INDIAN FINANCIAL SYSTEM & CAPITAL MARKETS

Himanshu Ahire 13 Meghana Deshpande 4

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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), other financial Institutions ( FI’s) & Non Banking Financial Companies ( NBFC’s) Non Institutional - money lenders, indigenous bankers. Short Term vs Long Term

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DEBT MARKET
Government Securities Other Securities Government Securities Treasury Bills , Long term Bonds Other Securities - Private corporate 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

Development Financial Institutions (DFIs)

Financial Intermediaries

Government Securities

Industrial Securities Market

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DEVELOPMENT FINANCIAL INSTITUTIONS

Definition : Development Bank is a multipurpose institution which shares entrepreneurial risk, changes its approach in tune with the industrial climate and encourages new industrial projects to bring about speedier economic growth. First development bank – Indian Finance Corporation 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 owned subsidiary of RBI – now owned by Government of India IDBI’s strengths Diversified portfolio across different industries, regions and sectors. Long standing business relationships with all major industrial houses Proven 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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SUBSIDIARY ORGANISATIONS OF IDBI

SIDBI ( Small Scale Industry) IDBI Capital( A Stock Brooking) IDBI Bank ( Universal Bank) INTECH ( IT related Services)

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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, supplier’s credit, buyer’s credit, leasing and hire purchase concerns, corporate loans, short term loans, Working capital term loans
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ICICI BANK
Industrial Credit and Development Corporation of India Limited was merged with ICICI Bank in 2001. Industrial Credit and Development Corporation of India was founded in 1955 to encourage and assist industrial development and investment in India.

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ICICI BANK OBJECTIVE

Providing assistance in creation, expansion, modernization of industrial enterprise Encouraging and promoting the participation of private capital, both internal and external in such enterprise 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 and channelize 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 Exchange Type 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 manner Provide investors with a transparent & efficient mode of trading. Modeled along the lines of the NASDAQ market of USA

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FACTS -OTCEI
Quick Payment & Delivery of shares Decentralized Working Enable smaller companies to get listed - is the only exchange to allow listing of companies with paid-up below 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 Automated Trading) Order Based System - Time, Price & size

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NSE - OBJECTIVES
Nation Wide Trading facility for equities , debts & hybrids Equal access to investors across Country Provide fairness, efficiency & transparency Meet International securities standard. Shorter settlement cycle

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NSE TYPE OF MARKET

Normal Market - Regular lot size Odd Lot Market - odd lot size - Buy & Sell orders should exact match Spot Market - same as Normal Market but has different 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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THANK YOU

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