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1.5 Classification of Financial Services Industry ………………………….6
1.6 Participants Involved In Providing Financial Services…………………7
Section-II Overview of Financial Services
2.1 Objectives of Financial Services……………………………………….8
2.2 Structure of Indian Financial System…………………………….……………......9
2.3 Scope of Financial Services…………………………………………..11
2.4 Features of Financial Service ……………………….……………......13
2.5 Growth of Financial Services ……………..…………………………14
2.6 Challenges faced by Financial Services Industry…………………….15
2.7 Development of financial Services in India…………………………..16
2.8 Structure of the Indian Banking Industry……………………………..17
Section-III Bank as a Financial Service Provider
3.1 Introduction of Bank…………………………………………………15
3.2 Nationalisation of Banks in India……………………………………16
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FINANCIAL SERVICES3.3 Functions of a Bank……………………………………………….…..17
3.4 Financial Services by Banks in Rural Sector…………………….………………24
3.5 Banking Services Provided by Through Different channels…………21
Section-IV Financial Services
4.1 Mutual Fund Services
4.1.1 Introduction Mutual Fund……………………….…………………26
4.1.2 Definition of Mutual Fund ………………………………………...27
4.1.3 Types of Mutual Fund…………..…………………………………..28
4.1.4 Benefits of Investing in Mutual Fund……………………………..29
4.1.5 Risks in Involved in Investing in Mutual Fund ………….……….31
4.1.6 Rights of Mutual Fund Holder in India……………………………33
4.2 Venture Capital Services
4.2.1 Introduction of Venture Capital……………..……………………..32
4.2.2 Meaning of Venture Capital………………………………………..33
4.2.3 Features of Venture Capital………………………………………..33
4.2.4 Scope of Venture Capital…………………………………………..34
4.2.5 Venture Capital Regulations in India………………………………36
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Section-V Finance Services
5.1 Derivative
5.1.1 Introduction of Derivative’s…………………………………….....37
5.1.2 Benefits of Derivative’s…………………………………………38
5.1.3 Types of Derivative’s…………………………………………..38
5.2 Merchant Banking
5.2.1 Introduction of Merchant Banking…………………………………42
5.2.2 Mrechant Banking Indian Scenario………………………………..43
5.2.3 Guidelines for Merchant Bankers………………………………..44
5.2.4 Services Rendered by Merchant Banks…………………………..45
Section-VI Financial Services
6.1 Leasing Services
6.1.1 Introduction of Leasing ……….……….……………………………46
6.1.2 Definition of Lease ……………..…………………………………..47
6.1.3 RBI Guidelines to Leasing Companies ……………………………..48
6.1.4 Types of a lease ……………………………………………………....47
6.2 Factoring Services
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FINANCIAL SERVICES6.2.1 Introduction to Factoring…………………………………………..50
6.2.2 How does Factoring Works………………………………………...51
6.2.3 RBI Guidelines for Factorings……………………………………..52
6.2.4 Benefits of Factoring……………………………………………….53
6.2.5 Different types of Factoring……………………………………….54
6.2.6 Bank Finance to Factoring Companies…………………………….55
.
Section-VII Risk and Benefits of Financial Services
7.1 Risks of Outsourcing Financial Services by banks……….………….56
7.2 Pros of Financial Services……………………………….…………..58
7.3 Cons of Financial Services…………………………………………..60
Section-VIII Scenario of Financial Services
8.1 Current Scenario of Financial Services…………..………………….62
8.2 Future of Financial Services………………………………….………63
Case Study of Housing Loan……………………………………………64
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FINANCIAL SERVICESConclusion of Financial Services………………………………………..74
Articles.
Abbreviations.
Glossary.
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1.1 Introduction of Financial Services1.1 Introduction of Financial Services
A financial service is a term used to refer to the services provided by the finance industry. A financial service is also the terms used to describe organizations that deal with the management of money. Banks, investment banks, insurance companies, credit card companies and stock brokerages, are examples of the types of firms comprising the industry, which provides a variety of money and investment related services. Financial services are the largest industry (or industry category) in the world, in terms of earnings; as of 2004, the industry represents 20% of the market capitalization.
Finance is the ability of funds management. Finance includes saving money and frequently includes lending money. The field of finance deals with the concepts of time, money and risk and how they are interconnected. Finance also deals with how funds are spent and budgeted. Services which are provided in the finance industry are known as financial services. There are number of services which are included in the category of the financial services and all these services are provided by the financial institutions. There are a number of other financial services which are provided by each financial institution like commercial banks carry out consumer financing and investment banks carry out securities trading. Financial services result in a huge market which is known as financial market.
The programs and services such as planning and management of finances and planning of the banking investments and providing the insurance are all a part of the financial services. These financial services, which are provided by the financial institutions, comprise of the financial transactions. A financial transaction is process that enables a person to either make an investment or clear the debts, or investment in any other form.
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FINANCIAL SERVICESThese days the method of transaction between the organizations and the individual
has taken a new form and the concept of electronic. These are the services which
an insurance company provides, which can be taxed.
The retrieval of money in any form through credit cards or the debit cards is all a form of financial transactions. The financial services are all aimed at providing facilities to the public, using which people can invest their money in a safe place. Insurance policies are important to help keep the future safe. These financial services are aimed to make the people financially stable. But any investment that a person makes must be well calculated. Financial services are an important part of any financial organization because only through these financial services does a financial organization grows. The main aim of all of the above mentioned industries is to provide the financial services to the general public.
Concept of Financial servicesConcept of Financial services
The Finance services industry though a highly profitable Industry with respect to earnings does not count for a large share of the market and also employs a lesser number of people as compared to some of the other Industries. Financial services through the network of elements such as financial institution, financial market, and financial instruments serve the individuals, institutions and corporates. Financial services are provided by banks, insurance companies, general financial institution, and stock exchanges
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FINANCIAL SERVICES
1.2 Definition of Financial Services1.2 Definition of Financial Services
Financial Service 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.
.
1.3 History of Financial Services1.3 History of Financial Services
The term financial services became more prevalent in the United States partly as a result of the Gramm-Leach-Bliley Act of the late 1990s, which enabled different types of companies in the US financial services industry to merge. Critics of this act say the term financial services attempts to make the unison (UNION) of these operations sound natural, ignoring the history of problems that have arisen from combining them, such as conflicts of interest and monopolization . Others, noting that many of the restrictions abolished by the Gramm-Leach-Bliley Act had never existed in other countries or had been abolished earlier than in the US, say the term financial services is a natural one, in long term use, which means nothing more than its constituent words.
Companies usually have two distinct approaches to this new type of business. One approach would be a bank which simply buys an insurance company or an investment bank, keeps the original brands of the acquired firm, and adds the acquisition to its holding company simply to diversify its earnings.
The growth development of financial system is measured in terms of the width and depth of the range of products offered by it. There has been limited innovation in the realm of financial services products. It is imperative therefore that the financial services sector works to achieve growth and development, by innovating an introducing a wide range of financial products tailor-made to suit the needs of varying entrepreneurs.
For instance, a number of tailors made and imaginatively designed financial packages may be offered by the venture capital fund to satisfy the needs of entrepreneurs.
Similarly leasing firms should be encouraged to provide leasing facilities for a variety of capital equipment, besides ensuring that leasing companies are not created merely to trade in tax shields at government cost.
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1.5 CLASSIFICATION OF FINANCIAL SERVICES INDUSTRY
I) Capital market intermediaries andII) Money market intermediaries.
The capital market intermediaries consist of term lending institution and investing institutions which mainly provide long term funds. On the other hand, money market consists of commercial banks, co-operative banks and other agencies which supply only short term funds. Hence, the term ‘financial services industry’ includes all kinds of organizations which intermediate and facilitate financial transactions of both individuals and corporate customers.
For e.g.
1) Capital Market Intermediaries:-Equity shares, Bonds2) Money Market Intermediaries:-Certificate of deposite, Commercial
Paper, Treasury Bills.
The Difference between Banking and Financial Services
There are various types of financial institutions and they do have different services. Based on the various types of financial institutions, banks are resposible for collcting deposits of the customers as their savings or as investment in the case of investments banks, On the other hand, there are a number of financial services like insurance, mortgage services, loan lending etc (which are provided by other institutions). We can also say that there are many types of financial sercices and
banks provide savings, depository and investment services while other services are
offered by other institutions.
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1.6 Participants Involved in Providing Financial Services
Banks
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FINANCIAL SERVICESIt is one of the biggest financial services companies of the world. There are
different types of banks in the world. Some of these are commercial banks, private banks and many more. There are some banks that work for the capital markets only. Banks provide a number of financial services to the clients. These services include depository services, lending services, credit card facilities and many more. These services are provided for both the individuals and the commercial sector.
Intermediation or Advisory Services Company
These companies are basically involved in providing investment services to the clients. These companies are designed to provide advises to the investors in selecting the right investment options that suit their investment plans and also the risk tolerance capacity. At the same time, the intermediation or advisory services companies are handling the investor's money and investing it according to the client's choice.
Insurance Companies
The insurance companies provide the clients with risk coverage services. These services are designed to cover a number of risks that are related to an individual's life, property and many more. These services are not only designed to provide security but at the same time there are a number of insurance plans that are designed to provide regular income to the clients.
Credit Rating Agencies
The credit rating agencies are those firms that evaluate different types of financial services companies. These ratings are based on a number of factors like the kind of services, risk factor involved with the services, customer facilitation and many more.
Conglomerates
A financial services conglomerate is a financial services firm that is active in more than one sector of the financial services market e.g. life insurance, general insurance, health insurance, asset management, retail banking, wholesale banking, investment banking.
2.1 Financial Services – Objective
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FINANCIAL SERVICES Fund Raising :
Financial Services help to raise the required funds from host of investors, individuals, institutions and corporates. For this purpose various instruments of finance are used. The funds are demanded by the corporates house, individuals, etc.
Funds deployment :
Arrays of financial services are available in financial markets which help the players to ensure an effective deployment of funds raised. Financial Services help in decision making regarding financing mix.
Specialized services :
The financial services sector provides specialized services such as merchant banking, mutual funds, factoring, housing finance,hire purchase, leasing etc. besides banking and insurance. Institutions and agencies such as stock exchanges specialized and general financial institutions, non-banking finance companies, also provide these services.
Regulation :
In India, agencies such as Securities and Exchange Board of India (SEBI), Reserve Bank of India and the Department of Banking and Insurance, Government of India, through a plethora of legislations, regulate the functioning of the financial service institutions.
Economic growth :
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FINANCIAL SERVICESFinancial Services contribute, in good manner, to speeding up the
process of economic growth and development. This takes place through the mobilization of the savings of a cross section of people, for the purpose of channeling them into productive investments.
2.2 Structure of Indian Financial System
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FINANCIAL SERVICESThe financial system implies a set of complex and closely connected
institutions, agent’s practices and markets. The following is the typically structure
of financial system in any economy.
Financial System
A financial service is any kind of service of financial nature offered by a
financial service provider. All banking and insurance related services are included
in this concept. These services are intangible and invisible. There should be
proximity between service provider and consumer in order to complete a service
transaction. These services cover a wide range of activities. A financial service has
developed to meet the needs of companies. Banking and Insurance are traditional
services. The modern financial services are mutual funds, factoring venture capital,
credit cards, leasing, hire purchase, etc.
Financial services have started long back in western countries. In India, the
services have started during 1980s. These services play a significant and important
role in the changed business services.
2.3 Scope of financial services 2.3 Scope of financial services
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Financial Institutions
Financial Markets
Financial Instruments
Financial Services
FINANCIAL SERVICES
1. Traditional Activities1. Traditional Activities
i) i) Fund based activitiesFund based activitiesii)ii) Non fund based activities Non fund based activities
2. Morden Activities2. Morden Activities
1. Traditional activities
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;
i) Fund based activities andii)ii) Non-fund based activities
i)Fund based activities
The traditional services which come under fund based activities are the following:
a) Underwriting of or investment in shares, debentures, bonds etc. of new issues (primary market activities)
b) Dealing in secondary market activities.c) Participating in money market instruments like commercial papers,
certificate of deposits, treasury bills, discounting of bills etc.d) Involving in equipment leasing, hire purchase, venture capital, seed capital
etc.e) Dealing in foreign market activities.
ii)Non-fund based activities
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FINANCIAL SERVICESFinancial intermediaries provide services on the basis of non-fund activities also. This can also be called “fee based” activity. Today, customers whether individual or corporate are not satisfied with mere provision of finance. They expect more from financial service companies. Hence, a wide variety of services, are being provided under this head. They include the following:
a) Managing the capital issues, 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 issues.
b) Making arrangements for the placement of capital and debt instruments with investment institutions.
c) Arrangement of funds from financial institutions for the clients project cost or his working capital requirements.
d) Assisting in the process of getting all Government and other clearances.
2.Modern Activities2.Modern Activities
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FINANCIAL SERVICESBesides the above traditional services, the financial intermediaries of render innumerable services in recent times. Most of them are in the nature of non-fund based activity. In view of the importance, these activities have been discussed in brief under the head ‘New financial products and services’. However, some of the modern services provided by them are given in brief here under:
a) Rendering project advisory services right from the preparation of the project report till the raising of funds for starting the project with necessary Government approval.
b) Planning for mergers and acquisitions and assisting for their smooth carry out.
c) Guiding corporate customers in capital restructuring.d) Acting as Trustees to the debenture-holders.e) Hedging of risks due to exchange rate risk, interest rate risk, economic risk
and political risk by using swaps and other derivative products.f) Managing the portfolio of large Public Sector Corporations.g) Guiding the clients in minimization of the cost of debt and the determination
of the optimum debt equity mix.h) Undertaking risk management services like insurance services, buy-back
options etc.i) Undertaking services relating to the capital market such as:
Clearing services, Registration and transfers, Safe-custody of securities, Collection of income on securities.
j) Promoting credit rating agencies for the purpose of rating companies which want to go public by the issue of debt instruments.
k) Recommending the financial collaboration / joint ventures by identifying suitable joint venture partner and preparing joint venture agreement.
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FINANCIAL SERVICES
2.4 Financial Services –Features
Like any other services financial services are characterized by the following __
Intangibility: The basic features of financial services are that they are
intangible in nature. For financial service to be successfully created and
marketed, the institution of provided them must have a good image and
the confidence of its clients. Quality and innovativeness of services are
the focal points for building credibility and gaining the trust of the
clients.
Customer Orientation: The institution providing the financial services
study the needs of the customer in detail. Based on the results of the
study, they come out with innovative financial strategies that give due
regard to the costs, liquidity and maturity considerations for various
financial products. This way, financial services are customer-oriented.
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FINANCIAL SERVICES
Inseparability: The functions of producing and supplying financial
services have to be carried out simultaneously. This calls for a perfect
understanding between the financial service firms and their clients.
Perishability: Financial services have to be created and delivered to the
target clients. They cannot be stored. They have to be supplied
according to the requirement of customers. Hence, it is imperative that
the providers of the financial services ensure a match between demand
and supply.
Dynamism: Financial services institutions must be proactive in nature,
and evolve new services by visualizing the expectations of the
market .The financial services have to be constantly refined on the basis
of socio-economic changes occurring in the economy, such as
disposable income, standard of living, level of education, etc.
2.5 GROWTH OF FINANCIAL SERVICES
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FINANCIAL SERVICESThe growth of financial sector in India at present is nearly 8.5% per year. The
rise in the growth rate suggests the growth of the economy. The financial
policies and the monetary policies are able to sustain a stable growth rate. The
reforms’ pertaining to the monetary policies and the macro economic policies
over the last few years has influenced the Indian economic to the core. The
major step towards opening up of the financial market further was the
nullification of the regulations restricting the growth of the financial sector in
India. To maintain such a growth for a long term the inflation has to come down
further.
The financial sector in India has an overall growth of 15%, which has
exhibited stability over the last few years although several other markets across
the Asian region were going through a turmoil. The development of the system
pertaining to the financial sector was the key to the growth of the same. With
the opening of the financial market variety of products and services were
introduced to suit the need of the customer. The Reserve Bank of India (RBI)
played a dynamic role in the growth of the financial sector of India.
A)Growth of the banking sector in India:
The banking system in India is the most extensive.
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FINANCIAL SERVICES The total asset value of the entire banking sector in India is nearly
US$270 billion
The total deposits is nearlyUS$220 billion. Banking sector in India has
been transformed completely.
B)Growth of the Capital Market in India
The ratio of the transaction was increased with the share ratio and deposit
system
The removal of the pliable but ill-used forward trading mechanism
The introduction of infotech systems in the National Stock Exchange
(NSE) in order to cater to the various investors in different locations
Privatization of stock exchanges
C)Growth in the Insurance sector in India
With the opening of the market, foreign and private Indian players are
keen to convert untapped market potential into opportunity by providing
tailor-made products:
The insurance market is filled up with new players which has led to the
introduction of several innovative insurance based products value add-
ons, and services. Many foreign companies have also entered the arena
such as Tokio Marine, Aviva, Allianz, Lombart General, AMP, New
York Life, Standard Life, AIG, and Sun Life
The competition among the companies has led to aggressive marketing,
and distribution techniques
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FINANCIAL SERVICESD)Growth of the Venture Capital market in India
The venture capital sector in India is one of the most active in the
financial sector inspite of the hindrances by the external set up
Presently in India there are around 34 national and 2 international SEBI
registered venture capital funds.
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2.6 Challenges faced by Financial Service Companies
Market issue
In an increasingly competitive marketplace, successful players are focused on customer retention. Improvements in retention levels can often be achieved by improving the approach to customer management and customer segmentation. There is also a need to address increasing customer expectations for price and service.
Regulatory issues
Regulation has reached such a level that many organisations are focused almost
entirely on meeting regulatory requirements. This is causing businesses to put at
risk other initiatives required to maintain a competitive position in the market
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FINANCIAL SERVICES Operational issues
Globalisation, consolidation, convergence and the increasing focus on
competitiveness are all driving the need to improve the efficiency and effectiveness
of operations. Cost control remains a management imperative. Operational risk
systems and controls (driven by regulation) are necessities not options.
Technology issues
All of this change – in the marketplace, in the regulatory environment and in
operations – means that there is very often a need to replace and upgrade
infrastructure, hardware and software.
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2.7 Development of Financial Services in India
In last few years, India gas emerged as the one of the most rapidly growing
economies in the world. India has been categorized with nations like Brazil, Russia
and China (BRIC Nations) who are going to be the prime drivers of world
economy in next few decades. Since the time, India first opened its gates to foreign
investment (FDI & FII), there has been a complete turnaround. Now the traditional
Hindu rate of growth is a thing of past and clocking 8%-9% GDP growth rate is the
common norm. India along with other Asian powerhouse China makes for the
fastest growing nations in the entire world. In the recent time world economy has
developed certain serious economic difficulties, in the first instance failing of
banking & financial institutions and secondly the global economy has been badly
affected by falling demand in major economies.
The need for today is to build trust among the Financial Services Industry
supported by effective policy measure taken by the regulatory authority which will
raise standards of living. The Associated Chambers of Commerce and Industry of
India (ASSOCHAM), the apex body of the Chambers of Commerce of India, has
taken initiative by organizing a “Banking & Financial Services Industry (BFSI)”
Summit 2009 where analysts and consultants from global industry can elaborate in
more detail on issues and solutions affecting the BFSI sector & industries dealing
with them.
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2.8 Structure of the Indian Banking Industry
Classification of Banks
(2007)
Number of
Banks
Total Assets
(US$ billions)
Public Sector Banks 28 575
Indian Private Banks 25 175
Foreign Banks 29 48
Total 82 65
OPPORTUNITY
Foreign banks gaining prominence in India has a highly developed Financial
Services sector and popularity in India.
OVERVIEW
Total banking assets expected to grow to US$1 trillion by 2010 – a CAGR
of 11% .Over US$70 billion additional equity needed for growth plus Basel II
compliance. Consolidation in the banking space likely to be driven by private
players. Mutual funds: Assets Under Management (AUM) are expected to grow by
15% till 2010 .Retail finance is expected to grow at an annual rate of 18%, from
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FINANCIAL SERVICESUS$27.6 billion in 2003-04 to over US$75 billion by 2010.Demand for credit
likely to grow at 25% p.a. with rapid GDP growth.
3.1 INTRODUCTION OF BANK
In any economy Banks play a pivotal role. Without a sound and
effective banking system in India it cannot have a healthy economy. The past three
decades India’s banking system has several outstanding achievements to its credit.
Indian banking system has reached even to the remote corners of the country. This
is one of the main reasons of India’s growth process.
The name bank derives from the Italian word banco "desk/bench", used
during the Renaissance by Florentines bankers. Banks perform activities such as
accepting deposits and lendings. Banks' activities can be divided into retail
banking, dealing directly with individuals; business banking, providing services to
mid-size business; corporate banking dealing with large business entities; private
banking, providing wealth management services to High Net Worth Individuals;
and investment banking, relates to helping customers raise funds in the Capital
Markets and advising on mergers and acquisitions The first bank in India, though
conservative, was established in 1786 till today, the journey of Indian Banking
System can be segregated into three distinct phases. They are as mentioned below:
Early phase from 1786 to1969 of India banks
Nationalization of Indian bank and up to 1991prior to Indian banking
sector reforms.
New phase of Indian Banking System with the advent of Indian Financial
and Banking sector reform after 1991.
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Definition of bank
Banking Regulation Act of India,
1949 defines Banking as "accepting,
for the purpose of lending or
investment of deposits of money from
the public, repayable on demand or
otherwise and withdrawable by
cheques, draft, and order or
otherwise."
Other Definition of bank
According to Oxford English Dictionary, Bank is, “An establishment for custody
of money received from or on behalf of, its customers. Its essential duty is the
payment of the orders given on it by the customers, its profit mainly from the
investment of money left unused by them”.
Banks are now moving towards Universal Banking, which is a combination of
commercial banking, investment banking and various other activities including
insurance.
The evolution of IT services outsourcing in the Indian banks has presently
moved on to the level of Facilities Management (FM). Banks now looking at
business process management (BPM) to increase returns on investment improve
customer relationship management (CRM) and employee productivity.
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3.2 NATIONALISATION OF BANKS IN INDIA
The nationalization of banks in India took place in 1969 by Mrs. Indira
Gandhi the then prime minister. It nationalized 14 banks then. These banks were
mostly owned by businessmen and even managed by them.
Central Bank of India
Bank of Maharashtra
Dena Bank
Punjab National Bank
Syndicate Bank
Canara Bank
Indian Bank
Indian Overseas Bank
Bank of Baroda
Union Bank
Allahabad Bank
United Bank of India
UCO Bank
Bank of India
Before the steps of nationalization of Indian Banks, only State Bank
of India (SBI) was established. It took place in July 1955 under the SBI Act of
1955. The State Bank of India is India’s largest commercial bank.
SCHEDULED BANKS
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FINANCIAL SERVICES The second schedule of the Reserve Bank of India Act contains a
list of Banks which are described as “Scheduled Banks”. A bank in order to be
designated as a Scheduled bank should have a paid up capital and reserved as
prescribed by the Act. In terms of section 42(6) of RBI Act, 1934, the required
amount is only Rs. 5 lakh. However, presently to start a Commercial Bank the RBI
prescribed a minimum capital of Rs. 100 crore and its business must be managed in
a manner which, in the opinion of Reserve Bank of India. The scheduled Banks are
also required to maintain with the Reserve Bank of India a deposit in the form of
Cash Reserve Ratio, based on its demand and time liabilities, at a prescribed rate.
NON-SCHEDULED BANKS
The commercial banks, not included in the Second Schedule of
the RBI Act are known as Non-Scheduled Banks. They are not entitled to facilities
like refinance and rediscounting of bills, etc. from RBI. They do not get the
prestige as do scheduled banks.
BANKS IN INDIA
In India the banks are being segregated in different groups. Each
group has their own benefits and limitations in operating in India. Each has their
own dedicated target market. Few of them only work in rural sector while others in
both rural as well as urban. The RBI has shown certain interest to involve more of
foreign banks than the existing one recently.
3.3 Functions of a Bank
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FINANCIAL SERVICESSince Banking involves dealing directly with money, governments in most
countries regulate this sector rather stringently. In India, the regulation traditionally
has been very strict and in the opinion of certain quarters, responsible for the
present condition of banks, where NPAs are of a very high order. Banks essentially
perform the following functions:
A) Accepting Deposits from public/others (Deposits):
Banks are also called custodians of public money. Basically, the money is
accepted as deposit for safe keeping. Type of deposit accounts (Domestic
Customers)
Fixed Deposit Accounts : The term 'fixed' here
denotes tenure. Fixed Deposit, therefore,
presupposes a length of time for which the
depositor decides to keep the money with the Bank
and the rate of interest payable to the depositor is
decided by this tenure. Rate of interest differs from Bank to Bank.
FINANCIAL SERVICES When you invest in a mutual fund, you depend on the fund's manager to
make the right decisions regarding the fund's portfolio. If the manager does not
perform as well as you had hoped, you might not
make as much money on your investment as you
expected.
Future of Financial Services
The revised offer on financial services signals a substantial
improvement. India has offered to bind the existing trade and investment
regime. In the insurance sector, increasing the FDI investment limit up to 49 per
cent over the next 3 years will allow greater infusion of capital, introduction of
new instruments, market expansion and deeper penetration of insurance
services.
India can also undertake pre-commitments for merger and
acquisitions between foreign banks and Indian private sector banks, especially
as RBI’s Roadmap envisions foreign banks entering into mergers and
acquisitions with Indian private sector banks after 2009, subject to the 74 per
cent investment limit. Another area where pre-commitment would send a
positive signal to India’s trading partners would be regarding provision of
national treatment to foreign banks involving solvency ratios, income tax,
borrowing limits etc. Such pre-commitments would signal direction of future
TYBCOM (BBI)
FINANCIAL SERVICESreforms and give domestic service providers and regulators time to prepare
themselves for competition and put in place the required regulatory regime.
Finally, given the move towards greater capital account
convertibility and the advent of e-commerce in financial services, it would be
advisable for India to undertake some commitments in financial services. This
would also strengthen India’s case as it demands that developed countries
provide full market access and national treatment commitment and data
processing of financial services.
CASE STUDY OF FINANCIAL SERVICES
Mission
DENA BANK will provide its
Customers - premier financial services of great value,
Staff - positive work environment and opportunity for growth and achievement,
Shareholders - superior financial returns,
Community - economic growth
Vision
DENA BANK will emerge as the
most preferred Bank of customer choice in its area of operations, by its reputation and performance
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FINANCIAL SERVICES
DENA
BANK
Export Services
Dena Bank offers wide range of services both at pre-shipment and post-shipment stage to exporters to help them realize business opportunities world over. We offer both Pre-shipment and Post-shipment credit in Rupee denominated terms as well as in Foreign Currency to exporters having firm export orders or confirmed Letters of Credit.
Pre Shipment Export Credit (Packing Credit)
Dena Bank offers Pre-shipment Credit (Packing Credit) to the exporters for financing procuring, processing, manufacturing and/ or packing the goods for export. Packing Credit is granted for a period depending upon the circumstances of the individual case, such as the time required for procuring, manufacturing or processing (where necessary) and shipping the relative goods. Packing Credit is liquidated out of the proceeds of the Bill dawn for the exported commodities, once the Bill is purchased/ discounted etc., thereby converting pre-shipment credit into post-shipment credit.
Packing Credit in Foreign Currency (PCFC)
With a view to making credit available to exporters at internationally competitive rates, Dena Bank extends Pre-shipment Credit in Foreign Currency (PCFC) to exporters for domestic and imported inputs of exported goods at LIBOR/EURO LIBOR/ EURIBOR linked rates of interest. PCFC is available in major foreign currencies i.e. USD, GBP,
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FINANCIAL SERVICESEURO and YEN. Exporters can cover the cost of both domestic as well as imported inputs by these funds. PCFC can be liquidated out of proceeds of export documents on their submission for discounting/rediscounting under the EBR Scheme. Subject to mutual agreement between the exporter and the banker it can also be repaid / prepaid out of balances in EEFC A/c as also from rupee resources of the exporter to the extent exports have actually taken place.
Post Shipment Export Credit
Dena Bank offers Post-Shipment Credit to exporters after shipment of goods till the date of realization of export proceeds and includes any loan / advance granted on the security of any duty drawback allowed by the Govt. from time to time. The exporter has the option to avail of pre-shipment and post-shipment credit either in rupee or in foreign currency. . The exporter can avail the following advances at post-shipment stage:
i. To get export bills purchased /discounted / negotiated;
ii. To get advances against bills for collection;
iii. To receive advances against duty drawback receivable from Govt.
Letter of Credit Advising/ Confirmation
Dena Bank, having wide network of correspondent banks offers Letter of Credit advising services through SWIFT, fax, telephone to help exporters arrange for shipment and preparing the documents in advance.
Bank Guarantees
We offer bank guarantees on behalf of exporters to enable them to undertake big export contacts. The guarantees include bid-bond
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Exporters’ Gold Card Scheme
Dena Bank has launched GOLD CARD SCHEME for exporters to meet the working capital needs of exporters with good track record and credit worthiness, subject to their fulfilling the specified eligibility norms.
Eligibility Criteria:
i. Exporters whose accounts have been classified as “Standard” continuously for a period of 3 years and there are no irregularities / adverse features in the conduct of the account. ii. Established exporters having satisfactory track record with the branch for at least 3 years and enjoying Credit Rating stipulated by the Bank.
Key benefits under the scheme are as following:
i. Rate of interest is stipulated at 0.25% lower than the rate applicable for normal exporters for pre-shipment Rupee credit.
ii. The charge schedule and fee structure are relatively lower than those provided to other exporters.
iii. Preference given for grant of Packing Credit in Foreign Currency (PCFC).
iv. Applications for credit are processed at norms simpler and under a process faster than for other exporters.
Gold Card issued is valid for 3 years and will be renewed for a further period of 3 years subject to compliance of laid down sanction terms and conditions.
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Import Services
Dena Bank provides various types of fund based and non-fund based services to the importers for facilitating the imports in the country. All the facilities are subject to the prevalent rules of the Bank / RBI guidelines. Our Fund based services include Rupee and Foreign Currency loans, External Commercial Borrowing facilitation etc. and Non-Fund based services include establishment of Letter of Credit, collection/ payment of import bill and issuance of various guarantees on behalf of importers.
Letter of Credit
Dena Bank offers L/C facility for the purchase of goods in the international market. With the Letter of Credit, importers can build up better trust/ confidence in their suppliers and develop other business relationship at a much faster pace. The L/C facility can be granted to the importers after assessing their requirement / credit worthiness / financial strength and other parameters being to the satisfaction of the Bank. We help importers drafting the terms of Letter of Credit so as to protect their interest. The bank's vast network of branches and correspondent banks enables your enterprise to sustain a seamless flow of business on a wide platform.
Collection of Import Bills
The import bills are collected through our Authorized Branches at very competitive rates. Our bank has correspondent banking relationship with reputed International Banks throughout the world and affects remittances for imports’ payment in any part of the globe.
Bank Guarantees
Dena Bank on behalf of importers/ other customers issues guarantees in favour of beneficiaries abroad. The Guarantees can be both Performance and Financial. The issuance of guarantee is allowed for the purposes defined under FEMA subject to
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FINANCIAL SERVICESavailability of your credit limits or cash margin.
Fund based Services
We assist you to import desired goods by providing Rupee loans and Foreign Currency Loans. We facilitate buyer’s credit for your imports for the period specified under FEMA. We also assist our customers in raising foreign currency funds through External Commercial Borrowing (ECB) for expansion/ modernization of existing facilities and/ or import of capital goods etc.
Conclusion of Financial Services
Financial services constitute an important
component of financial system. Financial services is a
process by which funds are mobilized from a large
number of savers and make them available to all those
who is in need and particularly to corporate
customers. The main participants who are playing a
major role is providing financial services to serve the
needs of individual, institutions and corporate. They
render services such as mutual fund, merchant banking, leasing, factoring, housing
finance etc.
Financial Services contribute, in good manner, to speeding up the process of
economic growth and development. This takes place through the mobilization of
the savings of a cross section of people, for the purpose of channeling them into
productive investments. Financial services help not only in raising the fund but
also in ensuring their efficient distribution. The Financial Services industry
though a highly profitable Industry with respect to earnings does not count for a
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FINANCIAL SERVICESlarge share of the market and also employs a lesser number of people as compared
to some of the other Industries.
In the world almost every company now which previously described
themselves as a bank, insurance company, or brokerage house, now describes
themselves in some way as a financial services institution. The institution
providing the financial services study the needs of the customer in detail. Based on
the results of the study, they come out with innovative financial strategies that give
due regard to the costs, liquidity and maturity considerations for various financial
products.
Abbrevations
MF: Mutual Fund.
NHB: National Housing Bank.
RBI: Reserve Bank of India.
SBI FACS: State Bank of India Factors and Commercial Services Limited.
SEBI: Securities and Exchange Board of India.
SRO: Self-Regulatory Organization.
VCF: Venture Capital Fund.
AMBI: Association of Merchant Bankers of India
AMC: Asset Management Company.
AMFI: Association of Mutual Funds Industry.
EFTPOS: Electronic Funds Transfer at the Point-of-sale.
HDFC: Housing Development and Finance Corporation.
HFC: Housing Finance Company.
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BIBILIOGRAPHY
Books Author
Financial Market and Services E Gordon, Dr.K.Natrajan
Innovation and Banking and Insurance Romeo.S.Mascarenhas