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The Indian Financial services industry has undergone ametamorphosis since 1990. During the late 70s and 80s,the Indian financial services industry was dominatedby commercial banks and other financial institutionswhich cater to the requirements of Indian industry. Infact the capital market played a secondary role only.

The economic liberalization has brought ion a completetransformation in the Indian financial servicesindustry.

Prior to the economic liberalization the Indian financialservice sector was characterized by so many factorswhich retarded the growth of this sector.

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Prior to the economic liberalisation the Indianfinancial service sector was characterised by so

many factors which retarded the growth of thissector. Some of the significant factors were:

Excessive controls in the form of regulations of

interest rates, money rates etcToo many control over the prices of securitiesunder the erstwhile controller of capital issues.

Non availability of financial instruments on a

large scale as well as on different varities.Absence of independent credit rating and creditresearch agencies.

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Strict regulation of the foreign exchangemarket with too many restrictions on foreign

investment and foreign equity holding in Indiancompanies.

Lack of information about internationaldevelopments in the financial sector.

Non availability of debt instruments on a largescale.

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However, after the economicliberalisation,the entire financial sectorhas undergone a sea change and nowwe are witnessing the emergence ofnew financial products and service

almost everyday.

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The term Financial services in a broadsense means mobilizing and allocatingsavings. Thus it includes all activities

involved in the transformation of saving intoinvestment.

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The term financial services can be

defined as activities ,benefits andsatisfactions , connected with the saleof money, that offer to users andcustomers financial related value

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Financial service organizations renderservices to industrial enterprises andultimate consumer markets. Withinthe financial services industry the mainsectors are :

Banks

Financial InstitutionsNon Banking Finance Companies

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The suppliers of financialservices(financial intermediaries)include the following type of

institutions:Banks and financial institutions

House building societies

Insurance companiesCredit card issue companies

Investment trusts and mutual funds

Stock exchangesLeasing/Equipmentfinance/consumer finance co;

Unit trusts

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Intangible

Direct sale

Heterogeneity

Fluctuation in demand

Protect customer interests(customer oriented)

Labour intensive

Requires quality labourDominance of human element

Perishability

Simultaneous performance

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Traditional activities

Asset/Fund based activities

Fee based/Non fund based activities

Modern activities

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Equipment leasing/finance

Hire purchase & consumercredit

Bill discountingVenture capital

Housing Finance

Insurance companiesFactoring etc

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1.Merchant Banking

Issue management

Portfolio management

Corporate counseling

Loan syndication

Mergers and acquisitions

Capital restructuring

2.Credit rating(AAA,A++,B,C,D)

3.Stock broking and so on

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Lack of qualified personnel

Lack of investor awareness

Lack of transparency

Lack of specialization

Lack of recent data

Lack of efficient risk managementsystem

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