Indian Financial System

Cover
Contents
Preface
About the Author
Part I: Financial System
	Chapter 1: The Financial System: An Introduction
		INTRODUCTION
			Formal and Informal Financial Sectors
			The Indian Financial System
		COMPONENTS OF THE FORMAL FINANCIAL SYSTEM
			Financial Institutions
			Financial Markets
			Financial Instruments
			Financial Services
			Interaction Among Financial System Components
		FUNCTIONS OF A FINANCIAL SYSTEM
		KEY ELEMENTS OF A WELL-FUNCTIONING FINANCIAL SYSTEM
		FINANCIAL SYSTEM DESIGNS
		NATURE AND ROLE OF FINANCIAL INSTITUTIONS (INTERMEDIARIES) AND FINANCIAL MARKETS
			Financial Markets
			Money Market and Capital Market
			Primary Capital Market and Secondary Capital Market
			Characteristics of Financial Markets
			Functions of Financial Markets
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		REFERENCES
	Chapter 2: The Financial System and the Economy
		INTRODUCTION
			Types of Economic Units
		A MACRO-ECONOMIC FRAMEWORK ANALYSIS FOR EXPLORING THE ROLE OF THE FINANCIAL SYSTEM IN THE ECONOMY
		NATIONAL INCOME ACCOUNTS
			Classification of the Indian Economy
		FLOW OF FUNDS ACCOUNTS
			Flow of Funds-based Indicators of Financial Development
		TRENDS IN SAVING AND INVESTMENT
			Why Study Saving and Investment
			Saving and Investment in India
			Household Sector Financial Saving
			Saving and Investment in the Long Run
			Conclusion
		RELATIONSHIP BETWEEN THE FINANCIAL SYSTEM AND ECONOMIC GROWTH: SOME THEORETICAL AND EMPIRICAL EVIDENCE
			Empirical Research Evidence on Relationship Between the Financial System and Economic Growth
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		REFERENCES
	Chapter 3: Reforms in the Financial System
		BACKGROUND
		INDIAN FINANCIAL SYSTEM IN THE PRE-REFORMS PERIOD
		OBJECTIVES OF FINANCIAL SYSTEM REFORMS
			Financial Efficiency, Stability, and Integration
			Conclusion
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		REFERENCES
Part II: Financial Markets
	Chapter 4: The Money Market
		INTRODUCTION
			Functions of the Money Market
			Benefits of an Efficient Money Market
			The Indian Money Market
			Role of the Reserve Bank of India in the Money Market
			Steps to Develop the Money Market in India
			Money Market Centres
		MONEY MARKET INSTRUMENTS
		TREASURY BILLS
			Features of T-Bills
			Types of T-Bills
			Importance of T-Bills
			Development of the T-Bills Market
			Participants in the T-Bills Market
			Sale of T-Bills
			Types of Auctions
			91-Day T-Bills
			Size of the 91-Day T-Bills Market
			364-Day T-Bills
			182-Day T-Bills
			Implicit Yield at Cut-off Prices
			Sale of Government of India Treasury Bills by Auction
			Conclusion
			Cash Management Bills (CMBs)
		COMMERCIAL PAPER
			The Process for Issuing a CP
			Summary of Guidelines for Issuance of a CP
			Stamp Duty on CP
			Size of the CP Market
			Secondary Market in CPs
			Factors Inhibiting the Growth of the CP Market
		COMMERCIAL BILLS
			Types of Commercial Bills
			Features of Commercial Bills
			Measures to Develop the Bills Market
			Size of the Commercial Bills Market
		CERTIFICATES OF DEPOSIT
			Measures to Develop the CD Market
			Guidelines for Issue of Certificates of Deposit (CDs)
			Secondary Market for CDs
			Size of the CD Market
			Factors Inhibiting the Growth of CDs
			Comparison of Certificates of Deposit and Commercial Papers
		CALL/NOTICE MONEY MARKET
			Introduction
			Why Call Money
			Participants in the Call Money Market
			Role of the Reserve Bank in the Call Money Market
			Link Between the Call Money Market and Other Financial Markets
			Call Rate
		MIBOR
			Call Rates Volatility
			Factors Influencing Call Money Market Rate
			Measures for Curbing High Volatility
			Call and Notice Money Market
			Term Money Market
		COLLATERALIZED BORROWING AND LENDING OBLIGATION (CBLO)
		LINK BETWEN THE MONEY MARKET AND THE MONETARY POLICY IN INDIA
		TOOLS FOR MANAGING LIQUIDITY IN THE MONEY MARKET
			Reserve Requirements
			Interest Rates
			Base Rate
			Methodology for Computing Base Rate
			Bank Rate
			Standing Liquidly Facilities for Banks/Primary Dealers
			Repos
			Market Repo Transactions in Government Securities Market
			The Revised Guidelines for Repo, Reverse Repo and Re-repo are as Under
			New Operating Procedure of Policy Instruments
			Monetary Policy Framework
		AN OVE RVIEW OF THE MONEY MARKET
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		REFERENCES
	Chapter 5: The Capital Market
		INTRODUCTION
			Functions of a Capital Market
			Primary Capital Market and Secondary Capital Market
		HISTORY OF THE INDIAN CAPITAL MARKET
			A Brief History of the Rise of Equity Trading in India
		CAPITAL MARKET SCAMS
			Introduction
			The 1991–92 Securities Scam (The Harshad Mehta Scam)
			The 2001 Scam (Ketan Parekh Scam)
			Comparison of the Harshad Mehta Scam and the Ketan Parekh Scam
			Conclusion
		REFORMS IN THE CAPITAL MARKET
			The Primary Capital Market
			Secondary Capital Market
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		REFERENCES
	Chapter 6: The Primary Market
		INTRODUCTION
			Intermediaries to an Issue
		FREE PRICING REGIME
		BOOK BUILDING—A NEW ISSUE MECHANISM IN INDIA
			The Book Building Process
			Bidding Process
			Determination of Price
			Registering of prospectus with Registrar of Companies
			Applications Supported by Blocked Amount (ASBA) Process
			Allotment/Allocation in Book Built Issue
			Anchor Investor
			Benefits of Book Building Method
			Limitations of the Book Building Method
			Auction-based Book Building
			Reverse Book Building
		CHAPTER I
		CHAPTER II: DELISTING OF EQUITY SHARES
		CHAPTER III: VOLUNTARY DELISTING
		CHAPTER IV: EXIT OPPORTUN ITY
		COMPULSORY DELISTING
		SPECIAL PROVISIONS FOR SMALL COMPANIES AND DELISTING BY OPERATION OF LAW
		THE BOOK BUILDING PROCES
			Conclusion
		GREEN-SHOE OPTION
			Public Issue
		PRIMARY ISSUES
			Rights Issue
			Indian Depository Receipts (IDRs)
			Guidelines for Enabling Partial Two-Way Fungibility of Indian Depository Receipts (IDRs)
			Regulatory Framework for Rights Issues of Indian Depository Receipts
			Facilitating Capital Raising by Start-Ups
			Private Placement Market
			Private Placements of Securities by Companies
			Preferential Issue
			Qualified Institutions Placement (QIP)
		INSTITUTIONAL PLACEMENT PROGRAMME
		OFFER FOR SALE OF SHARES BY PROMOTERS THROUGH STOCK EXCHANGES
		RESOURCE MOBILIZATION FROM INTERNATIONAL MARKETS
			Factors Leading to an Increase in the Popularity of International Markets
			Global Depository Receipts (GDRs)
			American Depository Receipts (ADRs)
			Organizing Euro Issues
			Guidelines Relating to International Issues
			Resources raised through Euro issues
			External Commercial Borrowings (ECBs)
		GUIDELINES RELATING TO EXTERNAL COMMERCIAL BORROWINGS
		PART I
		PART II
			2. Routing of funds raised abroad to India: It may be noted that
		PART III
			3. Raising of loans as Trade Credit
			Foreign Currency Exchangeable Bonds (FCEBs)
			End-use of FCEB proceeds
			Issuing Company
			Promoter Group Companies
			Parking of FCEB proceeds abroad
		MASALA BONDS
			Framework for Issuance of Rupee Denominated Bonds Overseas
			Conclusion
		KEY TERMS
		SUMMARY
		MINI CASE
		QUESTIONS FOR DISCUSSION
		REVIEW QUESTIONS
			Answer in Brief
			Choose the Right Answer
		REFERENCES
	Chapter 7: Disinvestment of Public Sector Undertakings
		INTRODUCTION
			Disinvestment
		DISINVESTMENT MACHINERY
			Approach for Disinvestment
		DISINVESTMENT POLICY
		NATIONAL INVESTMENT FUND
			Salient Features of NIF
			Restructuring of NIF
		THE PSU SELL-OFF METHODS
			Strategic Sales Techniques
		CPSE ETF
		PROCEEDS REALIZED FROM DISINVESTMENT
		EVALUATING THE DISINVESTMENT PROGRAMME
		DISINVESTMENT OF PSUs IN DIFFERENT COUNTRIES
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		REFERENCES
	Chapter 8: The Secondary Market
		INTRODUCTION
			Functions of the Secondary Market
			Development of the Stock Market in India
		POST-REFORMS MARKET SCENARIO
			Regulation of Stock Exchanges
		ORGANIZATION, MANAGEMENT AND MEMBERSHIP OF STOCK EXCHANGES
			Demutualization of Stock Exchanges
			Policy on review of Ownership and Governance of Market Infrastructure Institutions
			Policy on Exit of Non-operational Stock Exchanges
		LISTING OF SECURITIES
		RISK MANAGEMENT
			Trading Rules and Regulations
			Circuit Breakers
			Dematerialization of Securities
		TRADING ARRANGEMENTS
			Direct-Market Access
		BULK DEAL
			Disclosures
		BLOCK DEAL
		NEGOTIATED DEALS
			Trading and Settlement
		ROLLING SETTLEMENT
		INTERNET TRADING
		STOCK MARKET INDEX
			Methodologies for Calculating the Index
			Global Stock Market Indices
			Major Indices in India
		STOCK EXCHANGES
			The Bombay Stock Exchange
			BSE Milestones
			Carry Forward Deals, or Badla
			Badla Mechanism
			Advantages
			Listing Categories
			BSE Indices
			Conclusion
		THE NATIONAL STOCK EXCHANGE OF INDIA
			Membership Pattern on the NSE
			Indices
			National Securities Clearing Corporation Limited
			Margin Requirements
			Capital Market Segment of the NSE
			Conclusion
		REGIONAL STOCK EXCHANGES
		MEASURES TO BOOST LIQUIDITY IN THE SECONDARY MARKET
			Investment by Foreign Institutional Investors in the Indian Stock Market
		FOREIGN PORT FOLIO INVESTORS
		CHAPTER I: DEFINITION OF FOREIGN PORT FOLIO INVESTORS
		CHAPTER II: REGISTRATION OF FOREIGN PORT FOLIO INVESTORS
			Application for Grant of Certificate as Foreign Portfolio Investor
			Eligibility Criteria of Foreign Portfolio Investor
			Categories of Foreign Portfolio Investor
			Procedure and Grant of Certificate
			Application to Conform to the Requirements
			Suspension, Cancellation or Surrender of Certificate
		CHAPTER III: A PPROVAL OF DESIGNATED DEPOSITORY PARTICIPANT
			Application for Approval to Act as Designated Depository Participant
			Eligibility Criteria of Designated Depository Participant
		CHAPTER IV: INVESTMENT CONDITIONS AND RESTRICTIONS
			Commencement of Investment
			Investment Restrictions
			Conditions for Issuance of Offshore Derivative Instruments
			FPI Investments
			Depositories
			Buy Back of Shares
			Conclusion
		MARKET MAKING SYSTEM
		GUIDELINES FOR MARKET MAKER
			Stock Lending and Borrowing (SLB)
			Conclusion
			Rolling Settlement
			Conclusion
			Straight Through Processing (STP)
			Margin Trading
			Conclusion
		IMPACT OF REFORMS AND MEASURES ON SECONDARY MARKET ACTIVITIES
			Conclusion
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
			Answer in Brief
			Choose the Right Answer
		REFERENCES
	Chatper 9: The Derivatives Market
		INTRODUCTION
			Economic Benefits of Derivatives
			Derivatives Defined Under the Securities Contracts (Regulation) Act, 1956
			History of Derivatives Trading
			Types of Financial Derivatives
			Distinctive Features of the Derivatives Market
			Exchange-traded Versus OTC Derivatives Markets
			Traders in Derivatives Market
		FORWARDS AND FUTURES
			Forward Contracts
			Futures Contracts
			Need for Futures Markets
			Futures Terminology
			Role of Clearing House/Corporation
			Pricing Futures
		FUTURES TRADING STRATEGIES
			Hedging with Index Futures
			Strategies for Speculation
			Arbitrage Strategies
		OPTIONS
			Types of Options
			Salient Features of Options
			Margins Applicable on Options
			Options Terminology
			Comparing Futures and Options
			Benefits of Options
			Pay-off Profile of Call Options
			Pay-off Profile of Put Options
			Pricing Options
			Assumptions Underlying the Black–Scholes Option Pricing Model
		OPTIONS TRADING STRATEGIES
			Option Spreads
			Volatility Trading
			Arbitrage with Options
			Hedging with Options
		DERIVATIVES MARKET IN INDIA
			Derivatives Market at the NSE
		DERIVATIVES TRADING IN INDIA
			Stock Index Options
			Review of Minimum Contract Size in Equity Derivatives Segment
			Derivative Products
			Participation in Derivatives Market by Mutual Funds
			Conclusion
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		REFERENCES
	Chapter 10: The Debt Market
		INTRODUCTION
			History of the Indian Debt Market
			Link Between the Money Market and the Debt Market
			Characteristics of the Debt Market
			Participants in the Debt Market
			Types of Instruments Traded in the Debt Market
			Dematerialization of Debt Securities
			Primary and Secondary Segments of Debt Market
		THE PRIVATE CORPORATE DEBT MARKET
			Regulatory Agencies Responsible for Regulating Different
			Regulations on issue and listing of debt securities
			The Primary market for corporate debt
			The Secondary Market for Corporate Debt
			Measures to Promote the Corporate Debt Market
			Change in investment Conditions/Restrictions for FPI Investments in Corporate Debt Securities
			Repo in Corporate Debt Securities (Reserve Bank) Directions, 2015
		THE PUBLIC SECTOR UNDERTAKING BOND MARKET
			Secondary Market in PSU Bonds
		THE GOVERNMENT SECURITIES MARKET
			Introduction
			Importance of the Government Securities Market (GSM)
			Issuers, Investors, and Types of Government Securities
			Government Securities Market in the Pre-1991 Period
			Objectives of Reforms in the Government Securities Market
			Some Policy Measures Undertaken in the 1990s
			STRIPS in the Government Securities market
			Retailing of Government Securities
			Investment by Foreign Portfolio Investors (FPI) in Government Securities
			‘When-issued’ Market in Government Securities
			The System of Ways and Means Advances (WMA) for the Centre
			What is Ways and Means Advances?
			Advantages of WMA
			WMA Limits
			Primary and Secondary Market Segments of the Government Securities Market
			Government Dated Securities
			Ownership pattern of central and state government securities
			Trading of Government Securities in the Secondary Market
			Settlement of Government Securities
			Medium Term Debt Management Strategy
			Tools for Managing Liquidity in the Government Securities Market
			Infrastructure Development of the Government Securities Market
			Standalone Primary Dealers (Reserve Bank) Directions, 2016
			Capital Funds and Capital Requirements
			Sources and Application of Funds
			Portfolio Management Services by SPDs
			Trading of G-Sec on Stock Exchanges
			Conclusion
			Measures to Strengthen the Government Securities Market Infrastructure
			Impact of Reforms in the Government Securities Market
			Relative Size of Financial Markets in India
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
			Answer in Brief
			Choose the Right Answer
		REFERENCES
	Chapter 11: New Financial Instruments
		INTRODUCTION
			What is a New Financial Instrument?
			Reasons for Innovations in Financial Instruments
		NEW FINANCIAL INSTRUMENTS
			Floating Rate Bonds
			Zero Interest Bonds
			Deep Discount Bonds (DDBs)
			Revolving Underwriting Finance Facility (RUFF)
			Auction Rated Debentures (ARDs)
			Secured Premium Notes (SPNs) with Detachable Warrants
			Non-convertible Debentures (NCDs) with Detachable Equity Warrants
			Secured Zero Interest Partly Convertible Debentures with Detachable and Separately Tradable Warrants
			Fully Convertible Debentures (FCDs) with Interest (Optional)
			Domestic Convertible Bonds
			Differential Shares
			Securitized Paper
			Collateralized Debt Obligations (CDO)
			Inverse Float Bonds
			Perpetual Bonds
			Municipal Bonds
		ELIGIBILITY
			Eligible Municipalities
		REQUIREMENTS FOR PUBLIC ISSUE
			General Conditions
			Disclosures in the Offer Document
			Filing of Draft Offer Document
			Utilization of Issue Proceeds
			Underwriting
		LISTING OF DEBT SECURITIES
			Mandatory Listing
		REQUIREMENTS FOR BOTH PUBLIC ISSUES AND PRIVATE PLACEMENT
			Asset Cover
			Buy-back
			Prohibitions of Mis-statements in the Offer Document
			Creation of Security for Secured Debentures
			Trust Deed
			Redemption and Roll-over
			Debenture Redemption Reserve
		CONDITIONS FOR CONTINUOUS LISTING AND TRADING OF DEBT SECURITIES
			Continuous Listing Conditions
			Trading and Reporting of Debt Securities
			Conclusion
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		REFERENCES
Part III: Financial Institutions
	Chapter 12: Development Financial Institutions
		INTRODUCTION
		EVOLUTION OF DEVELOPMENT BANKS
			Development Financial Institutions in India
		CHANGING ROLE OF DEVELOPMENT FINANCIAL INSTITUTIONS
			Universal Banking
		POLICY MEASURES RELATING TO DEVELOPMENT FINANCIAL INSTITUTIONS
			Policy Measures
		INDUSTRIAL FINANCE CORPORATION OF INDIA LIMITED
			Financing Activities
			Developmental and Promotional Activities of IFCI
			Steps taken for Revival
			Conclusion
		THE SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA
			Financial Products Offered by SIDBI
		DIRECT FINANCE
		INDIRECT FINANCE
			Micro and Small Enterprises Refinance Scheme (MSERS)
			Assistance to NBFCs
			SIDBI Foundation for Micro Credit (SFMC)
			Poorest States Inclusive Growth Programme (PSIG)
		GOVERNMENT SCHEMES
			TIFAC-SRIJAN Scheme
		RECENT INITIATIVES
		PROMOTIONAL & DEVELOPMENTAL SUPPORT
		SUBSIDIARIES/ASSOCIATES
			National Credit Guarantee Trustee Company Ltd (NCGTC)
			Receivables Exchange of India Ltd (RXIL)
			Achievements of SIDBI
			Resources raised by SIDBI
			Conclusion
		THE EXPORT-IMPORT BANK OF INDIA
			Objectives
			Exim Bank—Business Profile
			Performance and Contribution
			Conclusion
		NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
			NABARD’s Mission
			Functions of NABARD
			Promotion and Development
			Refinance
			Credit
			Direct Credit
			Rural Infrastructure Development Fund
			Economic Impact of RIDF Projects
			Thrust Areas of NABARD
			Participation in New Ventures
			Amendments to the NABARD Act, 1981
			NABARD as a Consultant
			NABARD as a Supervisor
			Institutional Development
			Conclusion
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		REFERENCES
	Chapter 13: Banking and Non-Banking Institutions
		BANKING INSTITUTIONS
		FUNCTIONS OF BANK
			Deposits
			Credit Creation
			Lending of Funds
			Ancilliary Functions
			Regulation of Banks in India
		DEVELOPMENT OF BANKING IN INDIA
		SCHEDULED COMMERCIAL BANKS
			Public Sector Banks
			Nationalized Banks
			Private Sector Banks
		LEAD BANK SCHEME
		LOCAL AREA BANKS
		DIFFERENTIATED BANKING
		SMALL FINANCE BANKS
			Operating Guidelines for Small Finance Banks issued by the RBI on 6 October 2016
		PAYMENTS BANKS
			Operating Guidelines for Payments Banks issued by the RBI on 6 October 2016
			Foreign Banks in India
			Branches of Indian banks abroad
			Setting up of off-shore Banking Units
			Mobilization, Lending and Investment of Funds
			Targets/Sub-targets for Priority Sector
			Computation of Adjusted Net Bank Credit (ANBC)
		DESCRIPTION OF ELIGIBLE CATEGORIES UNDER PRIORITY SECTOR
			1. Agriculture
		INVESTMENTS OF BANKS
			Investments in SLR Securities
			Investments in non-SLR securities
		REFORMS IN THE BANKING SECTOR
			Banking Sector Reforms
			Capital Adequacy
			Asset Quality
			Systems and Methods
			Industry Structure
			Regulation and Supervision
			Legal Amendments
			Technology in Banking
			Payment and Settlement System
			Diversification in Bank Operations
			Consolidation in Banking
			Equity Capital Raised by Public Sector Banks
			Risk Management in Banks
			Steps in risk management process
			Risk Management Tools
			Asset liability management (ALM)
			ALM guidelines
		STRESS TESTING
			Guidelines for Stress Testing
			Remedial Actions
			Prudential Regulation
			Regulatory Capital and Economic Capital
			The Basel Capital Accord
			Implementation of Basel norms in India
			Pillar 1
			Pillar 2
			Pillar 3
			Capital Adequacy Norms
			Basel II
			Composition of Regulatory Capital
			Elements of Regulatory Capital and the Criteria for their Inclusion in the Definition of Regulatory Capital
		COMMON EQUITY TIER 1 CAPITAL
			Common Equity–Indian Banks
			Common Equity Tier 1 Capital—Foreign Banks’ Branches
		ADITIONAL TIER 1 CAPITAL
			Additional Tier 1 Capital−Indian Banks
			Elements and Criteria for Additional Tier 1 Capital–Foreign Banks’ Branches
			Elements of Tier 2 Capital
			Tier 2 Capital–Indian Banks
			Tier 2 Capital–Foreign Banks’ Branches
			Regulatory Adjustments/Deductions
			Capital Charge for Credit Risk
		CAPITAL CHARGE FOR OPERATIONAL RISK
			Definition of Operational Risk
			The Measurement Methodologies
			The Basic Indicator Approach
			Part B: Supervisory Review and Evaluation Process (SREP)
			Guidelines for the SREP of the RBI and the ICAAP of Banks
			The Structural Aspects of the ICAAP
			Part C: Market Discipline
			Part D: Capital Conservation Buffer Framework
			Part E: Leverage Ratio Framework
			On-Balance Sheet Items
			Solution
			Computation of risk weighted assets
			Risk weighted assets for credit risk
			Risk weighted assets for market risk (Trading Book)
			Regional Rural Banks
			Conclusion
		COOPERATIVE BANKING
			Urban Cooperative Banks
			Supervision and Inspection of UCBs
			Investments in Non-SLR Securities by UCBs
			Placement of deposits with other banks by UCBs
			Classification of Capital Funds
			Asset Classification and Provisioning Norms
			Guidelines for merger of UCBs (having negative net worth) with DICGC support
			Rural Cooperative Banks
			Conclusion
		NON-BANKING FINANCIAL COMPANIES
			Types of NBFCs
			Other Categories of NBFCs
			Regulation of NBFCs
			Growth of NBFCs
		CONCLUSION
		KEY TERMS
		SUMMARY
		REFERENCES
		REVIEW QUESTIONS
	Chapter 14: Management of Non-Performing Assets by Banks
		INTRODUCTION
		TOOLS AVAILABLE TO BANKS TO MANAGE THEIR NPAs
			One Time Settlement/Compromise Scheme
			Lok Adalats
			Debt Recovery Tribunals
			Corporate Debt Restructuring (CDR)
			Willful Defaulters
			SARFAESI Act
			The Enforcement of Security Interest and Recovery of Debt Laws (Amendment) Act, 2012
			Asset Reconstruction Companies
		CIBIL
			Various Measures initiated by RBI to revitalise the stressed assets
			Scheme for Sustainable Structuring of Stressed Assets (S4A)
			Eligible Accounts
			Debt Sustainability
			Sustainable Debt
			The Resolution Plan
			Valuation and Marking to Market
			Overseeing Committee
			Asset Classification and Provisioning
			Flexible Structuring of Long Term Project Loans toInfrastructure and Core Industries
			Conditions for 5:25 Flexible Structuring Scheme
			The Insolvency and Bankruptcy Code, 2016
			Objectives of IBC
			Salient Features of the IBC
			Institutional Framework
		CORPORATE INSOLVENCY RESOLUTION PROCESS
			Persons who may Initiate Corporate Insolvency Resolution Process
			Initiation of Corporate Insolvency Resolution Process by Financial Creditor
			Insolvency Resolution by Operational Creditor
			Initiation of Corporate Insolvency Resolution Process by Corporate Applicant
			Persons not Entitled to Make Application
			Appointment and Tenure of Interim Resolution Professional
			Appointment of Resolution Professional (IP)
			Time-limit for Completion of Insolvency Resolution Process
			Declaration of Moratorium and Public Announcement
			Moratorium
			Public Announcement of Corporate Insolvency Resolution Process
			Distribution of assets (Priority Waterfall)
			Fast Track Corporate Insolvency Resolution Process
			Liquidation
		CONCLUSION
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		CASE STUDY
			Brief History
		ANNEXURE 14.1 PRUDENTIAL NORMS ON INCOME RECOGNITION, ASSET CLASIFICATION, AND PROVISIONING PERTAINING TO ADVANCES
			Part A
		REFERENCES
	Chapter 15: Mutual Funds
		INTRODUCTION
			Benefits of Mutual Funds
		HISTORY OF MUTUAL FUNDS
			Growth of Mutual Funds in India
		MUTUAL FUND CONCEPTS
		MUTUAL FUND INVESTORS AND ORGANIZATION OF A MUTUAL FUND
			Sponsor
			Mutual Funds as Trusts
			Asset Management Company
			Other administrative entities
			Role of Intermediaries in the Indian Mutual Fund Industry
			Types of Mutual Fund Schemes
			Functional Classification of Mutual Funds
			Portfolio Classification
			Investment Classification
			Geographical Classification
		EQUITY FUNDS
			Diversified Equity Funds
			Value Funds
			Special Funds
			Sectoral Funds
			Derivatives Arbitrage Funds
			Tax Saving Schemes
			Fund-of-Funds
			Quant Funds
		DEBT FUNDS
		OTHER FUNDS
		RISK AND RETURN IN MUTUAL FUNDS
			Returns from Mutual Funds
			Equity-oriented Schemes
			Debt-oriented Schemes
			How to Invest in a Scheme of Mutual Fund?
		SEBI GUIDELINES RELATING TO MUTUAL FUNDS
			Mutual Fund Schemes
			Investment Objective
			Pricing of Units
			government securities market.
			Disclosure Requirements
			Reporting Requirement
			Existing Schemes
			Other Aspects
			Overseas Investments by Mutual Funds
		THE ASSOCIATION OF MUTUAL FUNDS IN INDIA
			Objectives of AMFI
		UNIT TRUST OF INDIA
			UTI’s Associates
			Promotion of Institutions
			US-64
		GROWTH AND PERFORMANCE OF MUTUAL FUNDS IN INDIA
			Conclusion
		CASE STUDY 1
		CASE STUDY 2
			Net Worth
	Chapter 16: Insurance
		INTRODUCTION
			Role of Insurance in Economic Growth
			Principles of Insurance
		ORIGIN AND DEVELOPMENT OF INSURANCE
			History of Insurance in India
		OPENING OF THE INSURANCE SECTOR
		INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY
		INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY
			Mission Statement of the IRDA
			Duties, Powers, and Functions of the IRDA
			Operations of the IRDA
			Policy Holder’s Grievances Redressal System
			Policy Holder’s Grievances Redressal System
			Business to be done by an Insurer in the Rural Sector
		INSURANCE INTERMEDIARIES
			Agents
			Surveyors and Loss Assessors
			Brokers
			Third Party Administrators
			Bancassurance
		RISK MANAGEMENT
		GENERAL INSURANCE
		CROP INSURANCE
			General Insurance products
			Development of General Insurance
			Tariff Advisory Commitee
			De-tariffing in Non-life Insurance
			General Insurance Council
			Pattern of Investments
			Approved Investments for General Business
			Exposure/Prudential Norms
			Rural and social sector obligations for new entrants
			Maintenance of Solvency Margins of General Insurers
			Non-life Insurance Industry
			Conclusion
		HEALTH INSURANCE
			Health Insurance Policies
			Conclusion
		REINSURANCE
			Types of Reinsurance
			Reinsurance Business in Life and General Insurance
			Life Insurance-Reinsurance Regulations, 2000
			Non-life Reinsurance Regulations
		GENERAL INSURANCE CORPORATION OF INDIA
			Operations of GIC
			Conclusion
		LIFE INSURANCE
			Benefits of Life Insurance
			Life Insurance Products
			New Players in the Life Insurance Market
			Changing Trends in Life Insurance
			Investments
			Maintenance of Solvency Margins of Insurers
			Life Insurance Council
		LIFE INSURANCE CORPORATION (LIC) OF INDIA
			LIC Subsidiaries
			LIC Products
			Achievements of LIC
		THE LIFE INSURANCE INDUSTRY
		MICRO INSURANCE
			Micro Insurance Distribution
			Micro Insurance Regulation
			Future of Micro Insurance
		SOCIAL INSURANCE IN INDIA
			Rashtriya Swasthya Bima Yojana
			Mutual Insurance
			Conclusion
		KEY TERMS
		REVIEW QUESTIONS
		CASE STUDY 1
		CASE STUDY 2
Part IV: Financial Services
	Chapter 17: Investment Banking
		INTRODUCTION
		FUNCTIONS OF INVESTMENT BANKS
		TYPES OF INVESTMENT BANKS
		INVESTMENT-BANKING SERVICES
			Fund-raising Services
			Advisory Services
		MERCHANT-BANKING SERVICES
		SEBI (MERCHANT BANKER) REGULATIONS, 1992
			Appointment of Lead Merchant Bankers
			Merchant Banker not to act as Such for an Associate
			Underwriting Obligations
			Acquisition of Shares Prohibited
			Information to the Board
		PRE-ISSUE OBLIGATIONS
			Documents to be Submitted Along with the Offer Document by the Lead Manager
			Undertaking
			List of Promoters’ Group and Other Details
			Appointment of Intermediaries
			Appointment of Other Intermediaries
			Underwriting
			Offer Document to be Made Public
			No-complaint Certificate
			Mandatory-collection Centres
			Authorized Collection Agents
			Abridged Prospectus
			Agreements with Depositories
		POST-ISSUE OBLIGATIONS
			Post-issue Monitoring Reports
			Redressal of Investor Grievances
			Coordination with Intermediaries
			Underwriters
			Bankers to an Issue
			where the securities were proposed to be listed as per the offer document.
			Basis of Allotment
			Proportionate-allotment Procedure
			Other Responsibilities
		CHANGING LANDSCAPE OF INVESTMENT BANKING
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		REFERENCES
	Chapter 18: Depositories and Custodians
		THE DEPOSITORY SYSTEM
			Need for Setting-up a Depository in India
			Difference between a Demat Share and a Physical Share
			Benefits of a Depository System
			Cost Comparison for Trading in Physical and Demat Segments
			The Move on to a Depository System in India
			The Depository Process
			Trading/Settlement of Demat Securities
		THE NATIONAL SECURITIES DEPOSITORY LIMITED
			Business Partners of the NSDL
		THE CENTRAL DEPOSITORY SERVICES (INDIA) LIMITED
		COMPARISON OF CHARGES AT THE NSDL AND THE CDSL AND GROWTH OF DEMAT ACCOUNTS
			Growth in Demat Accounts
		CUSTODIANS
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		REFERENCES
	Chapter 19: Credit Rating
		INTRODUCTION
			The Importance of Credit Rating
			Origin of the Concept of Credit Rating
		THE GROWTH OF THE CREDIT RATING INDUSTRY IN INDIA
			Rating Methodology
			Rating Symbols
			SEBI Regulations for Credit Rating Agencies
		CHAPTER I: PRELIMINARY
		CHAPTER II: REGISTRATION OF CREDIT RATING AGENCIES
		CHAPTER III: GENERAL OBLIGATIONS OF CREDIT RATING AGENCIES
			Appointment of Compliance Officer
		CHAPTER IV: RESTRICTION ON RATING OF SECURITIES ISSUED BY PROMOT ERS OR BY CERT AIN OT HER PERSONS
		CREDIT RATING AGENCIES IN INDIA
			CRISIL Limited (formerly the Credit Rating Information Services of India Limited)
			ICRA Limited (Formerly Investment Information and Credit Rating Agency of India Limited)
			Credit Analysis and Research Limited (CARE) Ratings
			India Ratings and Research (Ind-Ra) Limited
			Brickwork Ratings
		SME RATING AGENCY OF INDIA LIMITED (SMERA)
		INFOMERICS VALUATION AND RATING PRIVATE LIMITED (Integrated Financial Omnibus Metrics Research of International Corporate Systems)
		IPO GRADING BY CREDIT RATING AGENCIES
			Limitations of Credit Rating in India
			Conclusion
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		REFERENCES
	Chapter 20: Factoring and Forfaiting
		INTRODUCTION
		FACTORING
			The Origin of Factoring
			Types of Factoring
			Factoring Mechanism
			Factoring Charges
			Legal Aspects of Factoring
			Advantages of Factoring
			Comparison of Factoring with Bills Discounting and Cash Credit
			International Factoring
			International Factoring Charges
			Factor Chain International
			Factoring in India
			Non-Banking Financial Company − Factor (Reserve Bank) Directions, 2012
			Factors Inhibiting the Growth of Factoring in India
		FORFAITING
			Origin of Forfaiting
			Characteristics of a Forfaiting Transaction
			Need for Forfaiting
			Benefits of Forfaiting
			Flow Chart of a Forfaiting Transaction
			Pricing of a Forfaiting Transaction
			Difference between Forfaiting and Factoring
			Growth of Forfaiting in India
			Conclusion
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		REFERENCES
	Chapter 21: Housing Finance
		INTRODUCTION
		ROLE OF HOUSING AND HOUSING FINANCE IN THE ECONOMY
		EVOLUTION OF HOUSING AND HOUSING FINANCE IN INDIA
		POLICY INITIATIVES AND MEASURES TO DEVELOP HOUSING SECTOR IN INDIA
			Smart Cities Mission
			Credit Risk Guarantee Fund Scheme for Low Income Housing (CRGFT)
			Real Estate (Regulation and Development) Act, 2016
		HOUSING-FINANCE INSTITUTIONS (HFIs)
			Scheduled Commercial Banks (SCBs)
			Scheduled Cooperative Banks
			Regional Rural Banks (RRBs)
			Agriculture and Rural Development Banks (ARDBs)
			Housing-finance Companies (HFCs)
			The National Cooperative Housing Federation of India (NCHF)
			Apex-cooperative Housing-finance Societies (ACHFS)
		TYPES OF HOUSING LOANS
		RISK MANAGEMENT BY HFCs
		MARKETING STRATEGIES OF HFCs
		NATIONAL HOUSING BANK
			Role of NHB in Housing Finance
			Various Initiatives Undertaken by NHB for the Development of Housing in India
			Prudential Norms for the Housing-finance Sector
		GUIDELINES RELATING TO HOUSING FINANCE
			I. Applicable to all Scheduled Commercial Banks, excluding Regional Rural Banks
			II. Applicable to Urban Co-operative Banks (UCBs)
			III. Issue of Long Term Bonds by Banks‒Financing of Infrastructure and Affordable Housing
		RESIDENTIAL MORTGAGE-BA CKED SECURITIZATION
			Benefits of Securitization
		REVERSE-MORTGAGE LOAN (RML)
			Benefits of RML
		MORTGAGE GUARANTEE SYSTEM
		HOUSING-FINANCE INDUSTRY: ISSUES AND FUTURE OUTLOOK
		KEY TERMS
		SUMMARY
		MINI CASE
		QUESTIONS FOR DISCUSSION
		REVIEW QUESTIONS
		REFERENCES
	Chapter 22: Leasing and Hire Purchase
		INTRODUCTION TO LEASE FINANCING
			Leasing and Economic Growth
			Leasing in India
		LEASE STRUCTURE
			Rights, Obligations and Responsibilities of the Lessor
			Rights, Obligations and Responsibilities of the Lessee
		TYPES OF LEASES
			Advantages and Disadvantages of Leasing
			Accounting for Lease in the Book of Lessee
			Accounting for Lease in the Book of Lessor
			Legal Aspect of Leasing
			Taxation Aspect of Leasing
		HIRE PURCHASE
			Essentials of Hire Purchase
			Difference Between Lease and Hire Purchase
			Accounting for Hire Purchase
			transaction as receivables (current assets) in the balance sheet.
			Taxation Aspect of Hire Purchase
		INSTALMENT PURCHASE
			Difference Between Instalment Purchase and Hire Purchase
			Conclusion
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		REFERENCES
	Chapter 23: Financial Inclusion and Microfinance
		INTRODUCTION TO FINANCIAL INCLUSION
			Evidences of Financial Exclusion
			Benefits of Financial Inclusion
			Process of Financial Inclusion
			Various Initiatives Undertaken for Financial Inclusion
			Conclusion
		MICROFINANCE
			Microfinance: The Paradigm
			NGOs and SHGs
			Microfinance Delivery Mechanisms
		RESOURCES FOR SUPPORTING MICROFINANCE
			Microfinance Development Fund (MFDF)
			Collaboration with External Agencies
			The Micro Financial Sector (Development and Regulations) Bill, 2007
			Micro Finance Industry
		MICRO FINANCE INDUSTRY MILESTONES
			RBI Regulations for NBFC-MFIs
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		REFERENCES
Part V: Financial Regulation
	Chapter 24: Financial Regulation
		REGULATION OF THE CAPITAL MARKET
		THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)
			Management of the SEBI under the SEBI Act, 1992
			Powers and Functions of the SEBI
			Regulations and Guidelines Issued by the SEBI
			Regulation of the Securities Market
			Supervision of Securities Market
			Inspection of Mutual Funds
			Self Regulatory Organizations (SROs)
			Investor Protection Measures
			Investors’ Education
			Investors’ Grievances Redressal
			Investors’ Associations
			Achievements of the SEBI
			Future Plans
			Conclusion
		THE RESERVE BANK OF INDIA
			Objectives of the Reserve Bank
			Organization of the Reserve Bank
			Subsidiaries
			Legal Framework
			Main Functions of the RBI
			Role of the Reserve Bank of India
			Conclusion
		KEY TERMS
		SUMMARY
		REVIEW QUESTIONS
		REFERENCES
Index