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MEANINGMEANING

The The financial industryfinancial industry, or financial services industry, includes a wide range of companies and , or financial services industry, includes a wide range of companies and institutions involved with money, including businesses providing money management, lending, institutions involved with money, including businesses providing money management, lending, investing, insuring and securities issuance and trading services. investing, insuring and securities issuance and trading services.

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The term ‘financial services’ in a broad sense means “mobilizing and allocating savings”

It includes all activities involved in transformation of savings into investments. Vital for Industrial development.

Traditional classification Capital market Money market

Part of the financial industry:

· Banks · Credit card issuers · Insurance companies · Investment bankers · Securities traders · Financial planners · Security exchanges

Present scenario

1.) Conservatism to dynamism2.)Emergence of primary Equity Market3.)Concept of credit rating4.)Process of globalization5.)process of liberalization

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Increased regulation across all markets is making it harder for banks to generate Increased regulation across all markets is making it harder for banks to generate profits and extend sufficient credit into the system. profits and extend sufficient credit into the system.

Banks are confronted with the need to raise huge amounts of funds in 2012 to Banks are confronted with the need to raise huge amounts of funds in 2012 to comply with new rules, which will be a difficult task in the current environment.comply with new rules, which will be a difficult task in the current environment.

The changed economical and geopolitical environment has also been extremely The changed economical and geopolitical environment has also been extremely challenging for the financial services sectorchallenging for the financial services sector..

The competitive and regulatory pressures for consolidation are leading to a rapid The competitive and regulatory pressures for consolidation are leading to a rapid increase in M&A activity, with more than $36.5 billion worth of deals announced till increase in M&A activity, with more than $36.5 billion worth of deals announced till May 2010 end.May 2010 end.

A study by Project Finance International (PFI), a source of global project finance A study by Project Finance International (PFI), a source of global project finance intelligence and a Thomson Reuters publication has ranked India on top in the global intelligence and a Thomson Reuters publication has ranked India on top in the global project finance (PF) market in 2009, ahead of Australia, Spain and the US.project finance (PF) market in 2009, ahead of Australia, Spain and the US.

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As per the Securities and Exchange Board of India (SEBI), number of registered As per the Securities and Exchange Board of India (SEBI), number of registered Foreign Institutional Investors (FIIs) as on May 31, 2010 was 1710 and the cumulative Foreign Institutional Investors (FIIs) as on May 31, 2010 was 1710 and the cumulative investments in equity since November 1992 to May 31, 2010, was US$ 77.2 billion, investments in equity since November 1992 to May 31, 2010, was US$ 77.2 billion, while the cumulative investments in debt during the same period were US$ 13.4 while the cumulative investments in debt during the same period were US$ 13.4 billion. The total FII inflow in equity during January to May 2010 was US$ 4.6 billion billion. The total FII inflow in equity during January to May 2010 was US$ 4.6 billion while it was US$ 5.9 billion in debt. Net investment made by FIIs in equity between while it was US$ 5.9 billion in debt. Net investment made by FIIs in equity between June 1, 2010 and June 14, 2010 was US$ 530.05 million while it was US$ 875.73 June 1, 2010 and June 14, 2010 was US$ 530.05 million while it was US$ 875.73 million in debtmillion in debt

As on June 4, 2010, India's foreign exchange reserves totalled US$ 271 billion, an As on June 4, 2010, India's foreign exchange reserves totalled US$ 271 billion, an increase of US$ 9.87 billion over the same period last year, according to the Reserve increase of US$ 9.87 billion over the same period last year, according to the Reserve Bank of India's Weekly Statistical Supplement. Bank of India's Weekly Statistical Supplement.

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Housing loans grew by more than 50% and loans to the retail commercial sector rose by more than 100%.

According to the weekly statistical supplement (WSS) of the Reserve Bank of India (RBI), Indian bank loans represented a rise of 19.1 per cent as of June 4, 2010 while deposits were up 14.3 per cent from the previous year.

In life insurance segment, India stands at fifth position in the emerging insurance economies globally and the segment is growing at a healthy 32-34 per cent annually, according to the Life Insurance Council.

The competitive and regulatory pressures for consolidation are leading to a rapid increase in M&A The competitive and regulatory pressures for consolidation are leading to a rapid increase in M&A activity, with more than $36.5 billion worth of deals announced till May 2010 end. activity, with more than $36.5 billion worth of deals announced till May 2010 end.

top 10 financial services companies in India

SBI Capital Markets Limited:SBI Capital Markets Limited:

Bajaj Capital Limited:Bajaj Capital Limited:

DSP Merrill Lynch Limited:DSP Merrill Lynch Limited:

Birla Global Finance Limited:Birla Global Finance Limited:

Housing Development Finance Corporation:Housing Development Finance Corporation:

PNB Housing Finance Limited:PNB Housing Finance Limited:

ICICI Group:ICICI Group:

LIC Finance Limited:LIC Finance Limited:

L & T Finance Limited:L & T Finance Limited:

Karvy Group:Karvy Group:

TYPE OF FACTOR

Favorable Unfavorable

Location of factor

Internal

External

Strengths

oLeading financial services company oComplementary yet diversified businessesoMulti-network distribution oFinancial strength rating

Weaknesses

oHigh combined ratiooExposure to subprime mortgage oLitigations

Opportunities

oExpansion into IndiaoIncreasing demand for pension and retirement products oGrowing US life insurance and pension marketoOpportunities in Mexico

Threats oRegulations on contingent commissionoSarbanes Oxley compliance costs oVolatility in financial markets oConsolidation in financial services industry oMounting insurance frauds

PESTLE ANALYSIS

Political Potential change of government

  Lifelong Learning policies

  Knowledge exchange polices

Economic Recession

  Maintaining competitive advantage

 

Knowledge Exchange,Skills and capacity impacting directly on the economy, Volatility of the rand, inflation, Corruption and organised financial crime, Worldwide financial crisis

SocialSocial Networks and Communities of Practice, Continued need for upliftment of the poor, Gap between the rich and the poor

  Culture

  Changing demographics

Technological

Web 2.0·, IT trends and the speed of change,Communication infrastructure, Costs of new technology, Increased use of technology to solicit cross-border financial services

  Availability of technological solutions

LegalCompliance issues relating to copyright, IPR, data protection, health & safety discrimination and human rights

Environmental Availability and fitness of estate

  Green agenda

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