Indian Money Indian Money

and and
capitaI market capitaI market
Indian Money Indian Money
and and
capitaI market capitaI market
Money Market Money Market Money Market Money Market
Tho nonoy naikol is lho naikol in vhich shoil -
loin funds aio loiiovod and Ionl
Accoiding lo RI
Monoy naikol is conlio foi doaIings, nainIy of a
shoil-loin chaiacloi, in nonolaiy assols, il nools
lho shoil - loin ioquiiononls of lho loiiovois and
piovidos Iiquidily oi cash lo Iondois. Il is lho pIaco
vhoio shoil loin suipIus invoslilIo funds al lho
disposaI of lho financiaI and olhoi inslilulions and
individuaIs aio lid ly loiiovois, again
conpiising inslilulions and individuaIs and aIso
ly lho govl.
:nctions of Money Market :nctions of Money Market :nctions of Money Market :nctions of Money Market
Is pioviding vaiious kinds of ciodil insliunonls,
nonoy naikol augnonls lho suppIy of funds.
Tho officionl voiking of lho nonoy naikol hoIps
nininizo lho gIuls and sliingoncios in lho nonoy
naikol duo lo lho soasonaI vaiialions in lho fIov of
and donand foi funds.
A nonoy naikol hoIps in avoiding soasonaI
fIuclualions in inloiosl ialos.
Il onhancos lho anounl of Iiquidily avaiIalIo lo lho
oconony.
y augnonling lho suppIy of funds, a nonoy naikol
hoIps in naking funds avaiIalIo al choapoi ialos.
:nctions of Money Market :nctions of Money Market :nctions of Money Market :nctions of Money Market
Thiough lho quick liansfoi of funds fion ono pIaco lo
anolhoi, hoIps in avoiding iogionaI gIuls and
sliingoncios of funds.
y pioviding piofilalIo invoslnonl oppoilunilios foi
shoil-loin funds, hoIps in incioasing lho piofil of lho
financiaI inslilulions.
Money market Constit:ents and Instr:ments Money market Constit:ents and Instr:ments Money market Constit:ents and Instr:ments Money market Constit:ents and Instr:ments
Monoy naikol can lo cIassifiod inlo lvo lypos-
Innoi sphoios
Ouloi sphoios
Innoi sphoios incIudos lanks, nogolialIo socuiilios,
financo conpanios.
Ouloi sphoios incIudo soIicilois, liokois of socuiilios
and onliio syslon of liado and ciodil.
Tho conliaI lank, connoiciaI lank, co-opoialivo
lanks, discounl housos, aio lho nain consliluonls of
voII dovoIopod nonoy naikol.
Money market Constit:ents and Instr:ments Money market Constit:ents and Instr:ments Money market Constit:ents and Instr:ments Money market Constit:ents and Instr:ments
In dovoIoping counliios Iiko India, lho nonoy naikol
is lioadIy dividod inlo oiganizod and unoiganizod
soclois.
Chanlois of connoico, liado associalions, olc hoIp
lho snoolh and officionl funclioning of lho nonoy
naikol ly hoIping lho coIIoclion and disliilulion of
infoinalion lo indusliy, liado and connoico.
Indian Money Market
Organized Banking Unorganized Banking Sub Narkets
Sector Sector
Call Noney Narket Bill Narket 364 days CD's CP's
bill Narket (certificate of dep's)
Commercial Bills Treasury Bills
(30 days)
Instr:ments of Money Market Instr:ments of Money Market Instr:ments of Money Market Instr:ments of Money Market
CoII/Mofice money
AII calogoiios of lanks and financiaI inslilulions aio
aIIovod lo pailicipalo in caII/nolico nonoy.
Tho funds aio Ionl foi ono day oi fion Saluiday lo
Monday oi foi a poiiod of 14 days.
CommercioI 8iIIs
&sod lo faciIilalo ciodil saIos.
Can lo discounlod vilh lanks, vhon poopIo aio in
nood of funds.
Instr:ments of Money Market Instr:ments of Money Market Instr:ments of Money Market Instr:ments of Money Market
%reosury 8iIIs
!ionissoiy nolos issuod ly lho ConliaI govl. lo iaiso
shoil loin funds lo liidgo shoil loin nisnalch
lolvoon iocoipls and oxpondiluio.
CommercioI Poper
&nsocuiod pionissoiy nolos of shoil-loin naluiily of
highIy ialod conpanios, issuod lo nool voiking
capilaI ioquiiononls.
Cerfificofe of Deposifs
Inlioducod ly RI in 1989
Issuod ly lanks al a discounl and faco vaIuo is payalIo
al naluiily..
Instr:ments of Money Market Instr:ments of Money Market Instr:ments of Money Market Instr:ments of Money Market
Issuod ly lanks duiing poiiods of lighl Iiquidily.
Tho CDs aio shoil-loin doposil insliunonls foi a
poiiod ianging fion lhioo nonlhs lo ono yoai.
Indian Money Market Indian Money Market Indian Money Market Indian Money Market
Indian nonoy naikol is lioadIy dividod in lo lvo
pails -
&noiganizod soclois
Oiganizod socloi
unoiganizod socloi of nonoy conpiisos of
unioguIalod non-lank financiaI inloinodiaiios,
indigonous lanks, nonoy Iondois olc.
Tho oiganizod socloi of lho Indian nonoy naikol
conpiisos lho RI, connoiciaI lanks, foioign lanks,
co-opoialivo lanks, financo coipoialions, nuluaI
funds, discounl and financo houso of India Iinilod
CapitaI Market CapitaI Market CapitaI Market CapitaI Market
Maikol foi Iong - loin funds.
Maikol foi Iong - loin IoanalIo funds as dislincl fion
nonoy naikol vhich doaIs in shoil-loin funds.
at:re and Constit:ents at:re and Constit:ents at:re and Constit:ents at:re and Constit:ents
Consisls of a nunloi of individuaIs and Inslilulions.
Slock oxchangos, connoiciaI lanks, financiaI
inslilulions, co-opoialivo lanks, insuianco conpanios
olc. aio inpoilanl consliluonls of lho capilaI naikol.
Indian CapitaI Market Indian CapitaI Market Indian CapitaI Market Indian CapitaI Market
Consisls of
1. Oiganizod Soclois
2. &noiganizod soclois
Indiun CupituI
Murket Structure
Capital Market Capital Market
Marketable Securities Marketable Securities Non Non- -Marketing Securities Marketing Securities
Govt. Govt.
Securities Securities
Corporate Corporate
securities securities
Mutual Mutual
Funds Funds
Bonds Bonds
Banks Banks
deposits deposits
Deposits Deposits
with with
companies companies
Loans & Loans &
advances oI advances oI
bank &FI bank &FI
Post oIIice Post oIIice
Deposits & Deposits &
certiIicates certiIicates
New Issue Market New Issue Market
- - Original Original
Stock Stock
Market Market
New Issue Market New Issue Market
- - Players Players- - Issues Issues
Promoters Promoters
Associates Associates
Employees Employees
Public Public
Brokers Brokers
Jobbers Jobbers
Dealers Dealers
Merchant bankers Merchant bankers
underwriters underwriters
Ad. Agencies Ad. Agencies
Indian Capital Market Structure Indian Capital Market Structure
eveIopment of the capitaI market eveIopment of the capitaI market eveIopment of the capitaI market eveIopment of the capitaI market
Tho Indian capilaI naikol has undoigono ionaikalIo
changos in lho posl indopondonco poiiod.
Tho inpoilanl facls lhal havo conliilulod lo lho
dovoIopnonl of lho capilaI naikol in India aio-
LogisIalivo noasuios.
LslalIishnonl of dovoIopnonl lanks.
Ciovlh of undoiviiling lusinoss.
!ulIic confidonco.
Incioasing avaionoss of invoslnonl oppoilunilios.
CapilaI Maikol iofoin.
$tock Exchange $tock Exchange $tock Exchange $tock Exchange
Slock oxchango is a naikol in vhich socuiilios aio
lioughl and soId
Slock oxchango noans any lody of individuaIs
vholhoi incoipoialod oi nol, conslilulod foi lho
puiposo of assisling, ioguIaling oi conlioIIing lho
lusinoss of luying, soIIing oi doaIing in socuiilios.
:nctions of $tock Exchange :nctions of $tock Exchange :nctions of $tock Exchange :nctions of $tock Exchange
!iovidos a ioady naikol foi luying and soIIing of
socuiilios.
Diiocls fIov of capilaI in lho nosl piofilalIo channoIs.
IaciIilalos spocuIalion.
!ionolos indusliiaI giovlh and ocononic
dovoIopnonl.
!ionolos halil of savings and invoslnonl.
ow B:siness is Transacted in a stock Exchange ow B:siness is Transacted in a stock Exchange ow B:siness is Transacted in a stock Exchange ow B:siness is Transacted in a stock Exchange
A lypicaI invoslnonl liansaclion viII consisl of foui
slagos-
!Iacing an oidoi vilh a liokoi.
Lxoculion of Oidoi
Ropoiling doaI lo lho cIionl
SollIononl of liansaclions.
RoguIalion of
Slock Lxchango
$ec:rities Contracts (reg:Iation) Act 1956 $ec:rities Contracts (reg:Iation) Act 1956 $ec:rities Contracts (reg:Iation) Act 1956 $ec:rities Contracts (reg:Iation) Act 1956
SCRA onaclod in 1956, cano inlo foico on Ioliuaiy 2O,
1957.
-ecfives
To piovonl undosiialIo liansaclion in socuiilios
To ioguIalo doaIings in socuiilios
RoguIalion of slock oxchangos.
RoguIalion of luying and soIIing of socuiilios oul sido
lho Iinils of slock oxchango.
!rovisions !rovisions !rovisions !rovisions
ronf of Pecognifion
Tho Acl piovidos lhal onIy iocognizod slock oxchangos
can funclion in lho counliy.
As of loday, aII lho 23 slock oxchangos havo loon
iocognizod ly lho govl.
Tho gianl of iocognilion of lho slock oxchango shaII lo
pulIishod in lho Cazollo of India and viII cono inlo
offocl fion lho dalo of pulIicalion in lho gazollo.
!rovisions !rovisions !rovisions !rovisions
$u-mission of Pefurns
Soclion 6 of lho Acl Iays dovn lhal ovoiy slock
oxchango shaII fuinish lo lho conliaI govl. such
poiiodicaI ioluins as nay lo piosciilod ioIaling lo ils
affaiis.
Tho poiiodicaI ioluins shaII lo fiIIod ly lho iocognizod
slock oxchangos lofoio 31
sl
}anuaiy oach yoai.
!rovisions !rovisions !rovisions !rovisions
Power fo Direcf PuIes fo -e Mode or fo Moke PuIes
Soclion 8 of lho Acl onpovois lho conliaI govl. lo
diiocl lho slock oxchango lo fiano iuIos oi lo anond
iuIos aIioady nado in iospocl of lho foIIoving-
Managononl of slock oxchango
Dulios and povois of offico - oaiois
Tho piocoduio foi iogislialion
!rovisions !rovisions !rovisions !rovisions
Power fo Moke or Amend 8ye Lows
Soclion 9 of lho Acl onpovois lho iocognizod slock
oxchango lo nako lyo-Iavs foi lho ioguIalion and
conlioI of conliacls vilh lho appiovaI of lho conliaI
govl.
Soclion 1O of lho acl onpovois lho conliaI govl. lo
anond lho lyo-Iavs as fianod undoi soclion 9
!rovisions !rovisions !rovisions !rovisions
Power fo $upersede overning 8ody ond $uspend
8usiness
Soclion 11 and 15 of lho acl, onpovoi lho conliaI govl.
lo supoisodo lho govoining lody of a slock oxchango
and lo suspond lho lusinoss of a iocognizod slock
oxchango.
!rovisions !rovisions !rovisions !rovisions
Power fo Moke Lisfing of securifies CompuIsory
Soclion 21 of lho Acl onpovois lho conliaI govl. lo
nako Iisling of socuiilios ly pulIic conpanios
conpuIsoiy.
Power fo Impose PenoIfies
Soclion 23 of lho acl Iays dovn ponaIlios foi offonco
connillod ly individuaIs.
Soclion 24 of lho acl piovidos foi lho sano lul foi
offonco connillod ly conpanios.
Tho ponaIly nay incIudo inpiisonnonl foi a poiiod of
ono yoai oi fino oi lolh.
$ec:rities and Exchange Board of India $ec:rities and Exchange Board of India $ec:rities and Exchange Board of India $ec:rities and Exchange Board of India
SLI vas conslilulod in 1988 ly a iosoIulion of govl. of
India.
Il vas nado a slaluloiy lody ly lho Socuiilios and
Lxchango oaid of India Acl 1992.
-ecfives
RoguIaling lho lusinoss in slock naikols and olhoi
socuiilios naikol.
Rogisloiing and ioguIaling lho voiking of slock
liokois.
Rogisloiing and ioguIaling lho voiking of invoslnonl
schonos.
!ionoling and ioguIaling lho soIf-ioguIaloiy
oiganizalions.
!iohililing fiauduIonl and unfaii liado piaclicos
ioIaling lo socuiilios naikol.
RoguIaling sulslanliaI acquisilion of shaios and lako
ovoi of lho conpanios.
:nctions of the $EBI :nctions of the $EBI :nctions of the $EBI :nctions of the $EBI
RoguIaling lho lusinoss in slock oxchangos and any
olhoi socuiilios naikol.
Rogisloiing and ioguIaling lho voiking of coIIoclivo
invoslnonl schonos.
!ionoling and ioguIaling soIf-ioguIaloiy
oiganizalions.
Rogisloiing and ioguIaling lho voiking of slock
liokois, sul liokois, shaio liansfoi agonls, noichanl
lankois, undoiviilois, poilfoIio nanagois, invoslnonl
advisois, and such olhoi inloinodiaiios vho aio
associalod vilh socuiilios in any nannoi.
:nctions of the $EBI :nctions of the $EBI :nctions of the $EBI :nctions of the $EBI
!ionoling of invoslois oducalion and liaining of
inloinodiaiios in socuiilios naikol.
!iohililing insidoi liading in socuiilios.
RoguIaling sulslanliaI acquisilion of shaios and lako
ovoi of conpanios.
CaIIing infoinalion, undoilaking inspoclion,
conducling onquiiios and audils of lho slock
oxchangos, inloinodiaiios and soIf-ioguIaloiy
oiganizalions.
:nctions of the $EBI :nctions of the $EBI :nctions of the $EBI :nctions of the $EBI
!oifoining such funclions and oxoicising such
povois undoi lho piovisions of lho CapilaI Issuos ACT
1947, Socuiilios Conliacls (RoguIalion) Acl 1956, as
nay lo doIogalod ly lho conliaI Covl.
!oifoining such olhoi funclions as nay lo piosciilod
ly lho govl.
Trends in $tock Exchange Trends in $tock Exchange Trends in $tock Exchange Trends in $tock Exchange
nIine Purchosing
Many of lho slock oxchangos in India aulonalod lhoii
aclivilios.
Inlioduclion of LLO( Opon LIoclionic Linil Oidoi
ook Maikol Schono) nado cuslonois lo puichaso
shaios lhiough onIino.
Mofionwide Infegrofed Morkefs
alionvido inlogialion has loon nado possilIo
lhough saloIIilo connunicalions.
alionvido inlogialod naikols hoIp lho liadoi any
vhoio in India lo havo oquaI accoss lo lho naikols.
Trends in $tock Exchange Trends in $tock Exchange Trends in $tock Exchange Trends in $tock Exchange
CIeoring House fhof uoronfees fhe %rode
alionaI Socuiilios CIoaiing Coipoialion (SCC) vas
sol up on SL lo guaianloo, lho aII liado on SL
Lvoiy liado lhal lakos pIaco is fioo fion iisk
Informofion Disseminofion $ysfem
oII inlogialod infoinalion dissoninalion syslon
oslalIishod in oach slock oxchango lo givo aII slock
ioIalod infoinalion lo cuslonois.
Il slops lho oxpIoilalion of cIionls ly liokois.
Trends in $tock Exchange Trends in $tock Exchange Trends in $tock Exchange Trends in $tock Exchange
InfIow of foreign PorffoIio Invesfmenf
Iion 1993 onvaids, noaiIy $4O,OOO coio voih of
socuiilios havo loon pickod up ly foioign inslilulionaI
invoslois.
8rood -ose of Invesfing Pu-Iic
Il is a popuIai loIiof lhal invoslois incIudo onIy iich
incono cIass gioup.
Iainois, poons, diivois olc. conslilulo a najoi chunk
of invoslois.
Il is said lhal in ovoiy oighl shaiohoIdoi in oui
counliy loday, ono is fainoi
Trends in $tock Exchange Trends in $tock Exchange Trends in $tock Exchange Trends in $tock Exchange
Increose in Mo of 8rokers
In India lhoio aio aloul 3OOO liokois
Thoio aio aloul 3O,OOO sul-liokois and consuIlanls
spioad aII ovoi counliy.
$EBI and CapitaI Market Reforms $EBI and CapitaI Market Reforms $EBI and CapitaI Market Reforms $EBI and CapitaI Market Reforms
SLI in consuIlalion vilh lho govl. has lakon a nunloi
of slops lo inlioduco inpiovod piaclicos and gioaloi
lianspaioncy in lho capilaI naikols and lho hoaIlhy
dovoIopnonl of lho capilaI naikols.
Primory Morkef Peforms
Conpanios issuing capilaI in lho piinaiy naikol aio
nov ioquiiod lo discIoso aII naloiiaI facls and spocific
iisk faclois vilh lhoii piojocls.
Thoy shouId aIso givo infoinalion iogaiding lho lasis
of caIcuIalion of pioniun.
SLI inlioducod a codo of advoilisononl foi pulIic
issuos foi onsuiing faii and liulhfuI discIosuios
In oidoi lo oncouiago I!O, SLI has poinillod
conpanios lo doloinino pai vaIuo of shaios ly lhon.
SL has aIIovod issuos of I!Os lo go foi 'ook
uiIding
To ioduco lho cosl of issuo, SLI has nado
undoiviiling of issuo oplionaI.
SLI has inlioducod ioguIalions govoining sulslanliaI
acquisilion of shaios and lakoovois.
Moichanl laking has loon slaluloiiIy lioughl undoi
lho ioguIaloiy fianovoik of SLI.
SLI has advisod slock oxchangos lo anond lho Iisling
agioononl lo onsuio lhal a Iislod conpany fuinishos
annuaI slalononl lo lho slock oxchangos shoving lho
vaiialions lolvoon financiaI piojoclions and uliIizalion
of funds in lho offoi docunonls.
Thiough SLI, govl. has nov poinillod lho solling up
of piivalo nuluaI funds.
Tho govl. of India has IiloiaIizod invoslnonl noins foi
RIs so lhal RIs and ovoisoas coipoialo lodios can
luy shaios and dolonluios vilhoul piioi poinission
of RI.
$econdory morkef reforms
SLI has slailod lho piocoss of iogislialion of
inloinodiaiios, such as slock liokois and sul-liokois
undoi lho piovisions of lho Socuiilios and Slcck
Lxchango oaid Acl 1992.
SLI nado iuIos foi naking cIionl/liokoi
ioIalionships noio lianspaionl, in pailicuIaiIy
sogiogaling cIionl and liokoi accounls.
SLI has nolifiod ioguIalions on insidoi liading undoi
lho piovisions of SLI Acl.
Sinco 1992, SLI has conslanlIy ioviovod lho
liadilionaI liading syslons in Indian Slock Lxchangos.
To nako lho govoining lodios of slock oxchangos, lho
govoining lody of slock oxchangos shouId havo 5
oIoclod nonlois, nol noio lhan 4 nonlois noninalod
ly lho govl. oi SLI and 3 oi fovoi onlois noninalod
as pulIic iopiosonlalivos.
Tho govl. has aIIovod foioign inslilulionaI invoslois
(IIIs) such as ponsion funds, nuluaI funds,
invoslnonl liusls, poilfoIio nanagononl conpanios
olc. lo invosl in lho Indian capilaI naikol piovidod
lhoy aio iogisloiod vilh SLI.
To piovonl oxcossivo spocuIalion in lho slock naikol,
SLI has inlioducod ioIIing sollIononls foin }uIy 2,
2OO1.