This document provides an overview of financial services as part of a post-graduation program on the management of financial services. It defines financial services and discusses key concepts like types of financial services, traditional vs modern services, regulatory framework, and functions and characteristics of financial services. The document also includes chapter summaries on topics like marketing of financial services, capital market services, mutual funds and more.

1. Post graduation program
Subject : MANAGEMENT OF FINANCIAL SERVICES

2. 
S.NO. REFERENCE NO. PARTICULARS SLIDE NO.
1. Chapter 1 Financial Services
2. Chapter 2 Marketing of
financial services
3. Chapter 3 Capital Market
Services
4. Chapter 4 Mutual Funds
and Venture
Capital Funds
5. Chapter 5 Other Financial
services
INDEX

3. 
Topics to be covered
Concepts of financial services
Types of financial services
Fee based and fund based financial services
Regulatory framework of financial services in India
Chapter 1 Financial Services

4. 
 Financial services may be defined as the products and
services offered by financial institutions for the
facilitation of various financial transactions and other
related activities.
 Financial services can be defined as the products and
services offered by institutions like banks of various kinds
for the facilitation of various financial transactions and
other related activities in the world of finance like loans,
insurance, credit cards, investment opportunities and
money management as well as providing information on
the stock market and other issues like market trends.
Meaning : Financial Services

5. 
 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 c
ompanies, consumer-finance companies, stock
brokerages, investment funds, individual managers,
and some government-sponsored enterprises.[1
Definition:

6. 
 As per section 65(10) of the Finance Act, 1994, “banking and financial
services” means the following services provided by a banking company or
a financial institution including a non banking financial company, namely;
 (i) financial leasing services including equipment leasing and hire-
purchase by a body corporate;
 (ii) credit card services;
 (iii) merchant banking services;
 (iv) securities and foreign exchange (forex) broking;
 (v) asset management including portfolio management, all forms of fund
management, pension fund management, custodial depository and trust
services, but does not include cash management;
 (vi) advisory and other auxiliary financial services including investment
and portfolio research and advice, advice on mergers and acquisition and
advice on corporate restructuring and strategy; and
 vii) provision and transfer of information and data processing.
Defination

7. 
 Financial services refer to services provided by the
finance industry. The finance industry encompasses
a broad range of organizations that deal with the
management of money. Among these organizations
are banks, credit card companies, insurance
companies, consumer finance companies, stock
brokerages, investment funds and some government
sponsored enterprises.
Meaning

8. 
Financial Services

9. 
 Facilitating transactions (exchange of goods and services)
in the economy.
 Mobilizing savings (for which the outlets would
otherwise be much more limited).
 Allocating capital funds (notably to finance productive
investment).
 Monitoring managers (so that the funds allocated will be
spent as envisaged).
 Transforming risk (reducing it through aggregation and
enabling it to be carried by those more willing to bear it).
Functions of Financial
Services

10. 
 Customer-Specific
 Intangibility
 Concomitant
 Tendency to Perish
 People Based Services
 Market Dynamics
Characteristics and Features of
Financial Services

11. 
 Customer-Specific: Financial services are usually
customer focused. The firms providing these
services, study the needs of their customers in detail
before deciding their financial strategy, giving due
regard to costs, liquidity and maturity
considerations. Financial services firms continuously
remain in touch with their customers, so that they
can design products which can cater to the specific
needs of their customers.
Characteristics and Features of
Financial Services

12. 
 Intangibility: In a highly competitive global
environment brand image is very crucial. Unless the
financial institutions providing financial products
and services have good image, enjoying the
confidence of their clients, they may not be
successful. Thus institutions have to focus on the
quality and innovativeness of their services to build
up their credibility.
Characteristics and Features of
Financial Services

13. 
 Concomitant: Production of financial services and
supply of these services have to be concomitant. Both
these functions i.e. production of new and innovative
financial services and supplying of these services are
to be performed simultaneously.
 Tendency to Perish: Unlike any other service,
financial services do tend to perish and hence cannot
be stored. They have to be supplied as required by
the customers. Hence financial institutions have to
ensure a proper synchronization of demand and
supply.
Characteristics and Features of
Financial Services

14. 
 People Based Services: Marketing of financial services has to
be people intensive and hence it’s subjected to variability of
performance or quality of service. The personnel in financial
services organization need to be selected on the basis of their
suitability and trained properly, so that they can perform their
activities efficiently and effectively.
 Market Dynamics: The market dynamics depends to a great
extent, on socioeconomic changes such as disposable income,
standard of living and educational changes related to the
various classes of customers. Therefore financial services have
to be constantly redefined and refined taking into consideration
the market dynamics. The institutions providing financial
services, while evolving new services could be proactive in
visualizing in advance what the market wants, or being reactive
to the needs and wants of their customers.
Characteristics and Features of
Financial Services

15. 
 For Provision of funds
 For Managing investible funds
 For Risk financing
 For Consultancy services
 For Market operations
Types of Financial
Services

16. 
 Venture capital
 Banking services
 Asset financing
 Trade financing
 Credit cards
 Factoring and forfaiting
For provision of funds

17. 
 Portfolio management
 Merchant banking
 Mutual and pension funds
Managing Investible
Funds:

18. 
 Project preparatory services
 Insurance
 Export credit guarantee
For risk financing

19. 
 Project preparatory services
 Project report preparation
 Project appraisal
 Rehabilitation of projects
 Business advisory services
 Valuation of investments
 Credit rating
 Merger, acquisition and reengineering
For consultancy services

20. 
 Stock market operations
 Money market operations
 Asset management
 Registrar and share transfer agencies
 Trusteeship
 Retail market operation
 Futures, options and derivatives
For market operations

21. 
 (a) Equity and market research
 (b) Investor education
 (c) Training of personnel
 (d) Financial information services
Research and development

22. 
Provision of funds Managing
Investible
Funds
Risk
Financing
Consultancy
services
Market
Operations
1. Venture capital
2. Banking services
3. Factoring and
forfaiting
1.Portfolio
management
1.Project
preparatory
services
1.Project
preparatory,
2.Project report
preparation
3.Project
appraisal
1.Stock
market &
2.Money
market
operations
4. Asset financing
5.Credit cards
2.Merchant
banking
2.Insurance 4.Valuation of
investments
and credit
rating.
3.Asset
manageme
nt
6.Trade financing 3.Mutual and
pension funds
3.Export
credit
guarantee
5.Merger,
acquisition and
reengineering
4.Registrar
and share
transfer
agencies
Types of Financial Services

23. 
Financial services cover a wide range of
services. They can be broadly classified into
two, namely:
1. Traditional services
2. Modern services
Scope of Financial
Services

24. 
 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.
1. Fund based activities.
2. Non-fund based activities.
Traditional Activities

25. 
 It refers to services that are used to acquire assets or
funds for a customer.
Fund Based Services

26. 
 Fund based activities: The traditional services which
come under fund based activities are the following:
• Underwriting or investment in shares, debentures, bonds,
etc. of new issues (primary market activities).
• Dealing in secondary market activities.
• Participating in money market instruments
like commercial papers, certificate of deposits, treasury
bills, discounting of bills etc.
• Involving in equipment leasing, hire purchase, venture
capital, seed capital etc.
Fund Based Services

27. 
 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:
Non- fund Based
Services

28. 
 Managing the 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.
 Making arrangements for the placement of capital
and debt instruments with investment institutions.
 Arrangement of funds from financial institutions for the
clients project cost or his working capital requirements.
 Assisting in the process of getting all Government and
other clearances.
Non- fund Based Services

29. 
 Beside the traditional services, the financial
intermediaries render innumerable services in recent
times. Most of them are in the nature of non-fund
based activity. These activities have been in brief
under the head “New financial products and
services”.
Modern Activities

30. 
 Rendering project advisory services right from the preparation
of the project report till the raising of funds for starting the
project with necessary Government approvals.
 Planning for M&A and assisting for their smooth carry out.
 Guiding corporate customers in capital restructuring.
 Acting as trustees to the debenture holders.
 Recommending suitable changes in the management structure
and management style with a view to achieving better results.
 Structuring the financial collaborations/joint ventures by
identifying suitable joint venture partners and preparing joint
venture agreements.
Modern Activities

31. 
 Rehabilitating and restructuring sick companies through
appropriate scheme of reconstruction and facilitating the
implementation of the scheme.
 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.
 Undertaking risk management services like insurance services,
buy-back options etc.
 Advising the clients on the questions of selecting the best
source of funds taking into consideration the quantum of
funds required, their cost, lending period etc.
Modern Activities

32. 
 Guiding the clients in the minimization of the cost of
debt and in the determination of the optimum debt-
equity mix.
 Promoting credit rating agencies for the purpose of
rating companies which want to go public by the
issue of debt instrument.
 Undertaking services relating to the capital market,
such as 1)Clearing services, 2)Registration and
transfers, 3)Safe custody of securities, 4)Collection of
income on securities.
Modern Activities

33. 
 There are five broad classification of Regulatory
Framework related to Financial Services in India
which are as follows:
 1. Institutional Regulations
 2. Prudential Regulations
 3. Investor Regulations
 4. Legislative Regulations
 5. Self Regulations
Regulatory framework of
financial services

34. 
 Institutional Regulations also known as Structural
Regulations, are those that stem from a host of
Regulatory Institutions set up in a financial market
by the government.
 Structural regulations calls for a clear demarcation of
the activities of financial institutions.
 The object of these regulations is to promote healthy
competition among market players.
 SEBI and RBI are most important apex institutions
for regulation of these markets.
Institutional Regulations

35. 
 Regulations related to internal management of
financial institutions and other financial service
organizations regarding their capital adequacy,
liquidity and solvency may be called as “ prudential
regulations”.
 These regulations prevent the entry of firms without
adequate resources.
 Ex. RBI has come out with regulations related to
NBFCs in raising Public Deposits.
Prudential Regulations

36. 
 Regulations that are designed to protect the interest
of small and individual investors are called investor
regulations.
 The primary objective of these regulations is to
promote healthy trading and thereby instill
confidence in investors.
Investors Regulations

37. 
 These regulations are contained in the legislative
measures brought by the government from time to
time keeping in mind the need for all round
development of the financial service industry.
 Some of the important regulations are :
 Banking Regulation Act
 Securities Contracts (Regulation) Act
Legislative Regulations

38. 
 In addition to the regulations ordained by the
regulatory, institutions, legislations etc. there are self
imposed regulations.
 For instance, the foreign exchange dealers have their
own regulations, Merchant Bankers also have their
own regulations.
Self-Regulations