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Section: A

Chapter:1

The term financial intermediaries refer to all kind of organisations which intermediate and facilitate financial transactions of both individual and corporate customers. Gordon and Natrajan

Financial Intermediaries

Organised Sector Capital Market Intermediaries


Development Bank

Unorganised Sector
Money Lenders Indigenous Bankers

Money Market Intermediaries

RBI

UTI Insurance Companies Agl. Financing Institutions Government


IRBI/ IIBI

Commercial
Banks Cooperative Banks

Pawn Brokers Traders and Landlords

Post Office
Government
Treasury Bills

EXIM
NBFC

Financial services includes all activities involved in transformation of savings into investments. Financial services refers to the mobilisation and allocation of savings. Financial services or financial intermediation is a process by which funds are mobilised from a large number of savers and make them available to needy customers.

Customer Oriented Intangible Dominance of Human element Perishable Simultaneous Performance

Economic growth Promotion of Savings Capital formation Provision of Liquidity Employment Opportunity Contribution to GDP

Scope of Financial Services

Traditional Activities

Modern Activities

Fund based Activities Non-Fund based Activities

It includes the following: Working Capital Financing Tem Loans Capital Expenditure Equipment Finance Project Finance Personal Loans Segment Consumer Loans Advance against Shares Housing Loans Education Loans. Investments Capital Market Instruments Debt Market Instruments.

It includes the following: Managing capital issues Making arrangements for the placement of capital and debt instruments with investment institutions Arrangement of funds from financial institutions for customers Assistance in getting government clearance

Derivative Products

Merchant Banking

Loan Syndication

Reverse Mortgage

Leasing

Corporate advisory Service Custodial Service

New Financial Product and Services

Mutual Funds

Factoring Venture Capital

Forfaiting

In includes the following: Advisory Services Planning for M & A Acting as trustee to debenture holders Structuring financial collaboration Rehabilitation and reconstruction sick units Hedging of risk Providing recommendations for change in management structure

Risk Management services like insurance Guidance to minimise cost of capital Portfolio Management Promoting Credit Rating Recommendation for source of fund, lending period etc. Providing services regarding capital market like clearance services, registration, transfer , safe custody of securities, collection of income on securities.

A. Historical Classification Deposit taking Firms Insurance Companies Investment Companies Securities Firm Problems in classification: This classification fails to account for the hybrid services and fails to account for growing complexities.

B. Modern Classification: According to this classification Financial service industry also include all the bodies which provide following services (in addition to the traditional service providers): Depositories Venture Capital Merchant Banking Credit Rating Agencies Factoring Custodial services Portfolio Management Securitization etc.

These organization may opt any of the following type of organization structure: Corporate Organisation: More suitable in case of

Large Scale of operation More Capital requirement Corporate takeover Risky Venture Separation of ownership and management is required

Partnership Firms Mutual Organizations

Insurance and Pension Management Outsourcing and back-office services Asset Management Private Banking etc.

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