Management of Financial Services Notes
Subject Overview
The third Accounting and Finance elective, examining India's financial services industry — mutual funds, insurance, venture capital and behavioural finance, credit rating and leasing/
Subject at a glance
4
Units
35
Topics
4
Credits
4
Infographics
Unit-wise Syllabus
4 units — open any unit for detailed topic-wise notes, diagrams and important exam questions
- Meaning
- types and importance of financial services
- financial sector reforms and future challenges for Indian banks
- mutual and pension funds
- insurance services
- bank assurance
- reinsurance
- venture capital and private equity
- hedge funds
- e-banking
- securitization
- asset reconstruction companies
- depository system and SEBI's role
Fund-based
Leasing, hire purchase, factoring, venture capital
Fee-based
Merchant banking, credit rating, portfolio management
Banking and insurance
Bancassurance, e-banking
Market services
Depositories, asset reconstruction
Study guide
This unit covers the meaning and types of financial services, financial sector reforms, mutual and pension funds, insurance, bancassurance, reinsurance, venture capital and private equity, hedge funds, e-banking, securitisation, ARCs and the depository system. Prepare a map of financial services providers.
- Concept and objectives of credit rating
- credit rating agencies in India
- rating methodology
- leasing concept and types
- tax aspects of leasing
- origin and development of merchant banking
- SEBI guidelines
- venture capital concepts and guidelines in India
- 1
Request from issuer
- 2
Rating team assigned
- 3
Information and meetings
Management, financials
- 4
Analysis
Business and financial risk
- 5
Rating committee decides
- 6
Communication and surveillance
Study guide
You study credit rating objectives, agencies and methodology, leasing and tax aspects, merchant banking, SEBI guidelines and venture capital. Learn how a rating is assigned.
- Meaning
- features and process of debt securitization
- factoring development
- types
- procedural and financial aspects
- plastic money forms (credit and debit cards)
- credit card processes
- factors affecting plastic money utilization in India
- 1Originator pools loans
e.g. home loans
- 2Sells to an SPV
Special purpose vehicle
- 3SPV issues securities
Pass-through certificates
- 4Investors buy securities
- 5Borrowers' repayments
Flow through to investors
Study guide
You study debt securitisation, factoring (types, procedures, finance) and plastic money, including credit card processes and factors affecting use in India. Understand how securitisation transforms loans into securities.
- ALM significance
- process and techniques (gap, duration, simulation, value at risk)
- credit/operational/market/liquidity risk management
- corporate treasury management
- Basel norms
- ALM software
- Gap analysis
- Rate-sensitive assets − rate-sensitive liabilities
- Duration analysis
- Sensitivity of value to rate changes
- Simulation
- What-if scenarios
- Value at risk
- Maximum loss at a confidence level
Study guide
You study asset-liability management techniques (gap, duration, simulation, VaR), credit, operational, market and liquidity risk, treasury and Basel norms with ALM software. Practise a simple gap analysis.
Why Management of Financial Services Matters
Financial services are a wide field with roles across banks, NBFCs, rating agencies and fintech, and this paper supports finance specialisation and professional exams.
How to Prepare for Management of Financial Services
- Learn each financial service with its regulator and a real company example.
- Practise gap and duration problems.
- Follow fintech and NBFC developments.
Management of Financial Services: Frequently Asked Questions
What is securitisation?
Securitisation pools loans or receivables and sells them as tradable securities to investors, releasing funds for lenders.