SYLLABUSFORBASICSOF FINANCIALSERVICES
Unit - 1 : Financial System
An overview of Financial System, Financial Markets,
Structure of Financial Market (Organised and Unorganized Market),
Components of Financial System, Major Financial Intermediaries, Financial Products,
Function of Financial System, Regulatory Framework of Indian Financial System (Overview
of SEBI and RBI-Role and Importance as regulators).
Unit - 2 : Commercial Banks, RBI And Development Banks
Concept of Commercial Banks - Functions, Investment Policy of Commercial Banks,
Liquidity in Banks, Asset Structure of Commercial
Banks, Non-Performing Assets, Interest Rate reforms, Capital Adequacy Norms.
Reserve Bank of India - Organisation & Management, Role and Functions
Development Banks - Characteristics of Development Banks, Need And Emergence of
Development Financial Institutions In India, Function of Development Banks.

Unit - 3 : Insurance.
Concept, Basic Characteristics of Insurance, Insurance Company Operations, Principles of
Insurance, Reinsurance, Purpose and Need of Insurance, Different Kinds of Life Insurance
Products, Basic Idea About Fire and Marine Insurance and Bancassurance
Unit - 4 : Mutual Funds.
Concept of Mutual Funds, Growth of Mutual Funds in India, Features and Importance of
Mutual Fund. Mutual Fund Schemes, Money Market Mutual Funds, Private Sector
Mutual Funds, Evaluation of the Performance of Mutual Funds, Functioning of Mutual
Funds in India.

Business need finance at the point of the business man
decides to start it. Business need finance for purchasing
fixed assets (fixed capital) and payment for raw
materials and salary to employees( working capital)
FINANCE IS THE LIFE BLOOD OF BUSINESS.
BUSINESS FINANCE

CONCEPT OF FINANCIAL
MARKET
Business is a part of an economic system. An
economic system consists of two main sector-
a) house holds – save funds
b) businee- use these fund
Financial market collect fund from the house holds
and allocate to the business. This process is
called as financial intermediation.
There are two major mechanisms for functioning
financial intermediation, they are banks and
financial markets.

• An institutional framework existing in a country to enable
• financial transactions.
• A financial system is a matrix of financial institutions,
financial markets, financial services to facilitate the
transfer of funds.
• The Financial system provides channels to transfer
funds from savers of money like retail individuals to big
business houses who need money and this way
stimuluses the pace of economic development

Mobilising savings
Promoting investment
 Encouraging investment in financial asset
Creating credit
 Providing financial services
 Developing backward areas

1.Financial Institutions
2. Financial Markets
3. Financial Instruments/Assets/Securities
4. Financial Services

 Financial institutions facilitate smooth
working of the financial system by making
investors and borrowers meet.
 They mobilize the savings of investors either
directly or indirectly via financial markets, by
making use of different financial instruments.
 Banking system of India including
Commercial banks and Co-operative banks.
 Non-banking institutions like UTI, Hire
purchase, Leasing Companies, Mutual Fund
companies.

 A financial market is the place where financial
assets are created or transferred. It can be
broadly categorized into money markets and
capital markets. Money market handles short-
term financial assets (less than a year) whereas
capital markets take care of those financial assets
that have maturity period of more than a
year. The key functions are:
1. Assist in creation and allocation of credit
and liquidity.
2. Serve as intermediaries for mobilization of
savings.
3. Help achieve balanced economic growth.
4. Offer financial convenience.

Financial
Market
Money
Market
Capital
Market
Primary
Market
Secondary
Market

 One more classification is possible: primary
markets and secondary markets. Primary
markets handles new issue of securities in
contrast secondary markets take care of
securities that are presently available in the
stock market.

 Financial markets catch the attention of investors
and make it possible for companies to finance
their operations and attain growth. Money
markets make it possible for businesses to gain
access to funds on a short term basis, while
capital markets allow businesses to gain long-
term funding to aid expansion. Without financial
markets, borrowers would have problems finding
lenders. Intermediaries like banks assist in this
procedure. Banks take deposits from investors
and lend money from this pool of deposited
money to people who need loan. Banks
commonly provide money in the form of loans.

 This is an important component of financial
system. The products which are traded in a
financial market are financial assets, securities or
other type of financial instruments. There is a
wide range of securities in the markets since the
needs of investors and credit seekers are
different. They indicate a claim on the settlement
of principal down the road or payment of a
regular amount by means of interest or
dividend. Equity shares, debentures, bonds, etc
are some examples.

 Financial services consist of services provided by
Asset Management and Liability Management
Companies. They help to get the necessary funds
and also make sure that they are efficiently
deployed. They assist to determine the financing
combination and extend their professional
services upto the stage of servicing of
lenders. They help with borrowing, selling and
purchasing securities, lending and investing,
making and allowing payments and settlements
and taking care of risk exposures in financial
markets. These range from the leasing
companies, mutual fund houses, merchant
bankers, portfolio managers, bill discounting and
acceptance houses.

Unorganized market-Not controlled by RBI.
Organized market-controlled by RBI and other
regulatory bodies.
Capital market-Deals with long term securities,
maturityperiod is above 1year.
Industrial security market-securities like share and
debenture issued.
Primary market-Also known as new issue market.
Secondary market-Trading of securities takes place
which have passed through primary market.

Government securities market-securities issued by
central state or semi government.eg-port trust
Long term loan market-loans are given for long term
generally for 5 yrs to 20 yrs.
Term loan market-supply long term or medium term
loan to corporate customer.
Mortgage market-loan given against immovable
property.
Financial guarantee market-finance is given against
the third party.

Money market-It is short term fund market may have
maturity up to 1year.
Call money market-loans are given for short period
say 1day or 14days.
Commercial bill money-It is a market for bill of
exchange.
Treasury bills market-They have short term
maturity, issued bygovernment.
Short-term loan market-In the form of cash credit
and overdraft.

BANKS
INSURANCE
MUTUAL FUNDS
MERCHANT BANKING
VENTURE CAPITAL
FACTORING
FORFEITING

Intangibility
Customer orientation
Inseparability
Perishability
Dynamism

SCOPE OF FINANCIAL SERVICES