Professional Documents
Culture Documents
System
Financial System
Existence of a well organized financial
system
Promotes the well being and standard of
living of the people of a country
Money and monetary assets
Promotes investment
Financial System of any country consists
of financial markets, financial
intermediation and financial instruments
or financial products
Flow of funds (savings)
Seekers of funds
Suppliers of funds
(Mainly business firms
Flow of financial services (Mainly households)
and government)
Incomes , and financial
claims
Indian Financial System
Un-Organized
Organized
Money lenders
Regulators
Local bankers
Financial Institutions
Traders
Financial Markets
Landlords
Financial services
Pawn brokers
Financial Instruments
Organized Indian Financial System
Primary Market
Secondary Market
SEBI
•Brokers
•Investment Bankers
Primary Secondary •Stock Exchanges
•Underwriters
Process used
Equity Debt
Lack of transparency
Physical settlement
Variety of manipulative practices
Institutional deficiencies
Insider trading
Money Market
Lack of Integration
Treasury Bills
Commercial Paper
Certificate of Deposit
Commercial Bills
Term Money
1. Primary Segment
2.Secondary Segment
Call Money Market
FINANCIAL INSTRUMENTS
1 .Primary Markets
Helps companies in raising funds through issue of
securities like shares and debentures.
Governed by SEBI (Securities and Exchange Board of
India).
Methods of issuing securities in Primary Market:
– Public Issue
– Rights Issue
– Bonus Issue
– Private Placement
– Bought-out Deals
International Capital
Markets
Development attributed to following factors:
investors’ need to avoid taxes in their own country
and to ensure protection against depreciating home
currencies.
emergence of new technologies in the area of
financial services, development and deregulation of
financial markets
Equity Instruments
GDR:
instruments which possess a number of underlying shares held by the
custodian domestic bank of the company.
The GDRs are traded on a foreign stock exchange, issued to the non-resident
investors.
The GDR’s are denominated in the foreign currency and the underlying shares
are denominated in the local currency of the issuer.
The GDR’s are considered as common equity of the company and are entitled to
dividends and voting rights.
ADR
2. Secondary Market
Securities already issued in the primary market are traded
in the secondary market. Provides liquidity to the securities
held by the investors.
Provides liquidity to the securities held by the
investors.
Operates through stock exchanges that regulate the trading
activities in this market.
Equity Market
3. Derivatives Market
Financial derivative is a product derived from the market of an
underlying asset.
Participants:
– Hedgers
– Speculators
– Arbitrators
Types of Derivatives:
– Futures
– Options
- Caps
- floors and Collars
Debt. Market
Government of India, public sector units and corporations
together comprise as dominant issuer of debt markets in
India. Local governments, mutual funds and international
financial institution issue debt instruments as well but very
infrequently. The Central Government mobilizes funds
mainly through issue of dated securities and T-bills. Bonds are
also issued by government sponsored institutions like the
development financial institutions (DFIs) like IFCI and IDBI,
banks and public sector units. Some, but not all, of the PSU
bonds are tax-exempt. The corporate bond market comprise of
commercial papers and bonds. In recent years, there has been
an increase in issuance of
Financial Institution
Financial Institution
Financial Institutions
Industrial Development Bank of India (IDBI)
Industrial Finance Corporation of India (IFCI )
Industrial Investment Bank of India (IIBI)
Export and Import Bank of India
State Financial Corporations
State Industrial Development Corporations
Non-banking financial institution
Project Activities
Financial Services
Corporate advisory Services
Corporate advisory Services to Foreign Investors
PROMOTIONAL ACTIVITIES
The reasons to this dismal state of affairs of the company are as follows
Operational Inefficiency
Political Interference
Traditional sector financing
Higher provisioning for Non –performing assets
The steps taken for the revival of IFCI are as follows:
IFCI constituted an expert committee in 2001
To formulate a medium-to long term strategic plan for IFCI in the
emerging new business environment
The committee has laid down the road map plan for the next five years
It has made recommendations covering a wide range of structural and
operational areas
It has strengthened its risk management techniques and is putting in
efforts to bring down the NPAs to a manageable level, through
corporate debt structuring
It has initiated action against defaulters and has filed suits against
defaulter companies
INDUSTRIAL DEVELOPMENT BANK OF INDIA
Ministry of Finance
IRDA
Security Exchange Board of India
(SEBI)
For Underwriters
Related Functions:
Banker to the Government: performs merchant banking
function for the central and the state governments.
Maintains banking accounts of all scheduled banks.
Monetary Measures
Agent Training
Institute EXAM Agent Registration Agents
Portal
Ins. Co.
(Development
Officer)
IRDA Function….
Data Correction Approval (License)
• Shows list of data correction requests by DPs
• IRDA can approve these requests
Cancellation Approval (License/Certificate)
• Shows list of license cancellation requests
• IRDA can approve or reject
• IRDA can cancel with or without refund
Recall Cancellation Approval
• Shows list of license recall cancellation requests
• IRDA can approve or reject
Termination Approval
• Shows list of license termination requests by Corporate DP
• IRDA can approve or reject termination requests
Terminate License
• IRDA can terminate individual/corporate license
Thank you