Financial system in india/ Babu,G.Ramesh

UNIT1
Indian Financial System
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1. Introduction
• Introduction
• Money
• Functions of Money
n Characteristics of Money
• Money Supply
• Prices and Money Management
• Prices
n Average Annual Trends in WPI Inflation
n Recent Monthly Trends in WPI Inflation
n Disaggregated Analysis of WPI Average Inflation
n Food Inflation in CPIs and WPI
n Inflation
n Anti-Inflationary Measures
• Monetary Developments During 2009-10
n Trends in Monetary Aggregates
n Money Market
n Certificates of Deposit
n Commercial Paper
n Treasury Bills (T-bills)
n Quarterly Reviews
n Challenges and Outlook
• Credit ••
• Finance
• Risk
n Finding Environmental and Other Risk
• Key Terms
• Summary
• Questions
2. Savings and Investment
Nature and Role of Financial System
Savings and Investments
Small Savings Schemes of the Government of India
Introduction
Objective
Operating Agencies
Promotion
Institutional Investment in Small Savings Schemes
NRIs' Investment in Small Savings Schemes
Current Small Savings Schemes with Main Features
Interest Rate
Market Interest Rates
Risk
Money and Inflation
Case Study: State of the Economy and Prospects
Economic Growth During 2009-10
Quarterly Trend
Per Capita Growth
Aggregate Demand and its Composition
'roduction and Supply
Industry and Infrastructure
Service Sector
Savings and Investments
Behaviour of Prices and Inflation
External Sector Developments
BOP Developments in HI 2009-10
Trade
Conduct of Monetary Policy
ase Study: Micro-Foundations of Inclusive Growth
Development and Distribution
The Challenge of Poverty
Universal Identification System
Subsidies and Development
Labour Regulation, Wages and Employment
A Family of Inflations and Food-Sector Interventions
Social Norms, Culture and Development
A Miscellany of Concerns ^
Case Study: Fiscal Developments and Public Finance
Central Government Finances
Budgetary Developments in 2009-10
Direct Taxes
Direct Taxes Code
Expenditure Trends
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Interest Payments
-Subsidies
Supplementary Demand for Grants
Central Plan Outlay
Government Debt
Economic and Functional Classification
Fiscal Outcome
The Report of the Thirteenth Finance Commission (TFC)
Collection Rates
Performance of the Departmental Enterprises of the Central
Government
n Department of Posts
n Broadcasting .>■
• Finances of State Governments • -."i' •
■ State-Level Reforms \\ " v ■
■ Value Added Tax ■ / i
■ Central Sales Tax Reforms
■ GST . . .
■ GST Rate Structure
■ Consolidated General Government
■ Outlook *
• Key Terms '• " ■
Summary
• Questions
3. Monetary Policy i>
• An Overview m
• The Theory . »
• The History of Monetary Policy " '
■ Trends in Central Banking » 'i, < *
■ Developing Countries \ ■'
m Types of Monetary Policy .Ibnl ni innr-ir , ■ : i
■ Inflation Targeting \ ,, ,,,,
■ Gold Standard ,,
■ Policy of Various Nations \
m Monetary Base , , , • ,
■ Reserve Requirements f . ^
■ Discount Window Lending
• Case Study: Monetary Policy 2010-11 »
■ Policy Stance
■ Other Development and Regulatory Policies
• Key Terms
• Summary ' -
• Questions
4. Banking System In India
• History of Banking in India
n Nationalisation of Banks in India
n Scheduled Commercial Banks in India
n Banks in India
n Guidelines Related to Banking System
n Liquidity Risk Management
n Currency Risk
n Interest Rate Risk (IRR)
Appendix-!: Maturity Profile—Liquidity
• Heads of Accounts Classification into Time Buckets
n Outflows
n Inflows
n Contingent Liabilities/Lines of Credit committed/available and
other Inflows/Outflows
n Financing of Gap
Appendix-ll: Interest Rate Sensitivity
• The Rate sensitivity of Heads of Accounts and Time Bucket
n Assets
Annexure-I: Name of the Bank ^
• Residual Maturity
n Total Outflows-Inflows
Annexure I: Name of the Bank
n Outflows
n Total Outflows
• Key Terms
• Summary
• Questions > ,
5. Financial Sector Reforms in India
• Conclusions
• Key Terms
n Functions of Financial Institutions
n Industrial Development Bank of India
n Industrial Finance Corporation of India
Unit 2
Financial Markets in India
6. Financial Markets
• Functions of Financial Markets
n Efficiency
n Financial Market Reports
n Fundamental Analysis
n Technical Analysis
n Financial Market Crash
n Classification of Financial Markets
Bank Credit
n Interest Rates
Sectoral Deployment of Credit
n Priority-sector Lending
n Rural Infrastructure Development Fund (RIDF)
Agricultural Credit
Initiatives for the Agricultural Sector
n Enlargement of the scope of KCC
n Crop Insurance on KCC
Micro Finance , . ^
Financial Performance of Banks n i' i n
n Capital Adequacy Ratio
n Technological Developments in Banks 'J"'
Non-Banking Financial Institutions (NBFIs) " n
Financial Institutions (FIs)
Non-Banking Financial Companies (NBFCs)
Capital and Commodity Markets '
n Capital Market
n Debt Market
Commodity Futures Market
n Regulation and Development of Commodity Futures Markets
Insurance and Pension Funds
n Insurance Penetration
n Challenges and Outlook
Key Terms
Summary
Questions
7. Money Market ' ;'
• Definitions of Money Market ' '
• Functions of Money Market
• Differences between Money & Capital Markets '' '
n Objective of Money Market
n Characteristic Features of a Developed Money Market '
n Importance of Money Market
• Call Money Market > P'
n Introduction
n Advantages of Call Money Market
n Call Market Operations
n Participants
n Geographical Location
n Turnover of the Call Market
• Commercial Bill Market
Introduction
• Treasury Bills Market
n History of Treasury Bills
n Definitions
n The Characteristics of Treasury Bills
n Merits of Treasury Bills
n Demerits of Treasury Bills
• Certificate of Deposit
n Definition
n The Characteristics of CD
• Commercial Paper
n Definition
n Bankers Acceptance
Annexure
• Definitions
• Key terms
• Summary
• Questions "
Primary Market
n Objectives of Capital Issues
n SEBI Guidelines
n SEBI Guidelines
• The Gazette of India Extraordinary
• Securities and Exchange Board of India
• Notification
• Chapter I: Preliminary
n Definitions
• Chapter II: Common Conditions for Public Issues and Rights Issues
• Chapter III: Provisions as to Public Issue
n Part II—Pricing in Public Issue
n Part III—Promoters' Contribution
n Part IV—Restriction on Transferability (Lock-in) of Promoters'
Contribution, etc.
n Part V—Minimum offer to Public, Reservations, etc.
• Chapter IV: Rights Issue
• Chapter V: Manner of Disclosures in the Offer Documents
• Chapter VI: General Obligations of Issuer and Intermediaries with
Respect to Public Issue and Rights Issue
• Chapter VII: Preferential Issue
• Chapter VIII: Qualified Institutions Placement —
Chapter IX: Bonus Issue
Chapter X: Issue of Indian Depository Receipts
Chapter XA: Issue of Specified Securities by Small and
Medium Enterprises
Chapter XI: Miscellaneous
Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009, Schedule I
Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009, Schedule II
Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009, Schedule III
Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, Schedule IV, Fees to be
Paid along with Offer Document
Part A: Fees to be Paid along with Draft Offer Document or in Case of
A Fast Track Issue, along with Offer Document
Part B: Fees to be Paid along with Updated Offer Document
Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, Schedule V, Manner
of Submission of Soft Copy of Draft Offer Document and Offer
Document to the Board
Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, Schedule VI, Formats '
of Due Diligence Certificates Form A Format of Due Diligence
Certificate to be Given by Merchant Banker along with Draft Offer
Document
Form B: Format of Due Diligence Certificate to be Given by
Debenture Trustee Along With Draft Offer Document
Form C. Format of Due Diligence Certificate to be Given by Merchant
Banker at the Time of Registering Offer Document with the Registrar
of Companies/Filing Letter of Offer with the Designated Stock Exchange
Form D: Format of Due Diligence Certificate to be Given by Merchant
Banker Immediately before Opening of the Issue
Form E: Format of Due Diligence Certificate to be Given by Merchant
Banker After Opening of the Issue but Before Closure of Subscription
Form F: Additional Confirmations/Certification to be Given by '
Merchant Banker in Due Diligence Certificate to be Given along with
Offer Document for Fast Track Issue
Form G: Format of Due Diligence Certificate to be Given by
Merchant Banker Along With Final Post-Issue Report
Form H: Additional Confirmations/Certification to be Given by
Merchant Banker in Due Diligence Certificate to be Given along with
Offer Document Regarding SME Exchange
Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009, Schedule VII, Nature of Updation/
Changes in the Offer Document and Consequent Steps therein
Requiring Filing of Updated Offer Document
• Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009, Schedule VIII, Disclosures in Offer
Document, Abridged Prospectus and Abridged Letter of Offer
Part A
n Instructions
n Front Cover Pages
n Back Cover Pages
n Green Shoe Option, if Applicable
n Capital Structure
n Share Premium Account (before and after the issue)
• Part B: Certain Disclosures Not Mandatory in Case of Fast Track
Public Issue
• Part C; Certain Disclosures Not Mandatory in Case of Further
Public Offer
• Part D: Disclosures in Abridged Prospectus
• Part E: Disclosures in Letter of Offer
• Part F; Disclosures in Abridged Letter of Offer
• Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, Schedule IX
• Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, Schedule X
• Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, Schedule XI, Book
Building Process-Part A
• Part B; Format of Bid Data Displayed on Stock Exchange
(Name of the Issue)—Bid Details
• Part C: Illustration Regarding Allotment to Qualified Institutional
Buyers Other Than Anchor Investors
• Part D: Alternate method of Book Building
• Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, Schedule XII
Format of Report for Green Shoe Option
• Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, Schedule XIII
Formats of Advertisements for Public Issue
• Part A; Format of Pre-Issue Advertisement for Public Issue
(Fixed Price/Book Built)
n The Issue
n Proposed Listing
n Lead Merchant Bankers/Book Running Lead Merchant Bankers/
Cobook
n Compliance Officer of The Issuer
n Availability of Prospectus
Part B: Format of Issue Opening Advertisement for Public Issue
(Fixed Price/Book Built)
n The Issue
n Proposed Listing
n Availability of Application Forms
n Availability of Prospectus
Part C: Format of Issue Closing Advertisement for Public Issue
(Fixed Price/Book Built)
n The Issue
n Proposed Listing
n Availability of Application Forms
n Availability of Prospectus
Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, Schedule XIV
Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, Schedule XV
Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, Schedule XVI
Formats of Post-Issue Reports
Part A: Format of Initial Post-Issue Report for Public Issue
Part B: Format of Initial Post-Issue Report for Rights Issue
Part C: Format of Final Post-Issue Report for Public Issue
(I) In Case of Subscribed Issue
(II) In Case of Undersubscribed Issue
Part D: Format of Final Post-Issue Report for Rights Issue
(I) In Case of Subscribed Issue
(II) In Case of Undersubscribed Issue
Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, Schedule XVII
Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, Schedule XVIII
Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, Schedule XIX
Part A: Disclosures in Prospectus for Issue of Indian Depository
Receipts
Part B: Disclosures in Abridged Prospectus for Issue of Indian
Depository Receipts
Part C: Format of the Due Diligence Certificate to be Filed by
the Lead Manager for IDR Issues
Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, Schedule XX
Securities and Exchange Board of India (Merchant Bankers) —
Regulations, 1992, Schedule IV
• Key Terms
• Summary
• Questions
9. Secondary Market
• Origin and Growth
n Securities Contracts Regulation Act, 1956
n The Companies Act, 1956
n The Income Tax Act, 1961
n Foreign Exchange Regulation
n Definitions
n Functions of Stock Exchange
n Classification of Securities Listed in Stock Exchange
• The Bombay Stock Exchange
n The Growth of Bombay Stock Exchange
n BOLT
n Listing
n Listed Securities
n Permitted Securities
n Tick Size
n Computation of Closing Price of Scrips
n Basket Trading System
• Settlements
n Risks
• National Stock Exchange
n Promoters
n Structure
n Wholesale Debt Segment
• National Stock Exchange of India Limited
• Arrangement of Chapters
n Suspension and Expulsion
• National Stock Exchange of India Limited
• Arrangement of Chapters
n Definitions
• Chapter I: Trading Segments
• Chapter II: Executive Committee
n Indices
n New Membership x
n Admission of a New Member in NSE
n Recent Developments
• National Securities Clearing Corporation Ltd.
n Partners
• Securities and Exchange Board of India
n Objectives of the SEBI n ,
n Powers of the SEBI .. »i' •
n Powers of SEBI
n Delegation of Powers
n Powers to Make Rules
n Powers of Making Regulations
n Organisation of the SEBI
n Licensing Authority
n Primary Markets
n Secondary Market
n Factors to be considered for Investment in Primary Market
n SEBI Guidelines
n Reforms in Primary Markets
n Reforms in Secondary Markets v\
n SEBI Guidelines to Capital Markets ^ .
The Gazette of India Extraordinary
Securities and Exchange Board of India
Notification
Key Terms
Summary
Questions
UNIT 3 ;
Financial Services in India . , a
10. Financial Services in India *
• Meaning of Financial Services
• Objectives of Financial Services i ftw.i
• Mobilisation of Resources ' 'i . :, •
n Parking of Resources - iM
n Skilful Services s,. > . Vt
n Economic Stability n i i Ut »
• Regulation mI »
n Classification of Financial Services ' n .■
• Scope of Financial Services ■ u r j . ■ s
■ Traditional Approach ■ > ■■
■ Modem Approach ■ ■ , t, «
• Key Terms " .
• Summary
• Questions
V
11. Merchant Banking
• Introduction
• Origin of Merchant Banking
• Definition of Merchant Banking
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• Main Objectives of a Merchant Banking Company
n Merchant Banking in India
n Activities/Services rendered by Merchant Banks
n Guidelines of the SEBI
• Key Terms
• Summary
• Questions
12. Credit Rating
• Introduction
• Definition
n ( a) To the Investors
n ( b) To the Borrowers
n ( c) To the Government
n ( d) To the Credit Rating Companies
• Types of Credit Rating
Limitations of Ratings
Scope of Credit Rating
Objectives of the Credit Rating
• Credit Rating Process
• Credit Rating Agencies in India
n CRISIL
n Investment Information and Credit Rating Agency of India (ICRA)
n Credit Analysis and Research Ltd. (CARE)
• Key Terms
• Summary
• Questions
13. Credit Cards
• Introduction
• Process of Credit Card Business Cycle
• Benefits of Credit Card
n Benefits of the Cardholders
n Benefits to the Issuers
n Privileges and Additional Facilities
n Types of Credit Cards
n Credit Cards in India
n Modern Trends in the Payment Business v
n ATM
• Key Terms
• Summary
• Questions
14. Housing Finance
• Institutional Framework —
• Objectives and Business
• Housing Finance Scheme "
n Home Loan Account NHB -<
n HDFC Schemes '
n Lie Housing Schemes r
n GIC Housing Finance *
n Can Financial Homes Ltd. •
n SBI Home Finance *
n Commercial Bank Scheme -4
n Housing and Urban Development Corporation •
n State Housing Finance Societies ,•
• Key Terms u 1 <•
• Summary n '•'.i-: ''"- •
• Questions ^ -i «
15. Mutual Funds / . ' ' ' "
• Definition '
• Advantages
n Low Transaction Cost , '
n Benefits of High Talent Expertism *
n Diversification '
n Tax Deductions " ' ' "
n Low Risk and Better Returns n n
n Investor's Protection . " ^
n Mutual Funds in India '
• Mutual Funds by Category '
• Mutual Funds by Schemes '
• Funds Flow by Category
• Funds Flow by Type
• Investment Trust
• Investment Trust in India *
• Organization .1' . iM n
• Organization Structure of Mutual Fund , *
n Ownership Status
n Scheme of Operation
n Portfolio Basis ^
n Based on Location '
n Other Types
• Objectives of a Mutual Fund H -v
• Importance of Mutual Fund
• Regulatory Framework
• Registration of Mutual Fund
n Regulation (5)
n Regulation (6)
n Regulation (7) _ "
n Regulation (8)
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