Management of Financial Services Notes
Subject Overview
Management of Financial Services is the second Accounting & Finance elective, covering the specific financial services that support businesses beyond core banking — merchant banking, leasing, credit rating, mutual funds, and more. You'll cover merchant banking practices in India, lease financing and hire purchase mechanics, credit rating agencies and mutual fund schemes, and close with retail banking products, plastic money, venture capital, and factoring. This is a 6-credit elective paper across 4 units, complementary to Banking Services Management and Security Analysis & Portfolio Management.
Subject at a glance
4
Units
27
Topics
6
Credits
4
Infographics
Unit-wise Syllabus
4 units — open any unit for detailed topic-wise notes, diagrams and important exam questions
- Meaning
- features and importance of financial services
- contribution to industry and the service sector
- origin and growth of merchant banking in India
- scope of merchant banking services
- management of public issues
Due diligence
Checks company records
Offer document
Prepares the prospectus
Pricing
Book building and price band
Marketing
Roadshows and investor outreach
Post-issue
Allotment and listing
Study guide
This unit introduces financial services and their importance, their contribution to industry and the service sector, the origin and growth of merchant banking in India, the scope of merchant banking services and the management of public issues. Learn the role of the merchant banker in an IPO.
- Meaning and types of leasing
- factors influencing lease decisions
- performance of the leasing industry in India
- hire purchase concept and characteristics
- mathematics of hire purchase
- effective interest rate
- legal and tax aspects
- RBI guidelines
Term
Most of the asset's life
Short term
Risks and rewards
With the lessee
With the lessor
Cancellation
Usually not cancellable
Often cancellable
Example
Machinery for years
Renting equipment for a project
Study guide
You study leasing: meaning, types and the factors influencing a lease decision, the leasing industry in India, hire purchase concept and characteristics, hire purchase mathematics and effective interest rate, legal and tax aspects and RBI guidelines. Practise the difference between a finance lease and an operating lease.
- Concept
- types
- advantages and disadvantages of credit rating
- credit rating agencies and their methodology
- growth of mutual funds in India
- mutual fund schemes
- concept and mechanism of factoring and securitisation of debt
- 1Sell on credit
Firm raises an invoice
- 2Assign invoice
Firm sells it to a factor
- 3Advance
Factor pays most of it at once
- 4Collect
Factor collects from the customer
- 5Settle
Balance paid, less fees
Study guide
You study credit rating, its types, advantages, disadvantages, rating agencies and methodology, the growth of mutual funds and their schemes and the concept and mechanism of factoring and securitisation of debt. Know the main credit rating agencies in India.
- Personal
- home
- car
- consumer and educational loans
- plastic money — credit and debit cards
- concept and growth of venture capital funds in India
Money used
Bank's credit, repaid later
Your own account balance
Interest
Charged on unpaid dues
None
Credit score
Builds credit history
No effect
Risk
Debt if overused
Limited to balance
Study guide
This unit covers retail banking (personal, home, car, consumer and educational loans), plastic money (credit and debit cards) and the growth of venture capital funds in India. Compare credit cards and debit cards in a table.
Why Management of Financial Services Matters
Financial services such as merchant banking, leasing, mutual funds and credit ratings form a large part of the finance industry, with many roles in banks, NBFCs and fintechs.
How to Prepare for Management of Financial Services
- Learn the types of lease and of mutual fund with simple examples.
- Prepare a short note on credit rating agencies and their rating scales.
- Follow IPO news to understand the role of merchant bankers.
Management of Financial Services: Frequently Asked Questions
What is factoring?
Factoring is selling a firm's trade receivables to a financial institution (the factor) at a discount to obtain immediate cash.
What does a merchant banker do?
A merchant banker manages public issues of securities, underwrites issues and provides advice on raising capital, mergers and acquisitions.