A
SYNOPSIS
ON
FINANCIAL SERVICES
SUBMITTED TO
DIRECTORATE OF DISTANCE EDUCATION
ANNAMALAI NAGAR
AS APARTIAL FULFILLMENT OF THE REQUIREMENT FOR AWARD OF THE
DEGREE OF
MASTERS OF BUSINESS ADMINISTRATIONS (MBA) WITH FINANCE
RESEARCH SUPERVISOR SUBMITTED BY
Dr. Bhagwati Swaroop Vinit Rattan
(BRANCH HEAD) ER. NO. – AU-DDE- 4740900595
BAJAJ ALLIANZ LIFE INSURANCE M.B.A. YEAR-2nd
CO.LTD
TITLE OF THE PROJECT
Financial Services
Name of the Student :- Vinit Rattan
Name of the Guide:- Bhagwati Swaroop
Name of the Department :-
Name of the Organization:- BAJAJ ALLIANZE CO. LTD.
FINANCIAL SERVICES: AN INTRODUCTION
The term financial services gained popularity in the US partly because of Gramm-Leach Bliley
Act of the late 1990s that enabled merger of various companies engaged in provision of
financial services. According to critics, the term financial services made the unison of these
companies sound very natural, actually ignoring the history of problems that occurred from
combining them (such as conflicts of monopolization and interest). However, there are many
others of the opinion that the term financial services is a natural one, meaning nothing more
than the constituent words; this faith arises from observation that many restrictions that the Act
abolished either never existed in other countries or had been abolished much earlier than in the
US.
The popularity of the term financial services is such that every company in the US that
described itself as a brokerage house, bank, or an insurance company is now redefining itself a
financial services institution in some way or the other. For instance, Allstate Insurance now
provides CDs and services related to investment brokerage, Bank of America provides full-
featured brokerage products, and E*TRADE has expanded its offerings to include bank
accounts and most of the companies generally adopt two distinct approaches to this new
business type.
First, is aimed at diversifying earnings through inorganic growth and increased product
offerings. For instance, a bank simply acquires an insurance company or investment bank, and
retains the original brands of the acquired entity while adding it to its holding company. For
example, in Japan, non-financial services companies are allowed within holding company. In
such a scenario, each company looks independent, even after the merger, and continues to have
its own customer base. This is essentially the style of JP Morgan Chase and Citigroup.
Second, is more to do with organic growth, wherein a bank would simply float its own
brokerage house or insurance division and try to sell it to its existing customer base, with
incentives for sourcing all related services from it. This is the business style of Wells Fargo and
Washington Mutual.
MEANING OF FINANCIALSERVICE
i. Financial services refer to services provided by the finance industry.
ii. The finance industry encompasses a broad range of organizations that deal with the
management of money.
iii. Among these organizations are banks, credit card companies, insurance companies,
consumer finance companies, stock brokerages, investment funds and some government
sponsored enterprises.
iv. The financial services can also be called ‘financial intermediation’. Financial
intermediation is a process by which funds are mobilized from a large number of savers
and make them available to all those who are in need of it and particularly to corporate
customers.
v. Financial services sector is a key area and it is very vital for industrial developments.
vi. A well developed financial services industry is absolutely necessary to mobilize the
savings and to allocate them to various investable channels and thereby to promote
industrial development in a country.
CLASSIFICATION OF FINANCIAL SERVICES INDUSTRY
The term ‘financial services industry’ includes all kinds of organizations which intermediate
and facilitate financial transactions of both individuals and corporate customers.
The financial intermediaries in India can be traditionally classified into two:
i. Capital Market Intermediaries and
ii. Money Market Intermediaries.
i. Capital Market Intermediaries:-
The capital market intermediaries consist of term lending institutions and investing institutions
which mainly provide long term funds.
ii. Money Market Intermediaries:-
Money market consists of commercial banks, co-operative banks and other agencies which
supply only short term funds.
OBJECTIVE OF THE STUDY
i. To understand the Concept of Financial Services, its classification and activities.
ii. To know how a well developed financial services industry is absolutely necessary to
mobilize the savings.
iii. To allocate them to various investable channels and thereby to promote industrial
development in a country.
iv. To understand how financial services mobilize and allocating savings.
v. To understand the activities involved in the transformation of savings into investment.
vi. To know the key areas of industrial development through financial services.
REASON FOR SELECTING THE TOPIC
The main reason to choose this topic is to understand the meaning and importance of
financial services. By this research we can understand the management of money in banks,
credit card companies, stock brokerages, investment fund and some government sponsored
enterprises. We will come to know , which one is the better financial service traditional
financial services or morden financial services.
Causes For Financial services Innovation
Financial intermediaries have to perform the task of financial innovation to meet the
dynamically changing needs of the economy and to help the investors cope with the
increasingly volatile and uncertain market place. There is a dire necessity for the financial
intermediaries to go for innovation due to the following reasons :
i. Low profitability
ii. Keen competition
iii. Economic Liberalization
iv. Improved communication technology
v. Investor Awareness
vi. Customer Service
vii. Global impact
SCOPE OF STUDY
Scope of financial services has changed over the years. Economies of scope were very much in
the limelight and different schools of thought gave different views.
Financial services cover a wide range of activities. They can be broadly classified into two,
namely :
i. Traditional Activities
ii. Modern Activities
RESEARCH METHODOLOGY
Research is common parlance refers to a search for knowledge. One can also define research as
a scientific and systematic search of pertinent information on a specific topic.
There are 2 methods of data collection.
i. Primary Data:-
Collecting the primary data by visiting financial institutions like corporate
banks(ICICI, IDBI, AXIS) , Insurance companies (BAJAJ ALLIANZ, ICICI
PRUDENTIAL, BIRLA SUN LIFE) and government financial institutions
(SBI, UTI, LIC).
Questionnaire Method
Personal feedback
ii. Secondary Data :-
Financial institutions’ report
Magazines
Television rating
Websites
ANALYSIS
Challenges Facing the Financial Services Sector
Though financial services sector is growing very fast, it has its own set of problems and
challenges. The financial sector has to face many challenges in its attempt to fulfill the ever-
growing financial demands of the economy.
i. Lack of qualified personnel
ii. Lack of investor awareness
iii. Lack of transparency
iv. Lack of specialization
v. Lack of recent data
vi. Lack of efficient risk management system
Present Scenario
The Indian economy is in the process of rapid transformation. Reforms are taking place in every
field / part of economy. Hence financial services sector is also witnessing changes.
i. Conservatism to dynamism
ii. Emergence of Primary Equity Market
iii. Concept of Credit Rating
iv. Process of globalization
v. Process of liberalization
CONCLUSION
In last few years, India has 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
(FDI & FII), there has been a complete turnaround. India along with other Asian powerhouse
China makes for the fastest growing nations in the entire world.
Even if we take the case of ongoing global recession, India has managed to perform far better
than other nations. Right from banking system to financial regularities, the country has thrived
on discipline and out-performance. The booming Indian economy resulted in widespread
growth and arrival of new industries. The most sparkling phenomenon is in form of financial
market of India.
BIBLOGRAPHY
i. http://www.wikipedia.com
ii. http://www.scribd.com
iii. Financial Service Management – RAI UNIVERSITY.
iv. Financial Organizations Web-sites and there leaf folds.
