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  IJRFM Volume 2, Issue 2 (February 2012) ISSN: 2231-5985 International Journal of Research in Finance & Marketing 524http://www.mairec.org   EVOLUATION OF FINANCIAL SERVICES INDUSTRY IN INDIA Dr. G.Ramesh Babu *Prof. A. Dhanalakshmi ** ABSTRACT  In the 20th century, the global economy has witnessed the gradual liberalization of trade and capital flows, followed by the deeper version of globalization, mainly attributed to thetechnological changes and political economic liberalization, and has created a world that ismore unified than ever before.. A well-regulated financial sector is essential in globalizedigital economy. Financial innovation has contributed to the development. Market based economies have in general done better. Financial service is one of the important componentsin Indian financial system. It fulfills the needs of the financial markets, financial institutionsand to serve the individual and institutional investors more efficiently. The functioning of the financial system depends upon the range of available financial services. It provides efficient management of the funds, services such as bill discounting, factoring, and parking of short-term funds in the money market. It includes the services offered by both types of companies such as asset and liability management companies. The asset management company includes,leasing, mutual funds, merchant bankers, and portfolio managers. The liability management companies are discounting houses, acceptance house, credit rating, venture capital, housing  finance. These services are also provided a number of various organizations such as non-banking finance companies, insurance companies, subsidiary of financial institutions, stock exchanges, and general financial institutions. All these organizations are regulated by SEBI, RBI, Department of banking and insurance and government of India through number of legislations. It stimulates the velocity of the economic growth. It differs in nature from other  service sectors. Keywords:  Global economy, Political economy, Asset management companies, Liabilitymanagement companies, Merchant bankers, Mutual funds, Leasing companies, Non-banking  finance companies. * Head, Department Of Commerce, S.S.R.J. College, Khammam, Andhra Pradesh, India.  ** Professor Of Management, Acharya Bangalore Business School, Bangalore.  IJRFM Volume 2, Issue 2 (February 2012) ISSN: 2231-5985 International Journal of Research in Finance & Marketing 525http://www.mairec.org   In the 20th century, the global economy has witnessed the gradual liberalization of trade andcapital flows, followed by the deeper version of globalization, mainly attributed to thetechnological changes and political economic liberalization, and has created a world that ismore unified than ever before. The advent of the internet has made time, distance immaterial,and eliminated physical and cultural differences between nations The Indian financial systemhas undergone revolutionary changes in the recent past. The economy has swung to theextremes from abundance of liquidity to an acute shortage of liquidity and now back to aneasy situation. There has been an explosive growth of financial innovation. New methods of financing such as merchant banking, leasing, venture capital, factoring, mutual funds,securitization, e-commerce, debit and credit cards, housing finance, auto finance companieshave emerged as alternative sources of finance. New financial instruments such ascommercial paper, zero interest bonds, deep discount bonds, secured premium notes, havegained prominence in the financial markets.A well-regulated financial sector is essential in globalize digital economy. Financialinnovation has contributed to the development. Market based economies have in generaldone better. Because of the constant identification and improved satisfaction of consumer needs, including needs for financial products .Financial deregulation, freezing of interest rateson bank lending rates, and their practices have helped the growth of the financial services.The quality and cost of effectiveness will count as pre-requisite for its success. The qualityof the service depends upon the technology. The efficiency of any firm involves intechnological relationship between input and outputs. In service sector, efficiency andcompetition are the landmarks of the success. The private sector was permitted to set upmutual funds, banks, and financial institutions.Financial service is one of the important components in Indian financial system. It fulfills theneeds of the financial markets, financial institutions and to serve the individual andinstitutional investors more efficiently. The functioning of the financial system depends uponthe range of available financial services. It provides efficient management of the funds,services such as bill discounting, factoring, and parking of short-term funds in the moneymarket. It includes the services offered by both types of companies such as asset and liabilitymanagement companies. It helps to raise the adequate financial resources and ensures itsefficient deployment. The asset management company includes, leasing, mutual funds,merchant bankers, and portfolio managers. The liability management companies arediscounting houses, acceptance house, credit rating, venture capital, housing finance. Theseservices are also provided a number of various organizations such as non-banking finance  IJRFM Volume 2, Issue 2 (February 2012) ISSN: 2231-5985 International Journal of Research in Finance & Marketing 526http://www.mairec.org   companies, insurance companies, subsidiary of financial institutions, stock exchanges, andgeneral financial institutions. All these organizations are regulated by SEBI, RBI,Department of banking and insurance and government of India through number of legislations. It stimulates the velocity of the economic growth. It differs in nature from other service sectors.Financial services organizations are working based on fee and fund based activities. Fee based organizations includes mutual funds, credit rating, merchant banking, portfoliomanagement. Fund based organization includes, term lending, housing finance, venturecapital, leasing etc., they provide financial services to the clients. Term lending institutionsmeet the long-term funding needs of the industries. Housing finance provide funds to theindividuals for acquisition of house property. Venture capital provides funds to the new projects in the form of equity for producing innovative products OBJECTIVES OF THE STUDY: The main purpose of the study is to examine the role played by various components of thefinancial services in rising of capital from the market.   DATA AND METHODOLOGY: The study is based mainly on secondary data. The main sources of the data are1) R.B.I. Bulletin S2) Annual Reports Of Sebi3) Annual Report Of Prime Database Management4) Vikalpa5) Economic And Political Weekly6) Finance India7) Management Accountant8) Arthavignan9) Indian Management10) Chartered Financial Analyst11) Management Researcher 12) Prajnan13) Journal Of Finance14) Government Of India Publications15) The Decision16) Journal Of Monetary Economics  IJRFM Volume 2, Issue 2 (February 2012) ISSN: 2231-5985 International Journal of Research in Finance & Marketing 527http://www.mairec.org   17) The Economic Times18) Business StandardThere is a paucity of research in the financial services sector in India. Much of little work had been dates back. Moreover, the advent of free pricing in 1992 has changed the dynamicsof the financial services sector in India. Hence the bulk of the work being reviewed earlier is of doubtful relevance in today’s context. The financial service is one of the areas, where substantial research needs to be done. Indianinstitute of management, Ahmadabad has also reviewed the research in the field of the capitalmarket. Financial services are useful for the development of capital market. For the purpose of review, research has been defined “doctoral dissertations, paper  s published in academic  journals, working papers and UN published papers.” They have not reviewed articles  published in the popular media such financial dailies, business magazines and other journals.In order to ensure that the coverage is an exhaustive as possible, they wrote to 118 Indianuniversity departments, institutes of management, and other relevant autonomous researchinstitutions in October 1992. However, they received response only from 52, of these early27 institutions reported that some research had been done in the field of capital market andfinancial services. India faces a tough competition from its global counter parts. The sector has to increase skills to integrate itself with the rest of the world. It faces many problemssuch as skilled personal quality of service, core competence, and technology. The presentstudy seeks to analyze the role played by the financial intermediaries in rising of capital fromthe primary market. The study differs from the other studies in nature, depth, period, and place selected. REVIEW OF LITERATURE: This research study is unique in the sense, that so far, no researcher has undertaken such ananalysis, as it is evident from the review of literature. STUDIES ON FIANANCIAL SERVICES: The study made in India in the field of financial services has been presented briefly. RAGHUNATHAN AND VARMA found that “there is essentiality to allow entry of privaterating agencies to ensure that the exercise is done more meaningfully.”  Bhatt examined about the functioning of merchant banking. According to him, “the most important functions are promotion, financing, loan syndication, investment advisory services,investment management; merchant banking institutions can also assist to NRIs investing their funds in shares of companies in India
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