Financial Services Management

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Financial Services Management:

Financial Services Management Unit 1 Chapter 1 Financial Services & Indian Financial System

Financial Services:

Financial Services 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.

Financial Services:

Financial Services Financial Services include, Money Management Portfolio management Stock broking Custodial Services Equipment leasing Retail financing Credit Card services Credit rating services Factoring services

Financial Services Categories:

Financial Services Categories

Nature of Financial Service:

Nature of Financial Service Intangibility – Not visible in nature Inseparability - Unique feature of service Heterogeneity – Financial Services can’t be uniform for all. Vary from one customer to the other. Perishability – Cannot be Stored. Advisory Marketing of financial services – Different Channels. Techno Savy – MICR, RTGS, NEFT.

Advantages to the Public:

Advantages to the Public Promoting the overall savings of the economy Distribute the savings efficiently to and cater to the social-economic needs and To facilitate trade transactions and credit facilities.

Players of Financial Services:

Players of Financial Services

Indian Financial System:

Indian Financial System Indian Financial System comprises the banking sector, insurance sector, FIs, the Non-banking financial Companies (NBFCs) and the Housing Finance Companies (HFCs). The term ‘Financial System’ encompasses the institutions, the financial markets, financial instruments and a host of financial services.

Structure of Indian Financial System:

Structure of Indian Financial System

Financial Services:

Financial Services

Leasing :

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

Hire Purchase:

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.

Bills Discounting:

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.

Venture Capital:

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.

Housing Finance:

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

Insurance:

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

Factoring:

Factoring Factoring 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. FUNCTIONS OF FACTORING ARE: Administration of sellers sales Léger Collection of receivers purchased Provision of purchased Protection against risk of bad debts Rendering advisory services

Mutual Funds:

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

Merchant Banking:

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.

Credit Rating:

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

Functions of Financial System:

Functions of Financial System Mechanism for mobilizing savings Mechanism for storing wealth Liquidity Credit mechanism Payment system Risk Management Policy implementation Information provider

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