Unit 3

Syllabus
UNIT I: Structure of Indian financial system (6 Hours)

• Structure of Indian financial system: An overview. Theories
of the Impact of financial development and savings; Prior
saving theory, Credit creation Theory, Theory of forced
savings, Financial regulation theory, Financial liberation
Theory.
UNIT II: RBI & Financial Institutions (10 Hours)
• Reserve Bank of India: organization, management and
functions, Recent monetary policy of RBI, Commercial banks:
meaning, functions, present structure, types, e-banking and
recent developments in commercial banking, NBFC, Sectorial
financial institution NABARD, Exim Bank and PFC
03/19/2024 Faculty Name: Iftikhar Baig Subject code and abbreviation: AMBA FM0313 IFMS) 1
Unit Number::III
Syllabus
UNIT III: Indian Financial Markets (8 Hour)
• Money market: meaning, constituents, functions of money
market, Money market instruments: call loans, treasury bills,
certificates of deposits, commercial bills, trade bills, Recent
trends in Indian money market, Capital market: primary and
secondary markets, their role recent developments, Government
securities market, SEBI: objectives and functions.
UNIT IV: Microfinance Development (8 Hours)
• Overview of micro finance; Types of micro finance; Income
generating activities and Micro Enterprise Market (demand)
analysis, Technological analysis, Socioeconomic analysis,
Environmental analysis. Logical framework, Implementation &
Monitoring Credit Delivery Methodology; Strategic Issues in
Microfinance: Sustainability.
Unit Number::III
Syllabus
UNIT V: Principles and Practice of Insurance (7 Hours)

• Principles and Practice of Insurance-Introduction to Risk and
Insurance, Types of Insurance-General and Life, Basic
principles of General and Life Insurance, Insurance contracts-
Regulations on investments (IRDA), Costing and pricing of
insurance products, Insurance Premiums & Riders, maturity
& Claims.
Unit Number::III
Money Market
• Meaning of Money Market:

• Money market is a market for short-term funds. We define the
short-term as a period of 364 days or less. In other words, the
borrowing and repayment take place in 364 days or less.
• The manufacturers need two types of finance: finance to meet
daily expenses like purchase of raw material, payment of wages,
excise duty, electricity charges etc., and finance to meet capital
expenditure like purchase of machinery, installation of pollution
control equipment etc.
Faculty Name: Iftikhar Baig Subject code and abbreviation: AMBA FM0313 IFMS) Unit Number::III
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Features and Objectives of Money Market
• Features and Objectives of Money Market:

1. Money market has no geographical constraints as that of a stock
exchange. The financial institutions dealing in monetary assets
may be spread over a wide geographical area.
2. Even though there are various centers of money market such as
Mumbai, Calcutta, Chennai, etc., they are not separate
independent markets but are inter-linked and interrelated.
3. It relates to all dealings in money or monetary assets.
4. It is a market purely for short-term funds.
03/19/2024 Faculty Name: Iftikhar Baig Subject code and abbreviation: AMBA FM0313 IFMS) Unit Number::III 5
Features and Objectives of Money Market
5. It is not a single homogeneous market. There are various sub-

markets such as Call money market, Bill market, etc.
6. Money market establishes a link between RBI and banks and
provides information of monetary policy and management.
7. Transactions can be conducted without the help of brokers.
8. Variety of instruments are traded in money market.
Objectives of Money Market
Objectives of Money Market:
1. To cater to the requirements of borrowers for short term
funds, and provide liquidity to the lenders of these funds.
2. To provide parking place for temporary employment of surplus
fund.
3. To provide facility to overcome short term deficits.
4. To enable the central bank to influence and regulate liquidity
in the economy.
5. To help the government to implement its monetary policy
through open market operation.
Structure of Indian Money Market
• Structure of Indian Money Market:

• (i) Broadly speaking, the money market in India comprises
two sectors- (a) Organised sector, and (b) Unorganised sector.
• (ii) The organised sector consists of the Reserve Bank of India,
the State Bank of India with its seven associates, twenty
nationalised commercial banks, other scheduled and non-
scheduled commercial banks, foreign banks, and Regional
Rural Banks.
• It is called organised because its part is systematically
coordinated by the RBI.
• (iii) Non-bank financial institutions such as the LIC, the GIC

and subsidiaries, the UTI also operate in this market, but only
indirectly through banks, and not directly.
• (iv) Quasi-government bodies and large companies also make
their short-term
(vi) The unorganised sector consists of indigenous banks and

money lenders. It is unorganised because activities of its parts are
not systematically coordinated by the RBI.
(vii) The money lenders operate throughout the country, but
without any link among themselves.
(viii) Indigenous banks are somewhat better organised because
they enjoy rediscount facilities from the commercial banks which,
in turn, have link with the RBI. But this type of organisation
represents only a loose link with the RBI.
Daily Quiz
1. Every financial market has the following characteristic:
A) It determines the level of interest rates. B) It allows common stock
to be traded. C) It allows loans to be made. D) It channels funds
from lenders-savers to borrowers-spenders.
2. Financial markets have the basic function of
A) bringing together people with funds to lend and people who want to
borrow funds. B) assuring that the swings in the business cycle are less
pronounced. C) assuring that governments need never resort to
printing money.
3. Which of the following can be described as involving direct
finance?
A) A corporation’s stock is traded in an over-the-counter market.
B) People buy shares in a mutual fund. C) A pension fund manager buys
commercial paper in the secondary market. D None of the above.
Daily Quiz
4. Define banks.
5. Define banker.
6. Discuss investors
7. Define financial transaction.
8. Discuss financial assets.
9. Explain clearing house.
10. Discuss savings.
Summary
• We have covered the following topics in this unit:

• Money Market
• Objectives of Money Market
• Structure of Indian Money Market
Prerequisite and Recap
• Money Market
• Objectives of Money Market
• Structure of Indian Money Market
Topic Mapping with course outcomes
Mapping
Unit- So. Topic Course Level
III No. Outcomes
1 Constituents of Indian CO3 High

III Money Market CO4 Medium
Unorganized Sector
2 Organized Sector CO3 High
Commercial Bill CO4 Medium
Market
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Objectives of topic/Session
• Students will be able to know the following concepts:

• Constituents of Indian Money Market
• Unorganized Sector
• Organized Sector
• Commercial Bill Market
Faculty Name: Iftikhar Baig Subject code and abbreviation: AMBA FM0313 IFMS) Unit
03/19/2024 16
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Constituents of Indian Money Market
• Constituents of Indian Money Market:

• Money market is a centre where short-term funds are supplied
and demanded. Thus, the main constituents of money market
are the lenders who supply and the borrowers who demand
short-term credit.
• I. Supply of Funds:
• There are two main sources of supply of short-term funds in
the Indian money market:
• (a) Unorganised indigenous sector, and
• (b) Organised modern sector.
• (i) Unorganized Sector:

• The unorganised sector comprises numerous indigenous
bankers and village money lenders. It is unorganized because
its activities are not controlled and coordinated by the Reserve
Bank of India.
• (ii) Organized Sector:
• The organized modern sector of Indian money market
comprises:
• (a) The Reserve Bank of India;
• (b) The State Bank of India and its associate banks;
• (c) The Indian joint stock commercial banks (scheduled and
non-scheduled) of which 20 scheduled banks have been
nationalised.
• II. Demand for Funds:
• In the Indian money market, the main borrowers of short-term
funds are: (a) Central Government, (b) State Governments, (c)
Local bodies, such as, municipalities, village panchayats, etc.,
(d) traders, industrialists, farmers, exporters and importers,
and (e) general public.
• Sub-Markets of Organised Money Market:

The organised sector of Indian money market can be further
classified into the following sub-markets:
• A. Call Money Market:
• The most important component of organised money market is
the call money market. It deals in call loans or call money
granted for one day. Since the participants in the call money
market are mostly banks, it is also called interbank call money
market.
• The banks with temporary deficit of funds form the demand
side and the banks with temporary excess of funds form the
supply side of the call money market.
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The main features of Indian call money market
• The main features of Indian call money market are as follows:
• (i) Call money market provides the institutional arrangement
for making the temporary surplus of some banks available to
other banks which are temporary in short of funds.
• (ii) Mainly the banks participate in the call money market. The
State Bank of India is always on the lenders’ side of the
market.
• (iii) The call money market operates through brokers who
always keep in touch with banks and establish a link between
the borrowing and lending banks.
• (iv) The call money market is highly sensitive and competitive
market. As such, it acts as the best indicator of the liquidity
position of the organised money market.
Treasury Bill Market
• B. Treasury Bill Market:
• The treasury bill market deals in treasury bills which are the
short-term (i.e., 91, 182 and 364 days) liability of the
Government of India. Theoretically these bills are issued to
meet the short-term financial requirements of the government.
• But, in reality, they have become a permanent source of funds
to the government. Every year, a portion of treasury bills are
converted into long-term bonds. Treasury bills are of two
types: ad hoc and regular.
• Ad hoc treasury bills are issued to the state governments,
semi- government departments and foreign central banks.
They are not sold to the banks and the general public, and are
not marketable.
Commercial Bill Market
C. Commercial Bill Market:
• Commercial bill market deals in commercial bills issued by
the firms engaged in business. These bills are generally of
three months maturity. A commercial bill is a promise to pay a
specified amount in a specified period by the buyer of goods
to the seller of the goods.
• The seller, who has sold his goods on credit draws the bill and
sends it to the buyer for acceptance. After the buyer or his
bank writes the word ‘accepted’ on the bill, it becomes a
marketable instrument and is sent to the seller.
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Collateral Loan Market
D. Collateral Loan Market:
• Collateral loan market deals with collateral loans i.e., loans
backed by security. In the Indian collateral loan market, the
commercial banks provide short- term loans against
government securities, shares and debentures of the
government, etc.
E. Certificate of Deposit and Commercial Paper Markets:
• Certificate of Deposit (CD) and Commercial Paper (CP)
markets deal with certificates of deposit and commercial
papers. These two instruments (CD and CP) were introduced
by Reserve Bank of India in March 1989 in order to widen the
range of money market instruments and give investors greater
flexibility in the deployment of their short-term surplus funds.
Daily Quiz
printing money.
finance?
Daily Quiz
4. Define banks.
5. Define banker.
Summary
• We have covered the following topics in this lecture:


Mapping
III No. Outcomes
1 Participants in money CO3 High

market
III CO2 Medium
Measures to improve
Indian money market
2 Primary market CO3 High
Rights issue CO4 Medium
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• Participants in money market
• Measures to improve Indian money market
• Primary market
• Rights issue
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Number::III
Participants in Money Market
A large number of borrowers and lenders make up the money
market.
• Some of the important players are listed below:
• 1. Central Government:
• Central Government is a borrower in the money market
through the issue of Treasury Bills (T-Bills). The T-Bills are
issued through the RBI. The T-Bills represent zero risk
instruments. They are issued with tenure of 91 days (3
months), 182 days (6 months) and 364 days (1 year).
• 2. Public Sector Undertakings:
• Many government companies have their shares listed on stock
exchanges. As listed companies, they can issue commercial
paper in order to obtain its working capital finance. The PSUs
are only borrowers in the money market.
• 3. Insurance Companies:
• Both general and life insurance companies are usual lenders in
the money market. Being cash surplus entities, they do not
borrow in the money market. With the introduction of CBLO
(Collateralized Borrowing and Lending Obligations), they
have become big investors. In between capital market
instruments and money market instruments, insurance
companies invest more in capital market instruments.
• 4. Mutual Funds:
• Mutual funds offer varieties of schemes for the different
investment objectives of the public. There are many schemes
known as Money Market Mutual Fund Schemes or Liquid
Schemes. These schemes have the investment objective of
investing in money market instruments.
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• 5. Banks:
• Scheduled commercial banks are very big borrowers and
lenders in the money market. They borrow and lend in call
money market, short-notice market, repo and reverse repo
market.
• They borrow in rediscounting market from the RBI and IDBI.
They lend in commercial paper market by way of buying the
commercial papers issued by corporates and listed public
sector units.
6. Corporates:
• Corporates borrow by issuing commercial papers which are
nothing but short-term promissory notes. They are issued by
listed companies after obtaining the necessary credit rating for
the CP.
• They also lend in the CBLO market their temporary surplus,
when the interest rate rules very high in the market.
• CBLO- Collateralized Borrowing and Lending Obligation is an

RBI-approved Money Market instrument for its eligible
participants. CBLO is a discounted Instrument available in
electronic form. CBLO is Conceived and Developed by CCIL. It
is hosted and Developed by Clearcorp Dealing System limited
(CDSL) which is a fully owned subsidiary of CCIL.
• What does CBLO facilitate?
• CBLO facilitates borrowing and Lending for various tenors,
from overnight to maximum of one year in a fully
collateralized environment. ( This means lending money by
accepting securities ).
• Eligible Securities:- Central Government Securities like
Treasury bills as specified by CCIL from time to time.
• Who are the participants
• Any entity interested to participate in CBLO should have a
prior Registration. The entities who have no access or
restricted access to the inter-bank call-money market and
institutions who have access can participate in this
Nationalized Banks
• NBFCs
• Private Banks
• Foreign Banks
• Financial Institutions
• Insurance Companies
• Co-Operative Banks
• Insurance Companies
• Mutual Funds
• Primary Dealers
• Corporate
• Provident/ Pension funds etc..,
• How does it Work??
• In this arrangement of CBLO members who are having excess
funds can lend their funds and gain interest. Members who
are in need of funds can borrow funds by depositing the
prescribed securities like treasury bills(in the custody of CCIL).
Thus the lending is done in a collateralized environment.
• Members willing to lend their funds or money should submit

their bids in the CBLO auction market which is open from
11.15 AM to 12.15 PM. The bid must include the amount and
the rate of interest.
• Lenders can edit or cancel their bid at any time during the
open session, But borrowers cannot edit their CBLO offers.
After the auction time closed, CBLO bids and offers in the
system are matched and notify the successful borrowers and
lenders. The minimum bid size is Rs.50 Lakhs and multiple lot
size of Rs.5 Lakhs.
• Thus we can say that CBLO is not opened to the public.
Measures to Improve Indian Money Market
• Measures to Improve Indian Money Market:

Suggestions to Remove Defects:
In a view of the various defects in the Indian money market,
the following suggestions have been made for its proper
development:
• (i) The activities of the indigenous banks should be brought
under the effective control of the Reserve Bank of India.
• (ii) Hundies used in the money market should be standardised
and written in the uniform manner in order to develop an all-
India money market,
• (iii) Banking facilities should be expanded especially in the
unbanked and neglected areas,
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Number::III
Primary market
• PRIMARY MARKET
• . Primary Market also known as NEW ISSUES MARKET
(NIM) is a market for raising fresh capital in the form of
shares and debentures. Corporate enterprises, which are
desirous of raising capital funds through the issue of
securities , approach the primary market. Issuers exchange
financial securities for long term funds.
• The primary market allows for the formation of capital in the
country and the accelerated industrial and economic
development.
• It refers to the set-up which helps the industry to raise the
funds by issuing different types of securities.
Primary market
• Primary Market
Source: www.google.com
Modes of raising capital
• Modes of raising capital
• Public issue- Where the securities are issued to the members of
the general public, it takes the form of “Public Issue”. It is the
most popular method of raising long term funds.When a
company makes public issue of shares for the first time, it is
called Initial public
• E-IPO- The companies are now allowed to issue capital
to the public through the on-line system of the stock exchanges.
For making such on-line issues, the companies should comply
with the provisions contained in Chapter 11A of
SEBI( Disclosure and Investor Protection) Guidelines, 2000.
Modes of raising capital
BOOK BUILDING/PRICE BAND
•It is a process used for marketing a public offer of equity
shares of a company.
• Book building is a process wherein the issue price of a
security is determined by the demand and supply forces in
the capital market
• Rights Issue
• Private Placement
Daily Quiz
printing money.
finance?
Daily Quiz
4. Define banks.
5. Define banker.
Summary

• Primary market
• Rights issue

• Primary market
• Rights issue
Mapping
III No. Outcomes
1 Public Issues CO3 High

III Features of Primary CO4 Medium
Market
2 Primary market CO3 High
intermediaries CO4 Medium
Registrars to an Issue and
Share Transfer Agents
03/19/2024 49

•Public Issues
•Features of Primary Market
•Primary market intermediaries
•Registrars to an Issue and Share Transfer Agents
03/19/2024 50
Number::III
Public Issues
•Public Issues
•An unlisted company has to satisfy the following criteria to be
eligible to make a public issue
•Pre-issue net worth of the co. should not be less than Rs.1 crore
in last 3 out of last 5 years with minimum net worth to be met
during immediately preceding 2 years
•Track record of distributable profits for at least three (3) out of
immediately preceding five (5) years
•The issue size (i.e. offer through offer document + firm allotment
+ promoters’ contribution through the offer document) shall not
exceed five (5) times its pre-issue net worth.
Features of Primary Market
• Features of Primary Market
• This is the market for new long term equity capital.
• The primary market is the market where the securities are sold
for the first time.
• In a primary issue, the securities are issued by the company
directly to investors.
• The company receives the money and issues new security
certificates to the investors.
• Primary issues are used by companies for the purpose of
setting up
• new business or for expanding or modernizing the existing
business.
• The new issue market does not include certain other sources of
new long term external finance.
Functions
• FUNCTIONS
• Origination- In primary market, origination means to
investigate, evaluate and procedure new project proposals. It
initiates before an issue is present in the market. It is done with
the help of merchant institutions. They provide advisory
service.
• Advisory service includes:
• Types of issue,
• Pricing,
• Methods of issue, etc.
• Underwriting- In primary market, to ensure success of new
issue, there is a need for underwriting firms. The company
needs to appoint underwriters.
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Functions
• Distribution- In primary market, the success of any grand new

issue is hinges on the issue is being subscribed by the people.
The sale of the securities to the supreme or highest investors is
termed as distribution.
• Distribution Job is given to brokers and dealers. The brokers or
agents maintain direct contact with the supreme investors.
03/19/2024 54
Primary market intermediaries
• Bankers to an Issue
• Portfolio managers
• Debenture trustees
Primary market intermediaries
• Registrars to an Issue and Share Transfer Agents

• Registrars to an issue (RTI) and share transfer agents (STA)
are registered with SEBI in terms of the SEBI (Registrar to the
Issue and Share Transfer Agent) Rules and Regulations, 1993.
Under these regulations, registration commenced in 1993-94
and is granted under two categories: category I - to act as both
registrar to the issue and share transfer agent and category II -
to act as either registrar to an issue or share transfer agent.
• With the setting up of the depository and the expansion of the
network of depositories, the traditional work of registrars is
likely to undergo a change.
03/19/2024 56
Daily Quiz
printing money.
finance?
Daily Quiz
4. Define banks.
5. Define banker.
Summary

•Public Issues
•Public Issues
Mapping
III No. Outcomes
1 Secondary market CO3 High

III Reforms in the secondary CO4 Medium
market
2 Trading, clearing and CO3 High
settlement CO4 Medium
Criteria for selecting
stocks to calculate index
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•Secondary market
•Reforms in the secondary market
•Secondary market intermediaries
•Trading, clearing and settlement
•Criteria for selecting stocks to calculate index
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Number::III
The Secondary Market
• The Secondary Market

• A market, which deals in securities that have been already
issued by companies , is known as “the secondary market”. It
is also called the stock exchange or the share market. The
secondary market is that market in which the buying and
selling of the previously issued securities is done.
Reforms in the secondary market
• REFORMS IN THE SECONDARY MARKET

• Guidelines with reference to substantial takeovers and
acquisitions – disclosures
• Guidelines with regards to mandatory public offer to the
investors
• Several mutual funds were allowed
• UTI brought under the SEBI
• Advertising code was initiated as well as the requirements of
pre-vetting of advertisement removed.
Secondary Market Intermediaries
• Secondary Market Intermediaries
• Stock brokers
• All stock brokers dealing in securities are registered with
SEBI in terms of SEBI (Stock Brokers and Sub Brokers)
Regulation 1992. During 1996-97, 391 additional brokers
were registered with SEBI making the total registered
membership to 8,867 as on March 31, 1997.
• Sub brokers
• In many cases, individual investors transact in securities
through sub brokers. It is therefore absolutely imperative to
regulate this class of intermediary.
Structure of sources of funds
Source: www.google.com
Trading, clearing and settlement
• TRADING, CLEARING AND SETTLEMENT

• Activities in the Secondary Market
• 1. Trading of securities
• 2. Risk management
• 3. Clearing and settlement of trades
• 4. Delivery of securities and funds
Trading, clearing and settlement
•Listing of Securities
•Listing means the admission of securities of a company to
trading on a stock exchange. Listing is not compulsory under the
Companies Act. It becomes necessary when a public limited
company desires to issue shares or debentures to the public.
When securities are listed in a stock exchange, the company has
to comply with the requirements of the exchange.
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Stock market index
• STOCK MARKET INDEX
•STOCK EXCHANGE
• A stock exchange can be defined as a centralized market for
buying and selling stocks where the price is determined
through supply-demand mechanism.
• According to the Securities
Contracts(Regulation)Act ,1956,which is the main law
governing stock exchanges in India, “stock exchange means
any body of individuals, whether incorporated or not,
constituted for the purpose of assisting, regulating, or
controlling the business of buying, selling or dealing in
securities.
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Stock market index
• Alternatively, an index may also be considered as an
instrument (after all it can be traded) which derives its value
from other instruments or indices.
• The index may be weighted to reflect the market capitalization
of its components, or may be a simple index which merely
represents the net change in the prices of the underlying
instruments. Most publicly quoted stock market indices are
weighted.
• Stock market indices are the barometer of the stock market.
BSE SENSEX,NSE-50 etc are some of the market indices.
•Their Usefulness:
•Indices help to recognize broad trends in the market.
•The investor can use the indices to allocate the funds rationally
among the stocks.
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Criteria for selecting stocks to calculate index
• Criteria For Selecting Stocks To Calculate Index
• Listing history: The company should have listing history on
BSE for at least one year
• Track record: The company should have listing history
• Market capitalization: Company should have one among 100
market capitalizations of BSE, And each company should have
more than0.5% of total market capitalization of BSE INDEX
• Frequency of trading: Company stocks should be traded on
each and every trading day for the last one year
• Industrial representation: Company Should be a leader in the
industry it represents
Daily Quiz
printing money.
finance?
Daily Quiz
4. Define banks.
5. Define banker.
Summary

•Secondary market
•Secondary market
Mapping
III No. Outcomes
1 Banking CO3 High

III Banking Structure in India CO4 Medium
2 Broad Classification of CO3 High
Banks in India CO5 Medium
Commercial Banks
03/19/2024 76

• Banking
• Banking Structure in India
• Broad Classification of Banks in India
• Commercial Banks
• Main function of commercial banks
•Agency function
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Stock index calculation
• STOCK INDEX CALCULATION
Source: www.stockmarket.com
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Price Weighted Index
Source: www.stockmarket.com
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Stock indices in india
•STOCK INDICES IN INDIA
•Bombay Stock Exchange(BSE) – Sensex
•National Stock Exchange of India(NSE) – Nifty
•MCX Stock Exchange [MCX - SX]
•BOMBAY STOCK EXCHANGE (BSE)
•Bombay Stock Exchange is the oldest stock exchange in Asia.
•BSE is the first stock exchange in the country.
Stock indices in india
•Over the past 133 years, BSE has facilitated the growth of the
Indian corporate sector by providing it with cost and time
efficient access to resources.
•National Stock Exchange (NSE)
•The National Stock Exchange of India (NSE) situated in
Mumbai.
•The NSE is owned by the group of leading financial institutions
such as Indian Bank or Life Insurance Corporation of India.
Securities And Exchange Board Of India (Foreign Institutional
Investors) Regulations, 1995.
• Why do we need a regulatory body for Investor
protection in India?
• India is an ` informationally ' weak market
• Boosting capital market demands restoring the confidence
of lay investors who have been beaten down by repeated
scams
• Progressively softening interest rates and an under
performing economy have eroded investment options,
and require enhanced investing skills.
Number::III
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•Mission of SEBI
•Securities & Exchange Board of India (SEBI) formed under
the SEBI Act, 1992 with the prime objective of
• Protecting the interests of investors in securities,
• Promoting the development of, an
• Regulating, the securities market and for matters connected
therewith or incidental thereto.’
•Focus being the greater investor protection, SEBI has become a
vigilant watchdog
Number::III
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Functions of SEBI
• Functions Of SEBI
• Section 11 of the Securities and Exchange Board of India Act.
• Regulation Of Business In The Stock Exchanges
A)review of the market operations, organizational structure
and administrative control of the exchange
B)Registration And Regulation Of The Working Of
Intermediaries
• Primary Market: Merchant Bankers, Underwriters, Portfolio
Managers etc.
• Secondary Market: Stock brokers, Sub- Brokers etc.
Functions of SEBI
C)Registration And Regulation Of Mutual Funds, Venture
Capital Funds & Collective Investment Schemes
• AMFI-Self Regulatory Organization-'promoting and
protecting the interest of mutual funds and their unit-
holders, increasing public awareness of mutual funds, and
serving the investors' interest by defining and maintaining
high ethical and professional standards in the mutual funds
industry.
Functions of SEBI
• Every new scheme launched by a mutual fund needs to
be filed with SEBI and SEBI reviews the document in
regard to the disclosures contained in such documents.
• Regulations have been laid down regarding listing of
funds, refund procedures, transfer procedures,
disclosures, guaranteeing returns etc
• SEBI has also laid down advertisement code to be
followed by a mutual fund in making any publicity
regarding a scheme and its performance
• SEBI has prescribed norms / restrictions for investment
management with a view
• to minimize / reduce undue investment risks.
Functions of SEBI
D)Promoting & Regulating Self Regulatory Organizations
 In order for the SRO to effectively execute its
responsibilities, it would be required to be structured,

organized, managed and controlled such that it retains its
independence, while continuing to perform a genuine
market development role
E)Prohibiting Fraudulent And Unfair Trade Practices In The
Securities Market
 SEBI is vested with powers to take action against these
practices relating to securities market manipulation and

misleading statements to induce sale/purchase of securities.
Functions of SEBI
F. Prohibition Of Insider Trading
 Stock Watch System, which has been put in place,
surveillance over insider trading would be further

strengthened.
G. Investor Education And The Training Of Intermediaries
•SEBI distributed the booklet titled “A Quick Reference Guide
for Investors” to the investors
•SEBI also issued a series of advertisement /public notices in
national as well as regional newspapers to educate and caution
the investors about the risks associated with the investments in
collective investment schemes
•SEBI has also issued messages in the interest of investors on
National Channel and Regional Stations on Doordarshan.
Functions of SEBI
H) Inspection And Inquiries
I) Regulating Substantial Acquisition Of Shares And Take-over.
J) Performing Such Functions And Exercising Such Powers
Under The Provisions Of The Securities Contracts
(Regulation) Act, 1956 As May Be Delegated To It By The
Central Government;
K) Levying Fees Or Other Charges For Carrying Out The
Purposes Of This Section
L) Conducting Research For The Above Purposes
Video Links
• Youtube/other Video Links

• https://youtu.be/p1KD-Y1e2Hg
• https://youtu.be/qqy7dSB9jcg
• https://youtu.be/epg4R7J-3Fg
• https://youtu.be/zfmIA05OQ3Y
• https://youtu.be/ZXYgGtiPKR4
• https://youtu.be/xgWoySFdAzw
03/19/2024 90
Number::III
Daily Quiz
• 1. Commercial paper cm be issued
• A) by all corporates
• B) by all corporates with net worth of at least Rs. 10 crore
• C) by all corporates with net worth of at least Rs. 5 crore
• D) can be issued only by banks
• E) All of the above
• 2 .Commercial bills market is a part of
• A) Organised money market
• B) Unorganized money market
• C) stock market
• D) capital market
• E) None of the above
Daily Quiz
• 3. Government securities with terms of more than 1 year
are called
• A) Government bonds
• B) treasury bills
• C) bills of exchange
• D) capital bills
• 4. Which of the following organisations is known as the
market regulator in India?
• A) IBA
• B) SEBI
• C) AMFI
Daily Quiz
• 5. In the capital market, the term arbitrage is used with

reference to
• A) purchase of securities to cover the sale
• B) sale of securities to reduce the loss on purchase
• C) simultaneous purchase and sale of securities to make
profits from price
• D) variation in different markets
• E) All of the above
MCQ s
1. Commercial paper cm be issued
• A) by all corporates
• B) by all corporates with net worth of at least Rs. 10 crore
• C) by all corporates with net worth of at least Rs. 5 crore
• D) can be issued only by banks
2 .Commercial bills market is a part of
• A) Organised money market
• B) Unorganized money market
• C) stock market
MCQ s
3. Government securities with terms of more than 1 year are
called
• A) Government bonds
• B) treasury bills
• C) bills of exchange
• D) capital bills
• E) None of these
MCQ s
4. Which of the following organisations is known as the
market regulator in India?
• A) IBA
• B) SEBI
• C) AMFI
5. In the capital market, the term arbitrage is used with
reference to
• A) purchase of securities to cover the sale
• B) sale of securities to reduce the loss on purchase
• C) simultaneous purchase and sale of securities to make
profits from price
MCQ s
6.Which of the following indexes is generally used as the
measure to reflect changes in the price level of consumer
goods and services purchased by households?
• A. Hang Seng Index
• B. Consumer Price Index
• C. Producer Price Index
• D. Consumer Confidence Index
7. Which among the following correctly defines Hundi?
• [A] They are slips on paper presented to the customer while
purchasing goods
[B] They are accounts of unorganized sector in India
[C] They are key instruments of credit in the unorganized
money market in India
MCQ s
8.Which among the following sentence is true?
• [A] RBI introduced Repos & Reverse Repos in 1992
[B] RBI Introduced Repos in 1992 & Reverse Repos in 1996
[C] RBI introduced Repos & Reverse Repos in 1996
[D] None of the above
Weekly Assignment
Q.1 Explain the tools of money market.

Q.2 Give your conceptual views on primary market.
Q.3 Mention the functions of SEBI.
Q.4 Summarize the working area of SEBI.
Old Question Papers
Old Question Papers
Old Question Papers
Old Question Papers
Old Question Papers
Old Question Papers
• MM: 100
• SECTION A
• Attempt all questions in brief. 2 x 7 = 14
• a. Define Prior Saving Theory.
• b. What do you mean by Financial System?
• c. What is EXIM?
• d. Differentiate between CRR and SLR.
• e.“Money market speeds up the liquidity position of a
company”. Justify.
• f. What are Deep-discount bonds?
• g. What is CASA?
Old Question Papers
• SECTION B
• Attempt any three of the following:7 x 3 = 21
• a. Explain the various types of Financial services.
• b. Explain the various roles performed by RBI for the
development of Indian banking sector.
• c. What are the various intermediaries of Primary capital
market?
• d. Explain the various types of Derivatives with their striking
features.
• e. Explain the structure of Indian banking sector.
Old Question Papers
• SECTION C
• Attempt any one part of the following: 7x1=7
• (a) Explain the Theory of forced savings with suitable
examples.
• (b) Describe the regulation mechanism of Indian Financial
System.
• (a) Explain the impact of monetary policy to accelerate the
growth of Indian
• economy.
• (b) Explain the role of NABARD in the economic and social
development of the country.
Old Question Papers
Attempt any one part of the following: 7 x 1 = 7
• (a) Explain the various powers enjoyed by SEBI as the regulator
of Capital market.
• (b) Describe the various instruments of Money Market.
• (a) What do you mean by GDRs? Explain the issue mechanism of
GDRs.
• (b) What is share? What are the various benefits enjoyed by a
shareholder?
• (a) What are the various products offered by commercial banks to
meet out the credit requirements of customers?
• (b) List out the various technological advancements floated in
payment mechanism of Indian scenario .
Old Question Papers
Attempt any one part of the following: 7 x 1 = 7

• (a) Explain the various powers enjoyed by SEBI as the regulator of
Capital market.
• (b) Describe the various instruments of Money Market.
• (a) What do you mean by GDRs? Explain the issue mechanism of
GDRs.
• (b) What is share? What are the various benefits enjoyed by a
shareholder?
• (a) What are the various products offered by commercial banks to
meet out the credit requirements of customers?
• (b) List out the various technological advancements floated in
payment mechanism of Indian scenario.
Expected Questions for University Exam
1. Discuss the instruments of money markets.

2. Give a brief explanation of various theories and their
contribution to economic development.
3. What is SEBI? Describe its objectives and functions.
4. What is money market? Discuss its functions.
5. What is SEBI? Describe its objectives and functions. (b) What
is money market? Discuss its functions.
6. Explain the concept of “Call Money Market” and “Hire
Purchase Market”, and bring out the points of difference
between the two.
Expected Questions for University Exam
1. What are the various intermediaries of Primary capital market?

2. Explain the various powers enjoyed by SEBI as the regulator
of Capital market.
3. Describe the various instruments of Money Market.
4. Define SEBI. Describe its objectives and functions. (b) Define
money market. Discuss its functions.
Summary
• We have covered the following topics in this lecture:

• Banking
• Banking Structure in India
• Broad Classification of Banks in India
• Commercial Banks
• Main function of commercial banks
•Agency function
References
References:
03/19/2024 113
References
Thank You

Unit 3

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Unit 3

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Syllabus

UNIT I: Structure of Indian financial system (6 Hours)

UNIT V: Principles and Practice of Insurance (7 Hours)

• Meaning of Money Market:

• Features and Objectives of Money Market:

5. It is not a single homogeneous market. There are various sub-

• Structure of Indian Money Market:

• (iii) Non-bank financial institutions such as the LIC, the GIC

(vi) The unorganised sector consists of indigenous banks and

• We have covered the following topics in this unit:

1 Constituents of Indian CO3 High

• Students will be able to know the following concepts:

• Constituents of Indian Money Market:

• (i) Unorganized Sector:

• Sub-Markets of Organised Money Market:

• We have covered the following topics in this lecture:

• Constituents of Indian Money Market

1 Participants in money CO3 High

• Students will be able to know the following concepts:

• CBLO- Collateralized Borrowing and Lending Obligation is an

• Members willing to lend their funds or money should submit

• Measures to Improve Indian Money Market:

• We have covered the following topics in this unit:

• Participants in money market

1 Public Issues CO3 High

• Students will be able to know the following concepts:

• Distribution- In primary market, the success of any grand new

• Registrars to an Issue and Share Transfer Agents

• We have covered the following topics in this unit:

1 Secondary market CO3 High

• Students will be able to know the following concepts:

• The Secondary Market

• REFORMS IN THE SECONDARY MARKET

• TRADING, CLEARING AND SETTLEMENT

• We have covered the following topics in this unit:

1 Banking CO3 High

• Students will be able to know the following concepts:

responsibilities, it would be required to be structured,

practices relating to securities market manipulation and

surveillance over insider trading would be further

• Youtube/other Video Links

• 5. In the capital market, the term arbitrage is used with

Q.1 Explain the tools of money market.

Attempt any one part of the following: 7 x 1 = 7

1. Discuss the instruments of money markets.

1. What are the various intermediaries of Primary capital market?

• We have covered the following topics in this lecture:

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