indian financial systme & capital markets

8/14/2019 Indian Financial Systme & Capital Markets

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Himanshu Ahire 13

Meghana Deshpande 4

INDIAN FINANCIALSYSTEM

&CAPITAL MARKETS

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OBJECTIVES

Introduction to Indian Financial Market

Introduction to Indian Capital Market

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CONSTITUENTS OF FINANCIAL

MARKET

Credit Market

Debt Market

Money Market

Capital Market

Foreign Exchange Market

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CREDIT MARKET

Institutional Vs Non Institutional

Institutional - Banks & Non Banking e.g.Development Financial Institutions (DFI), otherfinancial Institutions ( FIs) & Non Banking FinancialCompanies ( NBFCs)

Non Institutional - money lenders, indigenousbankers.

Short Term vs Long Term

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DEBT MARKET

Government Securities

Other Securities

Government Securities -Treasury Bills , Long term Bonds

Other Securities - Privatecorporate debt,Public Sector

Undertaking (PSU) Bonds

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MONEY MARKET

Short-Term Funds

Organized vs Unorganized Sector

Examples - Certificates of Deposit (CD) [Banks],Commercial Paper [Companies], Treasury Bills[Government]

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CAPITAL MARKETS

Importance of Capital Market

Money Market & Capital Market

Short Term Vs Long Term

Lenders

Borrowers

Intermediaries

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CAPITAL MARKET STRUCTURE

Capital Market In India

GovernmentSecurities

IndustrialSecuritiesMarket

DevelopmentFinancial

Institutions(DFIs)

FinancialIntermediaries

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DEVELOPMENT FINANCIAL

INSTITUTIONS

Definition : Development Bank is a multipurposeinstitution which shares entrepreneurial risk, changesits approach in tune with the industrial climate andencourages new industrial projects to bring aboutspeedier economic growth.

First development bank Indian FinanceCorporation of India in 1948

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TYPES OF FINANCIAL ASSISTANCE

PROVIDED

Provision of rupee and foreign currency loans

Subscription to shares and debentures

Underwriting of shares and debentures

Guaranteeing of deferred payments and loans

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TYPES OF DEVELOPMENT

ACTIVITIES

Identifying industrial potential in different areas

Development of entrepreneurship through training

and motivation

Assistance in project identification

Feasibility studies and preparation of project reports

Technical and managerial consultancy

Seed/ risk capital assistance

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IDBI

IDBI established 1964. First it was wholly ownedsubsidiary of RBI now owned by Government ofIndia

IDBIsstrengths

Diversified portfolio across different industries, regionsand sectors.

Long standing business relationships with all major

industrial housesProven core competence in project financing

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IDBI

Large balance sheet and sound financials

Capacity to take large single party exposure

Capacity to leverage

Sizeable stock of cost effective, long term funds

Fairly good retail network with large investor base

Lean organization with a sizeable pool of qualified,experienced professionals

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IDBI PRODUCTS/ SERVICES:

Project finance ( New Projects)

Equipment finance ( Specific Equipments)

Venture capital fund (Innovative Products & services)

Corporate loan ( Capital Expenditure )

Working capital loan

Equipment lease ( Purchase of Equipment on lease)

Finance with medium scale industries

Bills rediscounting

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INDUSTRIAL FINANCE

CORPORATION OF INDIA

Established 1948

Activities:

Project financing Setting up new projects,expansion & diversification schemes, modernization/balancing schemes of existing projects

Financial Services Equipment finance, equipment

credit, equipment leasing, suppliers credit, buyers

credit, leasing and hire purchase concerns, corporateloans, short term loans, Working capital term loans

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ICICI BANK

Industrial Credit and DevelopmentCorporation of India Limited was merged with

ICICI Bank in 2001.

Industrial Credit and DevelopmentCorporation of India was founded in 1955 toencourage and assist industrial development andinvestment in India.

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ICICI BANK OBJECTIVE

Providing assistance in creation, expansion,modernization of industrial enterprise

Encouraging and promoting the participation ofprivate capital, both internal and external in suchenterprise

Encouraging and promoting industrial investment and

expansion of investment

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INVESTMENT INSTITUTIONS

Unit Trust of India

Public sector mutual fund established in 1964

Objective

To mobilise the savings of the community andchannelize them into productive corporate investments

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INVESTMENT INSTITUTIONS

LIC - 1956

General Insurance Corporation of India -1972

Four subsidiaries:

United India Insurance Co ltd

Oriental Fire and General Insurance Co Ltd

National Insurance Co Ltd

New India Assurance Co Ltd.

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FINANCIAL INTERMEDIARIES

Merchant Banks- New Ventures, mergers &acquisitions.

Mutual Funds

Venture Capital - Development of entrepreneurship.

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SECURITIES MARKET

Stock ExchangeType of Stock Market

Number of Stock exchanges in India

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OTCEI (OVER THE COUNTER

EXCHANGE OF INDIA)

Incorporated in 1990

Aid enterprising promoters in raising finance for new

projects in a cost effective mannerProvide investors with a transparent & efficient modeof trading.

Modeled along the lines of the NASDAQ market ofUSA

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FACTS -OTCEI

Quick Payment & Delivery of shares

Decentralized Working

Enable smaller companies to get listed - is the onlyexchange to allow listing of companies with paid-upbelow Rs.3 crores

Is the only exchange to allow companies with less than

3 year track record to tap capital market

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NATIONAL STOCK EXCHANGE OF

INDIA

Established in 1994

National wide Electronic Screen based trading system.

NEAT System ( National Exchange AutomatedTrading)

Order Based System - Time, Price & size

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NSE TYPE OF MARKET

Normal Market- Regular lot size

Odd Lot Market- odd lot size - Buy & Sell ordersshould exact match

Spot Market- same as Normal Market but hasdifferent settlement period

Auction Market- Auction in case of dispute

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SEBI

Securities & Exchange Board of India ( SEBI)

Protect Interest of Investors

Regulating stock exchanges & securities Market

Prohibiting fraudulent & unfair trade practices

Prohibiting unexpected take-overs

Investor Education

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