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Financial Sectors and the Impact of Financial Regulations Financial sector in India refers to the non-profit organizations, State Bank, commercial banks, insurance companies, finance companies and other financial institutions that provide credit facilities to the people. The name of the financial sector is quite misleading as it is not only restricted to financial activities but also covers non-commercial activities such as direct savings, insurance, estate, pensions, trusts and many more. The financial institutions can be classified into two categories: the financial service banks and the non-financial service banks. The main functions of the financial sector are to lend money and to provide various financial products such as savings accounts, bonds, financial products, commercial loans, etc.    The non-financial sectors also have a role to play in financial services. There is a huge demand for housing finance , which requires financing from mortgage banks and the builders. The property rates are quite high in India and the buyers are looking for long term investment opportunities. Real estate has emerged as a lucrative option for the investors.    Besides these, there are various other services being provided by the financial sectors. It includes savings, investing, estate planning, etc. The saving segment enables individuals and families to save for different purposes. Banks provide various financial products such as savings accounts, mutual funds, fixed deposits, etc. These products are mainly meant to be used as a means of investment. However, various governments and organizations have come up with financial sector reforms that have made savings a much better option for individuals.    The development of international economic and social system has made the financial sectors to invest in the welfare of the common man. These institutions are providing monetary assistance and monetary aid to the poor families to overcome their basic needs and requirements. As per the latest statistics, about 75% people in the developing economies are living below the poverty line. Thus, the financial sectors are playing an important role in building a stronger foundation for the country.    Financial market players have adapted the financial regulations to serve their purpose. These regulations are designed to strengthen the financial system and provide improved service to both the creditors and the debtors. Moreover, the introduction of these regulations has also paved the way for the liberalization of credit markets. This is one of the reasons why there is a significant improvement in the financial ratios. Moreover, the introduction of these regulations has ensured effective management of the financial system, leading to a boost in the overall economic performance.    These regulations have not only helped the financial systems but the informal sectors as well. Since the financial regulations make it easier for small businesses to get credit, more small and medium sized enterprises (SME) are getting involved in the various activities. However, the impact of these regulations on the informal groups is less. The impact is seen on the finance industry, where the informal groups are actively involved in financing activities.    The impact on the finance industry is not visible because the sector is one of the smallest among the major sectors. The small scale industry is directly related to the small scale industries. Thus, the impact on the SME sector is indirect. Small scale industries are directly or indirectly linked to the market sectors. These market sectors have become partially or totally dependent upon the finance industry for their existence.    Since the introduction of these regulations, the number of financial sector institutions has significantly declined. This is a result of the increase in the demand for stable financial sector openness. As a result, there has been a significant improvement in the profitability and the efficiency of the financial sector. Overall, these regulations have had a great impact on the level of investment opportunities available to small scale as well as large scale businesses.

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