Professional Documents
Culture Documents
S.L.N College of Arts, Commerce & Management, Fort, Bangalore -02 Karnataka, INDIA.
INTRODUCTION
Money is an arm or leg - you either use it or loose it.
Henry ford
A well functioning financial market is a key to sustained economic growth. Money Its nature, behavior, regulation and problems. The field of finance is closely allied to the field of economics Indian Financial service industry; largest in the world Is dynamic constant changes. Banking, insurance, mutual fund, capital market play a greater role. Contribution of financial service to the GDP of the country is significant.
money
Organizations render service to industrial enterprise and ultimate
consumer.
Main sectors are Banks, Financial institutions and non-banking
financial companies.
REGUALATORY AUTHORITIES
1. Banking Regulation Act of 1949 authorizes RBI the licensing and supervising banks. 2. SEBI The purpose of the SEBI act is to
to protect the interest of the investors in securities Promote the development of security market to regulate the security market and For matters connected therewith are incidental thereto.
3. IRDA Insurance Regulatory and Development Authority was setup in 1999 to ensure level playing field and discourage monopoly.
IMPLEMENTATION
1. Interest rate deregulation 2. Reduction in CRR and SLR 3. Directed Credit weaker sections -- priority sector 4. Capital adequacy ratio 5. Prudential accounting standard 6. Private and Foreign banks 7. Branch licensing liberalized 8. Banks access to Capital market. 9. Supervision BFS has been setup 10. Banking ombudsman scheme 1985 was introduced 11. Merger of Banks. 12. Recovery tribunals
BANKING SECTOR
IMPACT OF REFORMS
During the last 40 years since bank nationalization in the year 1969 banking industry has changed tremendously,
From 1969 till today Indian banking has undergone sea changes both in quantity and quality. From a mere 8000 Crores deposits, by 2012 the bank deposits have touched 60 lakh crores. From 8000 branches in 1969 the number of branches have increased to 65000. Attitudinal changes have taken place, bank approach which has resulted a transformation from class banking to Mass banking
From security oriented to need based banking and banks are exploring ways and means to
reach to all types of customers financial needs
BANKING INNOVATIONS
The LPG policy have brought about tremendous changes in banking, which has lead to creative and
ATM
2. Use of Smart and stored value card 3. Electronic fund transfer point of sale
Banking contd
CHALLENGES AHEAD
The process of liberalization and globalization has presented certain challenges to the Indian banking. They are :1. Competition from new banks 2. Competition from global majors 3. Pressure on spread 4. Changes in product pricing 5. Relationship banking 6. Self regulation 7. Challenges from structure of Indian economy. 8. Management of non-performing asset 9. Managing technology
financial Shoppe
Ensuring access to Financial service and timely and adequate credit to
HOUSING FINANCE
DRIVERS OF CAPITAL FORMATION IN HOUSING SECTORS
Setting up of national housing bank. Allowed retail industry flow of FDIs. Establishment of HUDCO Urbanization programme trough national urban renewal mission funds lowering the housing finance interest rates Tax concessions both on interest and principal repayment Entry of private players and housing finance institutions Establishment of state level housing boards House building advance made to employees of public sector, corporations and financial institutions. World bank support Reduced stamp duty NHBs support to housing finance corporations.
MUTUAL FUNDS
PORTFOLIO
INCOME FUND GROWTH FUND AGGRESSIVE GROWTH FUND SPECIALISED FUND TAXATIONN FUND MONEY MARKET MUTUAL FUND
SCHEME OF OPERATION
OPEN ENDED SCHEME CLOSE ENDED SCHEME
OWNERSHIP
LOCATION
OTHERS
PUBLIC SECTOR DOMESTIC FUND LOAN FUNDS PRIVATE SECTOR GLOBAL FUND NONLOAN FUNDS INTERNATIONAL PROPERTY FUND FUNDS COMMODITY FUNDS
Fast Track to growth A clear indication of their gaining popularity is that assets under management have gone from a mere 25 crores in 1965 to almost 6 lakh crores in march 2012.is due to regulatory control that gave faith to investors
Entry of private sector players and sudden increase in number of schemes since 1993. relentless campaign by various bodies
Investors themselves realizing that mutual funds are after all a good deal.
With the new innovative products coming up the investors are getting more and more options to invest in various forms of equity products. SIP Systematic investment plan
Money Market
Gilt Income Growth Balanced ELSS Total
32424
6917 71258 22938 4663 1893 140093
59447
4876 47451 31551 5472 1740 150537
64711
3730 52903 67144 6833 3927 199248
97757
2057 68350 119538 9170 8726 323598
INSURANCE
To cater to the different needs of the insured a variety of policies are offered by the insurance organization. The principal life insurance policies are endowment, whole life, joint life etc.
Until 1999 there were only two public sector organizations i.e., Life Insurance
Corporation of India (LIC) and General insurance Corporation (GIC) and its 4 subsidiaries rendering insurance service.
covered. To the GDP only 1.29% coverage compared to 10% in Japan, 9 .1% in UK
and 7.31% in USA clearly demonstrate a wide scope in insurance service by devising attractive policy the insurance service can be extended to a great extend to the benefit of both insurance companies and assure the risk coverage to the insured.
VIRTUAL BANKING
1. 2. 3. 4.
Virtual banking refers to banking service delivered to the customer by means of a computer controlled system without involving the usual Banks branch. Virtual banking has been the result of Customer demand, Commercial motivation and Technological development over the years. The stress in Virtual Banking is on 4 aspects: Quality Cost Service Speed It provides quick and quality service to Customer and also provides diversified service and thus enhance more convenience to customers.
COMPUTERISATION IN BANKING
Computerization has become a must rather than a luxury due to the following
To improve the service to customers To improve the efficiency in the working of banks Reducing the cost of transaction and to provide quick service
COMPUTERISATION IN BANKING
1. Full branch computerization 2. ATM deployment 3. Tele-banking 4. Internet Banking: Cheque book issue request, balance enquiry, transaction enquiry, fund transfer, account statement. 5. Real Time Gross Settlement 6. National Electronic Fund Transfer
7. Core banking
COMPUTERISATION IN BANKING
E-BANKING
The use of ATM leads to the concept of anywhere and any time
banking. through these ATM cards one can operate his bank accounts
to withdraw money from any of banks ATM installed at the nearest site. This had broken down the time and space barrier.
The growing popularity of personal computers, easy access to internet and World Wide Web (www) has increased the use of internet by banks as a channel for receiving instruction and also delivering their products and service to customers. This generally referred to as internet banking
or net banking.
COMPUTERISATION IN BANKING
RISK: E-BANKING E-banking poses some different risk as compared to the traditional banking these risks are more pronounced in the case of internet banking. Firstly, the risks of technological change have to be carefully watched. This is essential to update technologies and remain cost-effective and remain customer friendly. The technologies are generally obtained from outside parties banks have to be careful about risk involved in such agreements. Security is an important area of risk for expansion of netbanking. Net-banking breaks the geographical boundaries; imposing regulatory conditions on such transactions will be a difficult task.
Following are some of the constraints of Indian financial service. Lack of education among investors Lack of standardization Inadequate and poor quality of information to the user Lack of research High service cost.