCE HOUSES.

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TYPES OF FS

INFORMAL
FORMAL FINANCIAL
FINANCIAL SERVICES SERVICES

• Accounts • Payday lenders

• Credit cards • Check cashing services
• Loans • Pawn shops
• Investment vehicles • Title lenders
• Direct deposit • Loans from family/friends
• Remittances • Cultural savings clubs
• Remittances offered through
nonfinancial institutions

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FUNCTIONS OF FS

 FUND RAISING
Help raise funds from host of
investors,corp,individuals.
 FUNDS DEPLOYMENT
Assist in decision making of profitable financing
mix.
 REGULATION
SEBI, RBI, Dept of Banking Insurance-ensures
orderly functioning of the financial markets
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FUNCTIONS OF FS….

 ECONOMIC GROWTH
Proper Channelizing of the funds -> speeds up
Economic growth
Developing country’s have greater rate of savings and
productive investments

 SPECIALIZED SERVICES
Credit Rating ,Venture Financing, lease financing,
factoring, merchant banking , stock lending,
insurance, hire purchase etc.
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 Credit Rating:
Credit Rating is a symbolic (alphanumeric) indicator of the
current opinion of the issuer to service its debt in timely
fashion.

 Venture capital financing: It is a type of financing

by venture capital. Venture capital is the capital invested in high
risk enterprises.

 Leasing: A Lease is a contractual agreement between two

parties, the lessor who is the owner of the asset and the lesser
who is the user of the asset.
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Factoring: The firm enter in to a factoring contract where it
sell its account receivables to another firm called Factor for
a commission.

Merchant Banking: Merchant Banking is a systematic

application of all enterprise developed with regard to
floatation of new companies, preparation, planning &
execution of new projects, giving expert guidance &
managing new floatation or new promotions of enterprises.

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PLAYERS IN FINANCIAL MARKETS

BUSINESS
HOUSE
FIRMS
HOLDS

FINANCIAL
GOVT
FIRMS

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FS-ENVIRONMENT
EMPLOYM
ENT
EXCHANGE
TRADE
RATE CYCLE

GLOBAL
PORTFOLIO
MGT FSE COMPETITI
ON

INFLATION
ECO.GRO
WTH
TECHNOLOGY

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 EMPLOYMENT-Full employment ensures
better utilization of a nation.-enhances GNP
 TRADE CYCLE:
▪ Periodic fluctuations in levels of economic or business
activity which is reflected in the variation in GNP.
 INFLATION:
▪ Brings out a change in the pattern of income distribution
 ECONOMIC GROWTH:
▪ Nation’s total output over a period-which depicts the
standard of living of its people.
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 Technological Changes:
 IT has become a fundamental force underlying
change and innovation in financial markets.
 Exchange Rate :
 BOP –is a systematic record of all economic
transactions of a country with the rest of the
world in an accounting year.
 This exchange rate influences the financial
services.

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 Enhanced Competition:
 Technological advancement has given rise
–”FINANCIAL SUPERMARKETS” which show
services have become customized offering new
products.
 Global Portfolio:
 Strong impact on nature of developments to take
place in the financial markets around the globe.

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FINANCIAL SERVICE SECTOR-
PROBLEMS
 Lack of Expertise
 Inadequate accommodation
 Inadequate Technology
 Inadequate Quality Service
 Restricted scope of operations
 Limited Innovation
 Lack of reliable benchmarking
 Unfair & unethical practices
 Captive Organizations
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 GROWTH OF FS IN INDIA
GROWTH OF FINANCIAL SERVICES SECTOR IN INDIA

MERCHANT BANKING ERA

INVESTMENT COMPANIES ERA

FINA
FINA MODERN SERVICES ERA NCIA
NCIA L
L DEPOSITORY ERA INST
SYST ITUIT
EM LEGISLATIVE ERA IONS

FII ‘S ERA

FINANCIAL MARKETS

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Scope of Finacial Services

 Financial services cover a wide range of

activities. They can be broadly classified into
two, namely :
 i. Traditional. Activities
 ii. Modern activities.

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Traditional Activities

 Traditionally, the financial intermediaries

have been rendering a wide range of services
encompassing both capital and money
market activities. They can be grouped under
two heads, viz.
 a. Fund based activities and
 h. Non-fund based activities.

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Fund based Activities

 i. Underwriting or investment in shares,

debentures, bonds, etc. of new issues
(primary market activities).

 ii. Dealing in secondary market activities.

 iii. Dealing in foreign exchange market

activities.

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 iv. Participating in money market instruments
like commercial papers, certificate of
deposits, treasury bills, discounting of bills
etc .
 v. Involving in equipment leasing, hire
purchase, venture capital, seed capital.

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. Non fund based activities

 Financial intermediaries provide services on

the basis of non-fund activities also. This can
be called 'fee based' activity. Today
customers, whether individual or corporate,
are not satisfied with mere provisions of
finance. They expect more from financial
services companies. Hence a wide variety of
services, are being provided under this head.
They include :
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 i. Managing die capital issue — i.e. management
of pre-issue and post-issue activities relating to the
capital issue in accordance with the SEBI guidelines
and thus enabling the promoters to market their
issue.
 ii. Making arrangements for the placement of
capital and debt instruments with investment
institutions.
 iii. Arrangement of funds from financial institutions
for the clients' project cost or his working capital
requirements.
 iv, Assisting in the process of getting all
Government and other clearances.
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Modern Activities

 Beside the above traditional services, the

financial intermediaries render innumerable
services in recent times. Most of them are in
the nature of non-fund based activity. In view
of the importance, these activities have been
in brief under the head 'New financial
products and services'. However, some of the
modern services provided by them are given
in brief hereunder.
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 i. Rendering project advisory services right
from the
 preparation of the project report rill the
raising of funds for starting the project with
necessary Government approvals.
 ii. Planning for M&A and assisting for their
smooth carry out.
 iii. Guiding corporate customers in capital
restructuring

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 iv. Acting as trustees to the debenture holders.
 v. Recommending suitable changes in the
management structure and management style with
a view to achieving better results.
 vi. Structuring the financial collaborations / joint
ventures by identifying suitable joint venture
partners and preparing joint venture agreements,
 Rehabilitating and restructuring sick companies
through appropriate scheme of reconstruction and
facilitating the implementation of the scheme.

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 viii. Hedging of risks due to exchange rate
risk, interest rate risk, economic risk, and
political risk by using swaps and other
derivative products.
 Managing [In- portfolio of large Public
Sector Corporations.
 x. Undertaking risk management services
like insurance services, buy-hack options etc.

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THANK YOU

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