Role of Financial Services in Indian Financial System

Financial services play an important role in the Indian financial system. They provide various services to the customers and help in the development of the economy. The following are the key roles of financial services in the Indian financial system:

1. Mobilization of Savings
Financial services help in mobilizing the savings of the people and channelizing them into productive investments. They offer various saving schemes and investment options to the customers, which help in increasing the savings rate of the economy.

2. Intermediation
Financial services act as intermediaries between the savers and the investors. They collect funds from the savers and provide them to the borrowers in the form of loans or investments. This process helps in the efficient allocation of resources in the economy.

3. Credit Creation
Financial services facilitate credit creation in the economy by providing loans to individuals, businesses, and other organizations. They help in meeting the credit needs of the economy and promote economic growth.

4. Risk Management
Financial services provide various risk management tools to the customers, which help in managing the risks associated with investments and borrowings. They offer insurance, hedging, and other risk management products that help in reducing the uncertainty in the economy.

5. Payment and Settlement
Financial services provide payment and settlement services to the customers, which help in facilitating the smooth functioning of the economy. They offer various payment options like cheques, credit cards, and online transfers, which help in the efficient exchange of goods and services.

6. Capital Formation
Financial services play a crucial role in capital formation in the economy. They provide long-term investments to the businesses, which help in the expansion of their operations. This, in turn, leads to the creation of more jobs and promotes economic growth.

In conclusion, financial services are an integral part of the Indian financial system. They provide various services to the customers and help in the overall development of the economy.