Professional Documents
Culture Documents
-An Overview
available
(ii) Finance: The activity by which claims to resources are either assembled
from those released by domestic savings, obtained from abroad,
or
specially created usually as bank deposits or notes and then
placed in
the hands of the investor.
(iii) Investments: The activity by which resources are actually committed to
production.
The financial system is a link between the savers (savings surplus economic
units) and the investors (savings deficit economic units). It is made up of all
those channels through which savings become available for investment.
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Financial Intermediotories
Call Market
T-Bill Market
CP-Market
Report Market
Stock Exchange
Shares, Debt
Instruments
Debentures etc.
Banks, NBFC,
MF insurance
organisations etc.
Nationalisation
RBI
1948
SBI
LIC
Banks
Development
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Institution
NCC (1968) National Credit Council to assess the demand of Credit &
determine priorities for grant of Loans, advances, investment &
requirements of priority sector (presently 40%)
Credit Guarantee Scheme (1960) for SSI Finance upto 75% of
defaulted amount or guarantee amount whichever is lower with ceiling
of Rs. 7.5 Lacs for W/Cap & Rs. 2.5 Lacs for T/L per borrower.
Commercial Banks
Continued old way of Deposit Banking & short term credit to trade
Selective Credit Control (Control through quantum, rate of interest margin etc).
Extensive Branch Expansion. (4000 in 1969 now over 5,00,000)
Refinance Facility to share risk & also cost of Banks funds (Nationalisation.
Objectives of Madame Indira Gandhi)
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LIC
Mobilised massive long term funds & single largest organisation with
large long term savings. Dominant role in underwriting issues and direct push
of industrial activities.
LIC helped in price stabilization during downswing (e.g. mid 2008 when
market faced crisis due to turmoil in global finance market).
Premium Amount (Rs. in Crs.) Rs. 87108 Crs.*
Life Insurance Policies
Nos. 5.09 Crs.
Nos. of Agents/Selling fore 10,00,000+
Rent Income
Rs. 7000 Crs. p.a.
* The largest Pvt. Sector ICICI prudential is Rs. 6813 Crs. (less than 10%)
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PROTECTION TO INVESTORS
v. Organisational Deficiencies.
Organisational Deficiencies
(i) Institutional Structure
* Banks, LIC, UTI, Collected Savings directly from investors
* DFI/PFI like IDBI, IFCI, ICICI, SFCs etc. got funds from sponsers like
RBI/GOVT.
* Term Finance moved to Big Industries
(ii)
Distributive Mechanism
FIs were incapable of handling growing needs of industries
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Privatisation of DFI
Reduction in Govt. holding & Public Participation e.g. IFCI Ltd., IDBI Ltd.,
ICICI Ltd.
Conversion into Banking / Merger into Banking Companies IDBI Bank &
ICICI Bank
Issuance of Bond by DFIs without Govt.s Guarantees to mobilise
resources.
Reduction in holding of Govt. in Banks, i.e. Public Participation / Listing
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NBFC
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Balanced Funds
Hybrid Equity Oriented
Hybrid Debt Oriented
Hybrid Asset Allocation
Hybrid Arbitrage
Bond Funds
Debt Medium Term/Short Term
Debt Medium Term/Short Term Institutional
Hybrid Monthly Income
Gilt Medium & Long Term
Debt Liquid Plus
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Primary Dealers
Money Market Mutual Funds came up
Call/Notice Market
Treasury Bills Market
Commercial Paper Market (CP)
Certificate of Deposit Market (CD)
Repo Market
FOREX Market
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CAPITAL MARKET
NSE set up as FIRST automated Exchange.(turnover now is Rs. 65000 Crs. p.d.)
Total 2500 + V-SATs in 191 cities; 1242 Members (1096 Corporates)
Depositories Promoters
Participants Centers
No. of Clients
NSSDL
IDBI, UTI, NSE, SBI etc.
282
1015
1 Cr.
CDSL
BSE, HDFC, SBI, BOI, BOB etc. 483
6469
60.37 Lacs
Custodian
OTC
Regional Stock Exchanges
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IDA
Affiliate of World Bank Soft Loan window of the Bank. Mainly for
developing & under-developed nations. Re-payment period upto 50
years Govt. & Private, both, eligible.
MIGA
(1988)
ABD
(1966)
Under the aegis of ECAFE (Economic Commission for Asia & Far East)
promote investment in Asia & Far East and also finance priority area.
Also co-ordinates with U.N. agencies.
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MONEY
STOCK
BOND
LOAN
Main Players
Commercial Banks
Corporations
Non Bank Financial Institutions.
Central Bank and other Govt. Agencies.
Venture Funds/PE Funds
Hedge Funds
University Funds
Trusts & Foundations and charitable Societies
Endowments.
HNI.
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Price Discovery
Liquidity
Cost of Transactions (saver search & information costs)
Transfer of savings from one sector to other
Reflects as Barometer for economic growth
Financial Assets
Treasury Bonds
Debt Bonus
Equity (with/without Voting Rights)
Commercial Paper/Debentures etc.
Euro & Petro Bonds.
Gold/Silver
Deep Discount Bond/Coss Border Bonds /instruments.
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July 1944
UNO
IMF
To Settle
Political
disputes/
Conflicts.
Bilateral
dialogues.
To regulate global
To promote international monetary cotrade & services.
operation, exchange stability and to
address to temporary liquidity problems
of members.
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Debt Market
Primary /
Secondary
RBI
Forex
Market
RBI
Capital Market
Primary /
Secondary &
Depository
SEBI
Insurance
Life/General
IRDA
Banks (including
RRBs, co-op etc)
RBI
Mutual Funds,
Venture Funds,
Investment
Bonds
RBI/SEBI
REGULATORY AUTHORITY
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