MARGINALIZATION (Different learners in Marginalized Group
Management financial services
1. Management financial services
Prepared by- Ajay Kumar
ROLL NO. -16PBA024
MBA 4TH SEM.
School of Management studies
Baddi University Emerging Sciences and
Technologies
3. Meaning
Management of financial services comprises two words management and financial
services.
Management means getting things done through other.
The term financial services means
• mobilizing and allocating savings
• all activities involved in the transformation of savings into investment.
In simple words management of financial services means use of management principles
(planning, organizing, directing and controlling) for the purpose of efficiently and
effectively use of financial services.
4. Features
• Financial services are Intangible
• Financial services are customer oriented
• The production and delivery of a service are simultaneous functions
• therefor are inseparable
• They are perishable in nature and cannot be stored
• They are dynamic in nature as a financial service varies with the
• changing requirements of the customer and the socio-economic
• environment. – must be dynamic socio economic changes, disposable
• income
• They are proactive in nature and help to visualize the expectations of the
• market
• They acts as link between the investor and borrower
• They aid in distribution of risks
6. Financial institutions
A financial institution (FI) is a company engaged in the business of dealing with
monetary transactions, such as deposits, loans, investments and currency
exchange.
Financial
institutions
Banking
institutions
Non-Banking
institutions Mutual Funds
Public sector Private sector
Insurance and
Housing Finance
companies
7. Financial market
A financial market is a market in which people trade financial securities,
commodities, and value at low transaction costs and at prices that reflect supply
and demand. Securities include stocks and bonds, and commodities include
precious metals or agricultural products.
8. Organised Markets -In the organized markets, there are standardized
rules and regulations governing their financial dealings. There is also a
high degree of institutionalization and instrumentalisation. These
markets are subject to strict supervision and control by the RBI or other
regulatory bodies.
Un-organised Markets - In these markets there are a number of money
lenders, indigenous bankers, traders etc., who lend money to the public.
Indigenous bankers also collect deposits from the public. There are also
private finance companies, chit funds etc., whose activities are not
controlled by the RBI.
9. Financial instruments
Financial instruments are monetary contracts between parties. They can be
created, traded, modified and settled. They can be cash (currency), evidence of
an ownership interest in an entity (share), or a contractual right to receive or
deliver cash (bond).
10. Cont.
Financial instruments refer to those documents which represent financial claims on
assets. As discussed earlier, financial asset refers to a claim to the repayment of a
certain sum of money at the end of a specified period together with interest or dividend.
Examples are Bill of exchange, Promissory Note, Treasury Bill, Government Bond, Deposit
Receipt, Share, Debenture, etc. Financial instruments can also be called financial
securities. Financial securities can be classified into:
(i) Primary or direct securities.
(ii) Secondary or indirect securities.
Primary Securities : These are securities directly issued by the ultimate investors to the
ultimate savers, e.g. shares and debentures issued directly to the public.
Secondary Securities : These are securities issued by some intermediaries called
financial intermediaries to the ultimate savers, e.g. Unit Trust of India and mutual funds
issue securities in the form of units to the public and the money pooled is invested in
companies.
11. Cont.
Short-term securities are those which mature within a period of one year. For
example, Bill of Exchange, Treasury Bill, etc.
Medium-term securities are those which have a maturity period ranging between one
and five years like Debentures maturing within a period of 5 years.
Long-term securities are those which have a maturity period of more than five years.
For example, Government Bonds maturing after 10 years.
12. Financial services
Financial services are the economic services provided by the finance industry,
which encompasses a broad range of businesses that manage money, including credit
unions, banks, credit-
card companies, insurance companies, accountancy companies, consumer-
finance companies, stock brokerages, investment funds, individual managers and
some government-sponsored enterprises.
13. Types of financial services
Capital market Services – It consists of consist of term lending institutions which mainly provide
long term funds.
Money market Services – It consists of commercial banks, financial institutions, co-operative
banks which providing short term funds agencies
Retail Service – Services provided to individuals for direct consumption
Wholesale Service – Services provided to corporate institutions which may be directly or indirectly
converted into retail services.
14. Fund Based Services – It refers to services that are used to acquire
assets or funds for a customer. It consists of –
– Primary market activities
– Secondary market activities
– Foreign exchange activities
– Specialized financial Services
Important fund based services include –
• Leasing
• Hire purchase
• Factoring
• Forfeiting
• Mutual funds
• Bill discounting
• Credit Financing
• Housing Finance
• Venture capital
Cont.
15. Cont.
Fee based services – When financial institutions operate in specialized
fields to earn income in form of fees, commission, brokerage or dividends it
is called a Fee based Service. They include –
• Issue Management
• Portfolio management
• Corporate counseling
• Merchant banking
• Credit rating
• Stock broking
• Capital restructuring
• Bank Guarantee
• Letter of Credit
• Debt Restructuring
16. Types of Financial Activities
Fund based Activities –
• Underwriting or investment in shares, debentures, bonds, etc. of new
• issues (Primary Market Activities)
• Dealing in secondary market activities
• Participating in money market instruments e.g. Discounting bills, treasury
• bills, certificate of deposit etc.
• Involving in equipment leasing, hire purchase, venture capitals
• Dealing in foreign exchange activities
17. Cont.
Fee based Activities –
• Managing the capital issue in accordance with SEBI guidelines enabling
• promoters to market their issue
• Making arrangements for placement of capital and debt instruments with
• investment institutions
• Arrangement of funds from financial institutions for clients project cost or
• working capital
• Assisting in getting all Government and other clearances
18. Cont.
Modern Activities –
• Rendering project advisory services right from the preparation of the
• project report till raising of funds
• Planning for Memorandum and Articles of Association and assisting for
• their smooth carry out
• Guiding Corporate Customers in capital restructuring
• Acting as trustees to the debenture holders
• Recommending changes in managing structure and style
• Structuring financial collaboration/Joint Venture by identifying partners
• and preparing Joint Venture agreements
19. Cont.
• Rehabilitating and Restructuring sick companies
• Hedging of risks by using swaps and other derivative products
• Managing the portfolio of large public sector corporations
• Undertaking risk management services e.g. Insurance, buy back options
• Advising clients
• Promoting credit rating agencies
• Minimizing cost of debt and determining optimum debt equity ratio