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Industry Analysis Of Financial ServicesGrp.No13

Swatee GhoshSamit kr. Kapat

Ronald Fernandes

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PLACES TO SAVE MONEY

Would you save your money in any of these places? Why? Why not? Can you think of other places to save money?

• Bed & Mattress• Cookie Jar• Pillow• Wallet• Money Belt• Small House Safe

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INFORMAL FINANCIALSERVICES

• Payday lenders• Check cashing services• Rent-to-own stores• Pawn shops• Loans from family/friends

FORMALFINANCIAL SERVICES

• Credit cards• Loans• Investment vehicles• Direct deposit• Wire transfers/ remittances

Financial services refer to services provided by the financial industry. The industry comprises of organizations who manage money.

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Banks A landmark was registered in the Indian banking sector

when the major banks were nationalized in 1969.

Commercial banks

Investments banks

Bonds (debt)

Stocks (equity)

Notary services

Credit cards

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Stock market

Origin Pre-independence Post-independence

India's market cap as a percentage of world market cap was 2.8 per cent as on December 31, 2009.

In 2009, there were 21 IPOs that raised US$ 4.18 billion as compared to 36 IPOs in 2008 that raised US$ 3.62 billion.

QIP is a capital raising tool, whereby a listed company can issue equity shares, fully and partly convertible debentures, or securities other than warrants, which are convertible into equity shares, to a qualified institutional buyer (QIB).

In 2009, Indian companies had raised close to US$ 7.13 billion (QIP)

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NSE

Trading at NSE

Fully automated screen-based trading mechanism Strictly follows the principle of an order-driven market Trading members are linked through a communication network This network allows them to execute trade from their offices The prices at which the buyer and seller are willing to transact will

appear on the screen When the prices match the transaction will be completed A confirmation slip will be printed at the office of the trading member

Advantage of trading at NSE

Integrated network for trading in stock market of India Fully automated screen based system that provides higher degree of

transparency Investors can transact from any part of the country at uniform prices Greater functional efficiency supported by totally computerized network

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Foreign Exchange

Currency exchange

Wire transfer

Foreign currency banking

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Investments services

Asset management

Hedge fund management

Custody management

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Insurance India 5th largest life insurance market in the

emerging insurance economies globally and the segment is growing at a healthy 32-34 per cent annually (LIC)

Total first year premium collected in 2009-10 was US$ 24.64 billion, an increase of 25.46 per cent over US$ 19.64 billion collected in 2008-09.(IRDA)

Brokers

Underwriters

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Others

Private equityAngel investorConglomeratesDebt resolutionVenture capital -Presently in India there are

around 34 national and 2 international SEBI registered venture capital funds

Mutual fundsMortgage companiesInvestment research agencies

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Economic Updates

Indian economy growth 7.4 per cent in 2009-10. (CSO) – financial services 9.7 per cent in 2009-10 (SEBI) Investors (FIIs) as on May 31, 2010 was

1,710 FII inflow in equity US$ 4.6 billion US$ 5.9 billion inflow in debt. (May)09US$ 875.73 million in debt(Aug)10Net investment , 2010 was US$ 530.05 million Mutual fund US$ 170.46 billion May 2010- US$

135.58 billion May 2009, (AMFI).India's foreign exchange reserves US$ 271. billion,

an increase of US$ 9.87 billion (RBI)

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Main players of financial servicesSBI Capital Markets Limited:Bajaj Capital Limited:DSP Merrill Lynch Limited:Birla Global Finance Limited:Housing Development Finance Corporation:PNB Housing Finance Limited:ICICI Group:LIC Finance Limited:L & T Finance Limited:Karvy Group:

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Consolidation

Increasing the number of customers and beating competitors by selling various Financial products through one distribution channel.

Diversifying products and customers to avoid the risk and to finance a loss-making part of the business with the profits of another one.

Maintaining a large capital base as a sponge to absorb losses and the growing cost of technology.

Increasing the quality of service and products to gain the

trust of the customers.

Increasing profitability in the battle against competitors

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Performance F.S.

At about $900 billion, India's stock of financial assets—including bank deposits, equities, and debt securities—is one-fifth the size of China's The gap is widening: by 2010, China's financial stock will reach $9 trillion, while India's will remain below $2 trillion.

India's financial system is more effective than China's, largely because the market share of more efficient foreign and privately owned banks in India has crept up to 25 percent.

Many nonperforming loans have been cleaned up, and while the true figure is hard to determine, they are now estimated at around 9 percent of all lending, compared with up to 40 percent in China.

India's stock market is booming, and its best companies list shares abroad.

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Growth F.S.

Present is nearly 8.5% per year. The rise in the growth rate suggests the growth of the economy.

To maintain such a growth for a long term the inflation has to come down further.

The financial sector in India had an overall growth of 15%, which has exhibited stability over the last few years although several other markets across the Asian region were going through a turmoil.

With the opening of the financial market variety of products and services were introduced to suit the need of the customer.

The Reserve Bank of India (RBI) played a dynamic role in the growth of the financial sector of India.

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Recession Financial services

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Recession 2008-09Impact

First, the Indian stock markets, both BSE as well as NSE, fell dramatically over 2008 .

India’s main index sensex plunged nearly 50% during the year from a high of 19,080 in January 2008 to 8,674 in January 2009.

FIIs’ net outflows have been Rs 47,706 crore (Rs 477.06 billion) till March 30 in the financial year 2008-09 as against huge inflows of Rs 53,000 crore (Rs 530 billion) in the previous fiscal.

Money and credit markets under pressure.(E.g.M.F.)

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Resistance ???Supervisory Review Process (SRP)Investment Fluctuation Reserve (IFR)-5%‘Held for Trading’ (HFT) & ‘Available for Sale’ (AFS)Housing loan Rs.30 lakh (USD 75,000 approx) to

individuals against the mortgage of residential housing properties from 75% to 50%

STEPS Taken:Financial Accounting-Conservative(net loss) Setting up of the Clearing Corporation of India Limited

(CCIL) Setting up of INFINET as the communication backbone for

the financial sector. Introduction of Negotiated Dealing System (NDS) for

screen-based trading in government securities. Credit Information Bureau of India Limited (CIBIL) for

information sharing on defaulters as also other borrowers

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Bibliography www.investopedio.comwww.sebi.comwww.debtresolutionpartners.comwww.mca.gov.inwww.wikipedia.orgwww.centrelink.gov.inwww.fisglobal.comwww.business.comwww.moneymadeclear.com

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THANK YOU

Q & A