The Importance of Financial Services in Today's Economy

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The functions of Indian financial system are made up of various essential segments called sectors. These sectors consist of businesses and enterprises providing services and goods to their consumers. The services provided by these business institutions are mainly brokerage firms, lending entities, and other financial services like safekeeping money. 

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The structure of indian financial system comprises a broad spectrum such as banking, credit cards, mortgages, payment services, taxation, investments, accounting, and planning. Financial services are also inclusive of professional and firm activities, which are often referred to as financial instruments. 

In this article, let's learn in detail about the importance of financial services and what the main elements of a financial services course are if you think about taking one. 

What are financial services? 

The role of the Indian financial system in economic development is taken care of by business entities or professionals, with large conglomerates being dominant in this sector, contributing immensely to the country’s economic growth.

Financial services are considered to be temporary rather than tangible assets. This is because financial services have limited their horizons to the activities of financial services entities and firms. In this scenario, financial products are goods, accounts, and investments that are bestowed upon an individual. 

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Types of financial services

The importance of financial services cannot be overstated; they are the backbone of the Indian economy, and various types of services are provided by financial entities in the country. They are: 


The banking sector is an important function of Indian financial system. The country comprises several public sectors, foreign sectors, private sectors, rural sectors, and urban cooperatives such as banks. The services offered by the banking sector are: 

Individual banking. 

Business banking. 


Treasury services. 

India's banking sector is regulated by the RBI, or Reserve Bank of India, which monitors its liquidity, financial health, and capitalisation. 

Professional Advisory 

Professional advisories offer a wide portfolio of important financial services to individuals and businesses, like investment due diligence, real estate consulting, M&A advisory, risk and tax consultation, etc. These services are offered by several entities, from domestic consultants to large organisations. 

Wealth Management 

Financial services offered in this segment include investing and managing the customer's wealth across various financial instruments. These financial instruments include, notably, equity, debt, mutual funds, insurance, derivatives, structured products, commodities, and other important financial goals.

Mutual Funds 

Mutual funds tend to offer various services highlighting the importance of financial services in India through professional investment offerings consisting of different assets, primarily debt and equity-linked assets. These buy-ins of mutual fund solutions are compared to stock markets and debt products. However, the mutual funds' segments have witnessed immense growth over the last five years and are considered to be the low-risk multipliers. 

Portfolio Management 

This segment includes a customised range of solutions that enable clients to reach their financial goals with the help of portfolio managers. This would help in analysing and optimising their investments across a wide range of assets like equity, debt, insurance, and real estate. 

The services of portfolio management are widely targeted at different HNIs with both discretionary and non-discretionary client interventions. 

Role of the Indian Financial System in Economic Development

The core functions of Indian financial system are what enable the county to improve its economic conditions. The benefits of economic growth are therefore reflected in the people as a sign of economic prosperity. Here are some aspects that emphasize the importance of Indian financial services in today's economy. 

Promotes Investments

The presence of financial services in the country not only creates a substantial demand for products and their producers, but it also meets the demands from one consumer to another for maximum investment. The role of financial services in India is to act as a rescue for investors like merchant bankers to enable an exponential capital raise. 

Promotes Savings 

Financial services like mutual funds and bonds provide an individual with opportunities for opening different kinds of savings. Therefore, differential investment options are now open for pensioners to gain reasonable returns without any risks. This scheme substantially increases the growth in income and other reinvestment opportunities that are initiated by the Government. 

Minimises Risks 

With the presence of insurance companies, the risks of financial services are minimised. Therefore, various types of risks are not only covered to offer protection in business conditions, but financial services also make it easier to curb losses from natural calamities. Moreover, insurance is not the only source of finance but also a great source of savings as well. 

Maximises Returns 

Businessmen acknowledge the importance of financial services due to their significance in yielding maximum returns. This is only possible because of credit availability at a very reasonable rate. They also go on leasing assets of very high value as well. This enables sellers and producers to increase turnover, which proliferates profit growth. Even during stiff competition, the producers can even sell their products at a lower margin and get high turnovers. 

Provides Greater Yields

Even though yields and returns might have a remote similarity, they are way different from one another. Yield attracts more producers to join the markets and increase their production to attract more customers. 

Hence, the importance of financial services lies in their ability to generate not only exponential profits but also serve as a great source for wealth maximization. Furthermore, financial services also enhance goodwill and induce immense diversification, which results in linear growth. 


Financial services are important for enabling the user to obtain assets on credit at a very convenient and reasonable interest rate. However, it is not easy to track the growth of financial services all the time. Therefore, it is required of some individuals who are good at understanding growth. This says a lot about the importance of financial services, overall.

If you are interested in taking up a financial services course and learning about its impacts on the Indian economy, check out Imarticus Learning's Advanced Management Programme in Financial Services and Capital Markets in collaboration with IIM Lucknow. This IIM Lucknow course on financial services enhances your knowledge of financial services and also helps to shape your professional life. 

For more details, check the website right away!

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