Project on Capital Market Reforms

PROJECT REPORT ON

Capital Market Reforms

SUBMITTED IN PARTIAL FULFILLMENT OF Degree of Master of Business Administration

Submitted by:

Under Supervision of: Nitish Dipankar

Department of Management Studies JAMIA HAMDARD NEW DELHI


TABLE OF CONTENTS 1) Acknowledgement 2) Executive Summary 3) Declaration 4) Bank Introduction a) History b) Business and Strategy 5) Product DetailsDetails- Saving Accounts 6) Insurance DetailsDetails- Mutual Funds 7) Research Methodology 8) Project Title- Capital Market Reforms a) Introduction b) Market Structure and Dimensions c) Reforms in Government Securities market d) Recent Initiatives 9) Data Analysis 10) Findings and recommendations 11) Annexure 1 12) Bibliography

Jamia Hamdard

Page 2


ACKNOWLEDGEMENT

I express my heartiest gratitude to my supervisor Nitish Dipankar for giving me an opportunity to prepare a report on the project assigned to me. Under his guidance I undertook this project, for extending the advice and direction that is required to carry on a study of this nature, and for helping me with the intricate details of the project at every step. Without his support and able guidance, it would have been very difficult to finish this work in the way I have done it.

However, I accept the sole responsibility of any possible errors of omission.

Jamia Hamdard

Page 3


DECLARATION I , student of Jamia Hamdard University, University, hereby declare that the project project work entitled ―Capita Market Reforms‖ has been carried out under the guidance of my supervisor

Nitish Dipankar at Standard Chartered Bank, New Delhi. It is an original bonafide work undertaken by me as a part of the course curriculum of M.B.A, FMIT (Jamia Hamdard University) The information provided in the study is authentic to the best of knowledge and the result embodied in this study has not been submitted to any other University or Institute for the ward of degree.

Jamia Hamdard

Page 4


EXECUTIVE SUMMARY

This project at Standard Chartered Bank was undertaken during the period of 6 Weeks (May 22nd '09 to July 15th ‘09) as part of my summer training. My Summer Training included the following-



Learning the basic Banking and Financial terms.



Process of various products of the bank



Ascertaining the matters related to the topic i.e. Capital Market Reforms in India



Interacting with the respondents about the questionnaire



Acquiring the Insurance related details of the Standard Chartered Bank

Jamia Hamdard

Page 5


Introduction The significant transformation of the Capital Market in India is clearly evident from the changes that have occurred in the Stock market. The developments have facilitated greater choice for investors, who have become more discerning and demanding. Currently, the most important factor shaping the world is globalization. The benefits of globalization have been well documented and are being increasingly recognized. Integration of domestic markets with international financial markets has been facilitated by tremendous advancement in information and communications technology. But, such an environment has also meant that a problem in one country can sometimes adversely impact one or more countries instantaneously, even if they are fundamentally strong. There is a growing realization that the ability of countries to conduct business across national borders and the ability to cope with the possible downside risks would depend on the soundness of the Capital market. This has consequently meant the adoption of a strong and transparent, prudential, regulatory, supervisory, technological and institutional framework in the sector on par with international best practices is necessary. All this necessitates a transformation: a transformation in the mindset, a transformation in the business processes and finally, a transformation in knowledge management. This process is not a one shot affair; it needs to be appropriately phased in the least disruptive manner.

Jamia Hamdard

Page 6


Research Methodology Methodology Research is a process through which we attempt to achieve systematically and with the support of data the answer to a question, the resolution of a problem, or a greater understanding of a phenomenon. This process, which is frequently called research methodology, has eight distinct characteristics:

1. Research originates with a question or problem. 2. Research requires a clear articulation of a goal. 3. Research follows a specific plan of procedure. 4. Research usually divides the principal problem into more manageable sub

problems. 5. Research is guided by the specific research problem, question, or hypothesis. 6. Research accepts certain critical assumptions. 7. Research requires the collection and interpretation of data in attempting to resolve

the problem that initiated the research. 8. Research is, by its nature, cyclical; or more exactly, helical. Objectives:

Objectives of a project tell us why project has been taken under study. It helps us to know more about the topic that is being undertaken and helps us to explore future prospects of that topic. Basically it tells what all have hav e been studied while making the th e project.



To learn about the Reforms in the Indian Capital Market.



To analyze the respondents‘ view about the Capital Market and related concepts.



To analyze the recent initiatives in Capital Market



To analyze the history of Standard chartered bank and its business & strategy.

Jamia Hamdard

Page 7


Duration of Study:

22nd May 2009 – 15th July 2009

Place of Study:

Standard Chartered Bank New Friends Colony New Delhi

Research Design:

Descriptive research is used in this project report in order to know about the responses to various views related to Indian Capital Market. This is the most popular type of research technique, generally used in survey research design and most useful in describing the characteristics of respondents. The methods used were following: 

Questionnaire method



Direct Interaction with the respondents.

Mode Of Data Collection: 

Primary Data: - The sources of Primary data were questionnaires and personal

interviews. 

Secondary data: - the sources of secondary data were internet, books and

newspaper articles.

Sample size : 50

Jamia Hamdard

Page 8


Introduction Introduction of the bank Standard Chartered Bank has deep roots and a long heritage in international banking. It has an extensive history in some of the world's most dynamic and fast-growing markets, such as Asia and the Middle East. No one has a better understanding of the wealth management needs of clients across these markets. Standard Chartered – a financial services giant – has top credit ratings and a 150-year history in banking, with a long-term commitment and financial investment in the Private Bank. The Standard Chartered Private Bank offers a full range of customized wealth management products and services. It uses a broad architecture approach to investment management to bring to customers some of the world‘s leading money managers and financial products. It is a London based bank, currently operational within over 70 nations with more than 1,700 branches and 73,000 strong workforce as of April 2009. Although the bank is located in Britain, still a huge chunk of its revenues originate from the continents of Asia, Africa and Middle East.

Standard Chartered Bank was formed as the merger of two banks viz. The Chartered Bank of India, Australia & China and The Standard Bank of British South Africa. The merger took place in the year 1969. Despite its British base, it has few customers in the United Kingdom and 90% of its profits come from Asia, Africa, and the Middle East. Because the bank's history is entwined with the development of the British Empire its operations lie predominantly in former British colonies, though over the past two decades it has expanded into countries

Jamia Hamdard

Page 9


that have historically had little British influence. It aims to provide a safe regulatory bridge between these developing economies. It now focuses on consumer, corporate, and institutional banking, and on the provision of treasury services — areas areas in which the Group had particular strength and expertise. Standard Chartered is listed on the London Stock Exchange and the Hong Kong Stock Exchange and is a constituent of the FTSE 100 Index. Its largest shareholder is Temasek Hodings.

History of the bank: The name Standard Chartered comes from the two original banks from which it was founded and which merged in 1969 — The Chartered Bank of India, Australia and China, and The Standard Bank of o f British South America

The Chartered Bank was founded by Scotsman James Wilson following the grant of a Royal Charter by Queen Victoria in 1853, while The Standard Bank was founded in the Cape Province of South Africa in 1862 by another Scotsman John Paterson. Both companies were keen to capitalize on the huge expansion of trade and to earn the handsome profits to be made from financing the movement of goods from Europe to the East and to Africa.

In those early years, both banks prospered. Chartered opened its first branches in Bombay, Calcutta and Shanghai in 1858, followed by Hong Kong and Singapore in 1859.

Jamia Hamdard

Page 10


With the opening of the Suez Canal in 1869 and the extension of the telegraph to China in 1871, Chartered was well placed to expand and develop its business.

In South Africa, Standard, having established a considerable number of branches, was prominent in financing the development of the diamond fields of Kimberley from 1867 and later extended its network further north to the new town of Johannesburg when gold was discovered there in 1885. Half the output of the second largest gold field in the world passed through The Standard Bank on its way to London.

Both banks – at that time still quite separate companies compan ies – survived the First World War and the Depression, but were directly affected by the wider conflict of the Second World War in terms of loss of business and closure of branches. There were also longer term effects for both banks as countries in Asia and Africa gained their independence in the ‗50s and ‗60s.

Each had acquired other small banks along the way and spread their networks further. In 1969, the banks decided to merge, and to counterbalance their existing network by expanding in Europe and the United States, while continuing their expansion in their traditional markets in Asia and Africa. All appeared to be going well, when in 1986 Lloyds Bank of Bank of the United Kingdom made a hostile takeover bid for the Group.

After having defeated the bid, Standard Chartered entered a period of change. It made

Jamia Hamdard

Page 11


provisions against Third World debt exposure and loans to corporations and entrepreneurs who could not meet their commitments. It also began a series of divestments notably in the United States and South Africa, and entered into a number of asset sales.

Business & Strategy Listed on both the London Stock Exchange and the Hong Kong Stock Exchange,Standard Chartered PLC is consistently ranked in the top 25 FTSE 100 companies by market capitalization. By combining its global capabilities with deep local knowledge, the bank develops innovative products and services to meet the diverse and ever-changing needs of individual, corporate and institutional customers in some of the world's most exciting and dynamic markets.

Personal Banking With global network of over 1,750 branches and outlets, it offers personal financial solutions to meet the needs of more than 14 million customers across Asia, Africa and the Middle East.

SME Banking SME Banking division offers a wide range of products and services to help small and medium-sized enterprises manage the demands of a growing business.

Wholesale Banking Headquartered in Singapore and London, with on-the-ground expertise that spans the global network, bank‘s Wholesale Banking division provides corporate and institutional

Jamia Hamdard

Page 12


clients with innovative solutions in trade finance, cash management, securities services, foreign exchange and risk management, capital raising, and corporate finance.

Islamic Banking Standard Chartered Saadiq's dedicated Islamic Banking team provides comprehensive international banking services and a wide range of Shariah compliant financial products that are based on Islamic values.

Private Banking Standard Chartered bank ‘s ‘s Private Bank advisors and investment specialists provide customised solutions to meet the unique needs and aspirations of high net worth clients.

Principles & Values: At Standard Chartered success is built on teamwork, partnership and the diversity of its people.At the heart of their values lie diversity and inclusion. They are a fundamental part of bank‘s culture, and constitute a long-term priority in its aim to become the world's best

international bank. Today it gives employments to 75,000 people, representing 115 nationalities, and one can find 60 nationalities among its 500 most senior leaders. Bank believes that this diversity helps to fuel creativity and innovation, supporting the development of exciting new products and services for our customers worldwide.

Standard chartered Bank stands for: Strategic intent 

The world's best international bank



Leading the way in Asia, Africa and the Middle East

Brand promise 

Leading by Example to be The Right Partner

Values 

Responsive

Jamia Hamdard

Page 13




Trustworthy



International



Creative



Courageous

Approach 

Participation Participation

Focusing on attractive, growing markets where bank can leverage its relationships and expertise



Competitive positioning

Combining global capability, deep local knowledge and creativity to outperform its competitors



Management Discipline Discipline

Continuously improving the way it works, balancing the pursuit of growth with firm control of costs and risks Commitment to stakeholders



Customers

Passionate about its customers' success, delighting them with the quality of our service 

People

Helping its people to grow, enabling individuals to make a difference and teams to win



Communities

Trusted and caring, dedicated to making a difference

Jamia Hamdard

Page 14




Investors

A distinctive investment delivering outstanding pe rformance and superior returns



Regulators Regulators

Exemplary governance and ethics wherever bank is standing.

Personal Banking Arrange of features are included for the customers ranging from accounts to insurances and investments needs. Following are the personal services provided by the Standard Chartered Bank: 



Accounts o

Term Deposits

o

Savings Accounts

o

AxcessPlus Account

o

Super Value Account

o

Parivaar Account

o

No Frills Account

o

Aasaan Account

o

2-in-1 Account

o

Depository Services

o

Corporate Salary Account

o

Current Accounts

o

Business Plus Account

o

Enhanced Business Plus Account

Credit Cards o

Choose your Credit Card

o

Emirates Platinum Card

o

Platinum Card

Jamia Hamdard

Page 15








o

Emirates Titanium Card

o

Super Value Titanium Card

o

Gold Card

o

EMI Card

o

Executive Card

o

Classic Card

o

Your Rewards Plus Program

o

Special offers

o

Fraud Protection

Debit & Prepaid Prepaid Cards o

Debit Cards

o

Shop Smart Card

o

Gold Debit Card

o

Prepaid Cards

o

Smart Travel

Loans & Mortgages Mortgages o

Personal Loans

o

Home Loans

o

Loan Against Securities

o

Home Saver

o

Loan Against Term Deposits

o

Home Saver Plus

o

Smart Credit Overdraft

o

Loan Against Property

o

Calculators

NRI Banking o

Which account is right for me?

o

NRE Account

o

NRO Savings Account

Jamia Hamdard

Page 16






o

FCNR Account

o

Accounts for Returning Indians

o

NRI Service Centers

Exclusive Banking o

Excel Banking

o

Priority Banking

o

Private Banking

Insurance & Investments Investments o

General Insurance

o

Life Insurance

o

Investment Services

Private Banking Standard Chartered Bank has been building partnerships with generations of clients since it opened its first branches in Shanghai and Calcutta in 1853. It is one of the few financial leaders that combine an extensive global reach with the in-depth, specialized knowledge that comes from a history of being in local markets close to its clients. Today, as one of the world‘s leading international banks, it is dedicated to providing unsurpassed client

service and is uniquely situated to provide customized solutions to meet all wealth management needs. Standard Chartered Bank has deep roots and a long heritage in international banking. It has an extensive history in some of the world's most dynamic and fast-growing markets, such as Asia and the Middle East. No one has a better understanding of the wealth management needs of clients across these markets. Standard Chartered — a financial services giant — has top credit ratings and a 150-year — has history in banking, with a long-term commitment and financial investment in the Private Bank. The Standard Chartered Private Bank offers a full range of customized wealth management products and services, including those offered by its award-winning

Jamia Hamdard

Page 17


commercial bank. It uses a broad architecture approach to investment management to bring some of the world‘s leading money managers mana gers and financial products. Some key facts about Standard Chartered Bank: 

Over 150 years in banking



Total assets of US$329 billion (as of March 2008)



Ranked 56th in size among top 1000 world banks (The Banker, July 2007)



70,000+ employees



A+/A3/A+ credit rating (S&P/Moody‘s/Fitch respectively, as of March 2008)



Listed on both London & Hong Kong exchanges



Ranks among the top 25 companies in the FTSE-100



Regulated by the UK FSA

SME Banking With years of banking experience, Standard Chartered Bank is undoubtedly in a strong position to help growing businesses sail through the complexities they may face. As an international bank with offices in more than 50 countries, It provides the global reach and international recognition that the company deserves. SME Banking offers one of the widest range of banking products and services in the market today. Managing a growing business demands most of existing time and energy. Its relationship managers understand customers‘ business requirement and help them manage their business better. 



Business Current Current Accounts Accounts o

International Trade Account

o

International Trade Account - TEC

Loans o

Business Installment Loan

o

Loan/Overdraft Against Property

o

Term Loan

Jamia Hamdard

Page 18






Trade & Working Capital Products o

Trade & Working Capital

o

Express Trade

Forex Services Services o



Forex Services

Others o

Online tax payment

o

Service charges & fees

o

Schedule an appointment

o

Raise a complaint

Commercial Banking Standard Chartered has maintained a long local presence, since 1858, with particular emphasis on relationship banking. Significant networks have been established with vendors and financial-related organizations to enable it to offer its customers a comprehensive range of flexible financial services, with special focus on transactional banking products. Supported by state-of-the-art operations, Standard Chartered is proactive in improving every part of our services. Electronic Delivery system has been put in place to ensure that transactions are handled speedily. It has its Cash Product Specialists Specialists and dedicated Customer Service Centre‘s to provide its customers with effective solutions. Standard Chartered fully understands the importance of time, convenience and efficiency to the success of your business. With over 140 years of experience in trade finance and an extensive international branch network, Standard Chartered is committed to help customers succeed in every competitive environment.

Jamia Hamdard

Page 19


Wholesale banking in detail Whole sale banking includes: 

Transaction banking



Principle finance



Financial markets



Corporate finance

Transaction banking offers a full scope of innovative, customized solutions in cash

management, trade finance and securities services. With an extensive branch network and award-winning suite of electronic client access channels it offers a full range of transaction banking solutions to help manage the working capital more efficiently. It provides a wide range of cash management services to corporate and institutional clients worldwide. It helps customers with payments and collections, information management, account services and liquidity management solutions. Standard Chartered has been meeting securities industry participants' needs in the Greater Asia region for over 150 years, serving a discerning client base that comprises leading North American, European and Asian institutions. We count among our clients the world's largest global custodians, broker-dealers, fund managers and institutional investors.

Standard Charterer‘s Principal Finance business has a strong track record of creating value through its investments. The group provides direct investment for growing companies, invests in distressed and high yield assets and also provides advisory services

Jamia Hamdard

Page 20


to companies in financial distress. The bank has dedicated a team focusing on making investments in real estate across Asia.

Leading the way in Financial markets, Standard Chartered delivers award-winning and innovative solutions to meet clients‘ risk management, financing and investment needs Bank‘s presence in Asia, Africa and the Middle East and active support for the development of it‘s equity infrastructures makes it well placed to help you tap into the

significant growth opportunities offered by these emerging markets.It provides a comprehensive range of online solutions tailored to meet the electronic trading needs of its clients.

Standard Charterer‘s Corporate Finance group provides innovative and pioneering solutions for clients, capitalizing on the Bank‘s comprehensive on-the-ground knowledge and strong international perspective to provide customized solutions to meet its clients‘

corporate finance needs, especially in cross-border trade and investment flows. With teams specializing in Mergers & Acquisitions and Leveraged Finance, Standard Chartered‘s Corporate Advisory group has the expertise, experience and local knowledge

to deliver high quality advice and execution on strategic cross-border advisory and leveraged financing transactions.

Jamia Hamdard

Page 21


Islamic banking is a rapidly growing phenomenon in the global financial markets.

Muslims have always shielded away from conventional banking, as it does not conform to their religious tenets. There has always been a demand among Muslims for financial products and services that conform to the Shariah (Islamic law). Based on this demand, a number of banks all over the world have started offering products and services that are in compliance with Shariah. With an estimated size of over USD 250 billion and a growth rate of 15%, Islamic banking has now established itself as a serious business segment in the eyes of financial institutions, businesses, consumers and regulators.

Standard Chartered, with an aim to meet the unique needs of its customer, has setup an Islamic Banking Division. The bank is now offering tailor-made Shariah compliant products to its customers.

Standard Chartered employs 38,000 people in 950 locations in more than 50 countries in the Asia Pacific Region, South Asia, the Middle East, Africa, the United Kingdom and the Americas. Standard Chartered is one of the world‘s most international banks, its

employees representing 80 nationalities. Standard Chartered is the largest international bank operating in Pakistan. With a presence of over 150 years in this industry, the bank is

Jamia Hamdard

Page 22


able to fully leverage its capabilities and product expertise to provide tailor-made solutions for its customers.

Standard Chartered realizes that a segment of their customers wanted products that were shariah compliant, and by introducing these Islamic financing options, they are fulfilling their promise of being responsive to their customer needs. These products have been developed under the guidance of an independent Shariah Supervisory Committee.

Product Details Of The Bank: Saving Accounts

A savings bank account is the most common operating account for individuals and others for non-commercial transactions. A savings account helps people to put through day-today banking transactions besides earning some return on the savings made. Banks usually have ceilings on the total number of transactions permitted in a specific time period. Banks also stipulate certain minimum balance to be maintained in savings accounts. The Savings account is a transaction account.

Interest on the account is determined in accordance with directives of the Reserve Bank of India. The current rate is 3.5% per annum. Interest is calculated on the Minimum Credit Balance between the close of the business on the 10th and the last day of each calendar month. Interest may be credited to the account on a quarterly or half yearly basis.

Jamia Hamdard

Page 23


Savings account can be opened by the following persons or bodies: 

A person in his / her name



Two or more persons in their joint names payable to : o

both or all of them or the survivor or survivors of them; or

o

either or any more of them or o r the survivor or the survivors of them; or

o

former / latter or survivor of a particular person during his lifetime or survivors jointly or survivor



Certain non-profit welfare organizations are also permitted to open Savings bank



accounts with banks

Savings / Current accounts can become inactive if you do not make any debit transactions for a continuous period. The duration of this period varies from bank to bank. What a bank asks for while opening an account 

Banks are required to know the true identity of the person wanting to open an Account.



Banks require photograph of the person to be kept on record for future identification purpose



Banks have to obtain PAN numbers (issued by Income Tax Dept.) of the account holder at the time of opening of the account



In the absence of PAN number, the customer should give a declaration in the

Jamia Hamdard

Page 24


prescribed format (Form no.60 or 61) as the case may be.

Standared Chartered Bank has a range of accounts with unique features to offer you quick and convenient banking facility. The range of accounts include- aXcess Plus account , Parivaar account, Super value account, 2-in-1 account, Corporate Salary account, No Frills account and Aasaan account.

Under aXcess Plus account, bank offers variety of channels to access your money such as Free Unlimited Visa ATM transactions, International Debit Card, etc. Under Parivaar account you can tap your family‘s financial strength while maintaining your individual

identity. The unique feature of this account is that you can maintain individual savings accounts with the benefit of clubbing balances in grouped accounts. Super value account gives to a host of free value added services such as Free Bill Pay, Free Inter Bank Funds Transfer, etc. You can link your fixed deposits with a savings or current account under 2-in-1 account. Corporate Salary account is an account for corporates to help them streamline salary payments. No Frills account is an account to offer basic banking facilities. Aasaan account is a no-maintenance, hassle free savings account with basic requirements. Features of some of the bank’s

Saving Accouunts:

Axcess plus: plus: 

FREE Unlimited Visa ATM transactions (Cash withdrawal and balance enquiry)



FREE Standard Chartered Bank branch access across the country

Jamia Hamdard

Page 25




FREE Doorstep Banking



FREE Demand Drafts/Pay Orders (drawn at SCB locations)



FREE Payable at Par Chequebook



International Debit Card



Extended Banking Hours

Super Value: 

Free globally valid Debit-cum-ATM card.



Free Access to 6500 ATMs in India.



Free Doorstep Banking.



Free Payable at Par cheque book/ account statements / DDs Free Bill Pay.



Free Inter Bank Funds Transfer.



Free Foreign Inward Remittance Certificates.



Other benefits of the SuperValue account: o

Globally valid debit card: Make purchases at over 12 million merchant outlets and withdraw cash at over 810,000 ATMs worldwide using funds from your account

o

Multicity Banking: Access your account even when you are out of town

o

Enjoy extended Banking hours at all our branches, and Speed Cheque Clearing

Jamia Hamdard

Page 26


and Metro Clearing facilities. o

24-hour branches, 365 day branches available at select locations

o

Phone banking: Available to you 365 days a year on a 24-hour basis in the metros and everyday of the week at other centers

o

Internet banking: Access and transact on your accounts through the Internet from any part of the world

o

Free Investment Advisory Services to assist you in investing in a range of mutual funds

o

Full suite of complimentary banking services including credit cards, loan products and capital market services.

Parivaar: Parivaar: 

Family can maintain individual savings accounts with the benefit of clubbing balances in grouped accounts.



Anytime, anywhere access to accounts through ATMs, Phone Banking and Internet banking. Option of Systematic Investment Plan (SIP): A well known long term wealth building tool that allows customers to invest a fixed amount of money every month in specific mutual funds. This comes with a direct debit facility and avoids the need to remember dates and write cheques every month.



Globally valid ATM-cum-debit card can be used at 55,000 merchant outlets in India and 12 million outlets worldwide.

Jamia Hamdard

Page 27


Aasaan: 

No Minimum Balance requirement.



Free unlimited access to any SCB branch across the country for Customer-inperson.



Unlimited Free access to Standard Chartered Bank ATM's.



Up to 4 free cash withdrawal transactions per month at other domestic VISA ATMs.



Nominal quarterly fee of Rs. 100 (reversed if the Average Balance in the quarter is Rs 10,000 or more).

Recent Alliances and Developments In 2000, Standard Chartered acquired Grindlays Bank from Bank from ANZ Bank, increasing its presence in private banking and further expanding its operations in India and Pakistan. Standard Chartered retained Grindlays' private banking operations in London and Luxembourg and the subsidiary in Jersey, all of which it integrated into its own private bank. This now serves high net worth customers in Hong Kong, Dubai, and Johannesburg under the name Standard Chartered Grindlays Offshore Financial Services. In India, Standard Chartered integrated most of Grindlays' operations, making Standard Chartered the largest foreign bank in the country, despite Standard Chartered having cut some branches and having reduced the staff from 5500 to 3500 people.

On 15 April 2005, the bank acquired Korea First Bank, beating HSBC in the bid. Since then the bank has rebranded the branches as SC First Bank.

Jamia Hamdard

Page 28


Standard Chartered completed the integration of its Bangkok branch Bangkok branch and Standard Chartered Nakornthon Bank in October, renaming the new entity Standard Chartered Bank(Thaiand). Standard Chartered also formed strategic alliances with Fleming Family & Partners to expand private wealth management in Asia and the Middle East, and acquired stakes in ACB Vietnam, Travelex, American Express Bank in Bank in Bangladesh and Bohai Bank in Bank in China. On 9 August 2006 Standard Chartered announced that it had acquired an 81% and shareholding in the Union Bank of Bank of Pakistan Pakistan in a deal ultimately worth $511 million. This deal represented the first acquisition by a foreign firm of a Pakistani bank and the merged bank, Standard Chartered Bank (Pakistan), is now Pakistan's sixth largest bank. On 22 October, 2006 Standard Chartered announced that it has received tenders for more than 51 per cent of the issued share capital of Hsinchu International Bank (―Hsinchu‖),

established in 1948 in Hsinchu province in Taiwan. Standard Chartered, which had first entered Taiwan in 1985, acquired majority ownership of the bank, Taiwan‘s seventh largest private sector bank by loans and deposits as at 30 June, 2006. Standard Chartered merged its existing three branches with Hsinchu's 83, and then delisted Hsinchu International Bank, changing the bank's name to Standard Chartered Bank (Taiwan) Limited). Prior to the merger, Hsinchu had suffered extensive losses on defaulted credit card debt.

In 2007, Standard Chartered opened its Private Banking global headquarters in Singapore.

Jamia Hamdard

Page 29


On 23 August, 2007 Standard Chartered entered into an agreement to buy a 49 percent of an Indian brokerage firm (UTI Securities) for $36 million in cash from Securities Trading Corporation of India Ltd., with the option to raise its stake to 75 percent in 2008 and, if both partners agree, to 100 percent by 2010. UTI Securities offers broking, wealth management and investment banking services across 60 Indian cities. On 29 February 2008, Standard Chartered PLC announced it has received all the required approvals leading to the completion of its acquisition of American Express Bank Ltd (AEB) from the American Express Company (AXP). The total cash consideration for the acquisition is US$ 823 million.

Insurance details of the bank: Mutual Funds Standard Chartered mutual fund is promoted by banking giant Standard Chartered and exclusively focuses on debt schemes. The fund started as ANZ Grindlays Mutual Fund and was later renamed as Standard Chartered Mutual Fund after the takeover of Grindlays Bank by Standard Chartered.

Standard Chartered Bank is a truly global bank with employees representing 80 nationalities. The bank has a strong brand presence in India and is well entrenched in developing markets of Asia Pacific region.

The sponsor of the fund is Standard Chartered Bank. The AMC of the fund is Standard Chartered Asset Management Company Private Limited. The sponsor holds a 75 per cent stake in the company and the balance is held by Atul Choksey of Apcotex. As of Aug

Jamia Hamdard

Page 30


2006, the fund has assets of over Rs.15,551 crore under management.

Mutual Funds Funds basics:

A Mutual Fund is a pool of money that gives small investors access to a well-diversified portfolio of equities, bonds, and other securities. Each shareholder participates in the gain or loss of the fund. Shares are issued and can be redeemed as needed (in the case of an open-ended fund). The fund's net asset value (NAV) is determined each day. Each mutual fund portfolio is invested to match the objective stated in its investment agenda.

An equity fund is one that is invested mainly in company equity through the stock

exchange and is exposed to the risk of volatility associated with the equity market. Although this fund is the riskiest within the genre of mutual funds, it is also known to yield the maximum yields and dividends.

A Fixed Income Fund is one that invests in avenues which offer fixed returns over a set

tenor. These funds are inherently linked to the general interest rate and are, therefore, unlike the stock market, safe from drastic fluctuation. The capital value is more easily sustainable while the returns are generally modest. However, active fund management can yield returns which are higher than most fixed income avenues in the market and therefore, it is an attractive investment avenue for investors with moderate risk appetites.

A Money Market Fund is one that invests in liquid, short-term avenues which offer

Jamia Hamdard

Page 31


fixed returns over short periods. These funds are inherently linked to the general interest rate and are, therefore, unlike the stock market, safe from drastic fluctuation. Underlying investment may include securities issued by corporate bodies, spread transactions, reverse-repo transactions, selective exposure in the CFS market, Term Finance Certificates (TFCs) and commercial paper.

Balance funds maintain a mix within equity and fixed income markets. The inclination

of this mix will be dictated by the fund‘s strategic intent and mission statement. This fund

offers more maneuvering room to its fund managers as they have the option to switch between market types i.e. fixed income avenues and capital markets. Effectively, the risk associated to this category lies somewhere between that of equity funds and fixed income funds and the returns also vacillate correspondingly between the ranges of the two.

Mutual Funds Offered: JS Investments Investments Limited: Limited:

JS ABAMCO was incorporated on February 22, 1995 and registered as an investment adviser and an asset management company with the SECP (formerly the Corporate Law Authority) on February 27, 1995 and August 29, 1995 respectively. Last year its legal title changed to JS Investments Limited. SCB offers the following mutual funds from this fund house: 

Unit Trust of Pakistan (UTP) is the first open-end mutual fund in Pakistan's

Jamia Hamdard

Page 32


private sector. UTP follows a balanced investment strategy which means that it switches its investments from fixed-income to equity & vice versa depending upon the investment outlook. When the stock market appears volatile, the funds normally switch portfolios to fixed-income & debt based b ased instruments and reverts back to equity when the situation becomes stable. Investment Strategy: UTP focuses on preserving the initial capital while providing

maximum diversification, along with liquidity, growth & consistent returns. In order to achieve these, the fund invests in three types of high quality assets. These include: 

Shares of companies which are either consistently dividend paying having growth prospects actively traded



Debt instruments with good credit rating



Short-term money market instruments



JS - Income Fund (JS - IF) is the second open-end mutual fund launched by

JS Investments Limited. JS-IF is a diversified investment program in fixed income securities through a single investment. The fund aims at achieving a high rate of current income consistent with reasonable concern for safety of capital and provides the investors with the convenience to join or leave the fund at their discretion. Investment Strategy: JS-IF will generally invest in assets that pay a fixed rupee amount,

e.g. investment grade debt securities, treasury bills, term finance certificates, bank deposits and Government bonds. They are generally not affected by the volatility at the

Jamia Hamdard

Page 33


Stock Exchanges. The element of risk is low and so is the return.



UTP- Islamic Fund (UTP- ISF) is an open-end Shariah compliant mutual fund managed by JS Investments Limited. The fund was launched in December

2002 with the Central Depository Company as the Trustee and has been given a 5star rating by PACRA. The fund is intended for long term investors who seek high returns with the peace of mind that their money is being managed according to Islamic rules of investing. Investment Strategy: UTP-ISF aims to grow investor‘s capital in the long term in

adherence with principles of Shariah compliance as advised by the Shariah Advisory Board (SAB) of this fund while ensuring liquidity. The fund investments are limited to asset classes approved by the Shariah Advisory Board and all companies under investment consideration are regularly screened for Shariah compliance.



UTP- Capital Protected Fund (UTP-CPF) was the first open-end open -end capital protected fund in Pakistan, established under a Trust Deed dated November 27,

2006 between JS Investments Limited as the Management Company and Standard Chartered Bank (Pakistan) Limited as the exclusive distributor. Following the tremendous success of this unique fund, 3 more Capital Protected Funds were launched jointly by JS Investments and SCBPL.

Investment Strategy: A Capital Protected Fund aims at protecting investor capital

through the investment structure by placing a significant percentage of the Fund as bank

Jamia Hamdard

Page 34


deposit(s) or in other return-based fixed income instruments, and uses the remaining funds to gain exposure into equity markets or any other investment instruments permissible by SECP that the Management Company feels would be appropriate to maximize return. The fund has a fixed tenor (e.g. 1 year or 3 years) which is the minimum period of holding for capital protection to be in force.

Jamia Hamdard

Page 35


Project Title-Capital Market Reforms Introduction: Introduction: Capital market reform enables the capital markets to embrace new ideas and techniques

affecting the capital market. Capital market liberalization is one such capital market reform

that

is

adopted

by

various

countries

to

strengthen

their

economy.

A capital market is a place that handles the buying and selling of the securities. This is the ideal place where both the governments and companies can raise their funds. The capital markets of all the countries have undergone a number of reforms in the history. Economic theories are made and implemented to reform the functionalities of the capital market. The prime objective behind all the policies and reforms was obviously to strengthen the capital market of a particular country as much as possible.

It has been always a big question to the economists whether to allow or not to allow the foreign investments in the country. Packaged with both advantages and disadvantages, the liberalization of the capital markets has always been controversial. In the 1980s and 1990s when the US Treasury and International Monetary Fund (IMF) tried to push worldwide capital-market liberalization, there had been enormous opposition. Economists were not in the support of free and unfettered markets.

Now, when the capitalist countries, developing capitalist countries, underdeveloped countries and a large number of socialist countries have nodded their support to the

Jamia Hamdard

Page 36


capital market reform and capital market globalization, the global capital market has evolved in a new identity. The concept of capital market is not restricted to the share and bond trading in the developed capitalist countries only but is equally influenced by the capital

markets

of

developing

and

underdeveloped

countries

as

well.

Now the economic or financial change in one country can affect the capital market of other country in real time. Almost all the countries are now exposed to the inter-country trades and inter-country investments. The use of internet and electronic media has added some more feasibility to the practice. Exchange Exchan ge of information is fast and accurate with internet. Another advantage of this system s ystem is that it brings the entire world in i n a single place. The capital market is one of the industries that enjoy enjo y the maximum facility of the internet

service.

MARKET STRUCTURE AND DIMENSIONS

The public-sector debt instruments mainly comprise central and state government securities, which account for about 65 percent of the country‘s debt market, and public sector bonds issued by companies in the public sector. Other debt instruments in the market are certificates of deposit and commercial paper in the short-dated sector, and corporate bonds in the medium- to long-dated sector.The debt market is an important source of funding for the corporate sector as well as the government. The borrowing rate of the government determines the risk-free rate in the market and is the benchmark against which all other paper is priced. The size of the Indian debt market is estimated at

Jamia Hamdard

Page 37


about Rs 4,172 billion, as of 31 March 1998 The development of the debt markets in India has been constrained by the limited number and variety of instruments, lack of liquidity, and dearth of investors. New debt instruments would add depth and volume to a market that today comprises mostly government securities.The main instruments in the Indian debt market are discussed briefly below.

Government of India Securities

Government of India securities (GOI securities), also called dated securities,are mediumto long-term obligations of the government that are issued on its behalf by the central bank, the Reserve Bank of India (RBI),and are registered in the holder‘s name at the

Public Debt Office of the RBI. The RBI also acts as the depository and maintains subsidiary general ledger accounts for banks and other select investors such as primary dealers, financial institutions, mutual funds, insurance companies, and provident funds. FIIs have recently been permitted to invest in GOI securities and to repatriate the profits from the investments. Banks, nonbank finance companies (NBFCs),1 and housing finance institutions (HFIs) are required to invest in government securities to satisfy their statutory liquidity reserve (SLR) requirements.

Dated securities usually have a maturity period of two to ten years,and the issue size varies from Rs 20 billion to Rs 50 billion. The outstanding GOI securities as of 31 March 1998, excluding securities issued by public-sector units which carried a central or state government guarantee, amounted to about Rs 2,254 billion. In 1997 – 1998, 1998, primary

Jamia Hamdard

Page 38


auctions of GOI securities had yields ranging from 11.15 percent to 13.05 percent for securities with a maturity of three to ten years. To boost the retail sector and give greater liquidity to retail investors, the RBI in October 1997 allowed banks to buy GOI securities and thensell them at prevailing market prices immediately after. Previously, there had to be an interval of at least 30 days between the purchase and resale of the securities.

Treasury Bills

Treasury bills (T-bills) are short-term rupee-denominated obligations issued by the RBI on behalf of the GOI. They are issued for maturityperiods of 14 days, 91 days, and 364 days. In addition, the RBI plans to introduce a 28-day T-bill. The typical auction size is Rs 5 billion for the 91-day T-bill, and Rs 200 million to Rs 20 billion for the 364-day Tbill. Outstanding T-bills amounted to about Rs 181 billion as of March 1998,compared with Rs 165 billion in March 1997.Investors in T-bills include banks, primary dealers, financial institutions, mutual funds, corporations, NBFCs, HFIs, state governments, and insurance companies. The new monetary and credit policy for the first half of 1998 – 1999 1999 allows FIIs to invest in T-bills. Nonresident Indians (NRIs) and overseas corporate bodies (OCBs) may similarly invest in Tbills,but cannot repatriate the profits. In the second half of 1997 – 1998, 1998, the RBI announced plans to introduce a uniform price auction for 91-day T-bills, to deal with the problem of ―winner‘s curse‖3 and to broaden market participation.

Jamia Hamdard

Page 39


Sovereign Bonds

India has not yet issued sovereign bonds in the international market. The country‘s sovereign rating is based on the ratings assigned to bond and debenture issues of publicsector Indian companies in the international market. Despite the country‘s ―low investment‖ or ―high non–investment grade‖ ratings, Indian corporations have generally

been able to obtain funds abroad on better terms than what the sovereign ratings might signify.

Some of the advantages of issuing sovereign bonds are:

• The government would have less need to borrow in the domestic market. • Corporations could use the bonds as a benchmark against which they could price their

issues. • The bonds would broaden the investor base in the international market sand help

mobilize long-term finance for infrastructure projects. • The cost of borrowings would be reduced relative to the domestic market.

drawbacks could, however, outweigh the advantages. For the sovereign bonds to The drawbacks

gain credibility in the international market, the government will need to have a sizeable presence in the market and not merely undertake a token borrowing. Its external debt would therefore increase.

Moreover, sovereign bonds are classified as external commercial borrowings (ECBs), on

Jamia Hamdard

Page 40


which India has set a ceiling. A foreign-currency bond may carry a lower nominal interest rate than a rupee-denominated government security with the same maturity, but the foreign-currency bond also entails an exchange-rate risk. Depending on the exchange rate, the sovereign bond could turn out to be much more expensive for the government than local borrowings.

Public-Sector Public-Sector Undertaking Undertaking Bonds Bonds (PSU Bonds) Bonds)

These are medium- to long-term obligations issued by public-sector corporations. The total value of outstanding PSU bonds as of March 1998 was Rs 654 billion, including Rs 203 billion in government-guaranteed bonds. Public-sector corporations issue three types of bonds: taxable bonds, tax-free bonds, and government-guaranteed bonds. To allow public-sector units in priority sectors to raise mone y in the markets at low rates, the government has either guaranteed their bond offerings or made the interest on the bonds tax-free to investors. The PSU can thus raise money from the capital markets at concessional rates. PSU bonds have a maturity period of three to seven years and an issue size of Rs 100 million to Rs 15 billion. The main investors in PSU bonds are banks, cashrich corporations, financial institutions, insurance companies, trusts, FIIs, provident funds, mutual funds, NBFCs, HFIs, and a few individuals. Most PSU bonds are issued through private placement, although public issues are gradually gaining in popularity. Seven public-sector units raised Rs 29 billion through privately placed bonds in 1997 – 1998; the year before, ten public-sector units raised Rs 33 billion through private placement. In the second half of 1997 – 1998, 1998, the RBI announced that it would allow

Jamia Hamdard

Page 41


repurchase agreement (repo) transactions in PSU bonds, held in dematerialized form in a depository, to take place on the recognized exchanges.

Certificates of Deposit

Certificates of deposit (CDs) are short-term, rupee-denominated instruments issued by banks and development finance institutions (DFIs). DFIs issue CDs with a maturity of one to three years. In March 1998, outstanding CDs amounted to Rs 143 billion. To attract more investors in the money market, the RBI, in October 1997, halved the minimum amount that a single investor can invest in CDs, from Rs 1 million to Rs 500,000. The main investors in CDs are DFIs, cash-rich corporations, insurance companies, mutual funds, NBFCs, HFIs, provident funds, and some individuals.FIIs are not permitted to invest in CDs. NRIs may invest in CDs, but the investments are nontransferable and nonrepatriable. Earlier, CDs had a mandatory initial holding period of 30 days during which the instrument was rendered illiquid. This lock-in period was shortened to 15 days in April 1998.

Commercial Paper

Indian corporations finance part of their working capital requirements by issuing these short-term negotiable promissory notes, which are denominated in rupees and are unsecured. Issuers must satisfy RBI guidelines relating to creditworthiness to issue commercial paper (CP), and must have the CP rated by at least one rating agency. The maturity period of CP varies from 91 days to a year. The required minimum issue size is Jamia Hamdard

Page 42


Rs 2.5 million, but the actual size can vary substantially and averages between Rs 20 million and Rs 100 million. The outstanding amount of CP reached a historic high of Rs 52 billion in January 1998, but then dropped sharply to Rs 15 billion in March 1998. FIIs are not permitted to invest in CP.

Corporate Bonds and Debentures

These are medium- to long-term obligations issued by private-sector companies, either through a public issue or more often through private placement, for fo r their medium-term working capital requirements or for project financing. The debentures are usually secured with a first charge on assets of the issuing corporation. On the average, the maturity period of debentures ranges from three to seven years. Bonds and debentures with a maturity beyond 18 months must be rated. Outstanding bonds and debentures in March 1998 totaled an estimated Rs 432 billion. Banks, DFIs, insurance companies, FIIs, mutual funds,NBFCs, and individuals are the main investors. FIIs can purchase only debentures that are listed or that the issuer plans to list. A listing in the stock market can sometimes provide liquidity to bonds and debentures, although these tend to be illiquid in actual practice and even those that are listed are hardly traded in the secondary market. Bonds and debentures that are issued through private placement are often unlisted. Besides the traditional nonconvertible debentures, corporations also issue equity-linked debentures, which are very popular with all classes of investors, especially individuals. A partly convertible equity-linked debenture, as the name implies, is convertible only in part into equity shares, while a fully convertible equity-linked debenture is convertible in its entirety into equity shares. The conversion price and period are usually specified in the

Jamia Hamdard

Page 43


indenture. Conversion into equity is usually automatic, and call and put options are normally not provided. The coupon rate paid on the debentures depends on their convertibility. Fully convertible debentures carry the lowest coupon rate and nonconvertible debentures the highest coupon rate.

Recently, a variety of instruments such as step-up and step-down bonds, deep-discount

bonds, floating-rate bonds, staggered redemption bonds, bullet redemption bonds, and other innovative instruments have been introduced to suit various investor profiles. Deepdiscount bonds, which are long-dated (20- to 25-year) bonds issued by DFIs and some large corporations, have proved to be very popular among individual investors who can expect to earn a considerable amount of money from an affordable investment of only about Rs 5,000. The bonds usually come with call and put options exercisable every five years. Interest is compounded and paid with the principal at maturity.

All corporations that issue bonds or debentures through public issue must set up a debenture redemption reserve (DRR), according to Securities and Exchange Board of India (SEBI) guidelines, and transfer a certain amount to the reserve each year out of retained earnings. The reserve must be funded in equal amounts over the life of the debenture so that when it matures at least 50 percent of its redemption value should be covered by the balance in the DRR. The transfer to the DRR is only a book entry. Although dividend-paying capacity is reduced (the reason for the unpopularity of the measure), the corporation is not restricted in how it chooses to invest the DRR. The transfers therefore continue to be invested in thebusiness of the corporation.

Jamia Hamdard

Page 44


ISSUANCE OF DEBT SECURITIES

GOI securities have generally been issued through auction in recent years, but have also been issued at preset interest rates from time to time. Government securities do not follow a fixed schedule of issuance; the government‘s large borrowing program, however, compels it to enter the market frequently. Auction details are announced a few days before the issue date. Investors in the securities must quote the yield per year, and bids up to the RBI cut-off yield are accepted. Every Friday, 91-day T-bills are auctioned for an amount announced in advance by the RBI. Primary dealers and the RBI underwrite the issue and take up whatever is left unsubscribed at the cut-off price decided at the auction. The RBI has announced its intention to move over to uniform price auctions for 91-day T-bills. An auction in 364-day T-bills is held every other Wednesday. Unlike 91day T-bills and government securities, the amounts, until recently, were not announced in advance for 364-day as well as 14-day T-bills.

In April 1998, however, the RBI decided to announce the amounts for competitive bids in all Treasury bill auctions and to keep noncompetitive bids outside the purview of those amounts. T-bill auctions are done in competitive French-style: those who bid at less than or equal to the cut-off yield get allotments at their bid; higher bidders get pro rata allocations. Successful bidders receive their allotments at their bid price and not at the cut-off price. Corporate debentures are issued mostly through private placement and therefore do not have to be rated. The mandates are given to merchant bankers, who are in touch with potential investors. The terms and price of the bonds are fixed by agreement

Jamia Hamdard

Page 45


among the issuer, the merchant banker, and the potential investors. The rating the issuer receives for its debt issuance affects the pricing of the issue.

Private Placement Placement

Large quantities of PSU and corporate bonds have been issued through private placement, which is an invitation to qualified investors to invest. The maximum number of investors in a private placement used to be unlimited but has recently been set at one

hundred. Private placements have emerged in recent years as an important means by which public- and private-sector companies can raise funds. In 1997 – 1998, 1998, when the market in new issues was generally subdued, banks, financial institutions, and public- and private-sector companies raised Rs 270 billion, or 85.3 percent of total funds raised, through private placement. The comparative figure for the previous year was Rs 150 billion, or 49.3 percent of the total funds raised. Privately placed bonds have emerged as the corporate sector‘s fundraising instrument of choice. The popularity of private

placements can be attributed largely to the lower issuance costs as well as the shorter time required to make an issue, compared with a public issue. Also, private placements can be tailored to the specific needs of large investors. From the issuer‘s point of view, the most important advantage of private placements is that, unlike public issues, they are not strictly regulated. For example, an issuer of a privately placed bond does not have to set up a DRR. On the other hand, movements in the volatile short-term money market can affect

Jamia Hamdard

Page 46


investor sentiment and pricing in the bond market, particularly private placements, which take at least 15 to 20 days to complete. The book-building or price discovery mechanism has begun to be adopted to get around this problem. The increasing popularity of private placements has made it necessary to deal with the matter of investor protection. Particularly for retail private placement issues, it would be advisable to augment the disclosure requirements in the memorandum of information and ensure greater transparency in the issue documents. In developed markets, the regulatory authorities set the parameters for private placements, including the maximum number of investors who can participate and the criteria for identifying the investors who are qualified to receive the private placement offer. With proper regulations and greater transparency, the private placement market can become an integral and important part of the primary market.

RATING OF DEBT INSTRUMENTS

The Securities and Exchange Board of India (SEBI), the watchdog of the Indian capital markets, has recently announced that credit rating will eventually be mandatory for all debt instruments. As of now, only publicly issued debt instruments with a maturity period of at least 18 months must be rated. The three main rating agencies in India are the Credit Rating Information Services of India Limited Limited (CRISIL), (CRISIL), Investment Investment Information Information and Credit Credit Rating (ICRA), (ICRA), and and Credit Analysis and Research Limited (CARE) . These rating agencies are backed by the

three DFIs in India:

Jamia Hamdard

Page 47


CRISIL by the Industrial Credit and Information Services of India Limited (ICICI), ICRA by the Industrial Industrial Finance Corporation Corporation of India (IFCI), and and CARE by by the Industrial Industrial Development Development Bank of India India (IDBI) . Therefore, DFI issues must be rated by

two agencies, under SEBI regulations, for the sake of impartiality. The SEBI, however, has not yet decided how conflicts in agency ratings should be resolved. SEBI guidelines issued in March 1998 allow corporations with a net capitalization of over Rs 1 billion for the last five years to set up a credit rating agency. International credit-rating agencies that propose to rate Indian debt instruments, including those that have entered into joint ventures with Indian credit-rating companies or hold an equity stake in such companies, must register with the SEBI.Credit-rating agencies are regulated more strictly to ensure that they function effectively, especially in view of the failure of some of them to warn investors of the impending financial crisis.

INVESTORS IN DEBT INSTRUMENTS

Besides the lack of variety in debt instruments, the dearth of investors has also deterred the growth of the debt market. The main investors are commercial banks, insurance companies, provident funds, specialized debt funds, NBFCs, HFIs, and some cash-rich corporations. Commercial banks,NBFCs, and HFIs invest in government securities and other debt instruments to comply with their SLR S LR requirements. The lack of liquidity l iquidity in the market prevents individuals from participating actively.

Jamia Hamdard

Page 48


SLR Requirements

Banks, NBFCs, and HFIs are required to invest in government securities and other approved debt instruments and securities to comply with the SLR requirements of the RBI. The SLR, which is the minimum level of investment in approved securities, computed daily, is a percentage of the outstanding net demand and time liabilities (NDTL) of banks. For NBFCs and HFIs, SLR is a percentage of their outstanding public deposits.SLR ratios are announced by the RBI together with the monetary and credit policy. Typically, this is done twice a year, in April and October, although recently the guidelines have been revised more frequently.

The SLR for commercial banks peaked at 38.5 percent of their outstanding NDTL in 1992 – 1993 1993 but was gradually reduced until October 1997, when the RBI fixed it at 25 percent. Still, most commercial banks hold SLR securities far in excess of their requirement — about 12 percent more than the current SLR of 25 percent — to comply with — about — to the required capital adequacy and prudential ratios.

Investments in government securities have no risk weight unlike some other fixedincome securities which carry a risk weight of 100 percent. Commercial banks in India are required to maintain an 8 percent capital adequacy ratio.

In the case of NBFCs and HFIs, the SLR applies only to public deposits and not to other term liabilities (as is the case with commercial banks). The SLR for NBFCs was set at

Jamia Hamdard

Page 49


12.5 percent on 1 April 1998, and will be raised to 15 percent on 1 April 1999. HFIs, on the other hand, must maintain their SLR at 10 percent, divided equally between government securities and bank deposits, versus the previous allocation of 25 percent for government securities and 75 percent for bank deposits.

MARKING TO THE MARKET

Mark-to-the-market requirements are laid down by the RBI for commercial banks and NBFCs, and by the National Housing Bank (NHB) for HFIs. In 1997 – 1998, 1998, commercial banks were permitted to invest up to 40 percent of their investible funds in a permanent portfolio of government securities, for which no provision p rovision for depreciation was required. The remaining 60 percent of their investments were classified as current portfolio which the banks had to value v alue at market prices (mark to the market).

The RBI has, however, increased its mark-to-the-market requirements over the years. In 1998 – 1999, 1999, commercial banks have to mark to the market at least 70 percent of their investment in government securities as against the previous 60 percent. For nongovernment paper, there are no explicit mark-to-the-market requirements. NBFCs and HFIs must take a different mark-to-the-market approach than the commercial banks. They must classify their investments, both equity and debt, into a permanent portfolio and a current portfolio, but the specific percentages are not prescribed. The classification is made at the time of investment and approved by the board of directors of the company or its authorized representative, taking into account the investment horizon planned by

Jamia Hamdard

Page 50


the NBFC or HFI. If the institution intends to sell within the year, it should classify the investment as current portfolio, but if it intends to hold on to the investment for a longer period, it can classify the investment as permanent portfolio. All current investments must be marked to the market; investments in the permanent portfolio, on the other hand, can be carried on the balance sheet at their original cost. A substantial portion of the government securities s ecurities portfolio of many commercial banks is made up of low – coupon coupon rate securities acquired before yields on government securities were freed to market determination. Securities reclassified from permanent to current portfolio must have provision for depreciation, since the acquisition cost of older securities significantly exceeds current market prices. Most of the older commercial -to the- market requirements, retaining a permanent banks have adopted the RBI‘s mark -to portfolio of government securities to reduce their provision for depreciation and show higher profits. But some newer private-sector banks have adopted the more transparent practice of marking to the market their entire portfolio of government securities.

TAX PROVISIONS

Except for tax-free bonds, which some public-sector units have been permitted to issue, and unlike the dividend paid on equity and preference shares, which is tax-exempt to investors,9 interest on debt instruments is taxable. The Income Tax Act requires the corporation that pays interest on bonds or debentures to deduct the tax at source. The rate of the tax varies from 10 percent to 20 percent depending on whether the interest is being paid to an individual or to a corporation.

Jamia Hamdard

Page 51


TRADING SYSTEM

Because of the limited number of players, deals in the institutional debt market are normally made directly between the parties concerned or through a broker. Banks rely on the telecommunications network to broker deals and keep track of the market. With the setting up of the whole-sale debt market under the National Stock Exchange (NSE) and the requirement to report trades, the system of trading has become more transparent and efficient. Government securities and T-bills are dematerialized insofar as deals are made and settled on a delivery-versus-payment basis through the subsidiary general ledger (SGL) account at the RBI.

REPO MARKETS

A repo (short for repurchase agreement ) is a contract to sell a security and to buy it back at a fixed price on an agreed future date. Market participants use repos to meet their short-term liquidity needs or reserve requirements. More importantly, the repo market enables the RBI to conduct open-market operations for monetary control. A repo transaction is for a minimum of three days and a maximum of 14days.Currently, only central government securities and all T-bills are eligible for repo, and only banks, primary dealers (PDs), and satellite dealers (SDs) may enter into repo transactions. In December 1997, 19 nonbank entities were allowed to enter into reverse repo transactions.

Repos in GOI securities were banned in mid-1992, following the discovery of a huge fraud in the securities market. Repos resumed on a limited scale between the RBI and banks in December 1992, and interbank repos in some new issues of GOI securities were later permitted to attract investors. Currently, repos are permitted in a ll GOI securities. In

Jamia Hamdard

Page 52


the second half of 1997 – 1998, 1998, the RBI announced that it would allow repos in PSU bonds as soon as the regulations relating to forward contracts are amended.

CLEARING AND DEPOSITORY SYSTEM

The passage of the Depositories Act by Parliament in August 1996 paved the way for the establishment of several depositories, which are expected to improve the efficiency of the capital market. The National Securities Depository Limited (NSDL), the first electronic depository for equity and debt securities in India, began operations in October 1996. It is sponsored jointly by IDBI, the Unit Trust of India (UTI), and the NSE. Dematerialization of equity shares is fairly Straight forward since the central government, which imposes stamp duty on the transfer of shares, charges a uniform rate of 0.50 percent of the market value of the shares. Stamp duty on the transfer of bonds and debentures, on the other hand, is a state government issue and is therefore subject to a variety of regimes. For this reason the NSDL has found it difficult to dematerialize these instruments. The RBI has already introduced the delivery-versus-payment system for government securities through the SGL account. There have also been suggestions to dematerialize money-market instruments such as commercial paper and certificates of deposit, as well as all T-bills and GOI securities, to improve clearing and settlement.

Jamia Hamdard

Page 53


UNDERWRITING OF DEBT INSTRUMENTS

The RBI used to pay a commission to primary dealers (PDs) based on their purchases (including development) of government securities in the primary market. Since June 1997, the RBI has been paying them instead an underwriting fee based on the underwriting amount offered by the PDs on a voluntary basis through competitive bidding. Under this scheme, PDs offer to underwrite at least 50 percent of the issue amount. Satellite dealers (SDs) form the second tier in the trading and distribution of government securities. They have recently been allowed to underwrite government securities issues, up to a maximum exposure of twice their net worth in each issue. SDs and PDs are moreover allowed to sub underwrite their commitments.

YIELD CURVE DISTORTIONS

The yield curve is distorted at various points. The rates are very low at the short end (91day T-bills), then rise sharply for securities of two-year maturity, and generally flatten after the five-year maturity. Plotting a benchmark yield curve is therefore difficult. Several factors are responsible for the distortions. Although 91-day T-bills are auctioned in a predetermined amount, the RBI participates in the auctions and can control interest rates. Large noncompetitive bidders, such as state governments and provident funds, also contribute to the distortion in the yield curve when they make large bids without naming their price. To deal with this problem, the RBI in April 1998 said that it would announce the amounts for competitive bids in all Tbill auctions and keep noncompetitive bids beyond the purview of such amounts. Also until April 1998, the borrowings of the central government under its Ways and Means Advances (WMA) were linked to the 91-day T-bill rate. In 1997 – 1998 1998 these borrowings were 3 percentage points below the 91-day T-bill cut-off price, exerting tremendous downward pressure on the 91-day T-bill rate. In April, the RBI announced that henceforth the WMA would be linked instead to the bank rate.

Jamia Hamdard

Page 54


The RBI participates as well in primary auctions of GOI securities and can determine the cut-off yield. There is an implicit reluctance to allow the rate for the maximum maturity (ten years) to exceed a stipulated interest rate. Rates for short-term maturities therefore tend to be significantly higher than market. The small number of players in the market results in lack of liquidity and pricing inefficiencies. Investors do not communicate yield expectations among themselves.

Reforms in Government securities market Institutional Institutional Measures Measures ❖

Administered interest rates on government securities were replaced by an auction

system for price discovery. ❖

Automatic monetization of fiscal deficit through the issue of ad hoc Treasury Bills

was phased out. ❖

Primary Dealers (PD) were introduced as market makers in the government securities

market. ❖

For ensuring transparency in the trading of government securities, Delivery versus

Pay (DvP) settlement system was introduced. ❖

Repurchase agreements (repo) were introduced as a tool of short term liquidity

adjustment. Subsequently, the Liquidity Adjustment Facility (LAF) was introduced. LAF operates through repo and reverse auctions to set up a corridor for short-term interest rate. LAF has emerged as the tool for both liquidity management and also signaling device for interest rates in the overnight market. ❖Market

Stabilizations Scheme (MSS) has been introduced, which has expanded the

instruments available to the Reserve Bank for managing the surplus liquidity in the system.

Jamia Hamdard

Page 55


Increase in Instruments Instruments in Government Securities Market ❖

91-day Treasury bill was introduced for managing liquidity and benchmarking. Zero

Coupon Bonds, Floating Rate Rate Bonds, Capital Indexed Indexed Bonds were issued issued and exchange traded interest rate futures were introduced. OTC interest rate derivatives like IRS/FRAs were introduced. Enabling Measures ❖

Foreign Institutional Investors (FIIs) were allowed to invest in government securities

subject to certain limits. ❖

Introduction of automated screen-based trading in government securities through

Negotiated Dealing System (NDS). Setting up of risk-free payments and settlement system in Government securities through Clearing Corporation of India Limited (CCIL).Phased introduction of Real Time Gross Settlement System (RTGS). ❖

Introduction of trading of government securities on stock exchanges for promoting

retailing in such securities, permitting non-banks t o participate in repo market.

Jamia Hamdard

Page 56


RECENT REFORMS The Indian regulatory and supervisory framework of securities market in India has been adequately strengthened through the legislative and administrative measures in the recent past. The regulatory framework for securities market is consistent with the best international benchmarks, such as, standards prescribed by International Organization of Securities Commissions (IOSCO). Recent capital market reforms reforms and an agenda for reforms are given below. 

Extensive Capital Market Reforms were undertaken during the 1990s encompassing legislative regulatory and institutional reforms. Statutory market regulator, which was created in 1992, was suitably empowered to regulate the collective investment schemes and plantation schemes through an amendment in 1999. Further, the organization strengthening of SEBI and suitable empowerment through compliance and enforcement powers including search and seizure powers were given through an amendment in SEBI Act in 2002. Although dematerialization started in 1997 after the legal foundations for electronic book keeping were provided and depositories created the regulator mandated gradually that trading in most of the stocks take place only in dematerialized form.



Till 2001 India was the only sophisticated market having account period settlement alongside the derivatives products. From middle of 2001 uniform rolling settlement and same settlement cycles were prescribed creating a true spot market.



After the legal framework for derivatives trading was provided by the amendment of SCRA in 1999 derivatives trading started in a gradual manner with stock index futures in June 2000. Later on options and single stock futures futures were introduced in 2000-2001 and now India‘s derivatives market turnover is more than the cash market and India is one of the largest single stock futures markets in the world.

Jamia Hamdard

Page 57




India‘s risk management systems have always been very modern and effective. The VaR based margining system was introduced in mid 2001 and the risk management systems have withstood huge volatility experienced in May 2003 and May 2004. This included real time exposure monitoring, disablement of broker terminals, VaR based margining etc.



India is one of the few countries to have started the screen based trading of government securities in January 2003.



In June 2003 the interest rate futures contracts on the screen based trading platform were introduced.



India is one of the few countries to have started the Straight through Processing (STP), which will completely automate the process of order flow and clearing and settlement on the stock exchanges.



RBI has introduced the Real Time Gross Settlement system (RTGS) in 2004 on experimental basis. RTGS will allow real delivery v/s. payment which is the international norm recognized by BIS and IOSCO.



To improve the governance mechanism of stock exchanges by mandating demutualization and corporatization of stock exchanges and to protect the interest of investors in securities market the Securities Laws (Amendment) Ordinance was promulgated on 12th October 2004. The Ordinance has since been replaced by a Bill.

Jamia Hamdard

Page 58


Recent initiatives 

Corporation and Demutualization of Stock Exchanges

Out of the 23 erstwhile stock exchanges, 18 have since been corporatized and demutualised in 2007-08. One stock exchange, i.e. Hyderabad Stock Exchange, failed to demutualise by the due date date and has therefore been de-recognized. Saurashtra Kutch Stock exchange, Mangalore Stock exchange and Magadh Stock exchange have been derecognized for various irregularities/non irregularities/non compliances. As regards Coimbatore Stock Exchange which had sought voluntary withdrawal of recognition, the matter is sub judice. 

Corporate Bond Markets

The Government had set up a High-Level Expert Committee on Corporate Bonds and Securitisation (Patil Committee) to look in to legal, regulatory, tax and market design issues in the development of the corporate bond market. The Committee submitted its report to the Government in December, 2005. The Budget of 200607 announced that the Government has accepted the recommendations of the Report and that steps would be taken to create a single, unified exchange-traded market for corporate bonds. The measures already taken in respect of implementation of the recommendations of the Patil P atil Committee include: - The Securities Contracts (Regulation) Act, 1956 has been amended to include securitized instruments within the ambit of "securities".

- The RBI Act has been amended to empower RBI to develop and regulate market for Repos in corporate bonds.

Jamia Hamdard

Page 59


- The limit of FII Investment Investment in corporate debt has been increased increased from US$ 0.5 billion to US$ 1.5 billion. - The trade reporting platform for corporate bonds has been operationalised since 1st January, 2007. - The trading platforms for corporate bonds at the major exchanges has been operationalized from July 1, 2007.



Securities Contracts (Regulation) Amendment Act, 2007

The Securities Contracts Regulation Act, 1956 has been amended to

include

securitization instruments under the definition of "securities"and provide for disclosure based regulation for issue of the securitized instruments and the procedure thereof. This has been done keepingin view that there is considerable potential in the securities market for the certificates or instruments under securitization transactions. The development of the securitized debt market is critical for meeting the humungous requirements of the infrastructure sector, particularlyhousing sector, in the country. Replication of the securities markets framework for these instruments would facilitate trading on stock exchanges and in turn help development of the market in terms of depth and liquidity. 

PAN as the sole sole identification identification number number

PAN has been made the sole identification number for all transactions in securities market. This is an investor investor friendly measure as he does not have to maintain different identification numbers for different kinds of transactions/different segments in financial markets. Further, identification through PAN would help the authorities in enforcement action.

Jamia Hamdard

Page 60




Equity Finance Finance for the Small and Medium Enterprises Enterprises (SMEs) (SMEs)

SMEs in India have traditionally relied on debt financing from banks and non-bank financial institutions. In order to develop the equity market for SMEs, SEBI has decided to create a separate exchange for the SMEs. It has decided that, to begin with there should be a single exchange for the SME sector for around 2-3 years to enable successful development of the market for SMEs. 

IPO grading

SEBI has made it compulsory for companies coming out with IPOs of equity shares to get their IPOs graded by at least one credit rating agency registered with SEBI from May 1, 2007. This measure is intended to provide the investor with an informed and objective opinion expressed by a professional rating agency after analyzing factors like business and financial prospects, management quality and corporate governance practices etc. Till January 2008 45 IPOs have been graded by credit rating agencies. 

Permitting Indian Indian mutual mutual funds to invest invest in overseas overseas securities securities

SEBI has fixed the aggregate ceiling for overseas investments at US $ 5 billion. Within the overall limit of US $ 5 billion, mutual funds can make overseas investments subject to a maximum of US $300 million per mutual fund. Further different regulations that allow individuals and Indian mutual funds to invest in overseas securities by permitting individuals to invest through Indian mutual funds has been converged.

Jamia Hamdard

Page 61




New derivative derivative products products

Mini derivative contract on Index (Sensex and Nifty) having a minimum contract size of Rs. 1 lakh have been introduced. It has been found that globally overall market liquidity and participation generally increases with introduction of mini contracts. Since January 11, 2008 SEBI has also allowed trading on options contracts on indices and stocks with a longer life/tenure of upto five years. These contracts are expected to provide liquidity at the longer end of the market. Since January 15, 2008 SEBI has permitted introduction of volatility index on futures and options contracts. An openly available and quoted measure of market volatility in the form of an index will help market participants. 

Short selling

In pursuance to budget announcement, SEBI has issued a circular on 20th December, 2007 to permit short selling by institutional investors and securities lending and borrowing to support settlement of short sales. 1. Investment options for Navaratna and Miniratna Public Sector Enterprises

The Navaratna and Miniratna Public Sector Enterprises have been allowed to invest in public sector mutual funds subject to the condition that they would not invest more than 30% of the available surplus funds in equity mutual funds and the Boards of PSEs would decide the guidelines, procedures and management control systems for such investment in consultation with their administrative Ministries. 

Investor Protection Protection and Education Education Fund (IPEF)

SEBI has set up the Investor Protection and Education Fund (IPEF) with the purpose of investor education and related activities. SEBI hascontributed a sum of Rs.10 crore

Jamia Hamdard

Page 62


toward the initial corpus of the IPEF from the SEBI General Fund. In addition following amounts will also be credited to the IPEF namely: (i)

Grants and donations given to IPEF by the Central Government, State Governments or any institution approved by SEBI for the purpose of the IPEF;

(ii)

Interest or other income received out of the investments made from the IPEF; and

(iii) Such other amount that SEBI may specify sp ecify in the interests of the investors. inves tors.

Jamia Hamdard

Page 63


Result And Analysis of The Survey: Based on the questionnaire here is a systematic analysis of the opinions of the respondents. 1) Do you have any knowledge about capital market?

Bar chart showing the number of respondents respondents who are aware of the Capital market According According to Age:

The line graph shows that young people are more aware of the capital market. The age group of 20-30years has 20 positive answer, whereas it decrease to 06 in the age group of 30-40years,next it increases to 08 in age group of 40-50years.

Jamia Hamdard

Page 64


Bar chart showing the number of respondents respondents who are aware of the Capital market According According To Salary: Salary:

18

9

4 2

Salary group of Rs. 20,000-30,000 are more aware of the capital market, then comes the Rs. 30,000-40,000 earners who show there interest in capital market. Rs. 40,000-50,000 have less interest here might be they take help of brokers if needed. Below Rs. 20,000 people are still having average knowledge of the same.

Jamia Hamdard

Page 65


Pie Chart showing the percentage of people aware, not aware, and partly aware of the Capital market:

Awareness about Capital Market: % of people aware

% of people not aware

Partly Aware

18%

16%

66%

66% of the respondents are aware of the Capital Market,18% of them are partly aware and only 185 of the respondents are not aware of it. Thus it can be said that a prominent number of population knows about Capital market.

Jamia Hamdard

Page 66


2) Capital Market Reforms should be related to…. (Disclosure, pricing or both)

Analysis for estimating the number of people responding in favor of both Disclosure and pricing-Accord pricing-According ing to Salary: Salary:

The Salary group of 20,000-30,000 says the maximum number of both option that means according to them reforms took place in both Disclosure and pricing. 40,000-50,000 salary group is not seemingly in favor of the opinion. Rests two are partially in favor of the same

Jamia Hamdard

Page 67


Graph showing number of respondents who replied reforms held in Disclosure – According According to Salary:

The comparatively below salary group of people have more interest and information about capital market as they are supposed to be the major part of the population. In terms of reforms they are in favor of disclosure disc losure also.

Jamia Hamdard

Page 68


Graph showing number of respondents who replied reforms held in Disclosure – According According to Salary: Salary:

Pricing is also favored by 20,000-30,000 salaried people, they are the main target of the survey because large number of population is comprised of this group.

Jamia Hamdard

Page 69


Pie Chart showing showing the the percentage percentage of responses responses of each each of the three options: options:

Capital Market Reforms: Disclosure %

Pricing %

Both %

26%

50%

24%

The survey says it should be in both the disclosure of terms and conditions and pricing of debt and equities. The respondents‘ answer in favor of both that is 50% is maximum.

Jamia Hamdard

Page 70


3) Market Infrastructure is one of the prerequisite for the flow of Information and Trade…

Number of people having a strong view on availability availability of Market Infrastructure Infrastructure – According According to age:

Age group of 20-30 is rational and is strongly in favor of about sound market Infrastructure for the flow of information and trade. Next in line is age group 40 -50 and the last is 30 – 40 age group that gives minimum favors in regards to the same.

Jamia Hamdard

Page 71


Number of people having just agreeing view on availability of Market Infrastructure Infrastructure – According According to age:

Again 20-30 age group people p eople agree to the fact that market infrastructure is needed,30-40 & 40-50 age groups are comparatively less in favor.

Jamia Hamdard

Page 72


Number of people disagreeing disagreeing on the view that a sound Market Infrastructure Infrastructure is necessary necessary for flow of information and trade – According According to age:

Age group of 20 – 30 Years is more aware of the fact that Market Infrastructure is prerequisite for flow of information and trade or say younger generation is quite rational about the view.

Jamia Hamdard

Page 73


Pie chart showing showing the three different different opinions opinions of the respondents respondents regarding regarding the availability availability of sound Market Infrastructure Infrastructure for flow of information and trade: trade:

Market Infrastructure: Strongly Agree %

Agree %

Disagree %

11%

35%

54%

The survey shows that market infrastructure is one of the prerequisite of flow of information and trade, as maximum number of respondent strongly agree to the fact.

Jamia Hamdard

Page 74


4) Does India has a Nation Wide Integrated market?

Number of respondents respondents strongly agreeing on the view of a nationwide nationwide market existence in India – According to occupation:

Only 3 of the Government employees and 3 of the private employees strongly agree to the opinion on Nation Wide Market existing ex isting in India.

Jamia Hamdard

Page 75


Number of respondents respondents agreeing agreeing on the view of of a nationwide nationwide market market existence existence in India – According to occupation:

Only private employees are in favor of the thing that India has Nation Wide Capital Market.

Jamia Hamdard

Page 76


Pie Chart showing percentage percentage of different opinions regarding the availability availability of nationwide nationwide integrated integrated Capital Capital market in India: India:

Nation Wide Integrated Market Exists: Agree %

Disagree %

Strongly Agree %

12%

22%

66%

Respondent have not strongly agreed to the fact, they just agree in large number that means still there is greater need of Market integration in India or say a wide spread market is to be there.

Jamia Hamdard

Page 77


6) Where do you prefer to invest in Stock market or in Banks?

Opinions about investing excusively in stock market – According to salary:

Higher income group people are more inclined to invest in stock market, as the graph shows Income group of Rs.30,000-40,000 invest more in stock market however opinion changes with further rise in income.

Jamia Hamdard

Page 78


Opinions about investing excusively in stock market – According to salary:

Less income groups plan to invest in banks exclusively as compared to higher income group

Jamia Hamdard

Page 79


Pie Chart showing percentage percentage of different opinions regarding the preference preference of investment either in stock market or in bank or in both of them:

Preference in Investment: Bank %

Both %

32%

Stock Market %

34%

34%

Equal number of people invest in Bank and both (Stock Market & Bank),i.e.34%, some figure less that is 32% invest in Stock Market.

Jamia Hamdard

Page 80


7) Free Pricing of Equities should be there or not?

Number of respondents respondents agreeing on the view of Free Equity Pricing – According to occupation: occupation:

Private employees are largely in favor of free equity pricing, as compared to the government employees. Businessmen do not prefer this option.

Jamia Hamdard

Page 81


Number of respondent respondentss agreeing on on the view view of Free Equity Equity Pricing Pricing – According According to Salary: Salary:

16 14 12 10 8 6 4 2 0

Income group of Rs. 20,000-30,000 20,000 -30,000 are preferring the idea of free equity equ ity Pricing, rest of the groups are not in favor.

Jamia Hamdard

Page 82


Pie Chart showing percentage percentage of different different opinions regarding the free pricing of equities:

Free Equity Pricing: Yes %

No %

Can't say %

22%

52% 26%

52% of the respondents voted for Free Equity Eq uity pricing,22% are unknown or can‘t give

any opinion. And 26% are not in favor of the same.

Jamia Hamdard

Page 83


8) Should there be any kind of regulations on brokers?

Number of respondent respondentss agreeing on the view view of putting regulations regulations on brokers brokers – According According to occupation: occupation:

Most of the respondents are in favor of some kind of regulations on brokers. Private employees are more agreeing on the point as compared to the rest.

Jamia Hamdard

Page 84


Number of respondent respondentss agreeing on the view view of putting regulations regulations on brokers brokers – According According to salary:

Salary group of below Rs.20, 000 are showing positive response i.e. they believe in regulation on brokers, same with the next two groups, Rs.40,000-50,000 group is less interested in the same.

Jamia Hamdard

Page 85


Pie Chart showing percentage percentage of different opinions regarding the regulations regulations on brokers:

Regulation on Brokers: Strongly agree %

Agree %

Disagree %

22% 34%

44%

Large number of population favors regulations on brokers.

Jamia Hamdard

Page 86


9) There should be detailed disclosure of terms and conditions on mutual funds or not?

Number of respondents respondents strongly agreeing on the view of disclosing all the terms and conditions on Mutual funds before before hand – According According to occupation: occupation: –

All the respondents strongly agree to the point that there should be disclosure of terms and conditions of mutual funds. Since private employees are more in the population there opinion is greater.

Jamia Hamdard

Page 87


Number of respondents respondents strongly agreeing on the view of disclosing all the terms and conditions on Mutual funds before before hand – According According to salary:

All the income group favor the fact, Rs.20,000-30,000 supports more also this group exists more so as their opinion, other groups like below 20,000 & Rs.30,000-40,000 also vote for the disclosure.

Jamia Hamdard

Page 88


Pie Chart showing percentage of different opinions regarding the disclosure of all the terms and conditions conditions of of Mutual funds funds before hand: hand:

Disclosure: Strongly Agree %

Agree %

Disagree %

0%

38%

62%

The result shows that major number of respondents prefers the point of disclosure.

Jamia Hamdard

Page 89


10) What can be the households’ share in Mutual funds

Bar chart showing showing the the opinions regarding regarding household’s household’s share in mutual funds-

According According to occupation: occupation:

Declining-8%

Govt.employee

Business man

Private employee

Small number of government employees i.e.2 say the the share is declining at

8%.Private

employees have the same opinion but with greater percentage.

Jamia Hamdard

Page 90


Bar chart showing showing the the opinions regarding household’s share in mutual funds According According to salary: salary:

Income group of 20,000-30,000 again have larger share of response i.e. declining at 8%.Below 20,000 comes next in line. The rest have their opinions.

Jamia Hamdard

Page 91


Pie Chart showing percentage percentage of different opinions regar ding house hold’s share in Mutual funds: funds:

House hold share in Mutual Funds: Can't say %

declining-8% %

Increasing-8% %

2% 44% 54%

The survey shows that 54% of the respondents were unaware of the point, however it can be judged as declining at 8% as large number of them i.e.44% have said so and only 2% have different opinion.

Jamia Hamdard

Page 92


10) Global effect is one of the leading factor that has greater impact on Stock market?

Bar chart showing showing the the number of respondents respondents strongly agreeing agreeing to the fact that that global scenario affects the the stock market - According According to occupation: occupation:

Govt.employee

Business man

Private employee

Private employees vent their positive response to a greater degree thus according to them they strongly agree to the fact that global scenarios affect the functioning of the Stock Market. Others have also the response but at less frequency.

Jamia Hamdard

Page 93


Bar chart showing showing the the number of respondents respondents only agreeing agreeing to the fact that global global scenario affects the the stock market - According According to occupation: occupation:

Govt.employee

Business man

Private employee

Government employees and private employees favor the point, business men are neutral of the view.

Jamia Hamdard

Page 94


Pie Chart showing percentage percentage of different opinions regarding the fact that globa scenario affects stock stock market :

Global Scenario Effects Stock Market: Strongly agree %

Agree %

Disagree %

0%

44% 56%

56% of the respondents are in strongly supporting the view and 44% of them are just agreeing with the concept, it means global scenario do effects.

Jamia Hamdard

Page 95


Findings and recommendations:

Following are some of the point that has been found out by the analysis. 

It can be said that a prominent number of population knows about Capital market.



The survey says reforms should be in both the disclosure of terms and conditions and pricing of debt and equities.



Market infrastructure is one of the prerequisite of flow of information and trade



Still there is greater need of Market integration in India.



Equal number of people invest in Bank and both (Stock Market & Bank), i.e.34%, some figure less that is 32% invest in Stock Market.



52% of the respondents voted for Free Equity pricing.



Large number of population favors regulations on brokers.



Major number of respondents prefers the point of disclosure.



56% of the respondents are in strongly supporting the view and 44% of them are just agreeing with the concept, it means global scenario do effects.



Share of house hold in Mutual fund is declining at rate of 8%

Jamia Hamdard

Page 96


Annexure 1 QUESTIONNAIRE Name: Designation -

Govt. Employee

Salary- 20,000 & below

Businessman

20,000 to 30,000

Private Employee 30, 000 to 40,000

40,000 to 50,000 Age- 20 to 30

30 to 40

40 to 50

1) Do you have any knowledge about the current capital market? a) Yes

b) No

c) Partly

2) Initially capital market reforms were related to… a) Disclosure

b) pricing

c) Can‘t say

3) Market infrastructure is one of the prerequisite for flow of information and trading…

a) Strongly disagree b) Strongly agree c) Agree d) Disagree

4) Does India has a nationwide integrated market? a) Strongly disagree b) Strongly agree

c) Agree d) Disagree

5) Where do you prefer to invest in stock market or in banks? a) Banks

b) Stock market

c) Both of them

6) Free pricing of equities should be there or not? a) Yes

Jamia Hamdard

b) No

c) Can‘t say

Page 97


7) Should there be any kind of regulations on brokers? a) Strongly disagree b) Strongly agree

c) Agree

d) Disagree

8) There should be detailed disclosure of terms and conditions on mutual funds or not? a) Strongly disagree b) Strongly agree c) Agree

d) Disagree

9) What is the households‘ share in mutual funds? a) Increasing-8%

b) Constant-10% c) Declining-8 d) Can‘t say

10) Global effect is one of the leading factor that has greater impact on stock Market……

a) Strongly disagree b) Strongly agree c) Agree

Jamia Hamdard

d) Disagree

Page 98


BIBLIOGRAPHY



Internet



Consultation with the supervisor



Interaction with respondents



News Paper

Jamia Hamdard

Page 99

Project on Capital Market Reforms

Recommend Documents