The document introduces the financial services sector as a significant global industry focused on the mobilization and allocation of savings for investments. It outlines the main functions of financial services, such as fund raising, deployment of funds, and the provision of various financial services, along with the regulatory environment in India. Additionally, it emphasizes the role of financial services in promoting economic growth, capital formation, and employment opportunities, while also discussing the impact of financial innovation on the sector.

2. Chapter 1: INTRODUCTION TO FINANCIAL SERVICES
INTRODUCTION: Financial service sector is one of the
largest industry in the world. In narrow sense financial
services means, merely a financial intermediation. But in
broader sense it means “ mobilization and allocation of
savings” i.e. transformation of savings into an investment.
This term is also used to describe organizations that deal
with management of money i.e. banks, investment
companies and other various financial institutions

3. Therefore…

4. FEATURES OF FINANCIAL SERVICES:
 Financial Service Market
 Customer Oriented
 Intangibility
 Simultaneous Performance
 Technology
 Economic Growth
 Perishability

5. FUNCTIONS OF FINANCIAL SERVICE
FUNCTIONS
FUND RAISING
DEPLOYMENT OF FUNDS
DIFFERENT SERVICES
REGULATIONS
ECONOMIC GROWTH AND
DEVELOPMENT
FRIEND2

6. FUND RAISING
• Financial services help to raise the
funds
• There are various sources to raise the
funds
• For E.g. group of investors,
individuals, institutions and
corporate’s
• The funds are raised by Corporate’s
and individuals etc.
Cash Loans
Equity
Bonds and
Debentures
Etc….

7. DEPLOYMENT OF FUNDS
Savings from people
in form of deposits
AND
deploys them in form
of loans, advances,
investments
To meet the increasing
responsibilities arising
from developing
companies
• A lot of variety of financial
services are available in
the financial markets
which help the players to
ensure an effective
deployment of the funds
raised
• Financial services assist in
the decision making
regarding the financing mix

8. DIFFERENT SERVICES
• Financial Service Sector
provides various services
• Such as, venture capital, credit
rating, financing depository etc.
• Banks, Financial Institutions,
NBFCs and various other
institutions provide these
financial assistance/ services

9. REGULATIONS • These financial institutions
are regulated by some
agencies .
• In India such agencies are
SEBI, RBI, Department of
Banking and Insurance of
Government of IndiaECONOMIC GROWTH AND
DEVELOPMENT
• Financial Services contribute good
measure for speeding up economic
growth and development
• This takes place through mobilization
of savings across section of people , for
the purpose of channelizing them into
productive investments

11. FUNCTIONS OF FINANCIAL SERVICE
FUNCTIONS
FUND RAISING
DEPLOYMENT OF FUNDS
DIFFERENT SERVICES
REGULATIONS
ECONOMIC GROWTH AND
DEVELOPMENT
FRIEND2

12. MOBILIZATION OF RESOURCES
ASSIST IN DECISION MAKING
SKILLFUL SERVICES
ECONOMIC STABILITY
REGULATION

13. MOBILIZATION OF RESOURCES
• The market is combination of
Borrowers and Savers
• Therefore Financial Service
Providers try to channelize the
savings of individuals and allocate
them into the corporate sector
who is in the need of finance to
make savings use in productive
way
Individual
Savings
Banks/Finan
cial
Institutions
Loans to
Corporate
Sector
Repayment
of Loans
Returns to
Individual
In form of
Interest

14. ASSIST IN DECISION MAKING
• The finance companies will show to the investors, to park their resources
in a better and safety place in the financial service market.
• They assist in decision making regarding the services of decision making
for eg. Factoring and Bill Discounting, Merchant Banking
SKILLFUL SERVICES
• The financial Services Require Specialized Knowledge and Greater Efficiency
• The knowledge is a key factor and will require instant and immediate decision
making powers

15. ECONOMIC STABILITY
• A stability in economy depends upon the infrastructure of the financial
system
• The financial services occupy prime role in economic growth
• Wealth generation is possible only with efficiency of financial services
REGULATION
• The financial regulatory authority in india includes SEBi, RBI and
Insurance Regulatory Development Authority (IRDA) and Banking
Department of Central Government

16. ECONOMIC GROWTH
PROMOTION OF SAVINGS
CAPITAL FORMATION
PROVISION OF LIQUIDITY
FINANCIAL INTERMEDIATION
CONTRIBUTION TO GNP
CREATION OF EMPLOYMENT OPPORTUNITIES
E P C P F C P

17. • Financial services such as mutual funds provide ample opportunity for
different types of saving.
• Different types of investment options are made available for the
convenience of pensioners as well as aged people so that they can be
assured of a reasonable return on investment without much risks.
• For people interested in the growth of their savings, various
reinvestment opportunities are provided.
• The laws enacted by the government regulate the working of various
financial services in such a way that the interests of the public who
save through these financial institutions are highly protected For ex,
Insurance Regulatory and Development Authority has introduced Act
for Insurance Companies i.e. Insurance Act,1938
PROMOTION OF SAVINGS

18. CAPITAL FORMATION
• One of the barometers of any economy is the presence of a vibrant
capital market.
• If there is hectic activity in the capital market, then it is an indication of
the presence of a positive economic condition.
• The financial services ensure that all the companies are able to acquire
adequate funds to boost production and to reap more profits eventually.
• In the absence of financial services, there will be paucity of funds which
will adversely affect the working of companies and will only result in a
negative growth of the capital market.
• When the capital market is more active, funds from foreign countries also
flow in. Hence, the changes in capital market is mainly due to the
availability of financial services.
PROVISION OF LIQUIDITY
• The financial services facilitate easy conversion of financial assets
into liquid cash
• It promotes liquidity system by allocating and reallocating savings and
investment into various economic activity

19. FINANCIAL INTERMEDIATION
• Financial service industry facilitates function of intermediation between
savers and investors by providing means of exchange and by undertaking
innumerable services
CONTRIBUTION TO GNP
The contribution of financial services to GNP has been increasing year
after year in all countries
CREATION OF EMPLOYMENT OPPORTUNITIES
Financial service industry creates thousands of new employment
opportunities every year.

20. SCOPE OF FINANCIAL SERVICES
TRADITIONAL APPROACH MODERN APPROACH
FUND BASED SERVICES FEE BASED SERVICES
Housing Finance Credit Rating Project Advisory Service
Hire Purchase Merchant Banking Clearance of Government approval
Factoring Management of Public Issue Mergers and Acquisitions
Venture Capital Portfolio Management Capital Structuring Service
Forfeiting Project Counseling Management Advisory Service
Underwriting Advisory Service Insurance
Mutual Funds Loan Syndication Collection of Income on service
Bills Discounting Investment Service to NRI’s Other Services
Foreign Exchange Service Intermediation
Insurance Service Depository Service
Leasing Finance Other Services

21. FINANCIAL INNOVATION:
• Basically financial innovation means creation of new financial
assets or new ways to use existing financial assets.
• Advances over a time in financial instruments, services and
payment system used in lending, borrowing
• Financial innovation is extremely desirable in long run.
• These changes includes innovations in technology, risk transfer
and equity generation.
• As a result of innovation new products and instruments are
emerging in capital market.
• Many financial intermediaries have started expanding their
activities in financial services sector by offering a variety of new
products.

22. Causes for
Financial
Innovation
Global
Impact
Competition
Demand
Technology
Economic
Liberalizati
on
To
Increase
Profit