Finance in india

Finance

Financial Services in India

India’s financial service sector is growing exponentially because of its diversification, both in term of existing firms and new entities entering the market. India financial sector comprises insurance companies, commercial banks, non-banking financial companies, mutual funds, web aggregators, pension funds, co-operatives and small other financial entities in the market. some new types of payment banking system come into existence recently which is regulated by the banking regulators. However, the banking sector of India is huge and vast and the commercial banks playing a major role to enhance the India market and economy. 64% of the total assets held by the banking sector in the financial system.

The government of India and RBI (Reserve Bank of India) have introduced several amendments to regulate and enhance the financial sector and have taken various measures to help MSME’S ( Micro, Small and Medium Enterprises). These measures including MUDRA ( Micro Units Development and Refinance Agency), launched  CGFS (Credit Guarantee Fund Scheme) for MSMEs.

As per some financial agency, by 2028, India is expected to be the fourth-largest private wealth market of the world. In 2017, SIDBI launched ‘Udyami Mitra’ portal for MSMEs in the country to improve credit availability. With the joint effort of the Indian government and the private sector, making India the most vibrant capital market.

Government Initiatives For Financial Services

In Banking Sector:

  1. Bank Board Bureau – The government decided to set up an autonomous Banks Board Bureau and their task is developing business strategies, strategy for raising capital, this bureau function has started from 01 April 2016,  Bureau will also help to select the heads of the PSU banks. Let’s understand the BBB structure. There are 3 ex-officio members and 3 expert members in addition to Chairman. All the Members including Chairman are part-time except ex-officio members.
  2. Capital for Public Sector Banks (PSBs)– Reforms has been initiated by the Government Under the Indradhanush Plan, action related to Appointment, Framework of Accountability, Governance, Bank Board Bureau, Capitalization, De-stressing PSBs, Empowerment. Further, the Government has told all PSBs to raise capital through Follow-on Public Offer (FPO) from Public markets based on specific criteria
  3. The merger of SBI Associates with State Bank of India- Government approved the proposal for merger of SBI associates with state bank of India and the same has been notified in Gazette of India. The merger came into effect from 1st April 2017.  State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, State Bank of Travancore are the associate’s bank and the customers of these banks can have the access to SBI’s global network.
  4.  Bhartiya Mahila Bank (BMB) merged with SBI and the same has been notified in the Gazette of India on 20 Mar 2017. From 1st April 2017, the merger has come into effect.

In Insurance Sector:

  1. On 4th March 2015, Insurance Laws (Amendment) Bill passed by the Lok Sabha and on 12th March 2015 by the Rajya Sabha, thus paving the way for critical reforms related amendments in the Insurance Act, 1938, 1972 and the Insurance Regulatory and Development Authority (IRDA) Act, 1999, the General Insurance Business (Nationalization) Act, 1972. The Insurance Laws Act 2015 notified on 23rd March and replaced all the major insurance laws. The amendment incorporated certain provisions to provide IRDAI to execute its functions more efficiently and effectively and also open the insurance market for the foreign investment cap in order to gain more profit from insurance.
  2. Listing of Public Sector General Insurance Companies– Government of India promoted and approved listing of the following five Government-owned General Insurance Companies on the stock exchanges, their name as such United India Insurance Company Ltd, Oriental Insurance Company Ltd, New India Assurance Company Ltd, General Insurance Corporation of India. and National Insurance Company Ltd

Government Schemes Launched as an Initiative

Pradhan Mantri Vaya Vandana Yojana:

The ‘Pradhan Mantri Vaya Vandana Yojana ’ has been launched by the Government to protect and scheme implemented through LIC (Life cooperation of India) for the elderly persons aged 60 years and above. This scheme provides an assured return of 8 annually for 10 years, you can pay your premium on a monthly, quarterly, half-yearly or annual depending on the options as taken by the subscriber while buying the policy.

Stand Up India Scheme:

Stand Up India scheme launched on 5th April 2016 by the government of India. This scheme is operational through Scheduled Commercial Banks across the country. Under this scheme, you can have the bank loans between 10 lakh to INR 1 crore for your enterprise including manufacturing, services or the trading sector. This scheme specially designed for the enterprises and who wants to open his/her own business and scheme implemented through the commercial banks is to provide the benefit of at least 2.5 Lakh borrowers. The main objective of the scheme is to provide equal opportunity to women, SC/ST, who they are interested in entrepreneurship.

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY):

This scheme is provided by the government of India to the people in the age group of 18 to 50 years with bank accounts. The scheme premium is INR. 330 per annum which is to be auto-debited in one instalment from the subscriber’s bank account as per the option chosen by him. The risk coverage provided under this scheme is for INR 2 lakh in case of death of the insured, due to any reason. This scheme is being provided by the LIC and other general insurance companies on similar terms. As on 31st March 2019, a total of 145763 claims were registered under this scheme, of which 135212 have been disbursed.

Pradhan Mantri Suraksha Bima Yojana (PMSBY):

This is a kind of Bima yojana provided by the government of India to the people in the age group 18 years to 70 years with the bank account. The risk coverage provided under the scheme is INR 2 lakh for accidental death and full disability and INR 1 lakh for partial disability. The premium is deducted from your bank account if you have enabled the auto-debit facility, the KYC is done through the Aadhar Card. This scheme offered by all the public sector general insurance companies offering the product on similar terms with necessary approvals and tie-up with banks for this purpose. As on 31st March 2019, a total of 40,749 Claims were registered under this scheme of which 32,176 have been disbursed.

Atal Pension Yojana (APY):

Atal Pension Yojana was launched on 9th May 2015 by the prime minister, this is the pension yojana and can be helpful after your retirement, a subscriber of the policy would receive a monthly pension of INR 1,000 or INR 2,000 or INR 3,000 or INR 4,000 or INR 5,000 at the age of 60 years. After the death of the policyholder, their family or nominee would get all the benefits as provided under this scheme and after the completing the age of 60 years, the policyholder would receive all the accumulated amount as well. This scheme is the best option and offering good returns without losing any single penny, if the returns on the investment are higher, the subscriber would get better pensionary benefits.

Pradhan Mantri Mudra Yojana:

Pradhan Mantri Mudra Yojana was launched on 8th April 2015, the main objective of the scheme is to enhance the confidence of the young, educated and skilled workers by providing the loans through the banks with no collaterals. under the three category that are as follows, you can have the loans facility, loan of up to INR 50,000 is given under sub-scheme ‘Shishu”, between INR 50,000 to 5.0 Lakhs under sub-scheme ‘Kishore’; and between 5.0 Lakhs to 10.0 Lakhs under sub-scheme ‘Tarun’. As on 31st mar 2019, INR 3,21,722 crores provided (INR142,345 cr. for Shishu category, INR104,386 cr. provided to Kishore category and INR 74,991 cr. sanctioned to Tarun category) in 5.99 crores accounts.

Pradhan Mantri Jan Dhan Yojana (PMJDY):

Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched on the independence day (15 Aug 2014) as the National Mission on Financial Inclusion. The main objective of the scheme is to provide banking access to every Indian with zero balance so they can easily get the government benefits directly like pension benefits, credit benefits, insurance and so on. This scheme offers unbanked citizen easy access to banking-related services and enhances awareness about financial products through financial literacy programmes. People can get benefits of government scheme such as life insurance that is covered  under Pradhan Mantri Jeevan Jyoti Bima Yojana, under the Atal Pension Yojana, they receive a guaranteed minimum pension and get personal accident insurance coverage under the Pradhan Mantri Suraksha Bima Yojana.

Let Us Understand The Market Size

India’s mutual market witnessed a huge hike in April 2020, it is around INR 23.93 trillion and it was INR 10.96 trillion in October 2014. And this is only possible because of the combined effort of government and mutual fund regulators, taking the help of campaign and making people aware of the mutual fund schemes.  India’s mutual fund schemes inflow via SIP (Systematic Investment Plan) reached INR 82,453 crore, a net inflow of INR 8.04 trillion registered by Equity mutual fund by the end of 2019.

AMFI is planning to increase the mutual fund growth to INR 95 Lakh Crore by 2025.

Insurance is another financial industry playing an important role, the insurance sector undergoing rapid expansion. The life insurance companies first-year premium reached INR 2.59 lakh crore in the fiscal year 2020. IPO’s market also seen rapid growth.

Foreign investment rules received a positive response from the insurance sector of India, many companies are planning to increase their stake in Indian companies. In the coming year, we easily can see the series of joint venture deals between globally recognised player and local players.

Hence, India’s leading bourse, BSE ( Bombay Stock Exchange) is planning to set up a joint venture with Ebix Inc to build a strong distribution network in the country for insurance, via a new distribution channel.

Another industry is the mobile wallet industry is also expanding gradually and supporting the Indian economy. By the end of 2022, mobile wallet transaction would touch INR 32  trillion.

10 Types of Financial Services in India

  1. Banking
  2. Capital Restructuring
  3. Insurance
  4. Mutual Funds
  5. Portfolio Management
  6. Professional Advisory
  7. Stock Market
  8. Tax/Audit Consulting
  9. Treasury/Debt Instruments
  10. Wealth Management

Let us understand these services in brief:-

1.Banking:

As we know that India’s banking sector is rapidly growing and already captured more than half of the total market, it is around 64%. There are 27 public sector banks, 21 are private sector banks, 49 are foreign banks, 56 are regional rural banks and 95000+ are urban/rural cooperative banks. What are the services are offered by banks?

  1. offer saving accounts, fixed deposit, current account
  2. offer credit cards services and debit card services
  3. offering loans ( business loan, home loan, car loan, personal loan and working-capital loan)
  4. offering business banking solution( saving accounts for business, treasury services and etc)

RBI is responsible to regulate the whole banking sector which monitors and maintain the financial health.

2.Capital Restructuring:

These services are designed for organizations, it involves the restructuring of capital structure (equity and debt). It typically includes capital raising, lender negotiations and structured transactions. bankruptcy, volatile markets, hostile takeovers and liquidity crunch are all comes under this segment of the financial services.

3.Insurance:

Insurance is another segment under financial services.  it is classified into two category

  1. General Insurance – All types of insurance comes under the general insurance except the life insurance.
  2. Life Insurance – Term plans, money back plan, unit-linked, pension plan etc.

In India, the insurance market is growing and having a strong presence. There are 39 general insurance companies in India, and 24 are life insurance companies. And the overall insurance market is regulated by the IRDAI (Insurance Regulatory and Development Authority of India). Insurance enables you to protect from uncertainties.

4.Mutual Funds:

Mutual fund is the growing sector in India, growth reached to INR 23.93 trillion in April 2020. It is a type of investment vehicle, collected money from investors to invest in securities like equity, bond, and other assets. These funds are operated by a specialized manager, who allocate the money in different securities and attempt to produce capital gains.  Mutual funds give investors to access the portfolio at low prices.

5.Portfolio Management:

This segment offers a specialized and customized range of solutions that let the client reach their financial goals through the portfolio team who analyze and optimize investments for clients across insurance, real state, pharma, debt and equity.

6.Professional Advisory:

Professional advisory offers individual and businesses a wide range of portfolio services, including valuation, real estate consulting, risk consulting, tax consulting and M&A advisory.

7.Stock Market:

The stock market is the platform where you can buy and sell shares. Investment in the stock market is often taking place via electronic trading platforms and stock brokerages.

8.Tax/ Audit Consulting:

In the auditing segment, the service provider offers solutions including tax audits, service tax audits, transaction audits, statutory audits, internal audits and more to ensure the smooth operation of the business entities from both qualitative and quantitative perspective.

9.Treasury/Debt Instruments:

Services are offered by treasury and debt instruments include investing the investor money into government and private organizations bonds(debt). Types of instruments in this segment including capital gain bond, GoI savings, non-convertible debentures, tax-free bonds and listed bonds. At the end of the investment period, the issuer of the bonds offers invested amount along with the interest to the investor.

10.Wealth management:

Wealth management is another segment of financial services, this segment managing and investing customer’s wealth across various financial instruments such as mutual funds, insurance products, debt, equity, commodities, derivatives and real estate based on the client’s goals.

List of Some Government Financial Agencies in India

Financial AgencyWebsiteAddress/Tel:/Email
SEBIhttps://www.sebi.gov.in/ Plot No.C4-A, 'G' Block
Bandra-Kurla Complex, Bandra (East),
Mumbai - 400051, Maharashtra
Tel : +91-22-26449000 / 40459000
Fax : +91-22-26449019-22 / 40459019-22
E-mail : sebi@sebi.gov.in
Tel : +91-22-26449950 / 40459950
Toll Free Investor Helpline: 1800 22 7575
IRDAIhttps://www.irdai.gov.in/Insurance Regulatory and Development Authority of India
Sy No. 115/1, Financial District,
Nanakramguda,Gachibowli, Hyderabad – 500032
Ph: +91-40-20204000/+91 40-39328000
e-mail: irda@irdai.gov.in
RBIhttps://www.rbi.org.in/Shri Shaktikanta Das
Governor
Reserve Bank of India
Central Office Building
18th Floor, Shahid Bhagat Singh Road
Mumbai-400 001.
Telephone: 22661872
AMFIhttps://www.amfiindia.com/One Indiabulls Centre,
701, Tower 2, B Wing, (7th Floor)
841, Senapati Bapat Marg,
Elphinstone Road,
Mumbai - 400 013
Telephone : +91 22 43346700
Fax : + 91 22 43346722
E-mail address : contact@amfiindia.com
IDRBThttps://www.idrbt.ac.in/Castle Hills, Road No.1, Masab Tank,
Hyderabad-500 057.
Telephone: +91 (40) 2329 4000/4999
Fax: +91 (40) 2353 5157
Email: publisher@idrbt.ac.in

Know the other departments of the Ministry of Finance

Here we provided the complete list of the ministry of finance with their address, contact details and director of the department.

Department of Expenditure

Shri H. Atheli
Director(Expenditure)
Ministry of Finance
Department of Expenditure
Room No. 76
New Delhi – 110001 (India)
Telephone No: 91-11-23092604

Department of Revenue

Shri Udai Singh Kumawat
JS (Revenue)
Ministry of Finance
Department of revenue
Room No. 46, North Block
New Delhi – 110 001
Telephone No: 011 – 23094595
Email:jsrev@nic.in

Department of Economic Affairs

Shri K Rajaraman
Additional Secretary
Ministry of Finance
Department of Economic Affairs
Room No. 129-B
New Delhi – 110001(India)
Telephone: 23093230
Intercom: 5012
Fax : 23092420
Email: jsinv-dea@nic.in

Department of Financial Services

Shri Ashok Kumar Singh
Director (Information Technology)
Ministry of Finance
Department of Financial Services
Jeevan Deep Building
Parliament Street
New Delhi – 110 001
Email:wim-dfs@nic.in

Source: (financialservices.gov.in, ibef.org, finmin.nic.in, investindia.gov.in)