Financial Services:
Financial Service industry include the firms that engaged in activies such as investing,lending,insurance,securities trading and securities issuance.In Financial market the financial asstes being created and transfered with the denomination of sum money.The benifits recieved may be in the form of dividend or interests.
In india Financial market contribute to 60% to GDP in 2010-11,which is grown from 36% of GDP in 1980-80.Also,Contribution of Financial service sector in employment is grown from 54% in 1971 to 63% in 2010.This shown huge growth of Financial service sector in the country.
Reasons for the Growth of Service Sector:
1.There is the explosive growth of Service sector started in twentieth century specially after second world war.
2.Globalization,Liberalization,Privatisation and industrial revolution across the globe have given the rise of quality and sophistication of Services.
3.As the literacy rate has improves specially women literacy rate , more and more women are educated and came in the job market specially to the service sector.
4.As the Capital market start developing,career opportunities start growing in service sector,which push large group of population in service sector.
5. As the country is shift to the deveploped statge from developing,more and more people start adopting career in Servise sectors.
Financial Systems:
It is a Institutional frameworke that exist in the country to enable financial transaction.It allow transfer of money between investors and borrowers.Financial systems work or operates of global,regional and corporation levels.There are some rugulators who regulate financial systems,some are like RBI,IRDA,SEBI ect.
Three main parts of financial systems:
1.Financial assets:These are the assets which are transfer between one party( eg. lenders) to another party(eg.borrowers).These may be Loan,Deposits,Bonds,Equities ect).
There are assets for savers like mutual funds,deposits,equities ect.Also assets for borrowers like loans,overdrafts ect.Government raise funds by issuing Bonds,Treasury bills ect.
2.Financial institutions:Thses are the institutions which run financial assets like Banks,Mutual funds,Insurance companies ect.Main airms of financial institutions is to mobilising savings from the depositors and then distribute effectively this savings.
3.Financial markets:These are are markets where transaction of financial products or assets are taking place.These markets are like money market,capital market,forex market ect.
Financial Services Classifications:
(A) Fund based financial services
1.Commercial banking:It is a types of Financial services which accept deposits and making business loans.Also,provides basics investment products.
2.Leasing:It is a contract between two parties,lessee and lessor.Lessee is user of assets and Lessor is the owner of assets.Lessee agree to pay a predetermeine rate of using assets to the Lessor.
3.Hire Purchase financing:It is types of financing in which a purchaser of goods are liable to pay a amount in installments over a period of time.
4.Mutual funds:It is a types of financial services,which pools saving from the investors and invest in a predetermine objectives.
5.Factoring:It is a types of financial transaction in which a business sells it's account recievable(invoices) to the third party( which is called factor) at discount.
6 Forefeiting:It is a types of financing in which banks give exporters cash in advance so as to guatantees payment to them.
7.Securitization:It ia process in which issuer create financial instruments by combining other financial assets and then marketing as a different packaged instruments to the investors.
8.Bank Financing:It is process in which banks finance any asstes by providing loans to the purchaser of the assets.
9.Stock Investment:In this process investor invest money in any company's stock or share for price appreciation in future period of time.
10.Venture Capital:It this process capital is invested in any new business idea.Venture capitalist provise capital to the enterprenure who have innovative business idea.
11.Credit Cards:It is a type of financial services in which advance credit is provided to the credit card holders according to his credit worthiness.
12.Insurance Products:Insurance products are also a part of Financial services,they insure the risk of any person or damage to any assets by charging small premium amount regularly.
(B) Non Fund based Financial Services:
1.Merchant Banking (include public issue management,underwriting ect):These are a types of Financial Institutions,which provides capital by subscribing shares of the firms or helps in selling the shares of the firms.Merchant Banks also provides consultancy services to the firms by providing correct advices related to the financial matters to the firms.
2.Portfolio management:It is a process of evaluating the investment objectives and risk profile of the investors and then allocate invested assets accordingly in order to maximise return at minimum risk.Portfolio management services are provide by the skilled finance professional,who have a expertise in researching investment assets.
3.Stock and Security broking:This is a types of financial services,where selling and buying of stocks and securities taking places on the behalf of customers by charging small amount(brokrage).
4.Merger and Takeover consultancy:These are an types of financial service providers,helps in merging and takeover of firms by using there expertise of analyzing the firms complete financial and operations reports.
5.Leasing and Hire purchase broking:These are an financial service providers,which helps firms or individuals in leasing there assets.
6.Foreign Exchange Broking:This is atypes of financial service,which helps in buying and selling of currency with another currency.For this service carry a charge for providing a service which is called brokrage.
7.Financial Consulting:This ia types of financial service in which financial professional give consultancy to any firm,which need to restructure it's financial statments.
8.Credit Rating:It is a rating giving by the credit rating agencies to the firms on the bases of the firm's efficiency of doing business.
9.Depositories:Thses are a types of service providers,which keeps the shares,mutual funds ect safely with them.They secure the investment of the investors at safer place.
10.Tax Planning advising:These are a another types of financial service providers,who provide service related to the Tax planning.They advice in minimizing Tax liabilities in a legal way.
MERCHANT BANKING:
In 13th Cerntury Merchant Bankers were Traders of Commodities and act of as a bankers to the European Kings.They finance the continental wars and coastel trades.They lent there names to lesser known traders by accepting bills through which they guaranteed that the holder of the bill would recieve full payment .
In today's time Merchant banker's provide financial consultancy to the firms and also hepls firms to raise capital by selling equitites.
Roles of Merchant Bankers:
1.Merchant Bankers helps companies on advicing on the capital strucutre and instruments of issue.
2.It hepls firms in assessing and appraisal there project reports.
3.Merchant Bankers helps in appointment of Bankers,Underwriters,Brokers,Registrars,Printers and advertisement agents.
4.Merchant Bankers helps firms going publicly by deciding accurate pricing of the Initial Public Offer(IPO).
5.Merchant Bankers decide the patterns of the advertisement of the IPO's.
6.Merchant Bankers decide the collection branches where applications of IPO's are received or collected.
7.Merchant Bankers decide the opening and closing of the subscription list.
8.Merchant Bankers obtain daily reports of the applications and amount collected at branches.
9.Merchant Bankers obtain consents of the Stock exchange and get basis of allotment approved.
Factors Selecting Merchant Mankers:
1.Ethics and Integrity:Merchant Bankers should be ehtical and not use any illigal activities in services it provide.
2.Raputations:Merchant Bankers should have good reputation in Financial market,it should have good credit rating.
3.Trained and Committed manpower:The firms which provide Merchant Banking facilities should appoint trained and committed main power.
4.Concern and interest of clients:A firm want merchant bannking facilities should be appoint Merchant bankers related to the interest of the client of the firm.
5. Liaison and Networking:Firms are selcting Merchant bankers who have good networking in financial market,so that he/se can perform his duty in an efficient manner.
6.Relationship and Contacts:A merchant banker should have good relationship and contact with his previous other clients and persons who provide underwriting facilities.
7.Infrastructure:Merchant Banker should have developed infrastrucutre like have underwriter facilities,have team of good Analyst and Financial professionals.
8.Past performance:A Merchant banker should have past track record of merchant banking facilities and issue management,which is a most important factors in selecting merchant bankers.
9.Track record of the company:Merchant Banking company should have good track record of providing services of issue management.
10.Track record of the promoters:A promoters of Merchant banking firm should have godd track record of running a firm legally and ethically.Promoters should not involve in any unfair practices.
11.Professional management:Merchant bankers should have good profesionals for running a firm.so that they can manage the new issue efficiently and effectivly.
12.Financial strength of the promoters and the company:A promoters of Merchant banking firms should have good fiancial capability and strength.
Prime Objectives of Merchant Bankers:
1.Main objective of Merchant Bankers is to provide long term funds to the projects or companies though Initila Public Offers(IPO) or right issues.'
2.Also,Merchant Bankers helps companies in Project counselling ,Loan syndications,Project appraisals and arrangement of Working capitals.
3.Merchant Bankers helps companies in deciding Capital structure.
4.Merchant Bankers providing Portfolio Management services by managing investment portfoilio's of big clients.
5.Merchant Bankers provide Underwiting services by helping companies in subscribing there Public offers.
6.Merchant Bankers helps companies in advicing the matters related to the corporates.Also,helps in managin the new issue of the firms.
SEBI Regulations for Merchant Bankers(1992):Code of conducts for Merchant Bankers
1.SEBI instruct Merchant Bankers for Observing high standads of integrity and fairness in all his dealings.
2.Merchant Bankers should render high standard of services,exercise due diligence,proper care,exercise independence judgement & disclose conflict of interest while providing unbiase services.
3.SEBI do not permitt merchant bankers to make any harmful statements or became privy to any act,practice or unfare competitions,likely to harm any other merchant banker.
4.Merchant banker should provide best possible services to the clients according to the clients needs and environment.
5.Merchant Bankers should ensure theat all professional dealings are effected in prompt ,efficient and cost effective manner.
6.Merchant Bankers deals in securities of the client company without making disclosure to the board as required under the regulation and also to the Board of directors of the client company.
7.Merchant Bnakers should provide investors with truth and adequate informations without making any misguiding or exaggerated claims and are aware of attendant risk before any investment decision are made.
8.Merchant Bankers should ensure copies of prospectus,memorandum and related literature are made available to the investors.
9.Merchant Bnakers should ensure fair allotment of securities and refund of application money without delay.
10.Merchant Bankers should dealt investors complaints adequately.
Qualities of Good Merchant Bankers:
1.Leadership:Merchant bankers should have good leadership qualities to manage his team efficiently and effectively.
2.Aggresive action:Merchant Bankers should have aggresive attitute in order to take decision fast and complete work fast and effecent.
3.Co-Operative and friendliness:Merchant Bankers should be Co-Operative in order to maintain good business relations with clients and his team.
4.Contacts:Merchant Bankers should have contact in finance market,so that he/se should arrange all facilities required for providing merchant banking and issue management like have contacts with underwriters.
5.Attitude towards problem solving:Merchant bankers should have attitude towards solving problems arises in providing services.
6.Keen to learn new skills,informations and knowledge:Merchant Bankers should have qualities to learn new skills and have good informations & knowledge related to the financial markets.
Financial Systems:
It is a Institutional frameworke that exist in the country to enable financial transaction.It allow transfer of money between investors and borrowers.Financial systems work or operates of global,regional and corporation levels.There are some rugulators who regulate financial systems,some are like RBI,IRDA,SEBI ect.
Three main parts of financial systems:
1.Financial assets:These are the assets which are transfer between one party( eg. lenders) to another party(eg.borrowers).These may be Loan,Deposits,Bonds,Equities ect).
There are assets for savers like mutual funds,deposits,equities ect.Also assets for borrowers like loans,overdrafts ect.Government raise funds by issuing Bonds,Treasury bills ect.
2.Financial institutions:Thses are the institutions which run financial assets like Banks,Mutual funds,Insurance companies ect.Main airms of financial institutions is to mobilising savings from the depositors and then distribute effectively this savings.
3.Financial markets:These are are markets where transaction of financial products or assets are taking place.These markets are like money market,capital market,forex market ect.
Financial Services Classifications:
(A) Fund based financial services
1.Commercial banking:It is a types of Financial services which accept deposits and making business loans.Also,provides basics investment products.
2.Leasing:It is a contract between two parties,lessee and lessor.Lessee is user of assets and Lessor is the owner of assets.Lessee agree to pay a predetermeine rate of using assets to the Lessor.
3.Hire Purchase financing:It is types of financing in which a purchaser of goods are liable to pay a amount in installments over a period of time.
4.Mutual funds:It is a types of financial services,which pools saving from the investors and invest in a predetermine objectives.
5.Factoring:It is a types of financial transaction in which a business sells it's account recievable(invoices) to the third party( which is called factor) at discount.
6 Forefeiting:It is a types of financing in which banks give exporters cash in advance so as to guatantees payment to them.
7.Securitization:It ia process in which issuer create financial instruments by combining other financial assets and then marketing as a different packaged instruments to the investors.
8.Bank Financing:It is process in which banks finance any asstes by providing loans to the purchaser of the assets.
9.Stock Investment:In this process investor invest money in any company's stock or share for price appreciation in future period of time.
10.Venture Capital:It this process capital is invested in any new business idea.Venture capitalist provise capital to the enterprenure who have innovative business idea.
11.Credit Cards:It is a type of financial services in which advance credit is provided to the credit card holders according to his credit worthiness.
12.Insurance Products:Insurance products are also a part of Financial services,they insure the risk of any person or damage to any assets by charging small premium amount regularly.
(B) Non Fund based Financial Services:
1.Merchant Banking (include public issue management,underwriting ect):These are a types of Financial Institutions,which provides capital by subscribing shares of the firms or helps in selling the shares of the firms.Merchant Banks also provides consultancy services to the firms by providing correct advices related to the financial matters to the firms.
2.Portfolio management:It is a process of evaluating the investment objectives and risk profile of the investors and then allocate invested assets accordingly in order to maximise return at minimum risk.Portfolio management services are provide by the skilled finance professional,who have a expertise in researching investment assets.
3.Stock and Security broking:This is a types of financial services,where selling and buying of stocks and securities taking places on the behalf of customers by charging small amount(brokrage).
4.Merger and Takeover consultancy:These are an types of financial service providers,helps in merging and takeover of firms by using there expertise of analyzing the firms complete financial and operations reports.
5.Leasing and Hire purchase broking:These are an financial service providers,which helps firms or individuals in leasing there assets.
6.Foreign Exchange Broking:This is atypes of financial service,which helps in buying and selling of currency with another currency.For this service carry a charge for providing a service which is called brokrage.
7.Financial Consulting:This ia types of financial service in which financial professional give consultancy to any firm,which need to restructure it's financial statments.
8.Credit Rating:It is a rating giving by the credit rating agencies to the firms on the bases of the firm's efficiency of doing business.
9.Depositories:Thses are a types of service providers,which keeps the shares,mutual funds ect safely with them.They secure the investment of the investors at safer place.
10.Tax Planning advising:These are a another types of financial service providers,who provide service related to the Tax planning.They advice in minimizing Tax liabilities in a legal way.
MERCHANT BANKING:
In 13th Cerntury Merchant Bankers were Traders of Commodities and act of as a bankers to the European Kings.They finance the continental wars and coastel trades.They lent there names to lesser known traders by accepting bills through which they guaranteed that the holder of the bill would recieve full payment .
In today's time Merchant banker's provide financial consultancy to the firms and also hepls firms to raise capital by selling equitites.
Roles of Merchant Bankers:
1.Merchant Bankers helps companies on advicing on the capital strucutre and instruments of issue.
2.It hepls firms in assessing and appraisal there project reports.
3.Merchant Bankers helps in appointment of Bankers,Underwriters,Brokers,Registrars,Printers and advertisement agents.
4.Merchant Bankers helps firms going publicly by deciding accurate pricing of the Initial Public Offer(IPO).
5.Merchant Bankers decide the patterns of the advertisement of the IPO's.
6.Merchant Bankers decide the collection branches where applications of IPO's are received or collected.
7.Merchant Bankers decide the opening and closing of the subscription list.
8.Merchant Bankers obtain daily reports of the applications and amount collected at branches.
9.Merchant Bankers obtain consents of the Stock exchange and get basis of allotment approved.
Factors Selecting Merchant Mankers:
1.Ethics and Integrity:Merchant Bankers should be ehtical and not use any illigal activities in services it provide.
2.Raputations:Merchant Bankers should have good reputation in Financial market,it should have good credit rating.
3.Trained and Committed manpower:The firms which provide Merchant Banking facilities should appoint trained and committed main power.
4.Concern and interest of clients:A firm want merchant bannking facilities should be appoint Merchant bankers related to the interest of the client of the firm.
5. Liaison and Networking:Firms are selcting Merchant bankers who have good networking in financial market,so that he/se can perform his duty in an efficient manner.
6.Relationship and Contacts:A merchant banker should have good relationship and contact with his previous other clients and persons who provide underwriting facilities.
7.Infrastructure:Merchant Banker should have developed infrastrucutre like have underwriter facilities,have team of good Analyst and Financial professionals.
8.Past performance:A Merchant banker should have past track record of merchant banking facilities and issue management,which is a most important factors in selecting merchant bankers.
9.Track record of the company:Merchant Banking company should have good track record of providing services of issue management.
10.Track record of the promoters:A promoters of Merchant banking firm should have godd track record of running a firm legally and ethically.Promoters should not involve in any unfair practices.
11.Professional management:Merchant bankers should have good profesionals for running a firm.so that they can manage the new issue efficiently and effectivly.
12.Financial strength of the promoters and the company:A promoters of Merchant banking firms should have good fiancial capability and strength.
Prime Objectives of Merchant Bankers:
1.Main objective of Merchant Bankers is to provide long term funds to the projects or companies though Initila Public Offers(IPO) or right issues.'
2.Also,Merchant Bankers helps companies in Project counselling ,Loan syndications,Project appraisals and arrangement of Working capitals.
3.Merchant Bankers helps companies in deciding Capital structure.
4.Merchant Bankers providing Portfolio Management services by managing investment portfoilio's of big clients.
5.Merchant Bankers provide Underwiting services by helping companies in subscribing there Public offers.
6.Merchant Bankers helps companies in advicing the matters related to the corporates.Also,helps in managin the new issue of the firms.
SEBI Regulations for Merchant Bankers(1992):Code of conducts for Merchant Bankers
1.SEBI instruct Merchant Bankers for Observing high standads of integrity and fairness in all his dealings.
2.Merchant Bankers should render high standard of services,exercise due diligence,proper care,exercise independence judgement & disclose conflict of interest while providing unbiase services.
3.SEBI do not permitt merchant bankers to make any harmful statements or became privy to any act,practice or unfare competitions,likely to harm any other merchant banker.
4.Merchant banker should provide best possible services to the clients according to the clients needs and environment.
5.Merchant Bankers should ensure theat all professional dealings are effected in prompt ,efficient and cost effective manner.
6.Merchant Bankers deals in securities of the client company without making disclosure to the board as required under the regulation and also to the Board of directors of the client company.
7.Merchant Bnakers should provide investors with truth and adequate informations without making any misguiding or exaggerated claims and are aware of attendant risk before any investment decision are made.
8.Merchant Bankers should ensure copies of prospectus,memorandum and related literature are made available to the investors.
9.Merchant Bnakers should ensure fair allotment of securities and refund of application money without delay.
10.Merchant Bankers should dealt investors complaints adequately.
Qualities of Good Merchant Bankers:
1.Leadership:Merchant bankers should have good leadership qualities to manage his team efficiently and effectively.
2.Aggresive action:Merchant Bankers should have aggresive attitute in order to take decision fast and complete work fast and effecent.
3.Co-Operative and friendliness:Merchant Bankers should be Co-Operative in order to maintain good business relations with clients and his team.
4.Contacts:Merchant Bankers should have contact in finance market,so that he/se should arrange all facilities required for providing merchant banking and issue management like have contacts with underwriters.
5.Attitude towards problem solving:Merchant bankers should have attitude towards solving problems arises in providing services.
6.Keen to learn new skills,informations and knowledge:Merchant Bankers should have qualities to learn new skills and have good informations & knowledge related to the financial markets.
Oversee resolution of some service issues as needed;Organize and assist with the delivery of local branch seminars. natwest online banking
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