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![MAIN SECTORS OF FINANCIAL
SERVICE INDUSTRY
BANKING COMPANIES :
Section – 5 of Banking Regulation Act , 1949 defines banking as , “ the accepting for the purpose of
lending or investments , of deposits of money from the public repayable on demand or otherwise and
withdrawable by cheque , draft , order or otherwise .”
FINANCIAL INSTITUTIONS :
Non banking institutions / financial companies engaged in any of the following activities :Financing by
way of loans , advances and so onAcquisition of shares / stocks / bonds / debentures / securitiesHire
purchase and consumer creditAny class of insurance , stock broking etc.
NON – BANKING FINANCIAL COMPANY [NBFC] :
It means and includes :Financial institution which is a companyA non – banking institution which is a
company and has as its principal business the receiving of deposits or lending .](https://image.slidesharecdn.com/presentation-190326000121/75/Indian-Financial-system-19-2048.jpg)
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Indian Financial system
- 1. INDIAN FINANCIAL SYSTEM By K. Bhargav StudentAt University Of Hyderabad
- 2. FINANCIAL SYSTEM The financialsystem of a country is a system that allows the exchange of funds between lenders, investors and borrowers. It helps in creation of wealth by linking saving with investment for economic development of the country. It facilitate the flow of funds from the households (savers) to business firms aid in wealth creation and development of both the parties.
- 3. FUNCTIONS OF INDIAN FINANCIALSYSTEM • It bridges the gap between savings and investment through efficient mobilization and allocation of surplus fund • It helps a business in capital formation • It helps in minimizing risk and allocating risk efficiently • It helps a business to liquidate tied up funds • It facilitates financial transactions through provision of various financial instruments • It facilitate trading of financial assets/instruments by developing and regulating financial markets
- 4. IMPORTANCE OF INDIANFINANCIAL SYSTEM • It accelerates the rate and volume of savings through provision of various financial instruments and efficient mobilization of savings • It aids in increasing the national output of the country by providing funds to corporate customers to expand their respective business • It protects the interests of investors and ensures smooth financial transactions through regulatory bodies such as RBI, SEBI etc. • It helps economic development and raising the standard of living of people
- 5. Financial Institutions Financial Markets FinancialInstruments Financial Services
- 7. FINANCIAL INSTITUTION v Financialinstitution is an institution that provides financial services. v Financial services refer to the activity of transfer of financial resources from the savers or investors to the users or borrowers. v Thus, essentially financial institutions are the intermediaries between the savers and borrowers of the money.
- 8. ROLE OF FINANCIALINSTITUTION IN THE FINANCIAL SYSTEM • Financial institutions mobilize the savings of the public • They provide credit facility to the needy persons • They render various other financial services like transfer of funds from one place to another, payment mechanism, etc., • Financial institutions enable transferring of funds from investors to corporate customers and other business entrepreneurs. • They facilitate the flow of money from one corner of the country to another corner. • They enable achievement of economy of large scale operations by providing funds for large scale business activities. • They reduce the cost of transaction by increasing the number of transactions. • They reduce the risk of loss of capital through diversification of funds to different industries.
- 9. CLASSIFICATION OF FINANCIALINSTITUTIONS
- 10.
- 11. FINANCIAL MARKETS A financialmarket is a market in which people trade financial securities and derivatives such as futures and options at low transaction costs. Securities include stocks and bonds, and precious metals. Basic classification of Financial markets: • Capital Market: The market for companies and individuals who want to grow in tandem. It’s a platform where public and private sectors often sell their stakes to raise fund in order to feed their projects in hand. The assets under this market don’t have any fixed maturity time. • Money Market: A major platform in financial market where securities and financial instruments with short- term maturities are traded is called the money market. Financial assets like treasury bills, certificates of deposits, commercial paper and bankers' acceptance are some of the short- term debt securities traded in the money market
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- 13. FUNCTIONS OF FINANCIALMARKETS • •It provides facilities for interaction between the Investors and borrowers. • •It provides security to dealings in financial assets. • •It provides information related to the financial markets to the investors and borrowers. • •It ensure liquidity by providing a mechanism for an investor to sell their financial assets.
- 14. FINANCIAL INSTRUMENTS Money MarketInstruments Capital Market Instruments Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash, evidence of an ownership interest in an entity, or a contractual right to receive or deliver cash.
- 15. MONEY MARKET INSTRUMENTS • MONEYMARKET CAN BE DEFINED AS A MARKET FOR SHORT-TERM MONEY AND FINANCIAL ASSETS THAT ARE NEAR SUBSTITUTES FOR MONEY.
- 16. CAPITAL MARKET INSTRUMENTS • CAPITALMARKET IS THE MARKET FOR SECURITIES WHERE COMPANIES AND THE GOVERNMENT CAN RISE LONG- TERM FUNDS.
- 17. FINANCIAL SERVICES Financial services arethe economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, creditcard companies, insurance companies, accountancy companies, consumer finance companies, stock brokerages, investment funds, individual managers and some government-sponsored enterprises
- 18. MAIN SECTORS OF FINANCIALSERVICE INDUSTRY BANKING COMPANIES FINANCIAL INSTITUTIONS NON BANKING FINANCIAL COMPANY
- 19. MAIN SECTORS OFFINANCIAL SERVICE INDUSTRY BANKING COMPANIES : Section – 5 of Banking Regulation Act , 1949 defines banking as , “ the accepting for the purpose of lending or investments , of deposits of money from the public repayable on demand or otherwise and withdrawable by cheque , draft , order or otherwise .” FINANCIAL INSTITUTIONS : Non banking institutions / financial companies engaged in any of the following activities :Financing by way of loans , advances and so onAcquisition of shares / stocks / bonds / debentures / securitiesHire purchase and consumer creditAny class of insurance , stock broking etc. NON – BANKING FINANCIAL COMPANY [NBFC] : It means and includes :Financial institution which is a companyA non – banking institution which is a company and has as its principal business the receiving of deposits or lending .
- 20. KINDS OF FINANCIALSERVICES ASSET BASED/ FUND BASED FEE BASED / ADVISORY SERVICES
- 21. ASSET / FUNDBASED SERVICES EQUIPMENT LEASING / LEASE FINANCING HIRE PURCHASE BILL DISCOUNTING VENTURE CAPITAL HOUSING FINANCE INSURANCE SERVICES FACTORING MERCHANT BANKING CREDIT RATING STOCK BROKING FEE BASED ADVISORY SERVICES KINDS OF FINANCIAL SERVICES
- 22. SUMMARY • It helpsto promote the development of weaker section of the society through rural development banks and co-operative societies • It helps corporate customers to make better financial decisions by providing effective financial as well as advisory services • It aids in Financial Deepening and Broadening: • Financial Deepening – It refers to the increase in financial assets as a percentage of GDP • Financial Broadening – It refers to increasing number
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