Classification of Financial Services

Classification of Financial Services Industry The financial intermediaries in India can be traditionally classified into two : i.Capital Market intermediaries and ii. Money market intermediaries. The capital market intermediaries consist of term lending institutions and investing institutions which mainly provide long term funds. On the other hand, money market consists of commercial banks, co-operative banks and other agencies which supply only short term funds. Hence, the term ‘financial services industry’ includes all kinds of organizations which intermediate and facilitate financial transactions of both individuals and corporate customers

Scope of Finacial Services Financial services cover a wide range of activities. They can be broadly classified into two, namely : i. Traditional Activities ii. Modern activities. Traditional Activities Traditionally, the financial intermediaries have been rendering a wide range of services encompassing both capital and money market activities. They can be grouped under two heads, viz.
a.Fund based activities and
b.Non-fund based activities.
Fund based activities : The traditional services which come under fund based activities are the following : i.Underwriting or investment in shares, debentures, bonds, etc. of new issues (primary market activities). ii. Dealing in secondary market activities. iii.Participating in money market instruments like commercial papers, certificate of deposits, treasury bills, discounting of bills etc. iv.Involving in equipment leasing, hire purchase, venture capital, seed capital. v.Dealing in foreign exchange market activities. Non fund based activities : Financial intermediaries provide services on the basis of non-fund activities also. This can be called ‘fee based’ activity. Today customers, whether individual or corporate, are not satisfied with mere provisions of finance. They expect more from financial services companies. Hence a wide variety of services, are being provided under this