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Transcript of Financial Markets and Instruments
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FINANCIAL MARKETS AND INSTRUMENTS
CONTENTS
CHAPTER 1INTRODUCTION TO FINANCIAL
SYSTEM
2 RESERVE BANK OF INDIA 3.MONEY MARKET,STRUCTURE,
OPERATIONS
4.S. E .B. I. GUIDELINES
5.CAPITAL MARKET ..OPERATIONS
6.MERCHANT BANKING ..ACTIVITY..
.. NBFCSTRUCTURE AND SERVICES
! .LEASING
" HIRE PURCHASE
1# CREDIT RATING
11.... MUTUAL FUNDS.
12.... FACTORING
13. FORFAITING
14 VENTURE CAPITAL
15. PRIVATE E$UITY
16. %EALTH MANAGEMENT
1. . OTHER FINANCIAL INSTITUTIONS
1!.. PENSION FUND.
1". SECURITISATION
2#..TERMINOLOGIES.
OB&ECTIVE
To understand our Financial system, acquire knowledge of various financial products, services , Institutions
and use it for Corporate / Individual requirements .
%HY TO STUDY
This subect covers the entire domestic financial system ,functions.
!arious financial services provided in the system . " finance professional should have basic knowledge ofday to day happenings in the financial system to take decision whether it is investment , borrowings or fund
raising.
HO% TO STUDY
#. $ead Financial papers%.articles by eminent finance &rofessionals.
'. (nderstand the terminologies used in the process and their meaning .
). There is no comprehensive te*t book covering the syllabus.
+. otes given has covered all as per syllabus.
-. $ead the notes and come to the class so that the doubts can be minimied.
%HAT ARE %E DISCUSSINGFinancial markets
Financial institutions
S'()*')(+..-+('/0.R+)'( )'(/'.-()*'-(*+)(+7 ' )+ '+
+(8/*+
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CHAPTER..1INTRODUCTION..
FINANCIAL SYSTEM COMPRISES OF ..
FINANCIAL.
. MARKETS
9. PRODUCTS.INSTRUMENTS
*. INTERMEDIARIES.
. INVESTORS.
+. INSTITUTIONS.
:. BENEFICIARIES.
REGULATORY AUTHORITIES.
1. RESERVE BANK OF INDIA.1"34
2. S E B I 1""2
3. I R D A.1"""+. PENSION FUND REGULATORYAND DEVELOPMENT AUTHORITY 2##!
SAVE..INVESTRAISE FUNDS..BORRO%
CREATE ASSETS PERFORM..PROFITGRO%TH..
INCREASE %EALTH..
PAY BACK THE LOANS..TAKE MORE.PERFORM BETTER..GRO%TH.
BOTH THESE OPPORTUNITIES ARE AVAILABLE IN THE MARKETS AND ALSO %ITHTHE INSTITUTIONS.
INVESTORS SHOULD PUT THE SURPLUS MONEY AVAILABLE ..TO PROPER
USE.
BENEFICIARIES %OULD CREATE ASSETS %HICH %ILL GRO% GENERATE
SURPLUS.
S'+; 7/ 8+ (+
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BENEFICIARY AL%AYS LOOKS AT..
CHEAP SOURCE..
COST OF FUNDS.
SIMPLE FORMALITIES..
THE SYSTEM SHOULD ENSURE CREATION OF INFRASTRUCTURE FOR
INVESTMENT ACTIVITY 0 FUND RASING ACTIVITY.
FINANCE FIELD IS EVER GREEN.
CHANGES HAPPENS ..
DUE TO E=TERNAL FACTORS..
INTERNAL FACTORS..
TO UNDERSTAND THE SUB&ECT OF FINANCE AND THE OPERATIONS
KEEP UPDATED %ITH THE MARKET KNO%LEDGE ..
CONTINUOUS FOLLO% UP.
MANY FACTORS AFFECTING THE CHANGE.
> READ FINANCIAL PAPERS DAILY ?
R B I ..REGULATESMONEY MARKET.BANKING SYSTEM..GOVERNMENT
OPERATIONS
SEBI.REGULATES .CAPITAL MARKET OPERATIONS.RELATED INSTITUTIONS
IRDA.REGULATES.INSURANCE SECTOR.
PFRDA..PESNION FUND MANAGEMENT
IMPORTANT ACTIVITIES HAPPENS IN THE SYSTEM FOR THE OPERATIONS.
1. ECONOMIC SURVEY2. UNION BUDGET
3. RBI@SMONETARY AND CREDIT POLICY
4. FOREIGN TRADE POLICY.
THESE ARE THE TOOLS FOR ECONOMIC DEVELOPMENT AND FUNCTIONING OF
VARIOUS PLAYERS IN THE SYSTEM.
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IMPORTANT DEPARTMENTS..
MONETARY POLICY DEPARTMENT.
RBI G8+(0( 00)0*+ '+ M0+'( 0 *(+/' -/* +8+( +( :'+( '+ U0/0 9)+' /
-(++0'+.
T+ -/* )'/0+ '+ -0 : *'/0 :( '+ ;(+', /0'/')'/0 0 )/+/0+ :( :)0*'/0/0 :
)( :/00*/ '+; :( +*0;/* +8+-;+0'.
T+ )/+/0+ *8+( '+ E*0;/* *+0(/, ;+'/* *+0(/, /0'+(0'/0 +*0;/* /')'/0 0
)/+ '+ ;(+' 0 /0'/')'/0 7/' 0+7 -/* , -()*', (+:(; ' 9+ /;-+;+0'+ )(/0 '+
:/00*/ +(.
F(; 2##5 RBI 7/ (+8/+7 '+ -/* )/+/0+
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S(' '+(; )+( ' 8+ **+ ' :)0 ' (+/'/* -(/*+.
INSTRUMENTS.PRODUCTS..SERVICES.
1. CALL AND NOTICE MONEY
2. COMMERCIAL BILLS
3. TREASURY BILLS
4. COMMERCIAL PAPER
5. CERTIFICATE OF DEPOSITS
6. GOVERNMENT SECURITIES
. REPOS.
CHARACTERISTICS.
INSTRUMENTS ISSUED AT A DISCOUNT TRADED AT A DISCOUNT AND
REEDEEMED AT PAR
A)(+ S:+'..
H/ /
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FROM 6.!.2##5 ALL NON BANK PARTICIPANTS E=CEPT PD@S %OULD BE PHASED
OUT .
PRUDENTIAL LIMITS ON E=POSURE IN THIS MARKET LINKED TO CAPITAL
FUNDS.
SCREEN BASED $UOTE BASED APPROACH IS PROPOSED.
NEED FOR USE OF SUCH PRODUCT.
TO MEET C R R RE$UIREMENTS.
ILLI$UIDITY IN THE MARKET.
SUDDEN %ITHDRA%ALS OF FUNDS.
2. COMMERCIAL BILLS
REPRESENTS GENUINE TRADE TRANSACTIONS.
BILLS ROUTED THROUGH COMMERCIAL BANKS.
BANKS DISCOUNT THESE BILLS.
BILLS.MAY BEDEMANDUSANCE.
BANKS CREATS ASSETS IN THE FORM BILLS DISCOUNTING .APPROACHES R
B I FOR REDISCOUNTING TO MEET ITS LI$UIDITY.
IT IS AN ON GOING FACILITY FOR THE BANKS %ITH
R B I .
THIS ALSO HAPPENS ONLY BET%EEN BANKS AND R B I .
R B I *(+ *+('/0 /0'+(+' :( '/ +0/0 7/* / 070 B0 ('+ .
3GOVERNMENT SECURITIES
G .O. I SECURITIES ARE SOVEREIGN DEBT OBLIGATIONS INSTRUMENTS.
TO FINANCE DEFICIT AND ASSIST PUBLIC SECTOR DEVELOPMENT
PROGRAMMES.
TENOR.2 YRS TO 3# YEARS.
COUPON EITHER PRE DETERMINED OR BIDDING PROCESS.
GOI SECURITIES ARE APPROVED SECURITIES FOR S. L. R RE$UIREMENTS OF
BANKS.
STATE GOVERNMENT SECURITIES.
AGENCY BONDS ARE ISSUED BY PSU@S GUARANTEED BY GOVERNMENT. CG..RS1#.###
SG.RS.1,###
AGENCYRS 5,###
PUBLIC DEBT OFFICE A DEPARTMENT OF
R B I MANAGES THIS FUNCTION.
4TREASURY BI LLS
KNO%N AS TBILLS ISSUED BY CENTRAL GOVERNMENT.
R .B. I ISSUES ON BEHALF OF GOVERNMENT FOR A TENOR OF "1 DAYS AND 364
DAYS.
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ROUTE FOR BORRO%ING PROGRAMME OF THE GOVERNMENT .
ISSUED A T A DISCOUNT AND REDEEMED AT PAR.,
ISSUED THROUGH AUCTION PROCESS.
DENOMINATION."1 DAYSRS.25### 364 DAYS FOR RS.1,##,###
UNIFORM PRICE AUCTION FOR "1 DAYS PAPER
CUT OFF PRICE METHOD.
MULTIPLE PRICE AUCTION FOR 364 DAYS PAPER.
RETAIL INVESTORS .THROUGH NON COMPETITIVE BIDDING .
TBILLS ARE FREELY TRANSFERABLE AND TRADED.
OVER THE COUNTER OR THROUGH N .S.E.
SECONDARY MARKET IS VERY ACTIVE..$UOTES ARE READILY AVAILABLE
5. REPOS
REPO MEANS AN INSTRUMENT FOR BORRO%ING FUNDS BY SELLING SECURITIES
%ITH AN AGREEMENT TO REPURCHASE THE SAME SECURITIES ON AMUTUALLYAGREE FUTURE DATE AT AN AGREED PRICE %HICH INCLUDES INTEREST FOR THE
FUNDS BORRO%ED.
SALE AND REPURC HASE OF SAME SECURITY ..BET%EEN T%O PARTIES..
SELLER SELLS SPECIFIC SECURITY %ITH AN AGREEMENT TO REPURCHASE. THE
SAME AT A DECIDED FUTURE DATE AND PRICE
> REPO?
R B I RELEASES SECURITIES TO BANKS UNDER THIS SCHEMEMOBILISES THE
FUNDS FOR THE GOVERNMENT
> REVERSE REPO?
REVERSE REPO IS AN INSTRUMENT FOR LENDING FUNDS BY PURCHASING SECURITIES
%ITH ANAGREEMENT TO RESELL THE SAME SECURITIES ON A MUTUALLY AGREED
FUTURE DATE AT AN AGREED PRICE %HICH INCLUDES INTEREST FOR THE FUNDS
LENT .
R B I ..LENDS AGAINST THE SECURITIES SOLD BYTHE BANK %ITH AREPURCHASE AGREEMENT.
SOURCE OF FUNDS FOR BANK.THIS THE RATE AT %HICH BANKS BORRO% . REPO
RATE
DEPENDS UPON THE PARTY INITIATED THE TRANSACTION.
MA&OR PLAYERS ARE BANKS.
REPO RATES ARE IN LINE %ITH ONGOING MARKET RATES.
6.CERTIFICATE OF DEPOSITS
CD@S ARE NEGOTIABLE MONEY MARKET INSTRUMENT.
INTRODUCED IN &UNE 1"!".
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INVESTORS
INDIVIDUALS.
BANKS.
CORPORATES.
TRUSTS.
NRI@S
FII@S
PROCEDURE
APPOINT.I P A
I P A ISSUE CERTIFICATE AFTER CHECKING ALL THE DOCUMENTS.
APPOINT A INTERMEDIARYMAY BE MERCHANT BANKER.FOR MARKETING.
GET THE INSTRUMENT RATED.
GET THE FUNDS BY SALE OF C.P.
ON DUE DATE %HO EVER IS THE HOLDER OF C.P. %ILL GET THE REPAYMENT .
I P A SHOULD REPORT TO R B I THE C.P. ISSUE.
ISSUER SHOULD DISCLOSE IN THEIR ANNUAL REPORT THE FUNDS RAISEDTHORUGH THIS ROUTE.
OPERATIONAL ASPECTS OF MONEY MARKET..
REGULATORY AUTHORITYRESERVE BANK OF INDIA..
PUBLIC DEBT ACT 1"44.
FI=ED INCOME MONEY MARKET AND DERIVATIVES ASSOCIATION OF INDIA >FIMMDA?
..S.R.O.
RECOMMENDS
HEALTHY BUSINESS PRACTICES..
EHTICAL CODE OF CONDUCT
PRINCIPLES AND PRACTICES
I0 '+ +( 2###G8+(0;+0' *+( +/0+'+ '+ (+ : (+-0/9//'
R B I .CONTROLS..G +* '(+G (+'+ +*)(/'/+M0+ ;(+' +*)(/'/+
SEBI *0'( '+ MF, 0 '+( -+('/0 0 S'* +*0+.. '(/0 ;+*0/;..+'*.
LI$UIDITY AD&USTMENT FACILITY
I0'()*+ /0 1""". B0/0 +*'( (+:(;.
M0+;+0' : (' '+(; /
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MULTIPLE PRICE AUCTION.FRENCH AUCTION
C)' :: /+ 6.2#
BANK YIELD
A 5.!#.......(.4##.## *(
B 6.25.......(.3##.##
C 6.35.......(1###.##
D 6.5#.......(2###.##
E 5."5......(. !##.##
F 6.##......(12##.##
H/+( '0 6.2# / (++*'+.
L7+' /+ :/(' -(/(/'
S+*0 7+' +*0.
A 7/ +' :/(' -(/(/'
E 7/ +' +*0
F +' ' -(/(/'
I0 '/ )*'/0 '+ 8+(0;+0' 7/ 9+ 9+0+:/'+ 9 /)/0 ' /::+(+0' /+ -+( 9/.
T+ *' : :)0 7/ 9+ 9+''+(.
RBI IS LOOKING AT COST OF FUNDS.
INVESTOR IS LOOKING AT THE RETURNSYIELD
D)'* )*'/0
U0/:(; -(/*+ ';+0'.
T+ 9/+( ' 7+( '0 *)' :: -(/*+ (+ (++*'+.
A';+0' 7/ 9+ ;+ ' )0/:(; -(/*+ ' '+ 7 8+ 9/ 98+ *)' :: -(/*+ ' '+ ;+
-(/*+.
T+ 9/ ' /+( '0 *)' :: 7/ 9+ /8+0 -(/(/'.
UNIFROM PRICE AUCTION..DUTCH AUCTION
BANK YIELD
A 5.!#
B 6.25
C 6.35
D 6.5#E 5."5
F 6.##
T+ *)' :: /+ / +' ' 6.1#.
A 90 7/* 8+ /+ 0' +*++/0 6.1# 0;+ A, E, 0 F 7/ +' '+ +*)(/'/+ 7/' 6.1#
/+ .
F(; A-(/ 2##" RBI 7/ )*'/0 '+ G8' +*)(/'/+ )0+( U0/:(; -(/*+ )*'/0.
E=AMPLE
1? = -)(*+ T 9/ : R1### :( R "!, "# 9+:(+ ;')(/'
%' / '+ /+ 0 '/ T 9/
Y/+>F*+ 8)+P(/*+? =365 1##
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P(/*+ 0 : : ;')(/'
5.342
2? A / ::+(+ T 9/ : R 1### :( ( "6!, 1!2 9+:(+ '+ '+ : ;')(/',
A +-+*' 0 /+ : 6.25.%) A 9) '+ T 9/ ::+(+
6.62"
RECENT CHANGES
R B I -+ )' 00 90/0 +0'/'/+ :(; * ;0+ ;(+'.
I0'()*'/0 : R T G S..R+ '/;+ ( +''+;+0' > :'+( +''+;+0' /0 *+ : 90? 9++0
/0'()*+.
COLLATERISED BORRO%ING AND LENDING OBLIGATIONCBLO..
CBLO/ 0+'/9+ /0'();+0' +8+-+ 9 CCIL-':(; :( 9((7/0 +0/0.0*(+/' (/ */'+.CCILP(8/+ )(0'++ /0' +:)'.' 9+ '(+ 0 CCIL
P':(;..>*+(/0 *(-('/0 : I0/ '?.
BENCHMARK RATES..
A(+ -(/*+ : /0'();+0' '' (+ '(+ /0 '+ ;(+'. 7/* (+ )+ :( -(/*/0 '+( /0'();+0'.
I0'+(0'/0 **+-'+ 9+0*;( / LIBOR > L00 /0'+( 90 ::+( ('+?
N'/0 '* +*0+ +8+-+ B+0* ;( ('+ :( I0/0 ;(+'
MIBID..MUMBAI INTER BANK BID RATE
MIBOR.MUMBAI INTER BANK OFFER RATE
B' '++ (+ )+ :( (' '+(; 0 ;+/); '+(; /0 M0+ ;(+'.
FIMMDAFI=ED INCOME MONEY MARKET AND DERAVITIVE ASSOCIATION
CREATES BENCHMARK RATES %HICH CAN BE USED BY THE MARKET PLAYERS.
C;-)''/0 / 9+ 0 '+ ' *+*'+. C;-)''/0 ) 9+ 0+ 0 ' 9/ 0
'/;+ 9)0 *+)+. .
GOVERNMENT SECURITIES INDICES
I0+ -(8/+ 9+0*;( :( -(':/ ;0+;+0' .
FOUR INDICES ARE THERE FOR GOVERNMENT SECURITIES MARKET.
IBE= PUBLISHED BY ICICI SECURITIES.
GOVERNMENT SECURITIES INDE= BYN S E
&P MORGAN@S INDIA GOVENRMENT BOND INDE=.
SBIGILT INDE=..
SECONDARY MARKET
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PLAT FORM FOR TRADING.
T(/0 /0 G8+(0;+0' +*)(/'/+ , T 9/, B0, '+( :/+ /0*;+ +*)(/'/+ ..
% .D. M SEGMENT OF N. .S .E.
GILT SEGMENT OF B S E
DIRECT NEGOTIATIONS.
%DM +;+0' : N S E *;;+0*+ -+('/0 /0 &)0+ 1""4.
F(; *(++0 9+ '(/0 :*//' :( +9' ;(+' /0 '+ *)0'(.
NEAT.>N'/0 +*0+ :( )';'+ '(/0 ?'+; -(8/+ '(/0 0 (+-('/0 :(
G.+*.
A +9' /0'();+0' (+ /0*)+.
T(/0 / (+( (/8+0;'*/0.
NEGOTIATED DEALING SYSTEM >NDS?.. COMMENCED OPERATIONS IN FEB.2##2.
A0 ++*'(0/* +/0 '+; :( :*//''/0 +/0 G+*.O0/0+ 9//0 :*//'. T(0-(+0* :
'(+ 0 ++*'(0/* +''+;+0'.
CLEARING CORPORATION OF INDIA LTD.>CCIL?
P(;'+ 9 B0 0 /0'/')'/0 7 /0*(-('+ /0 A-(/ 2##1 ' )--(' 0 :*//''+ *+(/0
0 +''+;+0' : '(+. I0 G.+*.
O9+*'/8+..
S+''+;+0' : G.+* '(0*'/0 0 DVP 9/>.+/8+( 8+() -;+0' ?
FI=ED INCOME DERIVATIVES
A0 /08+'( /0 '+ F/+ /0*;+ ;(+' / +-+ ' 8(/) (/ /0*)/0 I0'+(+' (/.
I0*;+ ; 9+ :(;.I0'+(+' -;+0'..*-/' /0(+/08+';+0' /0*;+.
I08+(+ (+'/0 ' '+ -(/*+ : B0 0 /0'+(+' ('+.
T++ (+ ++ 9 I0'+(+' ('+ +(/8'/8+
I0'+(+' ('+ 7-
F(7( ('+ (++;+0' (+ --)( ..
INTEREST RATE S%APS
T7 -('/+ (++ ' +*0+ '(+; : /0'+(+' -;+0' :( 0'/0 -(/0*/- ;)0'.
T+ '(0*'/0; 9+ 9+'7++0
F/+ ' :'/0 ('+.
F'/0 ('+ ' :/+ ('+.
O0+ :'/0 ('+ ' '+( :'/0 ('+O)':7 7/ 9+ 0 I0'+(+' -;+0'
DISOCUNT AND FINANCE HOUSE OF INDIA LTD..
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SET UP IN 1"!! AS PER THE VAGHUL COMMITTEE RECOMMENDATIONS.
PROMOTED BY R B I AND CB@S AND FI@S .
A LEADING PRIMARY DEALER.
TO MANAGE THE LI$UIDITY IMBALANCE IN MONEY MARKET.
TO BE AN ACTIVE TRADER IN THE SECONDARY MARKET OF MONEY MARKET.
PROVIDE SAFE AND RISK FREE INVESTMENT AVENUES.
GREATER LI$UIDITY.
IN &UNE 2##4 SBI GILTS LTD MERGED %ITH DFHI .
CHAPTER4
SEBI GUIDELINES..
S E B ISECURITY E=CHANGE BOARD OF INDIA .
C0*+-' : SEBI / 9+ 0 SEC : US.
1""# ..'('+ :)0*'/0/0)0+(') ' C C I .
1""1..CCI 9/+ ..
1""2SEBI *' 7 -+./' 9+*;+ '+ (+)'( )'(/' :( *-/' ;(+'-+('/0.
O9+*'/8+..
1. T -('+*' '+ /0'+(+' : '+ /08+'(.
2. B(/0 /0 D/*)(+ 0(;
3. T -(;'+, (+)'+ 0 +8+- '+ +*)(/'/+ ;(+' 0 /' -+('/0.
REFORMS >CHANGES? IN CAPITAL MARKET
SEBIAS A REGULATORY AUTHORITY.
I+0'/:/*'/0 : I0'+(;+/(/+.
R+/'('/0 : /0'+(;+/(/+.> M0'(?
C-/' + V(/) *0+ 9()' /0 ?
H/ /' R/ :*'(;0+;+0' -+(*+-'/0.
D)+ //+0*+ *+('/:/*'+
M.O.U.
I0'+( + *'/0 : (+-0/9//'/+.
U0+( 7(/'/0 >-'/0.?
L* /0 -+(/
S(+ /0 -''+(0
R'/0 : +9' /0'();+0'.
B 9)//0 -(*+.
R+)*'/0 : '/;+ /0 -' /)+ *'/8/'/+.
R+:)0 : )9*(/-'/0 /0 *+ : 0 )0+(7(/'/0.
G)/+/0+ :( D+9' /)+.
P+0' -/0' :( MB@
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G)/+/0+ ' B0) /)+.
A* :)')(+ 0 -'/0?
I0'()*'/0 INDO NE=T -':(; :( MID CAP '* '(/0.> YET TO FINALISE?
D+;)')/'/0 O: '* +*0+
G)/+/0+ :( IPO '() D+9' /0'();+0'..
I0'()*'/0 ASBA FACILITY.
SEBI 7/ *0+ '+ )/+/0+ -+( '+ *0+ (+
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VENTURE CAPITAL.
MUTUAL FUNDS
ADRGDR ISSUES
SUBSTANTIAL AC$UISITION TAKE OVERS
BUY BACK OF SECURITIES.
ISSUE OF S%EAT E$UITY.
COLLECTIVE INVESTMENT SCHEME.
PRICING OF AN ISSUE.
DISCLOSURE AND INVESTOR PROTECTION.
OFFER DOCUMENTS.PROSPECTUS.SEBI GUIDELINES
DISCLOSURES TO BE MADE..
STRUCTURE AND CONTENTS DEFINED..
HIGHLIGHTS
RISKFACTORSMANAGEMENT PERCEPTION..
GOVERNMENT APPROVALSSEBI DISCLAIMER CLAUSE
STOCK E=CHANGE DISCLAIMER CLAUSE..LISTING.
MINIMUM SUBSCRIPTION
RATING AND DEBENTURE TRUSTEE >IN CASE OF DEBT ISSUE?
ISSUE MANAGEMENT TEAM
CAPITAL STRUCTURE LOCK IN PERIODBUILD UP OF CAPITAL
SHAREHOLDING PATTERN.
TERMS OF THE ISSUE.
INSTRUCTIONS TO APPLICANTS.
INFORMATION ABOUT DEPOSITORY.
STOCK INVEST PROCEDURE.TA= BENEFITS.
OB&ECTS OF THE ISSUE.
COMPANY PROFILE.
PROMOTERS BACK GROUND.
GROUP COMPANIES.
BOARD OF DIRECTORSOTHER DIRECTORSHIP
PRO&ECT DETAILS.
INDUSTRY PROFILE.
BUSINESS PROFILE.
OUTSTANDING LITIGATIONS.
&USTIFICATION PRICING$UALITATIVE$UANTITATIVE. > ISSUE %ITH PREMIUM?FINANCIALSAUDIT REPORT.
MAIN PROVISIONS OF ARTICLES.
MATERIAL CONTRACTS ..DOCUMENTS
PRO&ECTIONS ..VS..PERFORMANCE. > INCASE OF COMPANY GOING FOR 20 TIME
THROUGH PUBLIC ISSUE?.
F( O::+( *);+0' : R/' /)+.L+''+( O: ::+(/0:(;'/0 / +-' ' ;/0/;); '+
+/'/0 (+ +( 07 ;(+ 9)' '+ *;-0..0(; '')'( *)+ 7/ 9+
:)(0/+.
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SCHEDULE I
>C)+ 5.3.1.2?
MEMORANDUM OF UNDERSTANDING BET%EEN THE LEAD MERCHANT
BANKER TO THE ISSUE AND THE ISSUER COMPANY
THIS MEMORANDUM OF UNDERSTANDING MADE BET%EEN....... >0;+ : '+
/)/0 *;-0?, A COMPANY %ITHIN THE MEANING OF THE COMPANIES ACT,1"56 AND HAVING ITS REGISTERED OFFICE AT ......... >(+/'+(+ ::/*+ (+ :
'+ /)/0 *;-0? >HEREINAFTER REFERRED TO AS '+ C;-0? AND........
C;-0 (+/'+(+ )0+( '+ C;-0/+ A*' 1"56, 0 8/0 /' (+/'+(+ ::/*+
'...................... 7/' '+ 9(0* ::/*+ ' >+(+/0:'+( (+:+((+ ' '+ L+ M+(*0'
B0+(?.
%HEREAS
1. T+ C;-0 / '/0 '+- :( /)+ :...................... >-('/*)( : '+ /)+?
' '+ -)9/* +/'/0 (++( : '+ C;-0 '+ / /)+ :
(++9+0')(+ / +(+/0:'+( (+:+((+ ' '+ /)+ AND
2. T+ *;-0 --(*+ '+ L+ M+(*0' B0+( ' ;0+ '+ /)+
0 '+ L+ M+(*0' B0+( **+-'+ '+ +0+;+0' /0'+(/ )9+*'' '+ *;-0 +0'+(/0 /0' ;+;(0); : )0+('0/0 :( '+ -)(-+
9+/0 '++ -(++0'
NO%, THEREFORE, '+ C;-0 0 '+ L+ M+(*0' B0+( +(+9 (++
:7
1. B+/+ '+ L+ M+(*0' B0+(, .........., ............, 0 ................., 7) 9+
*'/0 '+ *;0+( ' '+ /)+.
2. T+ C;-0 +(+9 +*(+ '' /' *;-/+ 7/' ( (++ ' *;-
7/' '+ '')'( :(;/'/+ )0+( '+ C;-0/+ A*', G)/+/0+ :(
D/*)(+ 0 I08+'( P('+*'/0 /)+ 9 '+ S+*)(/'/+ 0 E*0+
B( : I0/ >+(+/0:'+( (+:+((+ ' '+ B(? 0 '+( (++80' '')'+
' +09+ /' ' ;+ '+ /)+ 0 /0 -('/*)( /0 (+-+*' : '+ :7/0;''+(
>G/8+ +'/ 0 -('/*)( : '')'( *;-/0*+ 7/* '+ *;-0 '
:):/ 9+:(+ ;/0 '+ /)+?
C0+0' : '+ +0+( 9 9++0 9'/0+ 8/+........... >+'/ : '+
(+)'/0? 0 /0 **(0*+ ' '+ '+(; : '+ R+)'/0 -+ 9 '+
G+0+( M++'/0 + 0 .............. >'+ : '+ ;++'/0?.
3. T+ *;-0 )0+('+ 0 +*(+ '' 0 /0:(;'/0 ;+ 8/9+ '
'+ L+ M+(*0' B0+( ( 0 ''+;+0' ;+ /0 '+ O::+( D*);+0'
>U-'+ '/ &)0+ 1#, 2##?
P+ 24 : 34!
9+ *;-+'+ /0 (+-+*' 0 9+ '()+ 0 *((+*' 0 '' )0+( 0
*/(*);'0*+ /' /8+ ( 7/' 0 /0:(;'/0 ( ''+;+0' 7/* /
/+ ' ;/+ '+ /08+'(.
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-
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'+( (++80' *);+0', --+(, /0:(;'/0 (+'/0 ' -+0/0 /'/'/0, +'*.
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C;-0 ( )* '+( -*+>? ' *+('/0 :( /;+: '+ '()+ ''+ : ::/(
: '+ *;-0 /0*)/0 '+ -((+ ;+ /0 (+-+*' : '+ -(+*'
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--/0' '+( /0'+(;+/(/+ ( '+( -+(0 )* R+/'(( ' '+ I)+,
B0+( ' '+ I)+, R+:)0 B0+(, A8+('//0 A+0*/+, P(/0'+( :(
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8/*+.
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8/10/2019 Financial Markets and Instruments
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9/ : ';+0' ( *;-+'/0 : ::+( :(;/'/+.
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Q T+ +/0'+ L+ M+(*0' B0+( +0)(+ *;-/0*+ 7/' '+
G)/+/0+ :( D/*)(+ 0 I08+'( P('+*'/0 0 '+( '/-)'+
(+? M(+'/0 : '+ /)+, 7/* 7/ *8+(, /0'+( /, :(;)'/0 ;(+'/0
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/)+ ;'+(/ /0*)/0 --/*'/0 :(;, -(-+*') 0 9(*)(+, 0
+*//0 0 '+ +? S++*'/0 : 8(/) +0*/+ *00+*'+ 7/' /)+, 0;+ R+/'(( '
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>:? F7)- 7/' 90+( ' '+ /)+ ' +' U-'+ '/ &)0+ 1#, 2##?
P+ 25# : 34!
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-
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-(' : -(;'+( *0'(/9)'/0 )9+*' ' */0 0 '+ +*)(/'/+ -(-+ ' :(; -(' :
-(;'+(
*0'(/9)'/0 )9+*' ' */0, 7/ 0' 9+ /-+ '(0:+((+ 9 '+ -(;'+( )(/0 '+
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'('/0 :(; '+ '+ : ://0 '+ (:' -(-+*') 7/' '+ B( '/ '+ '+ : *;;+0*+;+0' :
*/0
-+(/ ''+ /0 '+ (:' -(-+*').
PLACE LEAD MERCHANT BANKER>S? TO THE ISSUE
DATE %ITH HIS THEIR SEAL >S?
ANNE=URE TO THE DUE DILIGENCE CERTIFICATE FOR THE ISSUE OF
BY LIMITED
1. M+;(0); 0 A('/*+ : A*/'/0 : '+ C;-0.
2. L+''+( : I0'+0'SIA R+/'('/0F(+/0 C9('/0 A--(8A--(8 :( /;-(' : -0' 0
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>U-'+ '/ &)0+ 1#, 2##?
P+ 252 : 34!
>C)+ 5.3.3.1?
FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY LEAD
MERCHANTBANKER>S? ALONG%ITH DRAFT OFFER DOCUMENT
T,
SECURITIES AND E=CHANGE BOARD OF INDIA
D+( S/(,
SUB. ISSUE OF BY LTD.%+, '+ )0+( 0'+ L+ M+(*0' B0+( >? ' '+ 98+ ;+0'/0+ :('*;/0
/)+ ''+ :7
1. %+ 8+ +;/0+ 8(/) *);+0' /0*)/0 '+ (+'/0 ' /'/'/0 /+
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12. R+-(' :(; G8+(0;+0' +0*/+ +-+(' +0*/+ *0)'0' *;-0 (+(/0 ;(+'
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PLACE LEAD MERCHANT BANKER >S? TO THE ISSUE
DATE %ITH HIS THEIR SEAL >S?
>U-'+ '/ &)0+ 1#, 2##?
P+ 253 : 34!
>? '+ (:' -(-+*')+''+( : ::+( :(7(+ ' '+ B( / /0 *0:(;/'
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>9? '+ + (+
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PLACE LEAD MERCHANT BANKER>S? TO THE ISSUE
DATE %ITH HIS THEIR SEAL >S?
>U-'+ '/ &)0+ 1#, 2##?
P+ 254 : 34!
ANNE=URE TO THE DUE DILIGENCE CERTIFICATE FOR THE ISSUE OF
BY LIMITED
1. M+;(0); 0 A('/*+ : A*/'/0 : '+ C;-0.
2. L+''+( : I0'+0'SIA R+/'('/0F(+/0 C9('/0 A--(8A--(8 :(
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G8+(0;+0' ( '+ C+0'( G8+(0;+0' --/*9+.
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: '+ P(-+*') --/*9//' : FERAMRTP -(8//0 ' '+
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+' /8+ +'/?.
23. 355>D++'+?
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PLACE LEAD MERCHANT BANKER >S? TO THE
DATE ISSUE %ITH HIS THEIR SEAL >S?
355 O;/''+ '+ :7/0 *)+ 8/+ SEBI C/(*)( N. SEBICFDDILDIP142##5251 '+
&0)( 25,
2##5
T()+ *- : '+ B( (+)'/0 -+ 9 '+ /)+( )'(//0 (+-(++0''/8+ : '+ R+/'((
' *' 0 /'
9+: /0 (+'/0 ' 0/0 : '*/08+'.
>U-'+ '/ &)0+ 1#, 2##?
P+ 256 : 34!
CHAPTER5
CAPITAL MARKET
M(+' :( L0 '+(; :)0/0
M(+' ;(+ :( (+'/ /08+'( .
A *+ -+*)'/8+ ;(+'.
V'/+ ;(+'.
C-/' ;(+' *;-(/+ : .
I..1..ISSUERS
CORPORATES.
COMMERCIAL BANKS,FINANCIAL INSTITUTIONS.
I..2. INSTRUMENTS..> PRODUCTS?
E$UITY SHARES..
PREFERENCE SHARES.
DEBT FAMILY.
DEBENTURES
.FULLY CONVERTIBLE ,
PARTLY CONVERTIBLE ,
NON CONVERTIBLE,
BONDS..CONVERTIBLE, REDEEMABLE
I3.. INTERMEDIARIES..
MERCHANT BANKER.
REGISTRAR TO ISSUE.
BANKERS TO ISSUE.
UNDER%RITERS
BROKERS.
DEBENTURE TRUSTEE.
I..4.. INSTITUTIONS..
STOCK E=CHANGES.
DEPOSITORIES.
CUSTODIANS.
CREDIT RATING AGENCY.
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SEBI GUIDELINES %ILL BE FOLLO%ED .
MERCHANT BANKER IS THE IMPORTANT INTERMEDIARY IN
CARRYING OUT THIS E=ERCISE %ITH A PROPER PLANNING AND
COORDINATION.
INVESTORS CAN SUBSCRIBE TO THE ISSUE OR MAKEA BID FOR THE
ISSUE DEPENDING UPON THE NATURE OF ROUTE TAKEN BY THE
ISSUER.
SEBI HAS GIVEN GUIDELINES FOR THE PLAYERS IN THE CAPITAL
MARKET
CHAPTER..6
MERCHANT BANKING
NECESSITY OF SUCH SERVICES..
CHANGE IN INDUSTRIAL SCENARIO..GRO%TH IN CORPORATE SECTOR
NE% SOURCES OF FUNDS.
LACK OF PROFESSIONAL SERVICES
PROPER CAPITAL STRUCTURING.
COMPLE=ITY IN CAPITAL MONEY MARKET PRODUCTS.
IDENTIFYING APPROPRIATE SOURCE.
ACTIVITIES
PRO&ECT COUNSELLING
PRO&ECT APPRAISAL SERVICES
LOAN SYNDICATION
ISSUE MANAGEMENT.
TREASURY MANAGEMENT SERVICES.
INTERNATIONAL FINANCE.
ADVISORY SERVICES..
ROLE AND RESPONSIBILITIES OF MERCHANT BANKER.
MERCHANT BANKERSELF
A PROFESSIONAL IN THE FINANCE FIELD.
A %ELL ORGANISED FINANCE PROFESSIONAL.
IDENTIFIED AS A CORPORATE FRIEND.
A %ELL INFORMED INTERMEDIARY.
$UALITIES
GOOD LISTENER.
PLANNER.
ORGANISER.
COORDINATOR.
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RELATIONSHIP MANAGER.
INDUSTRYMARKET KNO%LEDGE.
ANALYTICAL SKILLS.
ISSUE ASSIGNMENT...MERCHANT BANKER
LEAD THE TEAM
CORRECT GUIDANCE PROPER PRICING
PROFESSIONAL %ORK.
SUCCESS.
MERCHANT BANKER
S) ..
B+ ' D)+ //+0*+ 7(.
U0+('0 '+ D/*)(+ *0*+-'.
D P(-+( -(/*/0 : '+ +*)(/'/+.M(+' '+ +*)(/'/+ +::+*'/8+.
ISSUE MANAGEMENT
F(; ..M+(*0' B0+( 8/+7
ONLY ACTIVITY ..VISIBILITY OF M. B.
PLAN THE ACTIVITY.
ACTIVITY CHART AND RESPONSIBILITY.
GOOD RELATION %ITH OTHER INTERMEDIARIES .
UNDERSTAND THE MARKETPRICE THE ISSUE PROPERLY.
EACH ASSIGNMENT IS DIFFERENT.
DRAFTING OF THE OFFER DOCUMENT AND CAPITAL STRUCTURE IS VERY IMPORTANT.
MARKETING .MERCHANT BANKER
PROPER PRESENTATION TO INVESTORS.
IDENTIFY PROPER SOURCES.
NOT A SECONDARY MARKET MAN
RESPONSIBILITIES.
COMMITTMENT TO ISSUER.
COMMITTMENT TO INVESTORS. > DISCLOSURE ?
FOLLO% THE ETHICS.
NO COMPROMISES.
GOALSUCCESS
FOLLO% UP. RELATION BASED.
CONTINUITY IN SERVICES.
BUILDING UP SELF IMAGE
MORE PROFESSIONAL APPROACH.
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CASE STUDY FOR A MERCHANT BANKING ACTIVITY..
COST OF THE PRO&ECT HAS BEEN GIVEN FOR T%O DIFFERENT SITUATIONS.
HO% A MERCHANT BANKER ADVISES HIS CLIENT ABOUT THE FURTHER PLAN OF
ACTION FOR FUNDING .
RS IN LAKHS I II
NE% UNIT 6 YEARS OLD
LAND 2#.## 5#.##
LAND DEVELOPMENT 5.## 1#.##
BUILDING
FACTORY 5.## 25#.##
OFFICE 2#.## 1##.##
$UARTERS 5#.## 15#.##
PLANT ANDMACHINERY . 3##.## "##.##
MISC
FI=ED ASSETS 5.## 2##.##
PRELIM AND
PREOP E=P 5#.## 15#.##
CONTINGENCIES.. 35.## 14#.##
TECHNOLOGY
TRANSFER.. ##.## 3##.##
%ORKING CAPITALMARGIN. 2#.## 15#.##
TOTAL 65#.## 24##.##
SOURCES OF FUNDS..
GROUP1
TERM LOAN ..FROM BANKS, FIS, SFCS AND NBFCS
FOREIGN CURRENCY LOAN ..FROM CBS AND FIS
D.P.G ...FROM CBS
LEASING FINANCE FROM .NBFCELCO..
HIREPURCHASE..FROM ..NBFC.HP CO.
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P(+*'1.
R..65#.## L
F)0+.
R 325.## .P(;'+( *0'(/9)'/07/ 9+ +
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> ' 07 ;(+ 9)' '+ *'/8/'/+ ..READ THE ADVERTISEMNT OF AN
ISSUE.RECOMMENDATIONS ..VISIT SEBI %EBSITE AND READ THE OFFER
DOCUMENTS UNDERSTAND THE CAPITAL STRUCTURE.LOCK IN PERIOD..DUE
DILIGENCE DONE BY THE [email protected] THE ALLOTMENT ADVT TO UNDERSTAND THE
CONCEPT OF BASIS OF ALLOTMENT .?
DEBT SECURITIES LISTING
SEBI HAS COME OUT %ITH THE GUIDELINES REGARDING PUBLIC OFFER AND LISTING
OF DEBT SECURITIES DURING M 2##!..
T+ )/+/0+ (+ *+( 0-(;'+( *0'(/9)'/0, /*)(+ ,D+9+0')(+ '()'++ +'*
TRADING..SECONDARY MARKET OPERATIONS.
T(/0 ;+0 9)/0 0 +/0 : +*)(/'/+ '' (+ /'+ 0 '+ '* +*0+.
T+ '(/0 ' 9+ 0+ '() 0 )'(/+ 9(+( 7 / ;+;9+( : '* +*0+0 (+/'+(+ 7/' SEBI..
T+ */+0' ) 8+ *0'(*' /0+ 7/' -+*/:/+ 9(+( ' '+ '(0*'/0.
T 9+*)+ : 0/0+ '(/0 '+ +''+;+0' 0 '(0-(+0* : '+ '(0*'/0 *0 09+
)0+(' 9 '+ */+0'.
T+(+ (+ 9/* '(++ '-+ : I08+'( ..-+*)'/8+.(' '+(; 0 '+(; ..
@S+*0( ;(+' :*//''+ 9)' + 0' +0)(+ /
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V(/) :*'( ::+*' '+ ;(+' (+)(.
S/0*+ -' '7 +( C-/' ;(+' /0'()*+ D+(/8'/8+ '(/0, /0 '+ :(; : O-'/0
0 :)')(+.
51 C;-0/+ 8+ 9++0 /+0'/:/+ 7/* *0 9+ *0/+(+ )0+( '/ *+;+.
T/ ;(+' / +' ' +8+-.
A '+ -+('/0 (+ '+*0 (/8+0.
T+ +*0( ;(+' '(0*'/0 >'(/0?/0 +;' :(;' 0,.
STOCK E=CHANGE'')'(/ +:/0+ 0 9 : /0/8/) 7+'+( /0*(-('+ ( 0'
*0'/')'+ :( '+ -)(-+ : /'/0 ( *0'(/0 '+ 9)/0+ : +/0 ( +/0 /0 +*)(/'/+,.
S+*)(/'/+ *0'(*'> R+)'/0 ? *' 1"56
IMPORTANCE..
SUPPORT FOR &OINT STOCK ENTERPRISES.
FACILITY TO DEAL IN SECURITIES.
LI$UIFY THE CAPITAL IN AN ENTERPRISES BY AN INVESTOR.
%ITHOUT STOCK E=CHANGE THE CAPITAL %OULD HAVE BECOME
IMMOBILISED.
S'* +*0+ (+ )9+*' ' -(/;( (+)'/0..
T+ S+*)(/'/+ 0 *0'(*' (+)'/0 *' 1"56..' (+)'+ )0+/(9+ '(0*'/0 /0 +*)(/'/+
21 (+/0 '* +*0+ ..
CLOSURE OF SOME E=CHANGES
OTCEI.OVER THE COUNTER E=CHANGE OF INDIA.
> *0 9+ *0/+(+ 22 0 +*0+?
C;;+0*+ -+('/0 /0 1""1.
M++ 0 '+ NASDA$ > N'/0 */'/0 : S+*)(/'/+ ++( 0 )';'+
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T(0-(+0* : -+('/0.+0
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FOR BOOK BUILDING PROCESS THE SUBSCRIPTION HAS TO BE MADE ONLY BY THE
DEMAT ACCOUNT HOLDERS.
CUSTODIAL SERVICES.
R+'/0 ' +*)(/'/+ ;+0 ..:+ ++-/0 : +*)(/'/+ : */+0' 0 -(8//0 /0*/+0' +(8/*+..
M/0'/0/0 : **)0'.
C+*'/0 : 9+0+:/'.
R+*0*//0 '+ (+*(.
DERIVATIVES
A(+ /0'();+0' 7+ 8)+ / +(/8+ :(; '+ 8)+ : 0+ ( ;(+ )0+(/0 +-)(+.
C;;0 070 +(/8'/8+(+.FOR%ARDS..FUTURES..
OPTIONS.S%APS.
FUTURES.BASED ON INDICESARE .INDE= FUTURES.
BASED ON STOCKS..ARE..STOCK FUTURES.
ON THE SAME LINES THE OPTIONS ARE DEFINED..
FOR%ARDS..
A FOR%ARD CONTRACT IS A CONTRACT TO BUYSELL THE UNDERLYING ON A FUTURE
DATE AT A PRICE THAT IS DETERMINED TODAY.
NEGOTIATED BET%EEN T%O PARTIES
OUTSIDE THE FRAME %ORK OF STOCK E=CHANGE
THE CONTRCTS ARE ILLI$UID.
RE NEGOTIATE %ITH MUTUAL CONSENT..
FUTURES
ARE LIKE FOR%ARDS , E=CEPT THAT THEY ARE TRADE IN STOCK E=CHANGE. ONTHE BASIS OF STANDARD CONTRACTS
T+ '(+ )(0'++ 9 S'* +*0+.
N+'/'/0 / 0 '+ -(/*+.
P/'/0 (+ /
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O'+( -('> O-'/0 7(/'+(? / 9/+ ' '+ '+(; : '+ *0'(*'.
C0'(*' -+ 0 +-/('/0 '+.
O-'/0 -(+;/); ' 9+ -/ 9 '+ -'/0 9)+(.
A0 -'/0 ' 9) / *+ C -'/0..
A0 -'/0 ' + P)' -'/0
A0 A;+(/*0 -'/0 *0 9+ ++(*/+ 0'/;+ 9+:(+ ;')(/'. S'* -'/0
A0 E)(-+0 -'/0 *0 9+ ++(*/+ 0 0 ;')(/'.I0+ -'/0.
S%AP..
A 7- / 0 ((0+;+0' 9+'7++0 '7 -('/+ ' +*0+ '(+; : -;+0' **)'+ 0
/::+(+0' 9+.
MARGINS..
I0 '+ C-/' ;(+' +*0( ;(+' -+('/0 ..'+(+ / *0*+-' : 8/0 +
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ACCUMALATE
SELL
BOOK PROFITS
HOLD . EARLIER BUY RECOMMENDATIONS..SAYS HOLD MEANS IT HAS BEEN DO%N
GRADED.
OVER%EIGHT
OUTPERFORMER
UNDER%EIGHT
UNDERPERFORMER
INTERNATIONAL FINANCIAL REPORTING STANDARDS..
A**)0'/0 '0( +8+-+ 9 '+ I0'+(0'/0 **)0'/0 '0( 9( 7/* / 9
'0( :( -(+-('/0 : :/00*/ ''+;+0' .
I0 I0/ :(; A-(/ 2#11..' 9+ :7+ 9 *;-0/+ /'+ 0 BSE 0 NSE , '+( '0 0+' 7('
: ( 5## *(.
B0 0 /0)(0*+ *;-0/+ 7/ *08+(+ :(; A-(/ 2#13.
I0 I0/ /' 0++ '(/0/0 , /;-+;+0'/0 IT )--(',/0'+(0 /0:('()*')(+
I0/ 0++ ' ;+0 SEBIW I0)(0*+ 0 RBI (+)'/0.
STOCK MARKET INDE=..
I' / 0);9+( ;+)(/0 '+ (+'/8+ 8)+ : ()- : '*.
V)+ : '+ ()- *0+ 7/+ '+ (+ '(+.
I' / '+ /'(/* *;-(/0 : : (+')(0 0 ;0+ /08+'+ /0 '* ;(+'.
I' (+/' (+:+*' '+ ; : '+ ;(+'.
F( ;0 /' / '+ -)+ : '+ +*0;.
M(+' I0+ (+ *0'()*'+ 9 7 : 8)+ 7+/'+ ;+'. %(+ 9+ 0 9+ /0+ ('+.
VARIOUS ANALYTICAL APPROACH FOR VALUATION OF STOCKS..
F)0;+0' 0/.
P(*+ : /0 ' *;-0@ 9)/0+ :(; /08+';+0' -/0' : 8/+7.
A0/ : C;-0@ ;0+;+0' *-9//'/+,*;-+'/'/8+ 80'+ , + ('/ : 9)/0+,
T+*0/* A0/
F)')(+ 8)+ : (+, 8);+ '(+, + 0' ' :/00*/ ( :)0;+0' S( -(/*+
;8+;+0' '+*0/* /0/*'(, *(' -''+(0.
$)0'/''/8+ 0/.
P(*+ : +'+(;/0/0
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I PO GRADING..
IPO (/0 / +(8/*+ /;+ ' :*//''/0 '+ +;+0' : +
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SECTION.!
NON BANKING FINANCIAL COMPANIES..> NBFC?
T++ (+ '+ /0'/')'/0 7/' )' -(-+( +:/0/'/0 . T+ *0 **+-' +-/' 0 +0 /0 0
;00+(.
T++ /0'/')'+ 7+(+ /0 -(+ B0/0 . RBI 9+*;+ '+/( (+)'( )'(/' /0 1"".
I0 '+ ;/'+(; (+8/+7 : M0+'( -/* : 2##6 X2## ' '+ (+
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HIRE PURCHASE
MODE OF FUNDING THE GOODS TO BE PURCHASED AT A FUTURE DATE.
INITIALLY LET ON HIRE..HIRER HAS AN OPTION TO PURCHASEPAYMENT OF
INSTALMENTS FOR A SPECIFIC PERIOD .
TRANSACTIONS THROUGH A CONTRACT.
PROPERTY PASSES TO HIRER ON PAYMENT OF LAST INSTALMENT.
EACH INSTALMENT IS TREATED AS HIRE CHARGES.
HIRER CHARGES THE DEPRECIATION TILL HE USES THE ASSETS.
IT IS A BALANCE SHEET ITEM.
HIREE HAS A RIGHT TO TAKE BACK THE ASSET IN CASE THE INSTALMENT IS NOT
PAID.
SIMILAR TO BANK TERM LOAN.
MARGIN IS STIPULATED.
RATES %ILL BE $UOTED AS FLAT RATE.
THE EMI PAID %ILL BE BIFURCATED AS PRINCIPAL AND INTEREST FOR
ACCOUNTING PURPOSE. NORMALLY THIS %ILL BE USED TO AC$UIRE MOVABLE OR SMALL
E$UIPMENTS.
MORE POPULAR IN VEHICLE FINANCING.
BOTH HIRER AND HIREE HAVE DUTIES, RESPONSIBILITIES AS DEFINED IN THE
AGREEMENT.
THE APPRAISAL IS SAME AS BANK TERM LOAN.
CREDIT RATING
S E B I IS THE REGULATORY AUTHORITY.
MEANS ESTIMATING %ORTH OR VALUE OF OR ASSIGN VALUE TO..
THIS IS ONLY FOR INDUSTRIAL SECURITIES
RATING E=PRESSES THE CREDIT $UALITY OF THE SECURITY USING SYMBOLS.
RATES THE SECURITY NOT THE ISSUER.
NOT A RECOMMENDATION BY THE RATING AGENCY.
PROCESS EVALUATES THE RISK ASOCIATED %ITH THE INSTRUMENT.
DONE FOR DEBT INSTRUMENTSFI=ED DEPOSITS.
RATING INSTITUTIONS
1. CRISIL.1"!!PROMOTED BY I C I C I .
2. ICRA1""#..PROMOTED BY I F C I
3. CARE1""3..PROMTED BY I D B I
4. FITCHPRIVATE SECTOR.
NEED..
GRO%ING CASES OF DEFAULT BY COMPANIES.
&UDGING THE DEBT OBLIGATION.
INVESTOR SHOULD UNDERSTAND THE RISK.
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BENEFITS
INVESTORS.
RECOGNITION OF RISKS
CREDIBILITY OF THE ISSUER.
SYMBOLS EASY TO UNDERSTAND.
INVESTMENT DECISION.INDEPENDENTLY DONE.
SELECTION INSTRUMENTS FOR INVESTMENTS.
ISSUER..
RATING AS A MARKETING TOOL.
LO%ER COST OF FUNDS.
REACH MORE INVESTORS.
SELF DISCIPLINE BY ISSUERS.
GOOD RATED INSTURMENTSIMPROVES ..GOOD %ILL. REPUTATION.
ADVANTAGES IN GENERAL.
SOURCE OF RELIABLE INFORMATION.
STRENGTHS AND %EAK NESSES IDENTIFIED.
INVESTMENT MARKET ..%ILL BE STRONGER.
SYMBOLS
HIGHEST SAFETY.. AAA
HIGH SAFETY. AAA
ADE$UATE SAFETY ..AA
MODERATE SAFETYA
INADE$UATE SAFETYBBB
HIGHRISKBB
SUBSTANTIAL RISK..B
DEFAULT.C
RATING PROCESS.
MANUFACTURING COMPANY..
1. BUSINESS ANALYSIS.
2. INDUSTRY RISK.MARKET.
3. OPERATING EFFICIENCY.
4. MANAGEMENT ANALYSISPOLICIESSTRATEGIES.S%OT..PHILOSOPHY
DISCUSSION %ITH KEY PERSONNEL.
5. FINANCIAL ANALYSIS..ACCOUNTING $UALITYEARNINGSCASH
FLO%S
FINANCIAL SERVICES COMPANY.
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1. CAPITAL ADE$AUCY.
2. ASSET@S $UALITY
3. LI$UIDITY
4. PROFITABILITY
5. FUNDAMENTAL ANALYSIS
6. REGULATORY ENVIRONMENT.
LOT OF REFORMS HAS BEEN DONE IN THE SYSTEM. T%O AGENCIES RATING IS A
MUST.
THE RESPONSIBILITY OF THE RATING AGENCIES IS YET TO BE LOOKED INTO.
MUTUAL FUNDS..
A '-+ : F/00*/ /0'+(;+/( '' - '+ :)0 : /08+'( 7 ++ '+ ;+ +0+(
/08+';+0' 9+*'/8+ 0 /08+' /0 /::+(+0' :/00*/ -()*'.
T+ /08+'( (+ '+ U0/' +(.
STRUCTURE OF MUTUAL FUNDS IN INDIA..
1. SPONSOROR
2. TRUSTEES.
3. A.M.C.
4. CUSTODIANS
5. AGENTS.
6. R T I
. BANKS
SPONSOROR ESTABLISHES FUND.
REGISTRATION %ITH S E B I .
APPOINTS BOARD OF TRUSTEES.
TRUST DEED DEFINES THE OB&ECTIVE EACH SCHEMES.
TRUSTEES HOLD ASSETS ON BEHALF OF UNITHOLDERS.
APPOINTS ASSET MANAGEMENT COMPANY.
APPOINTS CUSTODIAN OF THE FUND.
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A M C@S FLOATS THE SCHEMES AND MANAGES THEM ACCORDING TO THE
SEBI REGULATIONS.
CUSTODIAN HOLDS THE SECURITIES IN SAFE KEEPING.
REGISTRAR MAINTAINS THE UNIT HOLDER@S ACCOUNTS.
SCHEMES DRA%N UP %ITH A PURPOSE .THE NAME INDICATES THE CATEGORY
GRO%TH FUNDS.
BOND FUNDS.
MONEY MARKET FUNDS.
E$UITY INCOME FUNDS.
SECTOR FUNDS.
T%O TYPES OF FUNDS ARE THERE..
1. OPEN ENDED FUNDS..
T++ '-+ : *+;+ (+ -+0 :( -+*/:/* -+(/ /0 '+ /0/'/ ::+( .
A0 /08+'( *0 +0'+( ( +/' /0 '/ *+;+ '+ S+*0( ;(+' / -+0 .
T+ +*0( ;(+' -+('+ 0 NAV *0*+-'.
2. CLOSE ENDED FUNDS.
T++ (+ :)0 -+0 :( -+*/:/* -)(-+ .;/0 ' 9+0+:/' *+;+ 7+(+ '+ :)0
/08+'+ 9 '+ )0/' +( / *+ /0 :( '(++ +( ( ;(+ . S;+ *+;+ (+ /'+ 0 '*
+*0+ :( +*0( -+('/0 .
N A V .NET ASSET VALUE
M(+' 8)+ : /08+';+0' R+*+/89+ O'+( **()+ /0*;+ '+( +'
A**()+ +-+0+ '+( -9+'+( /9//'/+
N : )0/' )' '0/0 0 NAV '+.
C*)'/0 : NAV / 0 /0'+0/8+ -(*+ '' '+ -*+ /0 (' '/;+ :(;+ ' '+ +0 : +*
9)/0+ .
T+ + ( (+
-)(*+ : )0/' (+ 9+ 0 NAV -(/*+.
E=IT LOAD.
S;+ *+;+ 7/' 0 /0'+0'/0 : ;/0 '+ /08+'( 0' ' (+++;
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R/ --+'/'+
I08+';+0' '+0)(+..(/ /08+';+0' ;)' 0' 9+ + :( 0. I' 7/ '+ '/;+ ' (+*8+(.
I08+';+0'
P+(:(;0*+.
CRISIL HAS *;-/'+ -+(:(;0*+ (0/0 ;+'..(0/0 : ;)') :)0 *+;+'7
+( NAV /'( 1## -(': /*)(+ 0 (0/0 '+.
AMFI. A-+ 9 : (+/'+(+ AMC@ 9+*'/8+ : '+ AMFI / ' -(;'+ /08+'(@
/0'+(+' 9 +:/0/0 0 ;/0'/0/0 / +'/* 0 -(:+/0 '0(.
S E B I / '+ (+)'( )'(/' ..
MUTUAL FUNDS INVESTMENT..
T+ :7/0 (+ '+ (+ : /08+';+0'
ADR@SGDR@S /)+ 9 I0/0 ( :(+/0 *;-0/+.
E FACTORS?
A0 9)/0+ *0*+(0 > THE CLIENT ? +/0 ( +(8/*+ ' '(+ *)';+(>THE
CUSTOMERS? 7+(+ 9 '+ :*'( -)(*+ '+ */+0'@ **)0' (+*+/89+ 9 +9' +/'+(
7/' ( 7/')' (+*)(+ ' '+ */+0' 0 /0 (+'/0 '+(+' *0'( '+ *(+/' +'+0+ ' '+
*)';+( 0 ;/0/'+( '+ + ++(.
S; 0 ;+/); *+ )0/' 0++ )* +(8/*+.
C+*'/0 : (+*+/89+ 0 '/;+.
D+ + ;(+ *;-/*'/0.
FACTORS DOES..
A((0+;+0' : *+*'/0 +9'.
A;/0/'('/0 : + ++(.
C8+(/0 *(+/' (/ /088+.
A8/( +(8/*+ 9 '+ ;(+' /0:(;'/0.
FACTORS.+ 7/' (+*)(+ :*'(/0/0 I0/.
FOR A CLIENT
OFF BALANCE SHEET ITEM.
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INSTITUIONS FOLLO%S UP.
MORE TIME FOR BUSINESS DEVELOPMENT
IMPROVE RETURN.
CAN AVOPID RISKY CUSTOMER.
COMFORTABLE CASH FLO%.
GOOD REPUTATION IN MARKET.
COMPARED TO BILLS DISOCUNTING>BANKS?. P*+ : +(8/*+.
N )-:(0' :++.
E -(*+)(+.
M/;); :)0 8/9+.
L+( *' : :)0.
S'()*')(+ :( +* *)';+(.
O:: 90*+ ++' /'+;.
I+0'/:/*'/0 : *)';+(.
A : 07 F*'( 8+ /0'()*+ -)(*+ 9/ :*'(/0 7+(+ /0 -)(*+ ;+ 0 *(+/'7/ 9+ :/00*+.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
FORFEITING
F/00*/0 (+*+/89+ ../0'+(0'/0 '(+.
P)(+ :/00*/0 ((0+;+0'.
%/' )' (+*)(+.
A (/ *8+(+.
A*'/8/' -(+ 8+( 3 ' 5 +(.
E-('+( + ' /;-('+( 0 +:+((+ -;+0' 9/.
B/ (70 9 +-('+( 7/ 9+ **+-'+ 9 I;-('+(.
P(;/( 0'+ /0 )(0'++ 9 +0(+;+0' 9 '+ /;-('+(@ 90.> AVAL?
E-('+( +0'+( /0' 0 ((0+;+0' 7/' FORFEITER ' + '+ 8+ 0'+ '
/*)0' 7/' )' (+*)(+.
DISCOUNTING OF THESE GUARANTEED NOTESPRICING DEPENDS UPON.
TERMS OF THE NOTES.
RATING OF THE GUARANTOR .
MARGIN TO COVER THE RISK
DAYS OF GRACE,
COMMITMENT CHARGES
RATE OF INTEREST.
FORFEITOR CAN HOLD THESE TILL MATURITY OR ELSE CAN SELL IT AS HIGHLY
SECURED PAPER
I;-('0' '/0 +(+ / '+ :/00*/ -/'/0 : '+ 90 7/* /8+ )(0'++.
!!!!!!!!!!!!!!!!!!!!!!!!!!
VENTURE CAPITAL
CONCEPT FUNDING..INNOVATION.ENTERPRISE.
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FOCUSSES ON GRO%TH.TESTING THE REALITY OF THE CONCEPT.
LONG %AIT FOR RETURNS.
HIGH GRO%TH HIGH RISK..
INVESTMENT IN THE FORM.E$UITY.$UASI E$UITY
DEBT..CONDITIONAL LOAN.
INVESTMENT IN UNTRIED TECHNOLOGY.
AT SEEDEARLY STAGE OF FINANCINGSUPORT THE CONCEPTRD
SUPPORTSTART UPS.GRO%TH STAGEFINANCING FULL SCALEPRODUCTION.
ALSO FUNBDS TAKE OVER ..AC$UISITION..BUY OUT ..
VC HAS $UALITY OF A COMMERCIAL BANKER..STOCK MARKET
INVESTOR.ENTREPRENEUR.
GRO%TH OF THE INDUSTRY.
1"!5 SA% DEVELOPMENT FUNDS. SET UP BY D F I @S
1""# INDIA SA% SPONSORED VC@S AND PRIVATE VC@S
21 VC@S ARE OPERATING.%ITH FUNDS
DRA% BACKS.
PRIORITISATION OF THRUST AREAS.
LACK OF REGIONAL FOCUS.
LACK OF FOCUS ON ENTREPRENEURIAL DEVELOPMENT.
SUCCESS OF VC@S..
IDENTIFICATION OF PROPER PERSON BEHIND THE
PRO&ECT.ENTREPRENEURIAL SKILLS.PROFESSIONAL APPROACHABILITY
TO INNOVATEPERSUEINTEGRITY
TECHNOLOGY.. GRO%TH PROSPECTS.
SHOULD BE IN APOSITION TO DISTINGUISH BET%EEN..POTENTIAL
PERFORMER.NON STARTER..NON PERFORMER.
E=IT ROUTE..OR DISINVESTMENT.
PROMOTERS BUY BACK
IPO
ALTERNATIVE INVESTOR.
VC@S SHOULD LOOK INTO SMALL AND MEDIUM ENTERPRISES FOR SUCCESS.
GOVERNMENT POLICY GIVING INCENTIVES %ILL HELP TO IMPROVE THIS
INDUSTRY.
S E B I IS THE REGULATORY AUTHORITY.APPROVAL AND LICENSE FROM S E B I IS
A MUST >SEBI > VENTURE CAPITAL FUND? REGULATIONS 1""6.?
..
PRIVATE E$UITY
N' +:/0+ /0 0 :/00*/ /'+(')(+
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M(+ 070 P(/8'+ -*+;+0' .
C0 9+ + /0' '+( '+ :/00*/0.
C0 :/00*+ A*
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I0 +* : '++ *+ '+ 8)'/0 : '+ C;-0 0 -(/*/0 : '+ +
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A;)0' -/ / /0 '+ 0')(+ : +:+((+ -;+0' *;-)0/0 :( '+ +(8/*+ (+0+(+.
T+(+ ) 9+ *0+ /0 ''/')+ '7( -+0/0+( 7 ) 9+ '(+'+ (+-+*'+ +0/(
*/'/+0 : '+ *)0'(.
M0+;+0' -(8/+ > M+0 ? '' -+(0 7/ 9+ 9+ ' /8+ +*+0' , /0+-+0+0' , +:
(+-+*' 0 ''/0 '0( + M('+ 9*+ +*)(/'/+?
S+*)(/'/'/0 / -(*+ 9 7/* '+ :(+*' :)')(+ /0*;+ : 0 +0'/' / '(0:(;+ 0
+9' /0'();+0' .
S)/'9+ (+-*/0 '+ :)')(+ C :77/* *0 9+ -)' ' -()*'/8+ )+ /0 '+ 9)/0+.
ORIGIN..
1"# /0 USA.
M' : '+ +8+-+ *)0'(/+ '('+ ;(+' :( +*)(/'/+ +'.
1""1 . F/(' '(0*'/0 ' -*+ /0 I0/.
ASSET SECURITISATION ../ +:/0+ *(+:) '()*')(+ -(*+ 7+(+9 0 0 '+(
(+*+/89+ (+ -*+ , )0+(7(/''+0 0 /0 '+ :(; : +' 9*+ +*)(/'/+.
I' / -(*+ 9 7/* 0 // SPV? 0(; /08+';+0' 90+( .
SPV *(+'+ -+*/ +*)(/' .
O0 *;-+'/0 : '(0*'/0 /+ ..'(0:+( : +' :( 8)+ *0/+('/0 '+ +' '0
(+;8+ :(; '+ B0*+ ++' : '+ O(//0'(.
SPV + '+ +*)(/'/+ ' /08+'(.
T++ +*)(/'/+ (+ P '() *+('/:/*'+.
R+-;+0' (+*+/8+ 9 '+ (//0'( ..-+ 0 ' '+ SPV.
SPV 7( '()'.
R'/0 (+
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LEGAL PROVISIONS TO BE AMENDED
STRONG SECONDARY MARKET TO BE SET UP.
%EALTH MANAGEMENT
M0/0 : 7+' 7/' 0 /0'+0'/0 : 7+' ;/;/'/0 0 0 0 /0 9/, 7/' -(-+(
:/00*/ -00/0.
T/ +(8/*+ / 9/* 07 (+
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P('+*'/0 '+ +'.
%+' ;0+;+0' / (+*+0' *0*+-'.
S'()*')(+ /'+ -((;;+.
M(+ --)( /0 (+'/ +;+0' .
T+ *(+ : C;-+'+ /08+';+0'.
I0+-+0+0' /08+';+0' )'/0.
E* /0/8/). 0++ 0 9+*'/8+.
L0 '+(; /08+';+0' '('+.
I08+';+0' 8/( +(8/*+I08+' 90/0-(':/ ;0+(..%+'
;0+(..
NEED OF SUCH SERVICES
G(7' /0 H N % I.
D/8+(+ 9+' : -()*'.
C0*+-' : F/00*/ -00/0.
C)';/+ /08+';+0' )'/0.
I08+';+0' -(;+'+( +'+(;/0'/0.
P(-+( +' *'/0.
A+' ;0+;+0'.
E0)(+ '/;+ (+')(0.
P(-+( ' -00/0.
%HO ARE THESE PROFESSIONALS..
I0)'( +-+(/+0*++-)(+.
D;/0 07++.
H/ +(++ : +'/*.
A0'/* /.
I0+-+0+0' +*//0 ;/0 .
ACTION.
T/;+ -+0' 0 +/0 '+ */+0'@ (+
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COMMODITY MARKET .
!!!!!!!!!!!!!!!!!!!!!
ADDITIONAL NOTES.
FOREIGN INVESTMENTS IN INDIA ..
A0 /08+';+0' :7/0 :(; 0+ *)0'( ' 0'+( / :(+/0 /08+';+0' .
I0/0 G8+(0;+0' */:/+ )0+(..
F(+/0 /(+*' /08+';+0'
F(+/0 /0'/')'/0 /08+';+0'
N0 (+/+0' I0/0
P+(0 : I0/0 (//0
%HY.
C(+'/0 : /'/0 +*0;/* *'/8/'
G+0+('/0 +;-;+0'F7 : '+*0
F(+/0 I08+';+0' /0 I0/ / 8+(0+ 9 '+ FDI -/* 00)0*+ 9 GOI /0 '+ -(8//0 :
FEMA 1""".
FDI/ /(+*' /08+';+0' ' '+ -+*/:/* +0'+(-(/+.
FIII08+';+0' /0 +*0( ;(+'.
FDI / ;(+ '9+ '0 FII..
FDI *0 +0'+( *+('/0 +*'( .7/' *+//0.
FII *0 9) 0 + ..*00' 8+ ;(+ '0 1# : '+ -/ )- *-/' : '+ *;-0.
U0+( FDI /08+';+0' *0 9+ ;+ 9 00 (+/+0' /0 (+ 0 *08+('/9+ +9+0')(+ : 0
I0/0 *;-0 )0+( '7 ()'+.
A)';'/* ()'+
G8+(0;+0' ()'+ .FIPB --(8 / (+
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F(7( ;(+' *;;//0 *;;/' +*0+ (+)'( +0*)(+ +''/0 )- : C;;/'
+*0+.
MC=.M)'/ *;;/' +*0+ : I0/
NCDE=N'/0 *;;/' 0 +(/8'/8+ +*0+ '.
NMCEN'/0 ;)'/ *;;/' +*0+
TERMINOLOGIES PRIMARY MARKET
SECONDARY MARKET.
TRADING
YIELD
COST OF FUNDS
RETURN ON INVESTMENT
SECURITY
SECURITIES
SECURITISATION
DERIVATIVES.
IPOFPO
REDEEM
LISTING
$UOTATIONS.
FRENCH AUCTION
DUTCH AUCTION
A S B A
LOCK IN PERIOD
GREEN SHOE OPTION
UNDER%RITING
DEVOLVEMENT
DEPOSITORIES
D.P.
DEMAT
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BASIS OF ALLOTMENT
MOU
DDC
INTERSE ALLOCATION
PREMIUM
OFFER PRICE.
PROMOTERS CONTRIBUTION
PROMOTERS HOLDING
LEASE RENTALS.
FINANCIAL LEASE
OPERATIONAL LEASE.
RTISTA
CUSTODIANS
NAV
RECORD DATE
BOOK CLOSURE
E= RIGHTSE= BONUS
CUM RIGHTS CUM BONUS
RENOUNCING THE RIGHTS.DELISTING
PRIMARY PERIOD
SECONDARY PERIOD
RESIDUAL VALUE
E=IT ROUTE
!!!!!!!!!!!!!!!!