Introduction

The sector with respect to financial services in India has witnessed rapid transformation, especially from the year 1990. Prior to it, the industry was overshadowed with the dominance of banks that operated commercially and all the financial needs were looked after by them. The period of economic liberalization opened up portals that brought significant changes in the financial sector and made it more prominent.

This sector has metamorphosed into a large industry as of now. To be precise, one of the world's biggest industries in today's time is intertwined with financial services.
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Financial services has become a crucial element of the financial service industry and lays a foundation stone for the modern economy. A nation can only prosper when its financial sector is flourishing.

Let's Understand Financial Services

On a general basis it can be construed that all the services that entail a financial nature are understood to be financial services. If viewed from a broader perspective it can be inferred that the term financial services is inclusive of carefully allocating savings. It constitutes every activity that forms a part of transforming the savings into investment.

These services are extended by the industry related to finance. The finance industry in whole comprises numerous organizations whose main work is to deal with managing money related activities. To exemplify, these organizations might include banks, consumer finance companies, investment funds etc.

Another term that is most suitable for defining the financial services is financial intermediation. This process of services usually involves the pooling of funds from the savers and then extending them to the people in need, especially customers in the corporate field.

Financial Services: Functions

Financial services sector is equipped with numerous functions, some of them have been listed below:

1. These services play a major role in facilitating transactions, in a way rendering exchange of goods and services in the realm of economy.
2. They aid in mobilizing the savings
3. They help in capital funds allocation
4. Keeps a keen eye on the managers monitoring
5. Reducing the possibility of risk by employing aggregation

Financial Services: Characteristics

• Being intangible: This is the ultimate characteristic of the financial services. It runs on the philosophy that it cannot be standardized. The entities that render these services must focus on winning the confidence of customers and have a quality brand image. The services extended must be packed with innovation.
• Being inseparable: The customer base and the financial services share a mutual shed and hence are inseparable from one another.
• Being perishable: These services cannot be confined to being stored, they must be extended as and when the customer asks for it.
• Being variable: It can't be ignored that different customers bring distinct financial needs and the needs must be separately catered to. In a way the financial services are tailored as per the needs and desires.
• Having to deal with humans: The financial services sector is mixed with the human touch, hence it can be said that the implementation of these services are quite labor intensive. It is in the dire need of competent human resources so that quality services can be executed.
• Forms its basis on information: These services are largely dependent on the information creation and its related dissemination.

Why are Financial Services Important?

In order to appreciate the financial services we need to chalk down its importance.
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1. Growth of economy:  This sector boosts the economy of any system since it pools the savings and transforms it into investments that are productive.
2. Savings are promoted: size transforming service proves quite resourceful
3. Promotes formation of capital: Services related to the capital market are triggered by this sector which in turn energizes the economy.
4. Creation of jobs: This industry plays an instrumental role in generating jobs.
5. Effective contribution to GNP: It has been very well verified that these services contribute extensively to the GNP of any country.
6. Promotes liquidity: It leaves no stone unturned in promoting liquidity into the economic world. This is carried through the allocation of savings.

What are the Types of Financial Services?

The financial services sector provides wide array of services, some of them are given below:

1. Financing of asset
2. Credit card facility
3. Services related to bank
4. Financing of trade
5. Merchant banking
6. Management of portfolio
7. Investment valuation
8. Rating of credit etc

Financial Services: Challenges

This sector is not free from challenges that come along with the change in economy, therefore it has to have a flexible approach. Some major challenges that financial service sector faces are listed below:

1. There is still slack of competent and qualified human resource
2. Lack of knowledge among investors regarding the array of financial services that are being offered.
3. Non-presence of transparent methods relating to accounting practices.
4. No scope of specialization
5. Lack of reliable information and data to come to a conclusion-based decision.
6. Lack of risk management practices.

Starting a Private Financial Services Business in India

Any individual who wishes to start a business that offers financial services must pay attention to fetching the following compliances:
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• The very step puts forth that the business must be registered under the Ministry of corporate affairs. This shall help with equipping the business with a legal identity
• Secondly, comply with the tax and GST registrations
• Here are some licensed that you must fetch:

1. License under Shops and Establishment
2. Acquire a trade license
3. The requisite license that retails fintech

• Get hold of the given agreements

1. Policy related to privacy
2. Vendor agreement
3. Conditions and terms of services

• Other compliances must be adhered to

1. Compliance related GDPR
2. Compliance under RBI related to managing finance business
3. Compliance related to payment gateway

Conclusion

In the nutshell it can be concluded that the financial services sector is very important when it comes to fulfilling the financial needs and requirements of the clients especially those who are unaware and uneducated in this field.

The financial services business in India can be established provided all the compliances and rules are kept in mind. The only weakness of this industry is that it demands the need of qualified personnel to carry out the activities responsibly and efficiently.