FINANCIAL SERVICES

Introduction
Meaning and Definitions
Features of Financial Services
Significance of Financial
Services
Types of Financial Services
Growth and Development of
Financial Services in India
Regulation of Financial Services

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Introduction
Every one depends on services of
others directly or indirectly. Service
sector plays an important role in the
present economy. Now the services
are dominating. Therefore, the
institutions providing services are
increasing, which has resulted into
an increase in varieties of services.
The term service is difficult to define,
since sometimes it includes certain
products also.

According Stanton Services are separately

identifiable, intangible activities which provide
want satisfaction when marketed to customers
and/or industrial users and which are not
necessarily tied to the sale of a product or
another service.

According to Gronross a service is an activity

or series of activities more or less intangible
nature that normally, not necessarily, take place
in interactions between the customer and
services employees and/or physical resources or
goods and/or system of the services provider,
which are provided as solution to customers
problems.

FEATURES OF SERVICE
1. Intangible in nature
2. Heterogeneous in character
3. Production, distribution and consumption
takes place simultaneously
4. An activity or series of activities
5. Cannot be stored
6. Consumer take part in its production
7. Costumer has to just enjoy the service
8. Costumer will not get ownership of service

FINANCIAL SERVICE
The services can be broadly classified
into Financial Services and Non-financial
Services. Earlier banks used to provide
financial services. Due to the increased
width and length of financial services,
financial services has gone radical
changes and thus specialized institutions
have come into existence to cater the
needs of community.

Financial service cater to the needs of

financial institutions, financial markets and
financial instrument geared to serve individual
and institutional investors.
Financial service is concerned with design and
delivery of advice and financial products to
individuals and businesses.
It includes services, activities and financial
products to cater the needs of both
savers/investors and users/industries.

Definition of Gronross when applied to financial

service gives the following meaning:
a financial service is an activity or series of
activities more or less intangible nature that
normally, not necessarily, take place in interactions
between the customer and services employees
and/or physical resources or goods and/or system
of the services provider, which are provided as
solution to savers and users problems.
Financial service refers to mobilizing and allocating
savings effectively, efficiently and economically.

FEATURES OF FINANCIAL SERVICES

Costumer oriented
Intangible
Perishable
Inseparable
Fluctuation in demand
Geographical dispersion
Labour intensive
Information based
Need quality labour

SIGNIFICANCE OF FINANCIAL
SERVICES

Savings and investment

Economic growth
Contribution to GNP
Capital formation
Safety, liquidity & profitability
Provision of finance
Role in money market
Generation of employment
National importance

1.Types of Financial Services

A. Traditional Services
a. Fund Based Services
b. Non-fund/Fee Based Services
B. Modern Services
2. A. Insurance and Insurance Related
Services
B. Banking and Other Financial
Services

A. Traditional Services:
Fund Based Services:
*
*
*
*
*
*
*
*
*

Lending
Underwriting
Leasing/Finance
Hire Purchase
Consumer Credit
Housing Finance
Bill Discounting
Insurance
Foreign Exchange

Non-fund Based/Fee Based Services:

* Capital Issue management
* Investment Consultancy
* Loan Syndication
* Stock Broking
* Guaranteeing
* Government Clearance
* Port-folio Management
* Raising Foreign Fund
* Placement of Debt

Modern Services:
* Depositaries * Custodial
* Credit Cards * Venture
* Credit Rating Capital
* Factoring * Mergers and
* Forfeiting Acquisitions
* Project Advice * Debt
* Mutual Fund Securitization
* Risk Management * Hedging of Risks
* Merchant Banking

Other Classification of Financial Services

A. Insurance & Insurance Related Services:
* Underwriting of Financial Risks in Life &
Non-life products
* Speciality Insurance Products
* Re-insurance
* Insurance Brokerage
B. Banking & Other financial Services:
a) Fee Based Commercial Banking
Business:
* Financial Management & Transaction
Services
* Advisory Services

* Custody Services
* Credit Card Services
* Letter of Credit for Business
Financers
b) Securities Related Services:
* Security Lending Services
* Mutual Fund Services
* Security Clearance
* Settlement Services
* Securities Trade Services
* Private Placement
* Underwriting Services

Growth and Development of Financial

Services in India: The following three stages can be identified
with the growth and development of Financial Services in India.

1st Stage
1960-1980

2nd Stage
1980-1990

3rd Stage
1991 onwards

a. Merchant banking d. Over the counter j. New

instruments
b. Insurance
services
k. Depository
c. Leasing
e. Mutual funds
Services
f. Factoring
l. Dematerialization
g. Discounting
m. Online trading
h. Venture capital
n. Book building
i. Credit rating

New Financial Instruments:

1. Treasury Bills/TBs
3. Commercial Papers
5. Deep Discount Bonds
6. Swaps
8. Commercial Bills
10. Securitized Debt
12. Bills Rediscounting
Scheme
14. Index-linked Guilt Bonds

2. Certificate of Deposits/CDs
4. Zero Interest convertible
Debenture/Bond
7. Repos & Reverse Repos
9. Call & Short Notice money
11. Inter-bank participation
Certificates/IBPC
13. Option bonds
15. Convertible Bonds

Regulation of Banking &

Financial Services
Regulation

of Banking and Financial Services

Regulation of Insurance Services
Regulation of Investments and Fee Based
Services
Regulation of Merchant Banking and other
Services

a. Regulation of banking & Financial Services:

b.
c.

* Banking Regulation Act 1949

* Reserve Bank of India
* Notification Rules and Directions
Insurance Services:
* Insurance Act 1938
* Insurance Regulatory Authority
Investment & Fee Based Services:
* Securities Contract Act 1956
* Indian Companies Act 1956
* Securities and Exchange of India
* Regulations, Guidelines and clarifications

d. Merchant Banking and Other Services

* Securities Exchange Board of
India Regulation Act 1992
* SEBI Rules for Registrar to an
Issue and Share Transfer Agent
1993
* SEBI (Bankers) Regulations 1994
SEBI (Debenture Trustees) 1993
Code of Advertisement to Capital
Offerings

 Various Acts, Authorities, Regulations & Provisions

Regulating Financial Services:
* Banking Regulation Act, 1949
* Reserve Bank of India
* Banking Laws Act, 1963
* SEBI (Merchant Banker) Regulation Act, 1992
* SEBI Rules for Underwriters
* SEBI (Brokers & Sub-brokers) Regulation, 1992
* SEBI Rules for Registrar to an Issue & Share
Transfer Agent, 1993
* SEBI (Bankers to an Issue) Regulations, 1994
* SEBI (Debenture Trustees) Regulations, 1993
* Code of Advertisement to Capital Offerings

ANY
QUARRIES * * * * *

THANK
YOU