This topic totally deals with Financial services

1. FINANCIAL SERVICES
By:-
Srujan
Venu Gopal
Nithin kishore

2. INTRODUCTION
 The financial Services mobilizing and allocating
savings and all activities in the transformation of
savings into investment. It is otherwise called as
financial intermediation.
 Financial Services refers to those services
rendered by banks, Financial Institutions,
Insurance Companies, Banks and other
intermediaries in the financial market
intermediaries.

3. OBJECTIVES
1)Fund raising: Financial services help to raise the required funds
from a host of investors, individuals, institution and corporate. For
this purpose, various instruments of finance are used.
2)Funds deployment: An array of financial services is available in the
financial markets which help the players to ensure an effective
deployment of funds raised.
3)Specialized services: The financial service sector provides
specialized services such as credit rating, venture capital financing ,
lease financing, mutual funds, credit cards, housing finance, etc…
besides banking and insurance..
4)Economic growth: Financial services contribute, in good measure,
to speeding up the process of economic growth & development.

4. CHARACTERISTICS
1)Intangibility-Not visible in nature
2)Inseparability-Unique feature of service
3)Heterogeneity-Financial services can’t be
uniform for all. Vary from one customer to the
other.
4)Customer Orientation
5)Link-between banks and investors
6)Perishability-cannot be stored

5. CLASSIFICATION OF FINANCIAL
SERVICES
1) Traditional Activities
2) Modern activities

6. Traditional Activities
Fund based activities Fee based
activities
1)Leasing 1)Merchant
Banking
2)Hire Purchase 2)Credit Rating
3)Bills discouting 3)Loan syndication
4)Venture Capital 4) Bank Guarantees
5)Housing Finance 5)Stock Broking
6)Insurance
7)Factoring

7. LEASING
 A Lease is a contractual agreement.
 In which a party is owning an asset( lessor).
 Provide the asset for use to the another
party(lessee).
 For an agreed period of time

8. HIRE PURCHASE
 A method of buying goods through making
installment payments over time. Under a hire
purchase contract, the buyer is leasing the
goods and does not obtain ownership until the
full amount of the contract is paid.

9. BILLS DISCOUNTING
Bank takes the bill drawn by borrower on his
(borrower's) customer and pays him immediately
deducting some amount as discount/commission.
The Bank then presents the Bill to the borrower's
customer on the due date of the Bill and collects the
total amount.

10. VENTURE CAPITAL
 Money provided by investors to startup
firms and small businesses with perceived
long-term growth potential.
 This is a very important source of funding
for startups that do not have access to
capital markets.
 It typically entails high risk for the investor,
but it has the potential for above-average
returns.

11. HOUSING FINANCE
 Financial Support provided by the banks and
housing financial institutions for the purchase
or construction or renovation of the house to
the ultimate borrower.
 National housing Board (NHB) will be the
regulating authority for housing finance under
monitoring by RBI.

12. INSURANCE
Insurance is a form of contract or agreement
under one party agrees in return of a
consideration to pay an agreed amount of
money to another party to make goods for a
loss, damage, injury to something of value.

13. FACTORING
This is a financial transaction whereby a
business job sells its accounts receivable (i.e.,
invoices) to a third party (called a factor) at a
discount in exchange for immediate money
with which to finance continued business.

14. MUTUAL FUNDS
A mutual fund is a professionally managed type
of collective investment that pools money from
many investors to buy stocks, bonds, short-term
money market instruments, and/or other
securities

15. CREDIT RATING
 A credit rating estimates the credit worthiness
of an individual, corporation, or even a country.
It is an evaluation made by credit bureaus of a
borrower’s overall credit history.
 A credit rating is also known as an evaluation of
a potential borrower's ability to repay debt,
prepared by a credit bureau at the request of
the lender

16. MERCHANT BANKING
 A merchant bank is a financial institution which provides
capital to companies in the form of share ownership instead of
loans. A merchant bank also provides advisory on corporate
matters to the firms they lend to.
 Both commercial banks and investment banks may engage in
merchant banking activities.
 Merchant banks' original purpose was to facilitate and/or
finance production and trade of commodities.

17. LOAN SYNDICATION
 This refers to a loan arranged by a bank called
lead manager for a borrower who is usually a
large corporate customer or a government
department.
 It also enables the members of the syndicate to
share the credit risk associated with a
particular loan among themselve

18. Financial Services includes
 Money Management
 Portfolio management
 Stock broking
 Custodial Services
 Equipment leasing
 Retail financing
 Credit Card services
 Credit rating services
 Factoring services

19. MODERN ACTIVITIES
 Acting as trustees to the debenture holders.
 Undertaking risk management services like
insurance services, buy-hack options etc.
 Guiding corporate customers in capital
restructuring.
 Managing In- portfolio of large Public Sector
Corporations.

20. IMPORTANCE
1)Economic Growth
2) Promotion of Savings
3) Capital Formation
4) Provision of Liquidity

21. FUNCTIONS
 Mechanism for mobilizing savings
 Mechanism for storing wealth
 Liquidity
 Credit mechanism
 Payment system
 Risk Management
 Policy implementation
 Information provider

22. ADVANTAGES
1)Supplies a well-developed infrastructure.
2)Availability to open commercial and industrial parks.
3)Furnishes substantial tax incentives for businesses
4)Offers moderate operating costs.
Disadvantages
1)Operational inefficiency.
2) Political interference.
3) Traditional sector financing.
4) Higher provisioning for non-performing assets

23. PHASE 2
Articles published in journals and
magazines

24. ARTICLE 1
Retail banking in china
Chinese banking faces a dramatic transformation over the next ten years.
While we expect the overall profits of the sector to grow at an annual rate of
about 10 percent, the source of its earnings will change significantly.
Three main forces will propel these developments.
 The first is strong and increasingly consumption-driven GDP growth,
ranging from 7 to 9 percent in recent years.
 Second, demand for traditional corporate-banking products, particularly
deposits and loans, will fall.
 Third, over the next five to seven years, we believe that the Chinese
government will gradually deregulate interest rates. That will significantly
reduce margins on both deposits and corporate lending.

25. CONT’D
The shift in the profit mix from corporate to retail
gives foreign banks a golden opportunity to tap into
the Chinese banking market by targeting affluent
customers, much the most attractive segment.
Partnerships with Chinese institutions will probably
be necessary for foreign banks that wish to compete
for the affluent market. Working with a Chinese bank
thus not only helps a foreign one circumvent
regulatory hurdles but also gives it instant access to
an established body of customers.

26. ARTICLE 2
Banking behind the scenes
During 2001 and early 2002, we studied the relative efficiency of the back-office
operations of 13 European banks as well as how 20 banks in Europe and North
America handled such operations. We found that the world-class banks manage
their back-office and IT operations as a portfolio of individual factories, each
demanding a unique solution depending on its characteristics. Our first study, on
the relative efficiency of the back-office operations of different banks, showed
that unit-processing costs for the same product can vary a good deal. The second
study, on the way banks run their back offices, found that the wide range of
options fall into five "smart-sourcing" categories:
1)Internal upgrades
2)Outsourcing
3)External co-sourcing
4)Internal co-sourcing (shared service centers)
5)Insourcing

27. Phase 3
Indian &International financial
services in Banking Sector
Indian banking is a branch banking model.
We compared this with US banking which
is unit banking model.

28. Branch Banking Unit Banking
Deposits and assets Deposits and assets are Deposits and assets are nt
diversified,scattered and diversified and are at one
hence risk is spead at place,hence risk is not
various places. spread.
Operational freedom: Less Operational freedom. More Operational freedom.
Loans and advances: Loans and advances are Loans and advances can
based onmerit,irrespective be influenced by authority
of the status . and power.
Financial resources: Larger financial resources Larger financial resources
in each branch. in one branch
Decision-making: Delay in Decision-making Time is saved as Decision-
as they have to depend on making is in the same
the head office. branch.

29. Cost of supervision High Less
Mismanagement: Exists as improper use of Proper checks are taken
power and authority exist up.no misuse of
Mismanagement
Concentration of power in Yes No
the hand of few people
Specialisation: Division of labour is Specialisation not
possible and hence possible due to lack of
specialisation possible trained staff and
knowledge
Distribution of Capital: Proper distribution of No proper distribution of
capital and power. capital and power.
Rate of interest: Rate of interest is Rate of interest is not
uniformed and specified uniformed as the bank
by the head office or has own policies and
based on instructions rates.
from RBI.
Competition: High competiton with the Less competition within
branches the bank

30. PHASE 4
Industrial Practises

31. SBI MUTUAL FUNDS
At SBI Mutual Fund we know that every investor has
unique financial goals and requires a different set of
products. Which is why, we have a wide range of
schemes that fulfill every kind of investors’
requirements. Each scheme is managed by devising
a different strategy which is reflective of the
investors profile and carries with it different risks
and rewards.

32.  There are six basic asset classes, which
we manage, and variations of these six
asset classes form various products:
1)Equity Schemes
2)Hybrid Schemes
3)Debt income Schemes
4)Fixed Maturity Schemes
5)Liquid
6)Exchange trade schemes

33. SBI BANK
 Personal banking
 NRI services (Bank Deposits, Loans and
Remittances to Investments)
 Agriculture
 Corporate banking(Working Capital
Financing , Term Loans, Deferred Payment
Guarantees, Corporate Loans )
 Domestic banking services
 International banking