There has been an upsurge in the financial services provided by various banks and financial institutions since 1990. Efficiency of emerging financial system depends upon the quality and variety of financial services provided by the banking and non-banking financial companies. Financial services, through the network of elements such as financial institutions, financial markets and financial instruments, serve the needs of individuals, institutions and corporate. It is through these elements that the functioning of the financial system is facilitated. In fact, an orderly functioning of the financial system depends, to a great extent, on the range and the quality of financial services extended by a host of providers.
The Indian Financial services industry has undergone a metamorphosis since 1990. During the late seventies and eighties, the Indian financial service industry was dominated by commercial banks and other financial institutions which cater to the requirements of the Indian industry. In fact the capital market played a secondary role only. The economic liberalization has brought in a complete transformation in the Indian financial services industry.
Prior to the economic liberalization, the Indian financial service sector was characterized by so many factors which retarded the growth of this sector. Some of the significant factors were:
(i) Excessive controls in the form of regulations of interest rates, money rates etc.
(ii) Too many control over the prices of securities under the erstwhile Controller of Capital Issues.
(iii) Non-availability of financial instruments on a large scale as well as on different varieties.
(iv) Absence of independent credit rating and credit research agencies.
(v) Strict regulation of the foreign exchange market with too many restrictions on foreign investment and foreign equity holding in Indian companies.
(vi) Lack of information about international developments in the financial sector.
(vii) Absence of a developed Government securities market and the existence of stagnant capital market without any reformation.
(viii) Non-availability of debt instruments on a large scale.
However, after the economic liberalization, the entire financial sector has undergone a sea-saw change and now we are witnessing the emergence of new financial products and services almost everyday. Thus, the present scenario is characterized by financial innovation and financial creativity and before going deep into it, it is imperative that one should understand the meaning and scope of financial services.
In general, all types of activities which are of a financial nature could be brought under the term ‘financial services’. The term “Financial Services” in a broad sense means “mobilizing and allocating savings”. Thus, it includes all activities involved in the transformation of saving into investment.
The ‘financial service’ can also be called ‘financial inter mediation’ Financial inter mediation is a process by which funds are moblized from a large number of savers and make them available to all those who are in need of it and particularly to corporate customers. Thus, financial services sector is a key are and it is very vital for industrial developments. A well developed financial services industry is absolutely necessary to mobilize the savings and to allocate them to various invest able channels and thereby to promote industrial development in a country.
The Indian Financial services industry has undergone a metamorphosis since 1990. During the late seventies and eighties, the Indian financial service industry was dominated by commercial banks and other financial institutions which cater to the requirements of the Indian industry. In fact the capital market played a secondary role only. The economic liberalization has brought in a complete transformation in the Indian financial services industry.
Prior to the economic liberalization, the Indian financial service sector was characterized by so many factors which retarded the growth of this sector. Some of the significant factors were:
(i) Excessive controls in the form of regulations of interest rates, money rates etc.
(ii) Too many control over the prices of securities under the erstwhile Controller of Capital Issues.
(iii) Non-availability of financial instruments on a large scale as well as on different varieties.
(iv) Absence of independent credit rating and credit research agencies.
(v) Strict regulation of the foreign exchange market with too many restrictions on foreign investment and foreign equity holding in Indian companies.
(vi) Lack of information about international developments in the financial sector.
(vii) Absence of a developed Government securities market and the existence of stagnant capital market without any reformation.
(viii) Non-availability of debt instruments on a large scale.
However, after the economic liberalization, the entire financial sector has undergone a sea-saw change and now we are witnessing the emergence of new financial products and services almost everyday. Thus, the present scenario is characterized by financial innovation and financial creativity and before going deep into it, it is imperative that one should understand the meaning and scope of financial services.
In general, all types of activities which are of a financial nature could be brought under the term ‘financial services’. The term “Financial Services” in a broad sense means “mobilizing and allocating savings”. Thus, it includes all activities involved in the transformation of saving into investment.
The ‘financial service’ can also be called ‘financial inter mediation’ Financial inter mediation is a process by which funds are moblized from a large number of savers and make them available to all those who are in need of it and particularly to corporate customers. Thus, financial services sector is a key are and it is very vital for industrial developments. A well developed financial services industry is absolutely necessary to mobilize the savings and to allocate them to various invest able channels and thereby to promote industrial development in a country.
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