Types of Financial Services Offered in India

The term “financial services” encompasses a wide range of services within the industry. Thanks to its massiveness in the number of services and strong demand drivers, India's financial services sector is experiencing upward growth. With many job opportunities available, even a basic financial analysis course can help you begin on the track to a successful career as a financial analyst.

What are financial services?

Financial services included all types of managing money. It covers a wide range of areas, including credit cards, Banking, accounting, payment services, mortgages, tax preparation and planning, and investment services. Typically, these Financial services are frequently specialized businesses and professional experts.

Why are Financial Services Important?

The smooth operation of an economy depends on heavy financial services. It helps individuals to make large financial services, save for the future, and facilitate the free movement of capital and liquidity in the market. The economy expands, helps businesses in managing risk effectively, and provides a structured framework to function during financial planning. It’s also a high-growth sector with numerous job opportunities. However, the financial regulatory framework is often seen as incomplete, highlighting demanding it to be reformed.

Understanding the Indian Financial System

The Indian Financial System is primarily divided into two segments: banking institutions and non-banking financial institutions. These two segments are further divided into subcategories. In banking, there are the commercial and cooperative ones. The commercial banks are classified as scheduled and non-scheduled banks. Scheduled banks include public sector banks, private sector banks, foreign banks, regional rural banks, small financial banks, and payment banks. While non-scheduled banks mainly comprise local area banks.

10 Types of Financial Services:

1. Banking

2. Professional Advisory

3. Wealth Management

4. Mutual Funds

5. Insurance

6. Stock Market

7. Treasury/Debt Instruments

8. Tax/Audit Consulting

9. Capital Restructuring

10. Portfolio Management

Banking

The banking industry forms the backbone of India’s financial services industry. The country has numerous banks, including 27 public sector, 21 private sector, 49 foreign, 56 regional rural banks and more than 95,000 urban/rural cooperative banks. Key financial services offered in this sector include:

Advertisment

Individual Banking: Checking and Savings accounts, debit and credit cards, and other related services.

Individual Business Banking: Merchant services, savings accounts, and checking accounts for businesses, treasury services, etc.

Loans : personal loans, business loans, automobile loans, home loans, working-capital loans, and others.

Reserve Bank of India (RBI) regulates the banking sector, monitoring and maintaining the segment’s liquidity, capitalization, and overall financial health.

Professional Advisory

India has a well-established network of professional financial advisory services that serve both individuals and businesses.  It offers a wide range of services, such as investment due diligence, M&A advisory, valuation, real-estate consulting, risk management, and tax consulting. These services are offered by a variety of services, ranging from independent domestic consultants to large multi-national firms.

Wealth Management

This segment of Financial services focuses on managing and investing customers’ wealth across a variety of financial instruments- including debt, equity, mutual funds, insurance products, structured products, commodities, and real estate. Investment strategies based on each client’s financial goals, risk profile, and time horizons.

Advertisment

Mutual Funds

Mutual fund service providers provide professional investment management across funds which include a mix of asset classes, mainly debt and equity-linked assets. Compared to the stock market and debt products, the buy-in for mutual fund solutions is usually lower. These products are widely popular in India due to their lower risks, tax benefits, stable returns, and diversification of properties. Over the last five years, the mutual funds sector has experienced double-digit growth in assets under management, reflecting its popularity as a low-risk wealth-building option.

Insurance Services

Financial services in this segment are mainly offered in two categories:

General Insurance: Covering areas like automotive, home, medical, fire, travel, and many more

Life Insurance: Including term-life, money-back, unit-linked, and pension plans.

Insurance products help individuals and organizations to protect themselves against unexpected circumstances and risks. Payouts vary depending on factors like the nature of the product, investment horizons, risk assessment of the customer, premiums paid, and other key qualitative and quantitative aspects. In India, the insurance sector is well-established, comprising 24 life insurance and 39 general insurance companies. The industry is regulated by the Insurance Regulatory and Development Authority of India (IRDAI).

Stock Market

The stock market segment offers investment options in Indian stock markets including the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), across various equity-linked products. Returns for investors come from capital appreciation – the increase in the value of the equity solution and/or dividends paid by the companies to their investors.

Treasury/Debt Instruments

This segment provides investment opportunities in government and private organization bonds (debt). Bond issuers (borrowers) offer fixed payments (interest) and return the principal amount to the investor at the end of the investment term. Common instruments in this category include listed bonds, non-convertible debentures, Government savings bonds, capital-gain bonds, and tax-free bonds.

Tax and Audit Consulting

This segment encompasses a wide range of financial services in the taxation and auditing domain, catering to both individual and business clients. Some key services include:

Tax Individual: Calculating tax liability, filing tax returns, providing tax-savings advice, and many more.

Tax  Business: Determining tax liability, transfer pricing analysis, GST registrations, and tax compliance advisory.

In auditing, providers offer solutions such as statutory audits, internal audits, service tax audits, tax audits, process and transaction audits, risk audits, and stock audits. These services are vital for ensuring smooth operation, maintaining compliance and quantitative perspective, as well as operational risk.

Capital Restructuring

This service is primarily aimed at organizations and focuses on reorganizing their capital structure, balancing debt and equity to improve profitability or address challenges such as bankruptcy, volatile markets, liquidity crunch or hostile takeover attempts. Common financial solutions in this segment include structured transactions, negotiations with leaders, accelerated M&A and acquisitions, and capital raising initiatives. 

Portfolio Management

This segment offers highly specialized, customized solutions designed to help clients achieve their financial goals.Portfolio managers analyze and optimize investments across clients across diverse assets such as debt, equity, insurance, real estate,and many more. These services are typically targeted at HNIs and are provided in two formats: discretionary and non-discretionary.

Conclusion - Financial Services in India

The Indian financial system has a very big and wide range of networks which help in growing Indian economic growth by connecting people, businesses and government bodies. Each sector plays a very important role and ensures its financial stability and growth. Reserve bank of India and the IRDAI make sure that transparency, efficiency and trust are maintained.