this article gives an insight of the fee based financial services.

1. Fee based
financial
services
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Assignmentof financial
marketandservices

2. INTRODUCTION –FINANCIAL SERVICES
OBJECTIVES OF FINANCIAL SERVIES
FUNCTIONS OF FINANCIAL SERVICES
CHARACTERISTIC AND FEATURES OF FINANCIAL
SERVICES
PAST PRESENT AND FUTURE OF FINANCIAL SERVICES
TYPES OF FINANCIAL SERVICES
FEE BASED FINANCIAL SERVICES
ISSUE MANAGEMENT
PORTFOLIO MANAGEMENT
CORPORATE COUNSELLING
LOAN SYNDICATE
MERGERS AND ACQUITIONS
STOCK BROKING
CONCLUSION
BIBLOGRAPHY

3. Financial services can be defined as the products and services
offered by institutions like banks of various kinds for the facilitation
of various financial transactions and other related activities in the
world of finance like loans, insurance, credit cards, investment
opportunities and money management as well as providing
information on the stock market and other issues like market
trends
NOTE: reference website https://www.mbaknol.com/business-finance/definition-of-financial-
services/

4. FOLLOWING ARE THE OBJECTIVES OF FINANCIAL
SERVICES COMPANIES:
FUND RAISING –
Financial services help to raise the required funds from a host of investors,
individuals, institutions, and corporates using various instruments.
FUNDS DEPLOYMENT-
Arrays of financial services are available in the financial markets which help
the players to ensure an effective deployment of the funds raised.
SPECIALISED SERVICES-
They are specialized services catering the needs of different corporates like
mutual funds, book building, etc.
REGULATION-
Agencies such as SEBI, RBI, Department of banking and insurance of the
government of India, through a plethora of legislations, regulate the
functioning of financial service institutions.
ECONOMIC GROWTH-
Financial services contribute, in good measure by mobilizing savings, to
speeding up the process of economic growth and development.
NOTE: Reference book- financial market services by Gurusamy

5. Functions of Financial Services
 Facilitating transactions (exchange of goods and
services) in the economy.
 Mobilizing savings (for which the outlets would otherwise
be much more limited).
 Allocating capital funds (notably to finance productive
investment).
 Monitoring managers (so that the funds allocated will be
spent as envisaged).
 Transforming risk (reducing it through aggregation and
enabling it to be carried by those more willing to bear it).
NOTE: reference website https://www.mbaknol.com/business-finance/definition-of-financial-
services/

6. Characteristics and Features of Financial
Services
1. Customer-Specific: Financial services are usually customer
focused. The firms providing these services, study the needs of
their customers in detail before deciding their financial strategy,
giving due regard to costs, liquidity and maturity considerations.
Financial services firms continuously remain in touch with their
customers, so that they can design products which can cater to
the specific needs of their customers. The providers of financial
services constantly carry out market surveys, so they can offer
new products much ahead of need and impending legislation.
Newer technologies are being used to introduce innovative,
customer friendly products and services which clearly indicate
that the concentration of the providers of financial services is on
generating firm/customer specific services.
2. Intangibility: In a highly competitive global environment brand
image is very crucial. Unless the financial institutions providing
financial products and services have good image, enjoying the
confidence of their clients, they may not be successful. Thus
institutions have to focus on the quality and innovativeness of
their services to build up their credibility.
3. Concomitant: Production of financial services and supply of
these services have to be concomitant. Both these functions i.e.
production of new and innovative financial services and
supplying of these services are to be performed simultaneously.
4. Tendency to Perish: Unlike any other service, financial
services do tend to perish and hence cannot be stored. They
have to be supplied as required by the customers. Hence
financial institutions have to ensure a proper synchronization of
demand and supply.
5. People Based Services: Marketing of financial services has to
be people intensive and hence it’s subjected to variability of
performance or quality of service. The personnel in financial

7. services organization need to be selected on the basis of their
suitability and trained properly, so that they can perform their
activities efficiently and effectively.
6. Market Dynamics: The market dynamics depends to a great
extent, on socioeconomic changes such as disposable income,
standard of living and educational changes related to the
various classes of customers. Therefore financial services have
to be constantly redefined and refined taking into consideration
the market dynamics. The institutions providing financial
services, while evolving new services could be proactive in
visualizing in advance what the market wants, or being reactive
to the needs and wants of their customers.
NOTE: 1. reference website https://www.mbaknol.com/business-finance/definition-of-financial-
services/
2. Book: merchant banking and financial services by Dr. S Gurusamy

8. Note: above diagram is extract from book called “Management of financial
services” by –C Rama gopal

9.  Equipment
leasing or
finance
 Hire-purchase
 Bills
discounting
 Housing finance
 Insurance
services
 Factoring
 Venture capital
 Issue
management
 Portfolio
management
 Corporate
counseling
 Loan syndicate
 Merger and
acquisition
 Capital restricting
 Credit rating
 Stock broking
 And many more

10. The management of issues for raising funds through various
types of instruments by companies is known as ‘issue
management’. The function of capital issues management in
India is carried out by merchant bankers who have the requisite
professional skill and competence. One of the major functions,
in fact, is issue management. Factors such as the tremendous
growth in the number and size of public listed companies, and
the complexity arising due to ever- increasingly significant role
played by merchant bankers in the recent past.
Functions
1. Obtaining approval for the issue from SEBI
2. Arranging for underwriting the proposal issue
3. Preparation of draft and finalization of the prospectus and obtaining
its clearance from the various agencies concerned
4. finalization of other documents such as application forms,
newspaper advertisement and statutory requirements.
5. making a choice regarding registrar to the issue, printing press,
advertisements and other statutory requirements.

11. 6. arranging for press conferences and the investors’ conferences
7. coordinating printing, publicity and other work in order to get
everything ready at the time of the public issue
8. complying with SEBI guidelines after the issue is over by sending
various reports as required by the authorities.
Categories of securities issue
Public issue Rights
iissueissu
e
Private placement

12. The working mechanism of public issue
tututru
Arranging underwriting
Decision to raise capital funds
Obtaining SEBI approval
Preparation and finalizationof prospectus
Selection of registrars, brokers, bankers, etc.
Arranging press and investor conference
Printing and publicity of public issue
documents
SEBI compliance
Issue launch

13. 1. Signing of MoU: Signing of MoU between the client company and the
merchant banker-issue management activities marks the award of the contract.
The role and responsibility of the merchant banker as against the issuing
company are clearly spelt out in the MoU.
2. Obtaining appraisal note: An appraisal note containing he details of the
proposed capital outlay of the project and the sources of funding is either
prepared in-house or is obtained from external appraising agencies viz., financial
institutions/banks etc. A project may be funded either by borrowing money from
outside agencies or by injecting capital.
3. Optimum capital structure: The level of capital that would maximize the
shareholders value and minimize the overall cost of capital has to be determined.
This has to be done considering the nature and size of the project. Equity
funding is preferable especially when the project is capital intensive.
4. Convening meeting: A meeting of the board of directors of the issuing
company is convened. This is followed by an EGM of its members. The purpose
of these meetings is to decide the various aspects related to the issue of
securities. An application to RBI, seeking its permission is made, where capital
issue of shares is to be offered to NRIs/OCBs or FIIs.
5. Appointment financial Intermediary: Financial intermediaries such as
Underwriters, Registrars, etc. have to be appointed. Necessary contracts need to
be made with the underwriter to ensure due subscription to offer. Similar
contracts when entered into with the Registrars to an issue, will help in share
allotment related work, appointment of bankers to an issue for handling the
collection of applications at various centers, printers for bulk printing of Issue
related stationery, legal advisors and advertising agency. Simultaneously
consents from various experts such as auditors, solicitors, legal advisors etc has
to be obtained under Section 58 of the Companies Act, 1956.
6. Preparing documents: As part of the issue management procedure the
documents to be prepared are initial applications of submission to those stock
exchanges where the issuing company intends to get its securities listed. MoU
with the registrar, with bankers to the issue, with advisors to the issue and co-
managers to the issue, agreement for purchase of properties etc. This has to be
sent for inclusion in the prospectus.
7. Due diligence certificate: The lead manager issue a due diligence
ACTIVITIES INVOLVED IN ISSUE MANAGEMENT

14. certificate which certifies that the company has scrupulously followed all legal
requirements has exercised utmost care while preparing the offer document and
has made a true fair and adequate disclosures in the draft offer document.
8. Submission of offer document: The draft offer document along with
the due diligence certificate is filed with SEBI. The SEBI in turn makes necessary
corrections in the offer document and returns the same with relevant
observations, if any within 21 days from the receipt of the offer document.
9. Finalization of collection centers: In order to collect the issue
application forms from the prospective investors to lead manager finalizes the
collection centers.
10. Filing with RoC: The offer document completed in all respects after
incorporating SEBI observation is filed with Registrar of Companies (RoC) to
obtain acknowledgement.
11. Launching the issue: The process of marketing the issue starts once
legal formalities are completed and statutory permission for issue of capital is
obtained. The lead manager has to arrange for the distribution of public issue
stationary to various collecting banks, brokers, investors etc. The issue is opened
for public immediately after obtaining the observation letter from SEBI which is
valid for a period of 365 days from the date of issue. Conducting press
conferences, brokers’ meets, issuing advertisements in various newspapers and
mobilizing brokers and sub-brokers marks the launching of a public issue. The
announcement regarding opening of issue is also required to be made through
advertising in newspapers, 10 days before the opening of the public issue.
12. Promoters’ contribution: A certificate to the effect that the required
contribution of the promoters has been raised before opening the issue, has to
be obtained from a Chartered Accountant, and duly filed with SEBI.
13. Issue closure: An announcement regarding the closure of the issue
should be made in the newspaper.
NOTE: reference websitehttps://www.citeman.com/4008-activities-involved-in-
public-issue-management.html

15. What is 'Portfolio Management'
Portfolio management is the art and science of making decisions
about investment mix and policy, matching investments to
objectives, asset allocation for individuals and institutions, and
balancing risk against performance. Portfolio management is all
about determining strengths, weaknesses, opportunities and
threats in the choice of debt vs. equity, domestic vs. international,
growth vs. safety, and many other trade-offs encountered in the
attempt to maximize return at a given appetite for risk.
The Key Elements of Portfolio Management
Asset Allocation: The key to effective portfolio management is
the long-term mix of assets. Asset allocation is based on the
understanding that different types of assets do not move in
concert, and some are more volatile than others. Asset
allocation seeks to optimize the risk/return profile of an
investor by investing in a mix of assets that have low
correlation to each other. Investors with a more aggressive
profile can weight their portfolio toward more volatile
investments. Investors with a more conservative profile can
weight their portfolio toward more stable investments.
Diversification: The only certainty in investing is it is
impossible to consistently predict the winners and losers, so
the prudent approach is to create a basket of investments
that provide broad exposure within an asset class.
Diversification is the spreading of risk and reward within an
asset class. Because it is difficult to know which particular
subset of an asset class or sector is likely to outperform
another, diversification seeks to capture the returns of all of
the sectors over time but with less volatility at any one time.
Proper diversification takes place across different classes of
securities, sectors of the economy and geographical regions.

16. Rebalancing: This is a method used to return a portfolio to its
original target allocation at annual intervals. It is important
for retaining the asset mix that best reflects an investor’s
risk/return profile. Otherwise, the movements of the markets
could expose the portfolio to greater risk or reduced return
opportunities. For example, a portfolio that starts out with a
70% equity and 30% fixed-income allocation could, through
an extended market rally, shift to an 80/20 allocation that
exposes the portfolio to more risk than the investor can
tolerate. Rebalancing almost always entails the sale of high-
priced/low-value securities and the redeployment of the
proceeds into low-priced/high-value or out-of-favor
securities. The annual iteration of rebalancing enables
investors to capture gains and expand the opportunity for
growth in high potential sectors while keeping the portfolio
aligned with the investor’s risk/return profile.
NOTE: reference website https://www.investopedia.com/terms/p/portfoliomanagement.asp

17. Corporate counseling denotes the advice provided by the
Merchant Banking to the corporate unit to ensure better
corporate performance in terms of image building among
investors, steady growth through good working and
appreciation in market value of its equity shares. The scope
of corporate counseling, capital restructuring and, portfolio
management and the full range of financial engineering
includes venture capital, public issue management, and loan
syndication, working capital, fixed deposit, lease financing,
acceptance credit, etc. However counseling is limited to only
opinions and suggestions and any detailed analysis would
form part of a specific service.
The scope of corporate counseling is restricted to the
explanations of concepts, procedures and laws to be
observed by the client company. Requirement of any action
to be taken or compliance of statutory formalities to be made
for implementation of those suggestions would mean the
demand for a specific type of service other than corporate
counseling being offered by the merchant bankers. An
academic analysis of corporate counseling present a
different picture than that transpires from the literature of the
merchant bankers Firstly corporate counseling is the
beginning of the merchant banking service which every
clients whether new or existing has got to avail a different
matter whether a merchant bank charges its client separately
for rendering the corporate counseling service or includes
the element of fee in the other heads of services but for the
angle of priority. Corporate counseling is first in line of the
services which a merchant banker offers and then other
services.
Secondly the scope of the corporate counseling is very vast.
Its coverage ranges from the managerial

18. economies,investments and financial management to
Corporate Laws and the related legal aspects of the
organizational goals, locations factors, organizational size
and operational scale, choice of product and market survey,
forecasting of product, cost reduction and cost analysis,
allocation of resources, investment decisions, capital
management and expenditure control, pricing methods and
marketing strategy, etc. As financial and investment experts,
a merchant banker has to guide the corporate clients in areas
covering financial reporting, project measurements, working
capital management, financial requirements and the sources
of finance, evaluating financial alternatives, rate of returns
and cost of capital besides basic corporate changes of
financial rearrangement, Reorganization, mergers and
acquisitions, etc. are the areas to be covered.
Corporate laws should basically cover the legal aspects
including the various legal formalities involved in areas of
corporate finance being raised from the financial institutions,
banks and the general public in the form of loan, new issues
of equity or debentures respectively.
NOTE: reference website https://www.mbaknol.com/financial-
management/merchant-banking-services-corporate-counseling/

19. Credit syndication also known as credit procurement and
project finance services. The main task involved in credit
syndication is to raise to rupee and foreign currency loans
with the banks and financial institutions both in India and
abroad. It also arranges the bridge finance and the resources
for cost escalations or cost Overruns.
Broadly, the credit syndications include the following acts;
(a) Estimating the total costs
(b) Drawing a financing plan for the total project cost-
conforming to the requirements of the promoters and their
collaborators. Financial institutions and banks, government
agencies and underwriters.
(c) Preparing loan application for financial assistance from
term lenders/financial institutions/banks and monitoring their
progress including the pre-sanction negotiations.
(d) Selecting the institutions and banks for participation in
financing.
(e) Follow-up of the term loan application with the financial
institutions and banks and obtaining the satisfaction for their
respective share of participation.
(f) Arranging bridge finance.
(g) Assisting in completion of formalities for drawl of term
finance sanctioned by institution expediting legal
documentation formalities drawing up inter-se agreements
etc. prescribed by the participating financial institutions and
banks.
(h) Assessing the working capital requirements.
NOTE: reference website https://www.mbaknol.com/financial-
management/merchant-banking-services-corporate-counseling/

20. Mergers and acquisitions (M&A) is a general term that refers
to the consolidation of companies or assets. M&A can
include a number of different transactions, such as mergers,
acquisitions, consolidations, tender offers, purchase of
assets and management acquisitions. In all cases, two
companies are involved. The term M&A also refers to the
department at financial institutions that deals with mergers
and acquisitions.
Merger: In a merger, the boards of directors for two
companies approve the combination and seek shareholders'
approval. After the merger, the acquired company ceases to
exist and becomes part of the acquiring company.
Acquisition: In a simple acquisition, the acquiring company
obtains the majority stake in the acquired firm, which does
not change its name or legal structure.
Consolidation: A consolidation creates a new company.
Stockholders of both companies must approve the
consolidation, and subsequent to the approval, they receive
common equity shares in the new firm.
Tender Offer: In a tender offer, one company offers to
purchase the outstanding stock of the other firm at a specific
price. The acquiring company communicates the offer
directly to the other company's shareholders, bypassing the
management and board of directors.

21. Acquisition of Assets: In a purchase of assets, one
company acquires the assets of another company. The
company whose assets are being acquired must obtain
approval from its shareholders. The purchase of assets is
typical during bankruptcy proceedings, where other
companies bid for various assets of the bankrupt company,
which is liquidated upon the final transfer of assets to the
acquiring firm(s).
Management Acquisition: In a management
acquisition, also known as a management-led
buyout (MBO), the executives of a company purchase a
controlling stake in a company, making it private. Often,
these former executives partner with a financier or former
corporate officers in order to help fund a transaction. Such
an M&A transaction is typically financed disproportionately
with debt and the majority of shareholders must approve
it.
Varieties of Mergers
 Horizontal merger - Two companies that are in direct
competition and share the same product lines and
markets.
 Vertical merger - A customer and company or a supplier
and company. Think of a cone supplier merging with an
ice cream maker.

22.  Congeneric mergers - Two businesses that serve the
same consumer base in different ways, such as a TV
manufacturer and a cable company.
 Market-extension merger - Two companies that sell the
same products in different markets.
 Product-extension merger - Two companies selling
different but related products in the same market.
 Conglomeration - Two companies that have no common
business areas.
There are two types of mergers that are distinguished by
how the merger is financed. Each has certain
implications for the companies involved and for
investors:
o Purchase Mergers - As the name suggests, this
kind of merger occurs when one company
purchases another. The purchase is made with
cash or through the issue of some kind of debt
instrument; the sale is taxable. Acquiring
companies often prefer this type of merger because
it can provide them with a tax benefit. Acquired
assets can be written-up to the actual purchase
price, and the difference between the book
value and the purchase price of the assets
can depreciate annually, reducing taxes payable by
the acquiring company.
o Consolidation Mergers - With this merger, a brand
new company is formed and both companies are
bought and combined under the new entity. The tax
terms are the same as those of a purchase merger.
NOTE: Reference book- financial market services by Gurusamy

23. A stockbroker is a regulated professional individual,
usually associated with a brokerage firm or broker-
dealer, who buys and sells stocks and
other securities for both retailand institutional clients
through a stock exchange or over the counter in
return for a fee or commission. Stockbrokers are
known by numerous professional designations,
depending on the license they hold, the type of
securities they sell, or the services they provide. In
the United States, a stockbroker must pass both
the Series 7 and either the Series 63 or the Series
66 exams in order to be properly licensed.
NOTE: reference website https://en.wikipedia.org/wiki/Stockbroker

24.  the corporates will be able to have easy
access to public fund.
 They will efficient allocation of capital
whereby increasing cost benefit.
 The government will be able to check the
activities of the corporates effectively
 With the expertised services available to
corporates they will ease in doing
business and in return increases
economic development.

25.  https://www.mbaknol.com/business-finance/definition-of-financial-
services/
 http://www.bbamantra.com/financial-services/
 https://www.citeman.com/4008-activities-involved-in-public-issue-
management.html
 https://www.investopedia.com/terms/p/portfoliomanagement.asp
 https://en.wikipedia.org/wiki/Stockbroker
Merchant banking and financial services -Dr. Gurusamy
Management of financial services – C Rama Gopal