FINANCIAL SERVICES--MEANING

Financial service
It is part of financial system that deals with arrangement or deployment of funds through various
types of debt, equity and derivatives instruments. It includes both financial products and services.

It can further be defined as the products and services offered by banks and other financial institutions
for the facilitation of various financial transactions and other related activities in the world of finance
like giving/taking loans, selling insurance, issuing credit/debit cards, engaging in investment
opportunities and doing financial management as well as providing information on the stock market
and other issues like market trends, economy watch, various financial policies etc.

“FSs are the activities, benefits, and satisfactions, connected with the sale
of money, that offer to the users and customers, financial value”

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In financial instruments, we come across cheques, bills, promissory notes, letter
of credit, etc.

In financial products, we come across different types of LIC, Post Office

In services we have leasing, factoring, hire purchase finance etc. These financial

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 FEATURES OF FINANCIAL SERVICES
Intangible
Direct Sale: simultaneous production & distribution
Heterogeneity
Fluctuating demand
Protects customers’ interest like in banking/insurance organizations
Technology oriented
Geographical dispersion: massive branch network
Lack of special identity/uniqueness: product vs. package
High cost of information i.e. its creation, dissemination and use
Requires trained and experienced staff, firms need to make extra efforts to
attract, motivate and retain the human resources

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 Importance
1. Vibrant Capital Market.
2. Expands activities of financial markets.
3. Benefits of Government.
4. Economic Development.
5. Economic Growth.
6. Ensures Greater Yield.
7. Maximizes Returns.
8. Minimizes Risks.
9. Promotes Savings.
10. Promotes Investments.
11. Balanced Regional Development.
12. Promotion of Domestic & Foreign Trade.

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 WHO PROVIDES FINANCIAL SERVICES
Specialized Financial Institutions/Development banks
IFCI,ICICI, IDBI, SFCs, SIDCs, IIBIL, UTI, SIDBI so on

Commercial banks
HDFC, Citi Bank, ICICI Bank, IDBI Bank, AXIS Bank, YES Bank etc

Stock exchanges
Finance Companies
Investment Companies
Unit trusts
Leasing Companies
Non-Banking Finance Companies
Credit Rating Agencies
Mutual Funds

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 KINDS OF FINANCIAL SERVIICES
Asset/Fund Based services Fee Based/Advisory Services
 Issue Mgmt.
 Portfolio Mgmt.
 Equipment Leasing  Corporate Counseling
 Hire Purchase  Loan Syndication
 Merger & Acquisition
 Bills Discounting  Capital Restructuring
 Venture Capital  Credit Rating
  Stock Broking
Housing Finance
 Insurance Services
 Factoring  Custodial Services
 Underwriting
 Mutual funds

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 Securities Trading,
Financial activity involving transactions of property such as stocks, bonds,
commodities, and currency instruments giving, to their legal holders rights
to money or other property. Securities include stocks, bonds, notes,
mortgages, and bills of exchange. Although the trading of stocks and bonds
dates back several centuries in many Western nations, the development of
the securities industry since World War II has been sweeping. The advent of
new technologies, particularly in computers and telecommunications, has
brought about a new era in securities trading. Traditionally stock exchanges
were recognized as organized markets for the trading of stocks and bonds.
Such markets were originally open to all, but at present only members of
the owning association may buy and sell directly.
Now there is another method(over-the-counter) of buying and selling
securities outside the organized stock exchange. Unlike an organized stock
exchange, the over-the-counter market is composed of dealers who
negotiate most transactions by telephone and computer.

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 Online Trading Offline Trading
Money saving opportunities  The one benefit that an investor
appreciates the most is that they are
Instant online access
not alone when making investment
Enter online trades at anytime Decisions
With online trading you are in charge  There are experienced and
professional brokerage companies that
handle their investments for them
 Investors are not faced with the
challenge of making these vital
investment decisions; especially, if
they do not have the experience
necessary to make the appropriate
investments
 Also, there is someone there to
answer any questions that may cause
concerns

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