Professional Documents
Culture Documents
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
Unorganised Sector
Money Lenders Indigenous Bankers
RBI
Commercial
Banks Cooperative Banks
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.
Economic growth Promotion of Savings Capital formation Provision of Liquidity Employment Opportunity Contribution to GDP
Traditional Activities
Modern 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
Mutual Funds
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
Insurance and Pension Management Outsourcing and back-office services Asset Management Private Banking etc.