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Financial markets and instruments
INTRODUCTION OF FINANCIAL SYSTEM

The economic development of any country depends on the existence of a
well organized financial system. It is the financial system which supplies
the necessary financial inputs for the production of goods and services
which in turn promote the well being and standard of living of the people
of a country. Thus, the financial system is a broader term which brings
under its fold the financial markets and the financial institution which
support the system. The major assets traded in the financial system are
money and monetary assets. The responsibility of the financial system is
to mobilize the savings in the form of money and monetary asset invest
them to productive ventures. An efficient functioning of the financial
system facilitates the free flow of funds to more productive activities and
thus promotes investment. Thus, the financial system provides the
intermediation between savers and investors and promotes faster
economic development.
Financial system
Financial
Financial
Financial
Financial
Institution
Markets
Instruments
Services
V.E.S college of arts, science and commerce

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STRUCTURE OF FINANCIAL SYSTEM

The financial system implies a set of complex and closely connected
institution, agents, practices and markets. The financial system of any
country consist of
1) Specialized and non-specialized financial institution.
2) Organized and unorganized financial markets.
3) Financial instruments and services which facilitate transfer of
funds.
Procedures and practices adopted in the markets, and financial
interrelationship are also part of the system. These parts are not always
mutually exclusive. The financial system is concerned about money,
credit and finance. The terms intimately related yet somewhat different
from each other. Money refers to the current medium of exchange or
means of payment. Credit is a sum of money to be returned normally with
interest. Finance is a monetary resource comprising debt and ownership
funds of the state, company or person.
Financial institutions
Financial institutions are the business organization that acts as a
mobilizes and depositories of savings, and as purveyors of credit or
finance. They also provide various financial services to the community.
They differ from the non-financial business organization in respect of
their wares. The distinction between the financial sector and the real
sector should not be taken to mean that there is something ephemeral or
unproductive about finance. At the same time, it means that the role of the
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financial sector should not be overstressed. The activities of different
financial institution may be either specialized or they may overlap. Yet,
we need to classify the financial institution and this is done on such basis
as their primary activity or the degree of their specialization with relation
to savers or borrowers with whom they customarily deal or the manner of
their creation. In other words, the functional, geographic, sectoral scope
of activity or the type of ownership are some of the criteria which are
often used to classify a large number and variety of financial institution
which exist in the economy. However, it should be kept in mind that such
classification is likely to be imperfect and tentative.
Financial services
A financial service is any kind of service of a financial nature offered by a
financial provider. All banking and insurance related services are included
in this concept. These services are intangible and invisible. There should
be proximity between the service provider and the consumer in order to
complete a service transaction. These services cover a wide range of
economic activities. Financial services have developed to meet the needs
of companies. Banking and insurance are traditional financial services.
The modern financial services include over the counter services. Share
transfer, pledging of shares, mutual funds, factoring, discounting, venture
capital and credit cards. Financial services have started long back in
western countries.

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FINANCIAL MARKETS
Financial markets are the centers or arrangements that provide facilities
for buying and selling of financial claims and services. The corporations,
financial institution, individuals, and governments trade in financial
products on these markets either directly or through brokers and dealers
on organized exchanges or off-exchanges. The participants on the demand
and supply sides of these markets are financial institution, agents,
brokers, dealers, borrowers, lenders, savers, and others who are
interlinked by the laws, contracts, and communication networks.
Financial markets are in the forefront in the developing
economies. Efficient financial markets are an essential for speedy
economic development. The vibrant financial market enhances the
efficiency of capital formation. Dr. Khan has opined that; a variegated
financial market can appeal to the security, motivation and other such
aspects of savers and attracts more savings by the creation of an array of
attractive attractive financial asset. It also tends to promote the
development financial structure. The role of financial market in the
financial system is quite unique. The relevance of financial market in the
financial system is not merely quantitative but also supportive. Thus,
financial market bridges one set of financial intermediaries with another
set of players. A well developed financial market enlarges the range of
financial services.

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FUNCTION OF FINANCIAL MARKETS

1) Financial markets aim to establish regular cost effective links
between buyers and sellers, savers and investors and so on.
2) Financial markets ensure efficient allocation of financial resources
for socially desirable and economically productive purposes.
3) Financial market influences both the quality and pace of economic
development.
4) It provides platform to the central bank of country for intervention
there by affecting the liquidity in the economy.
5) Market provides a mechanism for liquidity mismatch equalization.
6) Financial markets provide an arrangement for raising short term
and long term resources at market driven prices.
7) It provides a mechanism for cash management.
8) It help to develop near money instrument based on fundamental
principles of investment namely security, liquidity and yield.
TYPES OF MARKETS
1) Broad markets: - These markets are those which attract large
volume of funds from diversified types and widely scattered
investors.
2) Deep markets: - These markets are those that provide an
opportunity for large orders of purchase or sale of financial
instruments at a rate close to the initial market rate.
3) Shallow
markets:-
These
are
the
markets
that
remain
underdeveloped due to governmental controls and regulation. Such

markets generally suffer from high transaction cost and information
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arbitrage. Hence, such markets are imperfect market and do not
provide for efficient use of capital.
CLASSIFICATION OF FINANCIAL MARKETS

The financial system in India can be broadly classified into two
main categories and they are organized markets and unorganized market.
1) Organized markets: - In the organized market, there are standardized
rules and regulations governing their financial dealings. There is also a
high degree of institutionalization and instrumentalisation. These markets
are subject to strict supervision and control by the RBI or other regulatory
bodies.
These organized markets can be further classified into two. They are:
1) Capital market (securities market)
2) Money market

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CAPITAL MARKET:The capital market is a market for financial assets which have a long or
indefinite maturity. Generally, it deals with long term securities which
have maturity period of more than a year
Importance of capital market:
Absence of capital market acts as a deterrent factor to capital formation
and economic growth. Resources would remain idle if finances are not
funneled through the capital market. The importance of capital market
can be briefly summarized as follows:
The capital market serves as an important source for the productive
use of the economys saving. It mobilizes the saving of the people
for further investment and thus avoids their wastage in
unproductive uses.
It provides incentives to saving and facilitates capital formation by
offering suitable rate of interest as the price of the capital.
It provides an avenue for investors, particularly the household
sector to invest in financial asset which are more productive than
physical assets.
It facilitates increase in production and productivity in the
economy and thus, enhances the economic welfare of the society.
Thus, it facilitates the movement stream of command over capital
to the point of highest yield towards those who can apply them
productively and profitably to enhance the national income in the
aggregate.
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The operation of different institution in the capital market induces
economic growth. They give quantitative and qualitative direction
to the flow of funds and bring about rational allocation of scarce
resources.
A healthy capital market consisting of expert intermediaries
promotes stability in values of securities representing capital funds.
Moreover, it serves as an important source for technological up
gradation in the industrial sector by utilizing the funds invested by
the public.
Thus, a capital market serves as an important link between those who
save and those who aspire to invest their saving.
The capital market may be further being divided into three namely:
1. Government securities market
2. Long term loan market
3. Industrial securities market
A) GOVERNMENT SECURITIES MARKET:A market where the government securities are bought and sold is
called government securities market. The securities are bonds, treasury
bills, and special rupee securities in payment of India subscriptions to
IMF, IBRD, ADB, IDA etc. the special rupee securities are treated as a
part of internal floating debt of the government. These securities are
issued by the central government, state government, and semigovernment authorities, which include local government authorities like
City Corporation and municipalities, port trusts, state electricity board,
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Public Sector Corporation and other agencies like IDBI, IFCI, SECs,
SIDCs, NABARD and housing boards. These agencies are suppliers of
government securities and banks, financial institutions and investors
demand these securities in the market.
Government securities offer a safe avenue of investment through
guaranteed payment of interest and repayment of principal by the
government. They offer relatively a lower fixed rate of interest compared
to investment on other securities. These securities are issued in the
denomination of Rs 100 or Rs 1000. They have a fixed maturity period.
Interest is paid half yearly. RBI services loans as these are the liabilities
of the government of India and the state governments. These securities
are safe and risk free. These securities are also eligible as SLR
investment. As the date of maturity is specified in the securities they are
also called as dated government securities.
RBI plays a special role in the purchase and sale of securities as
part of its monetary management exercise. There is no underwriting or
guaranteeing required in the sale of government securities. Dealing in the
securities takes place through the mechanism provided by the RBI. The
brokers and dealers are approved by the RBI. A striking feature of these
securities is that they offer wide ranging tax incentive to the investors.
Therefore, these securities are more popular. Under the income tax act,
rebates are allowed for the investment in these securities. Each purchase
and sale has to be negotiated separately, the gilt-edged market is the over
the over the counter market. This market has two segment namely
primary market and secondary market. In the primary market, the issuers
are central and the state government. The secondary market comprises

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banks, financial institution, insurance companies, provident funds, trusts,
primary dealers and the RBI.
The securities of central and the state government are issued in
the form of stock certificate, promissory notes and bearer bonds. These
securities are traded at Bombay Stock Exchange. In terms of size, the
primary market for government securities is much bigger than the
industrial securities market. A notification for the issue of securities is
made a few days before the Public subscription is open. The opening of
the subscription depends on the response of the market and varies
between two to three days. The issue is made in number of branches in a
year. The offices of RBI and SBI receive the application for securities.
The Government, reserves the right to retain over subscription up to a
pre-specified percentage which is generally 10 percent, of the notified
amount. The mechanism of trading in Government Securities takes place
through the direct sale, securities general ledger accounts and bank
receipts method. The government may issue securities through the
following modes:
Issue of securities through auction
Issue of securities with pre-announced coupon rates
Issue of securities through tap sale
Issue of securities through conversion
The securities can be issued through auction either on price basis or
yield basis. The coupons on such securities are announced before the date
of floatation and the securities are issued at par. No aggregate amount is
indicated in the notification in the respect of the securities sold on tap.
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The holders of treasury bills of certain specified maturities and holder of
specified dated securities are provided an option to convert the respective
treasury bills or dated securities at specified prices into new securities
offered for sale.
B) Long-term loans market:Development banks and commercial banks play a significant role in
this market by supplying long term loans to corporate customers. Longterm loans market may further be classified into:1. Term loans market
2. Mortgages market
3. Financial guarantees market
1) TERM LOAN MARKET:In India, many industrial financing institutions have been created by the
government both at the national and regional levels to supply long-term
and medium term loans to corporate customers directly as well as
indirectly. These development banks dominate the industrial finance in
India. Institutions like IDBI, IFCI, ICICI, and other state financial
corporation come under this category. These institutions meet the
growing and varied long-term financial requirements of industries by
supplying long-term loans.
2)
MORTGAGES MARKET:-
The mortgages market refers to those centers which supply mortgage

loans mainly to individual customers. A mortgage loan is a loan against
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the security of immovable property like real estate. The transfer of
interest in a specific immovable property to secure a loan is called a
mortgage. This mortgage may be equitable mortgage or illegal one. Again
it may be a first charge or second charge. Equitable mortgage is created
by a mere deposit of title deeds to properties as securities where as in the
case of a legal mortgage the title in the property is legally transferred to
the lender by the borrower. Legal mortgage is less risky.
Similarly, in the first charge, the mortgager transfers his interest in the
specific property to the mortgagee as security. When the property in
question is already mortgaged once to another creditor, it becomes a
second charge when it is subsequently mortgaged to somebody else. The
mortgagee can also further transfer his interest in the mortgaged property
to another. In such a case, it is called a sub-mortgage.
3) FINANCIAL GUARANTEES MARKET:A Guarantee market is a center where finance is provided against the
guarantee of reputed person in the financial circle. Guarantee is a contract
to discharge the liability of a third party in case of his default. Guarantee
acts as a security from the creditors point of view. In case the borrower
fails to repay the loan, the liability falls on the shoulders of the guarantor.
Hence the guarantor must be known to both the borrower and the lender
and he must have the means to discharge his liability.
Though there are many types of guarantees, the common forms are:
1) Performance Guarantee, and
2) Financial Guarantee.

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Performance guarantees cover the payment of earnest money, retention
money, advance payments, non-completion of contracts etc. On the other
hand financial guarantees cover only financial contracts.
In India, the market for financial guarantees is well organized. The
financial guarantees in India relate to:
1) Deferred payments for imports and exports.
2) Medium and long-term loans rose abroad.
3) Loans advanced by banks and other financial institutions.
These
guarantees
are
provided
mainly
by
commercial
banks,
development banks, Governments both central and states and other

specialized guarantee institutions like ECGC (Export Credit Guarantee
Corporation) and DICGC (Deposit Insurance and credit guarantee
Corporation). This guarantee financial service is available to both
individual and corporate customers. For smooth functioning of any
financial system, this guarantee service is absolutely essential.
C) INDUSTRIAL SECURITIES MARKET:Industrial securities market being the major segment of the Indian
financial system has witnessed the most profound transformation in
recent years. From being a marginal institution in the mid-eighties, the
securities market has emerged as the most important mechanism for
allocating resources in the economy. The emerging significance of the
securities market is eloquently borne out by the rapid expansion in the
quantum of fund raised and the number of investors in the primary
market, as also number of increase in the stock exchanges and listed
stocks, speedy rise in the market capitalization and the volume of trade,
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entry of sophisticated investors like the foreign institutional investors and
mutual funds. The structure of both the segment of the market that is the
primary and the secondary market has witnessed significant changes in
the recent years.
Industrial market securities offer an ideal market for corporate securities
such as shares, debentures and bonds. Industrial securities market is much
smaller in India than that in other industrialized countries. This is because
of the industrial structure, investment habit and the level of education of
investors in India. The volume of industrial securities in relation to
government securities, their role in financing the private sector and their
significance as a saving medium indicate that the industrial securities
market in India can be regarded as the barometer of economic activity.
Industrial securities market comprises of the following segments:1) Primary market
2) Secondary market

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PRIMARY MARKET
Primary market is a market for raising fresh capital in the form of shares
and debentures. Public limited companies that are desirous of raising
capital funds through the issue of securities, approach this market. The
public limited companies and the government companies are the issuers
and individuals, institutions and mutual funds are the investors in this
market. The primary market allows for the formation of capital in the
country and the accelerated industrial and economic development.
Everywhere in the world capital markets have originated as the new issue
markets. Once industrial companies are set up in a big number and with
them a considerable volume of business comes into existence a market
for outstanding issues develops. In order to sell securities, the company
has to fulfill various requirements and decide upon the appropriate timing
and method of issue. It is quite normal to obtain the assistance of
underwriters, merchant banks or special agencies to look after these
aspects. This primary market is also called as the new issue market.
Hence, the primary market is that part of the capital markets that deals
with the issuance of new securities. Companies, governments or public
sector institutions can obtain funding through the sale of a new stock or
bond issue. This is typically done through a syndicate of securities
dealers. The process of selling new issues to investors is called
underwriting. In the case of a new stock issue, this sale is called an initial
public offering (IPO). Dealers earn a commission that is built into the
price of the security offering, though it can be found in the prospectus

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NEW ISSUE MARKET:The following table throws light on the new issue activity in India during
the year 1951 to 2002-03.
Fresh capital issues by non-government public limited companies
(Figures in crores)
Period
Equity
Debentures
shares
Preference
Total
shares
Annual
average
1951-
202
44
39
285
28.5
1960
1961-
462
188
77
728
72.8
1970
1971-
746
190
56
992
99.2
1980
1981-
7857
15459
40
23357
2335.7
1990
1991-
56997
40267
746
98010
16335.0
1997
1997-
10405
15152
206
25763
4294
2003
The fresh capital raised on the new issue market has increased decade
after decade; the greatest increase has occurred during the 1990s. The
annual average absolute amount of capital raised by non-government
public limited companies increased from Rs 28 crore during the 1950s to
Rs 16335 crore during the 1990s which declined to Rs 4294 crore during
1997-98 to 2002-03. Both equity capital and debenture capital have
contributed to this growth and decline. The stock market capital has
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financed three to 42 percent of the total capital formation in the private
corporate sector in different years during 1957 to 1994-95. it may be
noted that the capital market in India has financed hardly three to five
percent of private corporate sectors capital formation during 1997-98 to
2002-03.
The years 1993-94 and 1994-95 have been the most active ones in the
history of new issue market so far; the public and private sectors raised
more than Rs 30,000 crore of fresh capital on each of these years. The
mobilization of funds by the public sector on new issue market has taken
place primarily in the form of bonds. The bond issues by public sector
units and public sector banks and financial institution have been the
major part of total funds raised by the public sector.
FUNCTION OF NEW ISSUE MARKET:The major function of a new issue market is to facilitate transfer of
resources from savers to the users. The savers are individuals,
commercial banks, insurance companies etc. The users are public limited
companies and the government. The new issue market plays an important
role of mobilizing the funds from the savers and transfers them to
borrowers for production purposes, an important requisite of economic
growth. It is not only a platform for raising finance to establish new
enterprises but also for expansion, diversification and modernization of
existing units. In this basis the new issue market can be classified as:1) Market where firms go to the public for the first time through initial
public offering.

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2) Market where firms which are already trading raise additional capital
through seasoned equity offering
The main function of a new issue market can be divided into a triple
service function:1) Origination
2) Underwriting
3) Distribution
1) ORIGINATION:Origination refers to the work of investigation, analysis and processing of
a new project proposals. Origination starts before an issue is actually
floated in the market. There are two aspects in this function:
1) A careful study of the technical, economic and financial viability to
ensure soundness of the project. This is a preliminary investigation
undertaken by the sponsors of the issue.
2) Advisory services which improve the quality of capital issues and
ensure its success.
The advisory services include:
a) Type of issue. This refers to the kind of securities to be issued whether
equity share, preference share, debenture or convertible debenture
b) Magnitude of issue.
c) Time of floating an issue
d) Pricing of an issue
e) Methods of issue
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f) Technique of selling the securities
The function of origination is done by merchant bankers who may be
commercial banks, all India financial institution or private firms. Initially
this service was provided by specialized division of commercial banks. At
present, financial institution and private firms also perform this service.
Though this service is highly important, the success of the issue depends,
to a large extent, on the efficiency of the market.The origination itself
does not guarantee the success of the issue. Underwriting, a specialized
service is required in this regard.
3) UNDERWRITING: Underwriting is an agreement whereby the underwriter promises to
subscribe to a specified number of shares and debentures or a specified
amount of stock in the event of public not subscribing for the issue. If the
issue is fully subscribed, then there is no liability to the underwriter. If the
part of the share issues remains unsold, the underwriter will buy the
shares. Thus, underwriting is a guarantee for the marketability of the
shares.
METHODS OF UNDERWRITING:An underwriting agreement may undertake any of the following three
forms:-
1) Standing behind the issue:

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Under this method, the underwriter guarantees the sale of a specified
number of shares with in a specified period. If the public do not subscribe
to the specified amount of issues, the underwriter buys the balance in the
issue.
2) Outright purchase:The underwriter, in this method, makes outright purchase of shares and
resells them to the investors.
3) Consortium method:Underwriting is basically done by the group of underwriters in this
method. The underwriters form a syndicate for this purpose. This method
is adopted for large issues.
ADVANTAGES OF UNDERWRITING:Underwriting assumes great significance as it offers the following
advantages to the issuing company: The issuing company is relieved from the risk of finding buyers for
the issue offered to the public. The company is assured of raising
adequate capital.
The company is assured of getting the minimum subscription
within the stipulated time, a statutory obligation to be fulfilled by
the issuing company.
Underwriter undertakes the burden of highly specialized function
of distributing securities.
Public confidence on the issue is enhanced when underwritten is
done by the reputed underwriters.
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They provide expert advice with regard to the timing of the issue,
the pricing of the issue, the size and the type of securities to be
issued etc.
3) DISTRIBUTION:Underwriting is however only a stop-gap arrangement to guarantee the
success of an issue. The success of an issue, in the ultimate analysis,
depends on the issue being acquired by the investing public. The sale of
securities to the ultimate investors is referred to as distribution. It is a
specialized job which can be best performed by the brokers and the
dealers in securities, who maintain a regular and direct contact with the
ultimate investors.Thus the new issue market is a complex of institution
through which funds can be obtained by those who require them from
investors who have savings. The ability of the NIM to cope with the
growing requirement of the expanding corporate sector would depend on
the presence of specialist agencies to perform the function of origination,
underwriting and distribution.
METHOD OF FLOATING NEW ISSUES:The various methods which are used in the floatation of securities in the
new issue market are:
1) Public issues
2) Offer for sale
3) Placement
4) Right issues
PUBLIC ISSUES:-

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Under this issuing method, the issuing company directly offers to the
general public institution a fixed number of shares at stated prices
through a document called prospectus. This is the most common method
followed by joint stock companies to raise capital through the issue of
securities. The prospectus must state the following:
1) Name of the company
2) Address of the registered office of the company
3) Existing and proposed activities
4) Location of the industry
5) Name of the directors
6) Authorized and proposed issue capital to the public
7) Dates of opening and closing the subscription list
8) Minimum subscription
9) Names of the brokers, underwriters, bankers, managers and
registrars to the issue.
10) A statement by the company that it will appear to stock exchange
for the quotation of its shares.
According to the companies act, 1956 every application form must
be accompanied by a prospectus. Now, it is no longer necessary to furnish
a copy of the prospectus along with every application form as per the
companies amendment act, 1988. Now, an abridged prospectus is being
annexed to every share application form.
MERITS OF ISSUE THROUGH PROSPECTUS:-

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1) Sale through the prospectus has the advantage of inviting a large
section of the investing public through advertisement.
2) It is a direct method and no intermediaries are involved in it.
3) Shares, under this method, are allotted to a large section of
investors on a non-discriminatory basis. This procedure helps wide
dispersion of shares and to avoid concentration of wealth in few.
DEMERITS OF ISSUE THROUGH PROSPECTUS:1) It is an expensive method. The company has to incur expenses on
printing of prospectus,
advertisement,
banks commission,
underwriting commission, legal charges, stamp duty, listing fee and

registration charges.
2) This method is suitable only for large issues.
OFFER FOR SALE:The method of offer for sale consists in outright sale of securities through
the intermediary of issue houses or share brokers. In other words, the
shares are not offered to the public directly. This method consist of two
stages: The first stage is a direct sale by the issuing companies to the
issue houses and brokers at an agreed price. In the second stage,
intermediaries resell the above securities to the ultimate investors. The
issue houses or the stock brokers purchase the securities at a negotiated
price and resell at a higher price. The difference in the purchase price and
the sales price is called spread. It is otherwise called brought out deals.
The major advantage of this method is that the company is relieved from
the problem of printing and advertisement of prospectus and making
allotment of shares. Offer for sale is not common in India.
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PLACEMENT:Under this method, the issue houses or brokers buy the securities outright
with the intention of placing them with their clients afterwards. Here the
brokers act as almost wholesalers selling them in retail to the public. The
broker would make profit in the process of reselling to the public. The
issue houses and the brokers maintain their own list of clients and
through customers contact sell the securities. There is no need for a
formal prospectus as well as underwriting agreement.
PLACEMENT HAS THE FOLLOWING ADVANTAGES:1) Timing of issue is important for successful floatation of shares. In a
depressed market condition when the issues are not likely to get
public response through prospectus, placement method is a useful
method of floatation of shares.
2) This method is suitable when small company issue their shares.
3) It avoids delays involved in the public issue and it also reduces the
expenses involved in public issue.
It maintains confidentiality in issue and removes the fear of takeovers.
The main disadvantage of this method is that the securities are not widely
distributed to the large section of investors. This method of a private
placement is used to a limited extent in India. The promoters sell the
shares to their friends, relatives and well wishers to get minimum
subscription which is a precondition for issue of shares to the public.
RIGHT ISSUE:V.E.S college of arts, science and commerce
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Right issue is a method of raising funds in the market by an existing

company. A right means an option to buy certain securities at a certain
privileged price with in a within a specified period. Shares, so offered to
the existing shareholders are called right shares. Right shares are issued to
the existing shareholders in a proportion to their existing share
ownership. The ratio in which the new shares or debentures are offered to
the existing share capital would depend upon the requirement of capital.
The right themselves are transferable and saleable in the market.
Section 81 of the companies Act deals with right issue. According to this
section, where a company increases its subscribed capital by the issue of
new shares either after two years of its formation or after one year of its
first issue of shares whichever is earlier, these have to be first offered to
the existing shareholders with the right to reserve them in favour of a
nominee.A company issuing rights is required to send a circular to all
existing shareholders. The circular should provide information on how
additional funds would be used and their effect on the earning capacity of
the company. The company should normally give a time limit of at least
one month to two months to shareholders to exercise their right. If the
rights are not fully taken up, the balance is to be equitably distributed
among the application for additional shares. Any balance still left over
may be disposed off in the market in a way which is most beneficial to
the company.
ADVANTAGES:1) The cost of issue is minimum. There is no underwriting, brokerage,
advertising and pricing of prospectus expenses.

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2) It ensures equitable distribution of shares to all existing
shareholders and so control of company remains undisturbed as
proportionate ownership in the company remains the same.
3) It prevents the directors from issuing new shares in their own name
or to their relatives at a lower price and get controlling right.
SEBIS GUIDELINES FOR IPOS:The SEBI has been issuing guidelines from time to time with regard to
IPOs so as to protect the interest of investors and also to promote a
healthy capital market in the country. Some of the important guidelines
pertaining to IPOs are:
1) All allotments have to be made within 30 days of the closure of the
public issue and 42 days in the case of a right issue.
2) The set offer to the general public has to be at least 25% of the total
issue size for listing on a stock exchange. For listing an IPO on the
NSE :
a) The paid up capital should be Rs.20 crores.
b) The issuing company should have a track record of
profitability.
c) The project should be appraised by a financial institution or
a commercial bank or category 1 merchant banker.
3) In case an issue exceeds more than Rs.100 crore, the issue is
allowed to place the whole issue through book-building.
4) A minimum of 50% of the net offer to the public has to be reserved
for investors applying for less than 1000 shares.

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5) All listing formalities for a public issue have to be completed
within 70 days from the date of closure of the subscription list.
6) There should be at least 5 investors for every Rs. 1 lakh of equity
offered.
7) The PAN or GIR number should be compulsory quoted in the
application where the monetary value of investment is Rs.50,000 or
above.
8) The subscription list for public issues shall be kept open for at least
3 working days and not more than 10 working days.
INTERMEDIARIES IN THE NEW ISSUE MARKET:There are many intermediaries in the new issue market. Some of them are
mentioned below:
1) Merchant bankers
2) Registrars
3) Collecting and co-coordinating bankers
4) Underwriters and brokers
5) Share transfer agents
6) Debenture trustee
1)
MERCHANT BANKER:-

- 27 -

In the new issue market, the merchant bankers provide various services.
The merchant bankers act as lead managers, issue managers, portfolio
managers, consultants, advisers to the issue, underwriter to the issue.
Lead managers:Merchant bankers act as lead managers. As per SEBI guidelines it is
mandatory that all public issues should be managed by the merchant
bankers in the capacity of lead managers. Only in the case of right issues
not exceeding Rs.50 lakhs such an obligation is not necessary. The
number of lead managers to be appointed by a company depends upon the
size of the issue.
Portfolio managers:Merchant bankers provide portfolio management services to their clients.
Portfolio basically refers to investment in different kinds of securities
such as shares, debentures or bonds issued by different companies and
securities issued by the government. Portfolio management refers to
maintaining proper combination of securities in a manner that they give
maximum return with minimum risk.
Issue management:It is one of the important services provided by the merchant bankers.
Management of the issue involves marketing of corporate securities such
as equity shares, preference shares and debentures or bonds by offering
them to public. Merchant bank act as intermediary whose main job is to
transfer capital from those who own it to those who need it.
2)
REGISTRARS:-

- 28 -

Registrars are one of the important intermediaries who undertake all the
activities connected with new issue management. They are appointed by
the company in consultation with the merchant bankers to the issue.
Registrars have a major role to play in respect of servicing of investors.
Qualification for registrars to the issue:To be appointed as registrar to the issue, registration with SEBI is
essential. The criteria adopted by SEBI for registration are the
competency and expertise, quality of manpower, their track record, and
adequacy of infrastructure such as computers, storage space etc.A net
worth of Rs. 6 lakhs is essential for registrars. SEBI has laid down a code
of conduct for their observance. They have to maintain proper books of
accounts and registrars for a period of three years.
3) COLLECTING AND CO-ORDINATING BANKERS:
Collecting bankers collects the subscription in cash, cheques, stock invest
etc. co-coordinating bankers collect information on subscription and coordinate the collection work. They monitor the work and inform it to the
registrars and merchant bankers. Collecting bankers and co-coordinating
bankers may be the same bank or different banks.
4) UNDERWRITERS AND BROKERS:-

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The function and the role of underwriters are basically to guarantee the
minimum subscription of the issue. Brokers along with the net work of
sub-brokers market the new issues. They send own circulars and
application to the clients and do follow up to market the securities.
5) SHARE TRANSFER AGENTS:Share transfer agents maintain an up to date record of all shareholders of
a company with details of number of securities held, folio number and
bank account details, their address etc. These agents assist the company
in recording subsequent transfer between shareholders. The records of
this agents play a vital role in respect of deciding the correct beneficiaries
on a record dates for payment of dividend, eligibility for bonus shares,
right shares etc. all such agents are required to be registered with SEBI
and are required to adopt stipulated code of conduct.
6) DEBENTURE TRUSTEE:Debenture trustees can be defined as individual, or institutions who agree
to act as trustee for the debentures issued by a company. There role is to
maintain a record of assets forming the security against which debentures
are issued, verifying the state of this assets, their valuation, maintenance
etc. debenture trustees are expected to show due diligences in assuring
safety of debenture holders interest. All such trustees are expected to be
registered with SEBI which is empowered to inspect their records
regarding the discharge of their services.
SECONDARY MARKET
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A market which deals in securities that have been already issued by the
companies is called as secondary market. It is also known as stock
market. It is the base upon which the primary market is depending. For
the efficient growth of the primary market, a sound secondary market is
an essential requirement. The secondary market offers an important
facility of transfer of securities.
The activities of buying and selling of securities in a secondary market
are carried out through the mechanism of stock exchanges. There are at
present 24 stock exchanges in India, recognized by the government.
There are three important stock exchanges in Bombay namely the
Bombay Stock Exchange, National Stock Exchange and Over the Counter
Exchange of India. There has been a substantial growth of capital market
in India during the last 25 years which is evident from the following
table:-
Growth of Capital Market

Year
1975-76 1998-99 1999-00 2001-02 2003-04
Stock exchange
8
22
23
23
23
Listed cos
1852
9877
9871
5347
1926
MV of capital
3273 545361 912842
612224 1201207
Capital issue
98
43678
65948
45226
56588
Capital raised as
0.7
13.9
15.5
9.3
8.2
domestic saving
Note: - Market value of capital and the capital issues are in crores and
capital raised as gross domestic saving is in %.
During
the
financial
year
1991-92,
stock
markets
witnessed
unprecedented surge in share prices and increase in activities. The market

was subdued in 1992-93 due to the fallout of the detection of
irregularities in securities transactions. However, there has been a
- 31 -

substantial growth in the number of stock exchanges, listed companies,
and market value of capital. There was a lack of sufficient investment
support in the stock market in 1995-96 and 1996-97 facing a downside in
the prices of scrips.
Stock Exchanges in India

By the end of March 2001, 23 stock exchanges were functioning in India.
Out of these 20 exchanges are regional ones while four others National
Stock Exchanges of India Limited (NSIEL), the Over The Counter
Exchange of India (OTCEI), Inter-connected stock exchange of India
limited (ISE) and the Bombay Stock Exchange (BSE), operate at the
national level as they have mandate to have nationwide trading network.
The ISE is promoted by 15 regional stock exchanges in the country and
has been set up in Mumbai. The ISE provides a member-broker at any of
these stock exchanges an access into the national market segment, which
would be in addition to the local trading segment available at present.
The NSEIL, the BSE, OTCEL, ISE and majority of the stock exchanges
have adopted the screen based trading by system (SBTS) to provide
automated and modern facilities for trading in a transparent, fair and open
manner with access to investors across the country. Internet trading has
been permitted by SEBI in a limited way through the registered stock
brokers on behalf of clients for execution of trade on the registered stock
exchanges from 31 January, 2000. As on 31 march, 2001 there were 9954
listed companies on all the stock exchanges in the country. The market
capitalization of all listed companies at BSE was Rs. 571553 crore as on
- 32 -

31 March, 2001. Total turnover of all the stock exchanges during 20002001 was Rs.28, 80,804 crore.
Recent Developments in Secondary Market:Many steps have been taken in recent years to reform the secondary
market so that it may function efficiently and effectively. Some of the
developments in this direction are as follows:
1) Regulation of Intermediaries:To improve the functioning of intermediaries in the capital market, strict
control is being exercised on them by SEBI. The intermediaries such as
merchant bankers, underwriters, brokers, bankers to the issue etc must be
registered with the SEBI. To improve their financial adequacy, brokers
are expected to maintain a minimum capital of Rs.5 lakhs in major
exchanges and Rs. 2 lakh in minor exchanges and a minimum net worth
of 8% of the annual turnover.
2) Change in the management structure
In the early days, the board of stock exchanges was dominated by brokers
whose decisions were not fair and transparent. The SEBI now requires
that 50 % of the directors must be non-brokers directors or government
representatives.
3) Insistence of quality securities

- 33 -

For the efficient and active functioning of a stock exchange, quality
securities are absolutely essential. Realizing the fact, the SEBI has
announced recently revised norms for companies accessing the capital
market so that only quality securities are listed and traded in stock
exchanges.
4) Prohibition of insider trading
Insider can easily enter into manipulative dealings against the interest of
the public on the basis of any unpublished price sensitive information
available to them because of their position in the company. Now, there is
a ban on insider trading and hence, an insider is prevented from dealing in
securities of any listed company on the basis of any unpublished price
sensitive information. SEBI (Insider Trading) Amendment Regulation,
2002 have been formed giving more powers to SEBI to curb insider
trading.
5) Transparency of accounting principles
To ensure correct pricing mechanism and wider participation, all attempts
are being taken to achieve transparency in trading and accounting
procedures. Brokers are asked to show their prices, brokerage, service tax
etc separately in the contract notes and their accounts.
6) Strict supervision of stock market operations

- 34 -

The ministry of finance and the SEBI supervise the operations in stock
exchanges very strictly. The SEBI monitors the operations of stock
exchanges very closely with a view to ensure that dealings are conducted
in the best interest of the overall financial environment in the country in
general and the investors in particular. Strict rules have been framed with
regard to recognition of stock exchanges, membership, management,
maintenance of accounts etc. SEBI organizes inspection of brokers firms
and their accounts.
6) Prevention of price rigging
Greater powers have been given to SEBI under SEBI (Prohibition of
fraudulent and unfair trade practices relating to security market)
Regulation, 1995 to curb price rigging. Infact the SEBI exercised its
powers in 1996 for the first time by issuing show-cause notices to the
various parties-promoters, brokers and clients involved in price rigging.
Further, certain procedural changes have been planned in the auction
route to curb price rigging. Thus all efforts are being taken to protect the
interest of the investors.
8) Free pricing of securities
A new era in the capital market has begun with the process of
liberalization started from June 1991 onwards. In May 1992, the capital
issues control act was abolished and the functions of the controller of
capital issues were entrusted to SEBI. Now, any company is free to enter
the capital market to raise the necessary capital at any price that it wants.
Very recently, the SEBI has permitted companies to issues shares below
the face value of Rs 10 and liberalized the norms for initial public
- 35 -

offerings. This is mainly to permit companies with intrinsic value of
shares below Rs 10 to tap the market at a low price. Even existing
companies can split up their shares accordingly.
9) Freeing of interest rates
Interest rates on debentures and on PSU bonds were freed in August 1991
with a view to raising funds from the capital market at attractive rates
depending on the credit rating. Companies can now offer any rate to the
public and mobilize the savings.
10)
Setting up of Credit Rating Agencies
Credit rating agencies have been set up for awarding credit rating to the
money market instruments, debt instruments, deposits and even to equity
shares also. Now, all debt instruments must be compulsorily credit rated
by a credit rating agency so that the investing public may not be deceived
by financially unsound companies. It is a healthy trend towards a
developed capital market.
11) Reserve Bank of Indias Measures
The RBI is also taking measures to revive the capital market which is
undergoing a period of sluggishness. It has permitted commercial banks
to invest up to 5% of their incremental deposits in ordinary shares of the
corporate sector including PSUs. Again, banks are allowed to extend
loans to corporate against shares held by them so as to enable them to
meet promoters contribution to the equity in new companies. The RBI
has also increased the ceiling for banks advances to individuals against
- 36 -

shares and debentures. Further, financial institutions have been allowed to
purchase and sell treasury bills.
12) International listing
The big event in the history of Indian capital market is the listing of an
Indian companys share on an American Stock Exchange. The Bangalore
based Infosys Technologies shares have been listed on the NASDAQ
exchange under the symbol of INF.
MONEY MARKET
- 37 -
Money market is a market for short-term loans or financial assets. It is a

market for the lending and borrowing of short term funds. As the name
implies, it does not actually deal in cash or money. But it actually deals
with the near substitutes of money or near money like trade bills,
promissory notes and government papers drawn for a short period not
exceeding one year. These short term instruments can be converted into
cash readily without any loss and at low transaction cost.
Money market is the center for dealing mainly in short-term money
assets. It meets the short-term requirements of borrowers and provides
liquidity or cash to lenders. It is the place where short-term surplus funds
at the disposal of financial institution and individuals are borrowed by
individuals, institutions and also the government.
The money market does not refer to a particular place where short-term
funds are dealt with. It includes all individuals, institutions and
intermediaries dealing with short term funds . The transaction between
borrowers, lenders and middlemen takes place through telephone,
telegraph, mail and agents. No personal contact or presence of the two
parties is essential for negotiation in a money market. However, a
geographical name may be given to a money market according to its
location.
OBJECTIVES OF MONEY MARKET:V.E.S college of arts, science and commerce

- 38 -
The following are the important objectives of a money market:

To provide a parking place to employ short-term surplus funds.
To provide room for overcoming short-term deficits.
To enable the central bank to influence and regulate liquidity in the
economy through its intervention in this market.
To provide a reasonable access to users of short-term funds to meet
their requirements quickly, adequately and at a reasonable cost.
COMPOSITION OF MONEY MARKET
The money market is not a single homogeneous market. It consists of a

number of sub-markets which collectively constitute the money market.
The following are some of the main component of the money market:1) Call money market
2) Commercial bills market
3) Treasury bill market
4) Certificate of deposit market
5) Commercial papers market
CALL MONEY MARKET:The call money market refers to the market for extremely short
period loans; say one day to fourteen days. These loans are repayable on
demand at the option of either the lender or the borrower. These loans are
given to brokers and dealers in stock exchange. Similarly, banks with
- 39 -

surplus funds lend to other bank with deficit funds in the call money
market. Thus, it provides an equilibrating mechanism for evening out
short term surplus and deficits. Moreover, commercial banks can quickly
borrow from the call market to meet their statutory liquidity
requirements. They can also maximize their profits easily by investing
their surplus funds in the call market during the period when call rates are
high and volatile. The RBI has set up two institution called as Discount
and Finance House of India (DFHI) and Securities Trading
Corporation of India to act as a market maker in this market.
Operation in the call money market:Borrowers and lenders in a call market contact each other over the
telephone. Hence, it is basically over-the-telephone market. After the
negotiation over the phone, the borrowers and the lenders arrive at a deal
specifying the amount of loan and the rate of interest. After the deal is
over, the lender issues FBL cheque in favour of the borrower. The
borrower in turn issues call money borrowing receipt. When the loan is
repaid with interest, the lender returns the duly discharged receipt.
Instead of negotiating the deal directly, it can be routed through the
Discount and Finance House of India (DFHI). The borrower and the
lenders inform the DFHI about their fund requirement and availability at
a specified rate of interest. Once the deal is confirmed, Deal Settlement
Advice is exchanged. In case the DFHI borrows, it issues a call deposits
receipts to the lender and receives RBI cheque for the money borrowed.
The reverse takes place in case of lendings by the DFHI. The duty
discharged call deposit receipts are surrendered at the time of settlement.
Pure Interbank call money market:V.E.S college of arts, science and commerce
- 40 -
In 1998, the RBI set up a committee called the Narsiman committee to

conduct a study of Indian banking sector and to recommend the process
of liberalizing the sector. One of the recommendations of this committee
was to convert the existing call money market into a pure interbank
market. Effectively, it means eliminating presence of financial institution,
mutual
funds
and
corporate
from
this
market.
Before
such
recommendation could be implemented it was essential to make banking

sector self-sufficient in terms of their fund requirement. Accordingly, on
29th April, 2002, the RBI introduced measures to reduce the reliance of
bank on outside funds. These measures are as follows:
1) Daily lending outstanding were not to exceed 25% of net owned
funds as per the previous balance sheet as on 31st march.
2) Daily borrowing outstanding not to exceed 100% of net owned
funds or 20% of aggregate deposits as per the previous balance
sheet as an 31st march, whichever was higher.
Treasury bills market:A treasury bill is nothing but a promissory note issued by the government
under discount for a specified period stated therein. The government
promises to pay the specified amount mentioned therein to the bearer of
the instrument on the due date. The period does not exceed a period of
one year. It is purely a finance bill since it does not arise out of any trade
transaction. It does not require any grading or endorsement or
acceptance since it is a claim against the government.
Treasury bills are issued only by the RBI on behalf of the government.
Treasury bills are issued for meeting temporary government deficits. The
- 41 -

Treasury bill rate or the rate of discount is fixed by the RBI from time-totime. It is the lowest one in the entire structure of interest rates in the
country because of short-term maturity and high degree of liquidity and
security.
Types of treasury bills:In India, there are two types of treasury bills such as ordinary and ad
hoc. Ordinary treasury bills are issued to the public and other financial
institution for meeting the short-term financial requirement of the central
government. These bills are freely marketable and they can be brought
and sold at any time and they have secondary market also. On the other
hand ad hoc are always issued in favour of the RBI only. They are not
sold through tender or auction. They are purchased by the RBI on tap and
the RBI is authorized to issue currency notes against them. They are not
marketable in India. However the holders of these bills can always sell
them back to the RBI.
On the basis of periodicity, treasury bills may be classified into three and
they are:
1) 91 days treasury bills
91 days treasury bills are issued at a fixed discount rate of 4% as well as

through auction. 364 days treasury bills do not carry any fixed rate. The
discount rate on these bills are quoted in auction by the participants and
- 42 -

accepted by the authorities. Such a rate is called as cut off rate. In the
same way, the rate is fixed for 91 days Treasury bill sold through auction.
91 days treasury bills can be rediscounted with the RBI at any time after
14 days of their purchase.
Operation and participants:The RBI holds 91 days treasury bills and they are issued on tap basis
throughout the week. However, 364 days bills are sold through auction
which is conducted once in a fortnight. The date of auction and the last
date of submission of tenders are notified by the RBI through a press
release. Investors can submit more than one bid also. On the next working
day of the date of the auction, the accepted bills with the price are
displayed. The successful bidders have to collect letters of acceptance
from the RBI and deposit the same along with a cheque for the amount
due on RBI within 24 hours of the announcement of auction results. The
establishment of the DFHI has imparted greater liquidity in the treasury
bills market.
Commercial bills market:A commercial bill is one which arises out of a genuine trade transaction
i.e., credit transaction. As soon as goods are sold on credit, the seller
draws a bill on the buyer for the amount due. The buyer accepts it
immediately agreeing to pay the amount mentioned therein after a certain
specified date. Thus, a bill of exchange contains a written order creditor
to the debtor, to pay a certain sum, to a certain person, after a certain
period. It is a negotiable instrument.

- 43 -

Definition:Section 5 of the Negotiable Instrument Act defines a bill of exchange as
an instrument in writing containing an unconditional order, signed by the
maker, directing a certain person to pay a certain sum of money only to,
or to the order of a certain person or to the bearer of the instrument
Types of bills:Many types of bills are in circulation in a bill market. They can be
classified as follows:
1) Demand and Usance bills
2) Clean and Documentary bills
3) Inland and Foreign bills
4) Export and Import bills
5) Accommodation and Supply bills
Operations in bill market:
The bill market can be classified into two such as
a) Discount market
b) Acceptance market
Discount market:-

- 44 -

Discount market refers to the market where short term genuine trade bills
are discounted by financial intermediaries like commercial banks. When
credit sales are affected, the seller draws a bill on the buyer who accepts
it promising to pay the specified sum at the specified period. The seller
has to wait until the maturity of the bill for getting payment. But the
presence of the bill market enables him to get payment immediately. The
seller can ensure the payment immediately by discounting the bill with
some financial intermediary by paying a small amount of money called
discount rate. On the date of maturity, the intermediary claims the
amount of the bill from the person who has accepted the bill.
Acceptance market:The acceptance market refers to the market where short-term genuine
trade bills are accepted by financial intermediaries. All trade bills cannot
be discounted easily because the parties to the bill may not be financially
sound. In such cases the bills are accepted by the financial intermediaries
like banks, the bills earn a good reputation and such bills can be readily
discounted anywhere.
Certificate of deposit market:Certificate of deposit is one of the new instruments which is been
introduced in the money market with an aim to provide greater flexibility
to the investors in the deployment of their short term funds. Certificate of
deposit can be defined as a receipt given to a depositor by a bank or any
other eligible institution for the funds deposited with it. It is a marketable
instrument or a document of title to a time deposit for a specified period.

- 45 -

Features:a) A certificate of deposits being a negotiable instrument cannot be
pledged as security for borrowing, in case of need the instruments
is to be sold in the secondary market.
b) A certificate of deposit is a usance promissory note and is
therefore subject to stamp duty.
c) Bank can issue certificate of deposit for a period ranging from 15
days to 364 days. Where as eligible financial institution can issue
certificate of deposit up to 3 years.
d) Certificates of deposit are issued at a discount to face value and
are redeemed at par to face value. The difference between
redemptions price and issue price constitutes the yields to the
investors. Certificate of deposits are issued in the lot of Rs 5 lakh
and additional investment is in multiples of Rs 1 lakh.
e) Only commercial and co-operative banks can issue certificate of
deposits.
f) Banks are required to maintain CLR and SLR on the issue price of
certificate of deposits and not on the face value.
g) Floating rate certificate of deposits are permitted to be issued in
India. Resetting of interest rate is to be done by bench marketing
to an established market rate.
h) No premature repayment of CDs is permitted. This ensures that
funds to the extent of CDs issued are available to the bank till
maturity.
i) Proceeds collected on account of CDs are reflected in the banks
balance sheet as liability to others.
j) Normally, CDs yield rates are higher than the corresponding fixed
deposit rate.
- 46 -

k) In terms of section 42 of the RBI Act, banks are required to furnish
a fortnightly return of the CDs issued by them.
Commercial papers market:The commercial papers have come into existence in the money market
since January, 1990. Commercial papers can be defined as debt
instrument issued by corporate for raising short term resources from
money market. This instrument is based on leveraging of good credit
rating by corporate to reduce the cost of banks borrowing.
Features:a) These debt instruments are unsecured in nature.
b) These instruments are generally issued in India for period ranging
from 15 days to 364 days.
c) They are issued in the form of promissory notes which are payable
at par. By implication this instrument are issued at a discount.
d) The difference between the face value and issue price of the
instrument is called as discount. This provides the return to the
investors. This instruments are issued only in the demat form.
e) The corporate issuing the commercial papers require to have
minimum credit rating of P-2 from CRISIL.
f) There is no bench market interest rate and corporate are permitted
to issue commercial papers at discount in keeping with their
standing in the market.
g) Commercial papers can be issued in the minimum lot of Rs 25 lakh
and additional investment in denomination of Rs 5 lakh each.

- 47 -

h) Commercial papers can be issued only through commercial banks
who act as issuing and paying agents. The logic behind this
requirement is that the quantum of commercial papers issued by a
corporate are reduced from maximum permissible bank finance
available to a corporate from the banking industry.
i) Only a corporate having a minimum net worth of 4 crores and
permissible bank finance of 4 crore are permitted to issue
commercial papers.
j) Corporate issuing the commercial papers are required to have a
current ratio of not less than 1.33
k) Financial Intermediary Money Market Association (FIMMDA) has
prescribed various procedures, documentation, and prudential
safeguards to be followed while issuing commercial papers.
The success of the commercial papers and the development of the market
for commercial papers depend upon the emergence and the growth of
secondary market for such commercial papers. DFHI can help in the
growth of commercial papers market in the near future.
The Reserve bank of India

The RBI, as the central bank of the country, is the center of the Indian
financial system and monetary system. As the apex institution, it has been
guiding, monitoring, regulating, controlling, and promoting the destiny of
- 48 -

the Indian financial system since its inception. It is quite young compared
with such central banks as the bank of England, Riksbank of Sweden, and
the Federal Reserve Board of the US. However, it is perhaps the oldest
among the central banks in the developing countries. It started
functioning from 1st April, 1935 on the terms of the reserve bank of India
Act, 1934. It was a private shareholders institution till January 1949, after
which it became a state-owned institution under the Reserve Bank
(Transfer to Public Ownership) of India Act, 1948. This Act empowers
the central government, in consultation with the governor of the bank, to
issue such direction to it as they might consider necessary in the public
interest.
The bank is managed by a central board of directors, four local boards of
directors, and a committee of central board of directors. The function of
the local boards are to advice the central board on matters referred to
them; they are also required to perform duties as are delegated to them.
The final control of the bank vests in the central board which comprises
the governor, four deputy governors, and fifteen directors nominated by
the central government. Apart from the banking and issue department,
there are at present 20 departments and three training establishment at the
central office of the bank.
Function of RBI:
The RBI functions within the framework of a mixed economic system.
With regard to framing various policies, it is necessary to maintain close
and continuous collaboration between the government and the RBI. In the
- 49 -

event of a difference of opinion or conflict, the government view or
position can always be expected to prevail. The preamble of the RBI
Act,1934 states that whereas it is expedient to constitute a Reserve Bank
for India to regulate the issue of bank notes and the keeping of reserves
with a view to securing monetary stability in (India) and generally to
operate the currency and credit system of the country to its advantage.
Some of the important functions of the RBI are specified as follows:
a) To maintain monetary stability so that the business and economic
life can deliver welfare gains of a properly functioning mixed
economy.
b) To maintain financial stability and ensure sound financial
institution so that monetary stability can be safely pursued and
economic units can conduct their business with confidence.
c) To maintain stable payment system so that financial transaction can
be safely and efficiently executed.
d) To ensure that credit allocation by the financial system broadly
reflects the national economic priorities and societal concerns.
e) To regulate the overall volume of money and credit in the economy
with a view to ensure a reasonable degree pf price stability.
Role of RBI:The principal role played by the RBI includes the following:
1) Information provider
- 50 -

After incorporation of chapter III A in RBI Act in the year 1962, the RBI
is empowered to collect credit information from banking companies and
furnish such information to the government as well as to other banks. The
RBI thus acts as a database of credit information for entire financial
sector.
2) Promoter
As the custodian of the Indian financial system, the RBI has helped to
develop and promote several entities which are as follows:
a) Institution such as DICGC, IDFC, DFHI, STCI, etc.
b) Financial institution like IDBI, ICICI, IFCI, SIDBI, etc
c) NABARD, Agricultural College at pune, Regional Rural Bank for
the rural development.
d) EXIM Bank for foreign trade.
e) NHB for housing finance.
f) Indian Bank Association, Indian Institute of bank, National
Institute of Bank Management, Bankers trading college etc
3) Supervisor
As the principal regulatory authority over the Indian financial system, the
RBI is expected to exercise supervision over the Indian financial system.
This aspect has been entrusted to the board of financial supervision set up
under RBI regulation in 1994. Commercial banks, financial institution,
- 51 -

NBFC and certain specified institution are covered under this regulation.
The board for financial supervision ensures compliance in the areas of
credit management, asset classification, income recognition, and capital
adequacy provisioning and treasury norms. As per section 35 of Banking
Regulation Act, provides RBI with power to inspect books and accounts,
suspend operation of bank, issue directors etc. section 35(B) permits RBI
the authority to appoint the chairman, managing director and the whole
time directors.
4) Custodian
RBI acts as custodian for domestic currency as well as foreign currency
denominated securities which act as assets of country. The distribution of
domestic currency notes is handled by issue department of the RBI which
has 18 representatives offices across the country. This act as currency
chests. This mechanism helps to facilitate expansion and contraction of
currency in circulation. Additional chest are operated through SBI, public,
and private sector bank. These centers maintain ready stock of new and
re-usable notes and coins. All moneys held at this chest are owned by the
RBI. The presence of these offices eliminates the necessity for the
physical transfer of shares. They essentially help in making liquid cash
available in every corner of the country and additionally provide safe
mechanism for withdrawing soiled and unusable
Securities and Exchange Board of India (SEBI)

The government of India set up the Securities and Exchange Board of
India on 12th April, 1988 as a non-statutory body through a resolution for
dealing with all matters relating to the development and regulation of
- 52 -

securities market and investor protection and to advice the government on
all these matters.
SEBI was given statutory status and powers through an ordinance
promulgated on 30th January, 1992. The ordinance provided for the
establishment of a board to protect the interest of investors in securities
and to promote the development of and to regulate the securities market.
The statutory powers and function of SEBI were strengthened through the
promulgation of the securities law (Amendment) ordinance on 25th
January, 1995, which was subsequently replaced by an Act of parliament.
In term of this act, SEBI has been vested with regulatory powers over
corporate in the issuance of capital, and other related matter.
Objectives of SEBI:1) To promote orderly and healthy growth of the securities market in
India.
2) To protect the rights and interest of the investors through necessary
regulation.
3) To create proper market environment for orderly functioning of
securities market.
4) To regulate operation of financial intermediaries such as brokers,
underwriters, portfolio managers, and mutual funds. In addition to
promote professionalism among the intermediaries.
5) To create healthy market environment so as to enable companies to
raise adequate funds for their business through the sale of
securities.
6) To provide suitable education and guidance to investors so as to
enable them to protect their interest.
- 53 -
In short, SEBI is for the protection of investors, regulation of stock

exchanges and financial intermediaries and healthy growth of capital
market in India.
Functions of SEBI:Section 11 of the SEBI Act specifies the function as follows:
1) Regulatory function
a) Regulation of stock exchange and self regulatory organization
b) Registration and regulation of stock brokers, sub-brokers, registrar
to all the issue, merchant bankers, underwriters, portfoliomanagers, and such other intermediaries who are associated with
securities market.
c) Registration and regulation of the working of collective investment
schemes including mutual funds.
d) Prohibition of fraudulent and unfair trade practices relating to
securities market.
e) Prohibit insider trading in securities.
2) Development function
a) Promoting investors education
b) Training of intermediaries.

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c) Conducting research and published information useful to all market
participants.
d) Promotion of fair practices. Code of conduct for self regulatory
organizations.
Powers of SEBI:SEBI has been vested with the following powers:
Power to call periodic returns from recognized stock exchanges.
Power to call any information or explanation from the recognized
stock exchanges or their members.
Power to direct enquiries to be made in relation to affairs of stock
exchanges or their members.
Power to grant approval to bye-laws of recognized stock
exchanges.
Power to make or amend bye-laws of recognized stock exchanges.
Power to compel listing of securities by public companies.
Power to control and regulate stock exchanges.
Power to grant registration to market intermediaries.
Power to levy fees or other charges for carrying out the purpose of
regulation.
SEBI Guidelines:-

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SEBI has brought out a number of guidelines separately, from time to
time, for primary market and secondary market. They are as follows:
1) Primary market
New company: - A new company is the one which has completed 12
months of commercial production and does not have audited results and
where the promoters do not have a track record. Such a company will
have to issue shares only at par.
New company set up by the existing company: when a new company
has been set up existing company with a five year track record of
consistent profitability and a contribution of at least 50% in the equity of
new company. Such a company is free to price its issue i.e. such company
can issue shares at a premium.
Private and closely held companies: The private and closely held
companies having a track record of consistent profitability for at least
three years shall be permitted to price their issues freely. The issue price
shall be determined only by the issues in consultation with lead managers
to the issue.
Existing listed companies: The existing listed companies will be allowed
to raise fresh capital by freely pricing expanded capital provided the
promoters contribution is 50% on first Rs 100 crores of issue, 40% on
next Rs 200 crores, 30% on next Rs 300 crores and 15% on the balance
amount.
Reservation of issues:V.E.S college of arts, science and commerce
- 56 -

Reservation under public subscription for various categories of persons is
made in the following manner:
1) Permanent employees
--
10%
2) Indian Mutual funds
--
20%
3) Foreign Institutional Investors
--
15%
4) Development financial Institution
--
20%
5) Shareholders of group of companies
--
10%
2) Secondary market
Stock exchange:1) Board of directors of stock exchange has to be reconstituted so as
to include non-members, public representatives, and government
representatives to the extent of 50% of total number of members.
2) Capital adequacy norms have been laid down for members of
various stock exchanges depending upon their turnover of trade
and various other factors.
3) Working hours for all the stock exchanges has been fixed to be
from 12 noon to 3 pm.
4) All the recognized stock exchanges will have to inform about the
transaction within 24 hours.
5) Guidelines have been issued for introducing the system of market
making in less liquid scrips in a phased manner in all stock
exchanges.
Brokers:1) Registration of brokers and sub-brokers is made compulsory.

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2) In order to ensure that brokers are professionally qualified and
financially solvent, capital adequacy norms for registration of
brokers have been evolved.
3) Compulsory audit of brokers book and filing of audit report with
SEBI have been made mandatory.
4) To bring about greater transparency and accountability in the
broker-client relationship, SEBI has made it mandatory for brokers
to disclose transaction price and brokerage separately in the
contract notes issued to client.
5) No brokers are allowed to underwriters more than 5% of the public
issue.
DERIVATIVES MARKET
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Derivatives are becoming increasingly important in world market as a
tool for risk management. Derivatives instrument can be used to
minimize risk. Derivatives are used to separate the risk and transfer them
to parties willing to bear these risks. The kind of hedging that can be
obtained by using derivatives is cheaper and more convenient than what
could be obtained by using cash instruments. It is so because, when we
use derivatives for hedging, actual delivery of the underlying asset is not
at all essential for settlement purposes. The profit or loss on derivatives
deal alone is adjusted in the derivatives market.
Definition:Derivatives are the instruments which make payments calculated
using price of interest rates derived from on balance sheet or cash
instrument, but do not actually employ those cash instruments to funds
payments
Kinds of Financial Derivatives:Some of the important financial derivatives are as follows:

1) Forwards
2) Futures
3) Options
4) Swaps
Forwards:-

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A forward contract is an agreement between bank and its customer in
terms of which bank agrees to buy or sell a specified amount of a given
currency at a pre-determined rate for delivery on specific future date.
Features of a forward contract:1) A forward contract is a customized contract and a customer is
therefore able to buy or sell a specific amount of foreign currency
as per his trade liability.
2) This is only instrument which provides 100% hedge against
transaction risk.
3) The contracts are customized in terms of delivery date also ie : the
customer can sell or buy the requisite amount of foreign currency
on any specific future date.
4) A forward contract is over the counter contract (OTC) between the
bank and customer.
5) Since both the customer and the bank can theoretically fail before
maturity of the contract such contract carry 100% credit risk.
6) Cancellation of forward contract or any amendment to existing
contract is possible only with same counter party. This reduces the
negotiability in such contracts.
Futures: V.E.S college of arts, science and commerce

- 60 -

A futures contract is very similar to a forward contract in all respects
excepting the fact that it is completely a standardized one. Hence, a future
contract is nothing but a standardized forward contract. It is legally
enforceable and it is always traded on an organized exchange. A future
contract is one where there is an agreement between two parties to
exchange any asset or currency or commodity for cash at a certain future
date, at an agreed price. Both the parties must have mutual trust between
them.
Features of future contract:1) Futures are standardized and legally enforceable. Hence, they are
traded only in organized future exchanges. It is also difficult to
modify the agreement according to the needs of the contracting
parties.
2) The contracting parties need not pay any down payment at the time
of agreement. However, they deposit a certain percentage of
contract prices with the exchange and it is called initial margin.
This gives the guarantee that the contract will be honored.
3) The main feature of the future contract is to hedge against price
fluctuation. The buyers of a future contract hope to protect
themselves from future spot price increases and the sellers from
future spot decreases. Parties enter into future agreement on the
basis of their expectation of the future price in the spot market for
the asset in question.
4) Future contract is nothing but a standardized forward contract
which possesses the property of linearity. Parties to the contract get
symmetrical gains or losses due to price fluctuation of the
underlying asset on either direction.
- 61 -

5) In case of the future contract, the delivery of the asset in question is
not essential on the date of maturity of the contract. Generally,
parties simply exchange the difference between the future and spot
prices on the date of maturity.
6) Future contract attract margin requirement ie when buying and
selling any security on the exchange margin money account has to
be maintained with the exchange. The daily variation in the market
rate as against the contracted rate is credited or debited to the
margin money account.
7) A professional trader prefers to use future contract because of the
speed and the transparency of its operation.
Options contract:Traders and operators dealing in foreign currencies, commodities, or

securities often undertake liabilities devolving in the future which may or
may not occur. Forward contract and Future contract both require
mandatory settlement. Therefore in order to overcome this limitation, the
options contract has been developed.
An option contract can be defined as a right but not an obligation to buy
or sell the underlined security, commodity, or currency. Option contract
are purchased i.e. they involve payment called as premium for acquiring
this entitlement. This right may be to purchase or to sell. Option contract
which provide the right but not the obligation to buy the underlined
security are called as call option. Similarly, option contract which provide
the right but not the obligation to sell the underlined security are called
put option. Premium paid for acquiring option contract are not
refundable. The payment of premium is not dependent upon the contract
- 62 -

being exercised or being abandoned. The price at which the underlined
security is to be brought or sold is called strike price.
Features of option contract:1) Option contract are exchange traded contract and enjoy the benefit
of novation.
2) Option contract are standardized in terms of number of securities.
3) All option contracts for a given calendar month mature on last
Thursday of the month in India.
4) Option which can be exercised on any day up to the maturity date
are called American options which can be exercised only on
maturity date are called European options.
5) Option do not provide 100% hedge against future liabilities due to
their standardized nature.
6) Options always involve payment of premium to the option seller on
the date of contract. This premium is non-refundable due to this
factor options tend to be costlier than forward contract or future
contract.
SWAPS:It is a derivative instrument which can be used by the investors and
commercial banks for the following function:
1) Hedging exchange risk
2) Funding operations
3) Eliminating maturity mis-matches
- 63 -

1) Hedging exchange risk:SWAPS can be defined as exchange of cash flows in two different
currencies or securities. The transaction therefore involves two leg which
operate at different maturity. The principal amounts to be exchanged are
identical and rates for the two transactions are fixed simultaneously. A
SWAP is therefore free of any exchange risk. An investor can use SWAPS
to hedge risk in the following manner
Example: A foreign institutional investor (FII) bringing 1 million USD

into the country would normally be required to sell his dollars to an
authorized dealer in exchange for INR at say Rs 45 per dollar. If the FII
makes profit of 10 % during the year and needs to buy back dollars at a
rate higher than Rs 45 it leads to erosion in the profit to avoid such
situation a SWAPS transaction would provide him with two predetermined rate (a) for conversion into INR. (b) For reconversion back
into USD.The difference in the two rates being the cost of transaction
would be known to him when initiating the transaction. The FII is now
protected from any subsequent exchange rate change during the
intervening period.
2) Funding operation:The use of SWAPS as for the funding is identical to the use made by
foreign investors. This mechanism however, is used by foreign banks in
India to create rupee resources for lending in India.
3) Eliminating maturity mis-matches:V.E.S college of arts, science and commerce
- 64 -

Banks are continuously required to quote exchange rates to their clients
for different maturities. When client agree to such rates banks are
required to correspondingly buy or sell currencies for different future
maturities. It is not always possible to get desired forward maturities in
the market.
Example: A bank sells USD 50,000 to an importer for fixed maturity on

20th December, 2006. In turn it is able to buy USD 50,000 in the market
for delivery on 11th December, 2006. Bank now is led with a mis-match
position between 11th and 20th December 2006. To cover such situation
bank would now undertake SWAPS transaction by selling USD 50,000
for delivering on 11th December, 2006 and buying back the same amount
for delivering on 20th December,2006. This would eliminate interest rate
risk as also liquidity problems.
Foreign Exchange market

- 65 -

International trade and investment would not be possible without the
arrangement or mechanism for buying and selling foreign
currencies because the rupee is not the international means of
exchange. Foreign exchange market is necessary concomitant
to international transaction in an open economy. The
international aspects of saving and investment are reflected in
the volume of capital flows between countries.
Foreign exchange:According to the foreign exchange regulation Act, 1973, foreign

exchange means foreign currency and it includes all deposits, credit and
balance payable in any foreign currency, and any draft, travelers
cheques, letter of credit and bills of exchange expressed or drawn in
Indian currency but payable in any foreign currency and includes any
instruments payable, at the option of the drawee or holder thereof or any
other party thereto, either in Indian currency or in foreign currency.
Foreign exchange market:It can be defined as a virtual market being a electronically connected
network of international banks, brokers and service providers which
provide the environment for putting through foreign exchange
transaction. It facilitates the transfer of purchasing power denominated in
one currency to another. Structure of foreign exchange market: The
foreign exchange market can be divided into two parts. They are as
follows:
1) Retail market:V.E.S college of arts, science and commerce

- 66 -
The exchange of bank notes, bank drafts, currency, and travelers cheques
between private customers, tourists and banks takes place in the retail
market. The RBI has granted two types of money changers licences to
certain established firms, hotels, shops and other organisation to deal in
currency notes, coins, and travellers cheques to a limited extent. While
the full-fledged money changers can undertake both purchase and sale
transaction with the public, restricted money changers can only
purchase foreign currency from the foreign tourists.
2) Wholesale market:The wholesale market is primarily an inter-bank market in which major

banks trade in currencies held in different currency-dominated bank
accounts. This market is far larger than the banks notes market. Only the
head offices and the regional offices of the major commercial banks are
the market makers in the wholesale market. Most of the small banks and
the local offices of even the major banks do not deal directly in the interbank market. They usually have a credit line with large banks or with
their head offices and they serve their customers through the latter.
Through the correspondent relationship with banks in other countries,
major banks have ready access to foreign currencies. Inter-bank foreign
currency transaction usually do not involve a physical transfer of
currency, they simply involve bookkeeping entries among banks. There is
no central location for this market and trading in it is continuous. Banks
do not normally charge commission on their currency transaction, they
profit from the spread between the buying and selling rates.
The organization of foreign exchange market:V.E.S college of arts, science and commerce
- 67 -
Presently, there are 84 banks in India who have been authorized to deal in
foreign exchange and they are known as Authorized Dealers, and the
public has to conduct all their foreign exchange transaction through them.
Of these, foreign banks and bigger Indian banks are more active, giving
two way quotes. The market operates from the major centers such as
Mumbai, Delhi, Calcutta, Bangalore, Kochi and Ahmedabad, with
Mumbai accounting for the major part of the transaction. These
authorized dealers have formed an organization called Foreign Exchange
Dealers Association of India (FEDAI, which sets the ground rules for
fixation of commission and other charges. A large part of the inert-bank
transaction is conducted through 40 exchange brokers who are specialist
in matching supplies and demands of banks and who work for a
commission.
Inter-bank market:The inter-bank market can thus be said to have two parts. They are direct
and indirect. In the direct market, banks quote buying and selling prices
directly to each other and all participating banks are the market makers. It
has been sometimes characterized as decentralized, continuous, openbid, double-auction market. In the indirect market, the bank puts orders
with brokers who put them on books, and try to match purchases and
sales orders for different currencies. They charge commission to both the
buyers and the sellers. The operation of the inter-bank market is
controlled by a self regulatory organization called Foreign Exchange
Dealers Association of India (FEDAI).
The functions of FEDAI are as follows:V.E.S college of arts, science and commerce
- 68 -
1) It provides a platform to industry to proposed changes to existing

regulations to RBI.
2) It provides a mechanism for redressing disputes between market
participants.
3) It implements the code of ethics in terms of which market
participants are expected to function.
4) It provides a schedule of charges which are uniform to all its
members and it also negotiates changes in brokerage rates to be
charged for different services.
5) The FEDAI announces the spot date on every trading day so as to
ensure uniformity between all members.
Financial instruments
- 69 -
Financial instruments are claims to the payment of sum of money

in future or a periodic interval. For example, the important financial
instruments are shares, debentures, bonds, fixed deposits etc. regular
payment in the form of interest and dividend is paid by the company to
the investors. These instruments are classified as primary or secondary
instruments. The primary instrument are issued by the ultimate investors
directly to the ultimate savers such as equity shares, debentures, etc.
secondary instruments are issued by the financial intermediaries to the
ultimate savers such as bank deposits, insurance policies, units. The
financial instruments differ from each other in respect of their investment
characteristics. The important characteristics of the instruments are
liquidity, transferability, volatility, maturity, risk and return.
Financial instruments can be broadly classified as capital market
instruments and money market instruments. A capital market instruments
is a dept instrument of long period maturity where as money market
instruments is a dept instruments of short period maturity.
Some of the important capital market instruments are as follows:
1) Shares
2) Debentures and bonds
3) Company deposits
4) Innovative debt instruments
Shares:
- 70 -
Shares basically represent the own capital. Joint stock companies collect
their long term capital through the issue of shares to the investors. This is
basically called as stock financing. Share can be classified as equity
shares or preference shares. Shares basically constitute the ownership
securities. Investment in shares is as risky as well as profitable.
Transaction in shares takes place in the primary and secondary market.
The shares which are available for investment are classified into different
categories such as blue chip shares, growth shares, speculative shares,
income shares and so on. Nowadays trading of shares takes place only in
demat form.
Debentures and Bonds:Investors having surplus funds can invest it in debentures and bond issued
by the companies. Debentures and bonds both represent creditor ship
securities. Debentures indicate loan given to the company at a specific
rate of interest and on certain terms and conditions. Debentures are more
popular than shares due to the safety and security available. Companies
issue different types of debentures for the convenience of the investors. In
India, bonds and debentures are also issued by the public sector
companies and the financial institutions. For example: IDBI issues flexi
bonds, deep discount bonds, retirement bonds, growing interest bonds
and regular interest bonds. Such infrastructure bonds are popular among
the investors and their response is encouraging. They are over-subscribed
in many occasions. This is basically because of the tax benefit.
Company Deposits:V.E.S college of arts, science and commerce

- 71 -
In order to meet, temporary financial needs, companies accept deposit

from the investors. Such deposits are called public or company deposits.
Such company deposits are popular particularly among the middle class
investors. Many companies collect crores of rupees through such
deposits. Initially, companies were offering attractive rate of interest but
nowadays the interest rate is reduced considerably. At present companies
are offering interest rates of 9 to 12%.
On maturity, the depositors have to return the deposit receipt to the
company and the company pays back the deposit amount. The depositor
can renew his deposit for further period of one to three years at his
option. Many companies are now supplementing their fixed deposit
scheme by cumulative time deposit scheme under which the deposited
amount along with the interest is paid back in lump sum on maturity.
Nowadays the companies appoint managers to their fixed deposit
schemes. The managers help the companies in collecting deposits and
also to look after the administrative work in connection with such
deposits.
Innovative Debt Instruments:Innovation has been the key behind the success of many companies and it
forms an integral part of all planning and policy decision. This has helped
them to tune with the changing times and changing customer needs.
Accordingly, many innovative financial instruments have come into the
financial market in recent times. Some of them are as follows:

- 72 -

Zero interest convertible debentures and bonds, deep discount bonds,
index-linked guilt bonds, option bonds, secured premium notes, medium
term debentures, variable rate debentures, non-convertible debentures
with equity warrants, convertible bonds, easy exit bonds, carrot and stick
bonds, Yankee bonds, floating rate notes, and so on.
Money market instrument:

Money market is a market for borrowing and lending for short periods. It
is one of the constituent of capital market. However, it is basically
concerned with short term investment. Money market instruments are
fixed income securities similar to gilt-edged securities, preference shares
and debentures. Normally, individual investors are not interested in
money market instruments as the returns on the investment are not
attractive. However, institutional investors with huge surplus funds
purchase money market securities for short term investment. A money
market instrument is a debt instrument of short period maturity. Some of
the important money market instruments are as treasury bills, money at
call and short notice, commercial papers, certificate of deposits,
commercial bills and so on. These instruments have been explained in
detail in the money market.

- 73 -
BIBLIOGRAPHY:Books referred:
Financial markets and Institution - L.M Bhole
Financial markets and services
- Gordon and Natrajan
Indian financial system
- M.Y Khan
Security analysis and portfolio

Management
- Bhandgar

- 74 -
Serial
TOPICS
Page
No.
1
no.
Introduction and structure of financial 1
2
3
4
5
6
7
8
9
10
11
system
Financial markets : Introduction
Capital market
Primary market
Secondary market
Money market
Reserve Bank of India
Securities and Exchange Board of India
Derivatives Market
Foreign Exchange Market
Financial Instruments

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4
7
15
31
38
49
53
59
66
70

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Financial markets and instruments

INTRODUCTION OF FINANCIAL SYSTEM

V.E.S college of arts, science and commerce

Financial markets and instruments

STRUCTURE OF FINANCIAL SYSTEM

Financial markets and instruments

V.E.S college of arts, science and commerce

Financial markets and instruments

V.E.S college of arts, science and commerce

Financial markets and instruments

FUNCTION OF FINANCIAL MARKETS

underdeveloped due to governmental controls and regulation. Such

Financial markets and instruments

CLASSIFICATION OF FINANCIAL MARKETS

V.E.S college of arts, science and commerce

Financial markets and instruments

Financial markets and instruments

Financial markets and instruments

V.E.S college of arts, science and commerce

Financial markets and instruments

Financial markets and instruments

The mortgages market refers to those centers which supply mortgage

Financial markets and instruments

V.E.S college of arts, science and commerce

Financial markets and instruments

development banks, Governments both central and states and other

Financial markets and instruments

V.E.S college of arts, science and commerce

Financial markets and instruments

V.E.S college of arts, science and commerce

Financial markets and instruments

Financial markets and instruments

V.E.S college of arts, science and commerce

Financial markets and instruments

Financial markets and instruments

1) Standing behind the issue:

V.E.S college of arts, science and commerce

Financial markets and instruments

Financial markets and instruments

V.E.S college of arts, science and commerce

Financial markets and instruments

MERITS OF ISSUE THROUGH PROSPECTUS:-

V.E.S college of arts, science and commerce

Financial markets and instruments

underwriting commission, legal charges, stamp duty, listing fee and

Financial markets and instruments

Financial markets and instruments

Right issue is a method of raising funds in the market by an existing

V.E.S college of arts, science and commerce

Financial markets and instruments

V.E.S college of arts, science and commerce

Financial markets and instruments

V.E.S college of arts, science and commerce

Financial markets and instruments

V.E.S college of arts, science and commerce

Financial markets and instruments

4) UNDERWRITERS AND BROKERS:-

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Financial markets and instruments

Financial markets and instruments

Growth of Capital Market

unprecedented surge in share prices and increase in activities. The market

Financial markets and instruments