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EXECUTIVE SUMMARY Financial system has a vital role to play in every economy. The economic development of any country depends upon the existence of a well organized financial system. Hence, it is only financial system with the help of which any economic activities in the country takes place. The financial system helps in mobilizing savings in form of money and monetary assets and invests them to productive Ventures. n efficient functioning of financial system facilitates the free flow of and thus promotes investment. Thus and funds to more productive activities promotes

the financial system provides inter mediation between savers ! investors faster economic development.

financial system comprises of financial services provided by financial institution, using financial instruments with the help of financial markets. This pro"ect elaborates the role played by the financial markets and financial services in an economy.


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Financial (arkets are an important component of financial system in an economy Financial system aims at establishing a regular, smooth, efficient and cost effective link between savers ! investors. Thus, it helps encouraging both saving and investment. ll system facilitates expansion of financial markets over space 6 time and promote efficient allocation of financial resources. For socially desirable and economically productive purposes. They influence both the 7uality and the pace of economic development. Various constituents of financial system are financial, institutions, financial services, financial instruments and financial markets. These constituents of financial system are closely inter8mixed and operate in con"unction with each other. For eg. Financial institutions operate in financial markets generating, purchasing and selling financial instruments and rendering various financial services in accordance with the practices and procedures established by law or tradition. Financial markets are the centre or arrangements facilitating buying and selling of financial claims, assets, services and the securities. 4anking and non 9 banking financial institutions, dealers, borrowers and lenders, investors and savers, and agents are the participants on demand and supply side in these markets. Financial market may be specific place or location, e.g. stock exchange or it may be "ust on over 9 the 9 phone market. ,enerally speaking, there is no specific place or location to indicate a financial market. 2herever a financial transaction takes place, it is deemed to have taken place in the financial market. Hence financial markets are pervasive in nature since financial transaction are themselves very pervasive throughout the economic system. For instance, issue of e7uity shares, granting of loan by term lending, institutions, deposit of money into a bank, purchase of debentures, sale of shares and so on. However, financial markets can be referred to as those centres and arrangements which facilitate buying and selling, of financial assets, claims and services. 0ometimes, we do find the existence of a specific place or location for a financial market as in the case of stock exchange.


Classi i!a"i#$ # Fi$a$!ial Ma%&'"s

The classification of financial markets in #ndia is shown in +hart above. ($#%)a$is'* Ma%&'"s +, #n these markets there are a number of money

lenders, indigenous bankers, traders, etc., who lend money to the public. #ndigenous bankers also collect deposits from the public. There are also private finance companies, chit funds etc., whose activities are not controlled by the .4#. .ecently the .4# has taken steps to bring private finance companies and chit funds under its strict control by issuing non8banking financial companies :.eserve 4ank; %irections, 5<<6. The .4# has already taken some steps to bring the unorganised sector under the organised fold. They have not been successful. The regulations concerning their financial dealings are still inade7uate and their financial instruments have not been standardised. O%)a$is'* Ma%&'"s +, #n the organised markets, there are standardised rules

and regulations governing their financial dealings. There is also a high degree of institutionalisation and instrumentalisation. These markets are sub"ect to strict supervision and control by the .4# or other regulatory bodies. These organised markets can be further classified into two. They are=


:i; :ii;

+apital market (oney market

Ca-i"al Ma%&'" The capital market is a market for financial assets which have a long or indefinite maturity. ,enerally, it deals with long term securities which have maturity period of above one year. +apital market may be further divided into three namely= :i; #ndustrial securities market :ii; ,overnment securities market and :iii; -ong term loans market (i) Industrial Securities Market s the very name implies, it is a market for industrial securities namely= :i; &7uity shares or ordinary shares, :ii; *reference shares, and :iii; %ebentures or bonds. #t is a market where industrial concerns raise their capital or debt by issuing appropriate instruments. #t can be further subdivided into two. They are= :i; :ii; *rimary market or $ew issue market 0econdary market or 0tock exchange a

Primary Market *rimary market is a market for new issues or new financial claims. Hence, it is also called $ew #ssue market. The primary market deals with those securities which are issued to the public for the first time. #n the primary market, borrowers exchange new financial securities for long term funds. Thus, primary market facilitates capital formation. There are three ways by which a company may raise capital in a primary market. They are=


:i; *ublic issue :ii; .ights issue :iii; *rivate placement The most common method of raising capital by new companies is through sale of securities to the public. #t is called public issue. 2hen an existing company wants to raise additional capital, securities are first offered to the existing shareholders on a pre8emptive basis. #t is called rights issue. *rivate placement is a way of selling securities privately to a small group of investors. Secondary Market 0econdary market is a market for secondary sale of securities. #n other words, securities which have already passed through the new issue market are traded in this market. ,enerally, such securities are 7uoted in the 0tock &xchange and it provides a continuous and regular market for buying and selling of securities. This market consists of all stock exchanges recognised by the ,overnment of #ndia. The stock exchanges in #ndia are regulated under the 0ecurities +ontracts :.egulation; other stock markets. (ii) o!ernment Securities Market #t is otherwise called ,ilt8&dged securities market. #t is a market where ,overnment securities are traded. #n #ndia there are many kinds of ,overnment 0ecurities 8 short8term and long8term. -ong8term securities are traded in this market while short term securities are traded in the money market. 0ecurities issued by the +entral ,overnment, 0tate ,overnments, 0emi8,overnment authorities like +ity +orporations, *ort Trusts etc. #mprovement Trusts, 0tate &lectricity 4oards, (iii) "on#$Term "oans Market %evelopment banks and commercial banks play a significant role in this

ct, 5<>?. The 4ombay 0tock

&xchange is the principal stock exchange in #ndia which sets the tone of the

ll #ndia and 0tate level

financial institutions and public sector enterprises are dealt in this market.


market by supplying long term loans to corporate customers. -ong market may further be classified into= #. ##. ###. Term loans market (ortgages market Financial guarantees market.

term loans

Term "oans Market #n #ndia, many industrial financing institutions have been created by the ,overnment both at the national and regional levels to supply long term and medium term loans to corporate customers directly as well as indirectly. These development banks dominate the industrial finance in #ndia. #nstitutions like #%4t #F+t #+#+#, and other state financial corporations crone under this category. These institutions meet the growing and varied long8term financial re7uirements of industries by supplying long8term loans. They also help in identifying investment opportunities, encourage new entrepreneurs and support modernisation efforts.

Mort#a#es Market The mortgages market refers to those centers which supply mortgage loan mainly to individual customers. mortgage loan is a loan against the security of immovable property like real estate. The transfer of interest in a specific immovable property to secure a loan is called mortgage. This mortgage may be e7uitable mortgage or legal one. gain it may be a first charge or second charge. &7uitable mortgage is created by a mere deposit of title deeds to properties as security whereas in the case of a legal mortgage the title in the property is legally transferred to the lender by the borrower. -egal mortgage is less risky. %inancial uarantees Market


,uarantee market is a centre where finance

is provided against the

guarantee of a reputed person in the financial circle. ,uarantee is a contract to discharge the liability of a third party in case of his default. ,uarantee acts as a security from the creditor@s point of view. #n case the borrower fails to repay the loan, the liability falls on the shoulders of the guarantor. Hence the guarantor must be known to both the borrower and the lender and he must have the means to discharge his liability. Though there are many types of guarantees, the common forms are= :i; *erformance ,uarantee, and :ii; Financial ,uarantee. *erformance guarantees cover the payment of earnest money, retention money, advance payments, non8completion of contracts etc. )n the other hand financial guarantees cover only financial contracts.

IMPORTANCE OF CAPITAL MARKET bsence of capital market acts as a deterrent factor to capital formation and economic growth. .esources would remain idle if finances are not funneled through the capital market. The importance of capital market can be briefly summarized as follows= :i; The capital market serves as an important source for the avoids productive use

of the economy@s savings. #t mobilises the investment and thus :ii; :iii;

savings of the people for further

their wastage in unproductive uses.

#t provides incentives to saving and facilitates capital formation by offering suitable rates of interest as the price of capital. household sector to than physical assets. economy and #t provides an avenue for investors, particularly the more productive

invest in financial assets which are :iv;

#t facilitates increase in production and productivity in the


thus, enhances the economic welfare of the

society. Thus, it facilitates Athe


movement of stream of

command over capital to the point of highest profitably to

yieldA towards those who can apply them productively a enhance the national income in the aggregate.


The operations of different institutions in the capital market rational allocation of scarce resources.


economic growth. They give 7uantitative and of funds and bring about

7ualitative directions to the flow

CHAPTOR NO. 2 MONE. MARKET (oney market is a market for short8term loans or financial assets. #t is a


market for the lending and borrowing of short term funds. s the name implies, it does not actually deal in cash or money. 4ut it actually deals with near substitutes for money or near money like trade bills, promissory notes and ,overnment papers drawn for a short period not exceeding one year. These short term instruments can be converted into cash readily without any loss and at low transaction cost. (oney market is the centre for dealing mainlyB in short8term money assets. #t meets the short8term re7uirements of borrowers and provides li7uidity or cash to lenders. #t is the place where short8term surplus funds at the disposal of financial institutions and individuals are borrowed by individuals, institutions and also the ,overnment. /' i$i"i#$ + ccording to ,eottery +rowther, CThe money market is the collective name given to the various firms and institutions that deal in the various grades of near money.D FEAT(RES OF A MONE. MARKET The following are the general features of a money market = i; ii; :iii; #t is a market purely for 0hort8term funds or financial assets near money. #t deals with financial assets having a maturity period upto one year only. #t deals with only those assets which can be converted into cash readily without loss arid with minimum transaction cost. :iv; ,enerally transactions take place through phone i.e., oral communication. .elevant documents and written communications can be exchanged subse7uently. There is no formal place like stock exchange as in the case of a capital market. :v; :vi; Transactions have to be conducted without the help of brokers. #t is not a single homogeneous market. #t comprises of several



submarkets, each specialising in a particular type of financing. e.g., +all money market, cceptance market, 4ill market and so on. :vii; The components of a money market are the +entral 4ank, +ommercial 4anks, $on8banking financial companies, discount houses and acceptance houses. +ommercial banks generally play a dominant role in this market. O01'!"i2's The following are the important ob"ectives of a money market= :i; :ii; :iii; To provide a parking place to employ short8term surplus funds. To provide room for overcoming short8term deficits. To enable the +entral 4ank to influence and regulate li7uidity in the economy through its intervention in this market. :iv; To provide a reasonable access to users of short8term funds to meet their re7uirements 7uickly, ade7uately and at reasonable costs. COMPOSITION OF MONE. MARKET+ s stated earlier, the money market is not a single homogeneous market. #t consists of a number of sub8markets which collectively constitute the money market. There should be competition within each sub8market as well as between different sub8markets. The following are the main sub money market= :i; :ii; :iii; :iv; +all money market +ommercial bills market E discount market cceptance market Treasury bill market markets of a

CALL MONE. MARKET The call money market refers to the market for extremely short period


loans, say one day to fourteen days. These loans are repayable on demand at the option of either the lender or the borrower. s stated earlier, these loans are given to brokers and dealers in stock exchange. 0imilarly, banks with @surplus funds@ lend to other banks with @deficit funds@ in the call money market. Thus, it provides an e7uilibrating mechanism for evening out short term surpluses and deficits. (oreover, commercial banks can 7uickly borrow from the call market to meet their statutory li7uidity re7uirements. They can also maximise their profits easily by investing their surplus funds in the call market during the period when call rates are high and volatile. O-'%a"i#$s i$ Call Ma%&'" 4orrowers and lenders in a call market contact each other over telephone. Hence, it is basically over8the8telephone market. loan and the rate of interest. fter negotiations over the phone, the borrowers and lenders arrive at a deal specifying the amount of fter the deal is over, the lender issues F4che7ue in favour of the borrower. The borrower in turn issues call money borrowing receipt. 2hen the loan is repaid with interest, the lender returns the duly discharged receipt. A*2a$"a)'s + #n #ndia, commercial banks play a dominant role in the call loan market. They used to borrow and lend among themselves and such loans are called inter8bank loans. They are very popular in #ndia. 0o many advantages are available to commercial banks. They are as follows = i; ii; iii; iv; v; High -i7uidity High *rofitability (aintenance of 0-. 0afe and +heap ssistance to +entral 4ank )perations.



COMMERCIAL 3ILLS MARKET OR /ISCO(NT MARKET commercial bill is one which arises out of a genuine trade transaction, i.e., credit transaction. s soon as goods are sold on credit, the seller draws a bill on the buyer for the amount due. The buyer accepts it immediately agreeing to pay the amount mentioned therein after a certain specified date. Thus, a bill of exchange contains a written order from the creditor to the debtor, to pay a certain sum, to a certain person, after a certain period. short period ranging between F months and ? months. /' i$i"i#$ 0ection > of the $egotiable #nstruments follows= A n instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrumentA. T4-'s # 3ills (any types of bills are in circulation in a bill market. They can be broadly classified as follows= &emand and Usance 'ills( %emand bills are otherwise called sight bills. These bills are payable immediately as soon as they are presented to the drawee. $o time of payment is specified and hence they are payable at sight. 3sance bills are called time bills. These bills are payable immediately after the expiry of time period mentioned in the bills. The period varies according to the established trade custom or usage prevailing in the country. Clean 'ills and &ocumentary 'ills

bill of

exchange is a @self8li7uidating@ paper and negotiable. #t is drawn always for a

ct defines a bill of exchange as


2hen bills have to be accompanied by documents of title to goods like .ailway receipt, -orry receipt, 4ill of -ading etc., the bills are called documentary bills. These bills can be further classified into % DIP bills. #n the case of a DI DI I bills and bills, the documents accompanying bills have to I

be delivered @to the drawee immediately after his acceptance of the bill. Thus, bill becomes a clean bill immediately after acceptance. ,enerally % bills are drawn on parties who have a good financial standing. Inland and %orei#n 'ills (#nland bills are those drawn upon a person resident in #ndia and are @payable in #ndia. Foreign bills are drawn outside #ndia and they may be @payable either in #ndia or outside #ndia. They may be drawn upon a person resident in #ndia also. Foreign bills have their origin outside #ndia. They also include bills drawn in #ndia but made payable outside #ndia. E)*ort 'ills and Im*ort 'ills &xport bills are those drawn by #ndian exporters on importers outside #ndia and import bills are drawn on #ndian importers in #ndia by exporters outside #ndia. Indi#enous 'ills #ndigenous bills are those drawn and accepted according to native custom or usage of trade. These bills are popular among indigenous bankers only. #n #ndia, they are called @hundis@. The hundis are known by various names such as @0hah"og@, @$am"og@, @Gokhani@, @Termain"og@, @%arshani@, @%hani"og@ and so on. Accommodation 'ills and Su**ly 'ills #f bills do not arise out of genuine trade transactions, they are called accommodation bills. They are known as @kite bills@ or @wind bills@. Two parties


draw bills on each other purely for the purpose of mutual financial accommodation. These bills are discounted with bankers and the proceeds are shared among themselves. )n the due dates, they are paid. +*erations in 'ill Market From the operations point of view, the bill market can be classified into two viz. :i; :ii; &iscount Market %iscount market refers to the market where short8term genuine trade bills are discounted by financial intermediaries like commercial banks. 2hen credit sales are effected, the seller draws a bill on the buyer who accepts it promising to pay the specified sum at the specified period. The seller has to wait until the maturity of the bill for getting payment. 4ut, the presence of a bill market enables him to get payment immediately. Acce*tance Market The acceptance market refers to the market where short8term genuine trade bills are accepted by financial intermediaries. ll trade bills cannot be discounted easily because the parties to the bills may not be financially sound. 0uch bills are accepted by financial intermediaries like banks, the bills earn a good name and reputation and such bills can be readily discounted anywhere. #n -ondon,there are specialist firms called accpetance house which accept bills drawn by traders and impart greater marketability to bills. N'5 3ill Ma%&'" S!6'7' 1970 The 5<>H 4ill (arket 0cheme remained a partial success. #t was criticised that it did not develop a good bill market in #ndia. The scheme appears to be a

%iscount market cceptance market


device for extending credit for banks during busy seasons. #t is not based on genuine trade bills but on the conversion of loans and advances by scheduled banks into usance bills. The .ahe"a +ommittee set in motion the introduction of a new bill market. The report brought out the abuses of cash credit system and suggested the use of bill financing and for the supervision of the end use of funds lent by commercial banks. study group was appointed by the .eserve 4ank in February 5<IJ, under the chairmanship of 0hri. (. $arasimhan to go into the 7uestion of enlarging the use of the bill of exchange as an instrument for providing credit and creation of a bill market in #ndia. The group submitted the report in Gune 5<IJ. Following its recommendations, the .eserve 4ank announced a new bill market scheme under 0ection 5I:H;:a; of the .eserve 4ank of #ndia $ovember 5<IJ. :i; ll eligible scheduled banks are eligible to offer bills of exchange for rediscount. :ii; The bills of exchange should be a genuine trade bill and should have arisen out of the sale of goods. for this purpose. :iii; The bill should not have a maturity time of more than 5HJ days and when it is offered to the .eserve 4ank for rediscount its maturity should not exceed <J days. :iv; The bill should have at least two good signatures, one of which should be that of a licensed scheduled bank. :v; The minimum amount of bill should be .s. >,JJJ and on one occasion, the value of bill offered for rediscount should not be less than .s. >J,JJJ. #n 5<I5, the .eserve 4ank simplified the procedure for rediscounting

ct in

ccommodation bills are not eligible


the bills. To avoid delays and reduce the work involved in physically delivering and redelivering the bills to and from the bank, it was decided to dispense with the actual lodgement of bills, each of the face value of .s. H lakhs and below. The minimum amount of a bill eligible for rediscount with the 4ank was reduced to .s. 5,JJJ. The facility which was available only in (umbai, /olkata, +hennai and $ew %elhi, was extended to /anpur and 4angalore. #n pril, 5<IH, the bills drawn on and accepted by the #ndustrial +redit

and #nvestment +orporation of #ndia -imited on behalf of the purchasers were covered by the scheme provided they are presented to the .eserve 4ank by an eligible scheduled bank. The .eserve 4ank has been making constant efforts for the orderly development of a bill market. However, it will take a long time to have a bill market of the type found in advanced countries. TREAS(R. 3ILL MARKET Gust like commercial bills which represent commercial debt, treasury bills represent short8term borrowings of the ,overnment. Treasury bill market refers to the market where treasury bills are bought and sold. Treasury bills are very popular and en"oy a higher degree of li7uidity since they are issued by the ,overnment. M'a$i$) a$* F'a"8%'s treasury bill is nothing but a promissory note issued by the ,overnment under discount for a specified period stated therein. The ,overnment promises to pay the specified amount mentioned therein to the bearer of the instrument on the due date. The period does not exceed a period of one year. #t is purely a finance bill since it does not arise out of any trade transaction. #t does not re7uire any @grading@ or @endorsement@ or @acceptance@ since it is a claim against the ,overnment.


Treasury bills are issued only by the .4# on behalf of the ,overnment. Treasury bills are issued for meeting temporary ,overnment deficits. The treasury bill rate or the rate of discount is fixed by the .4# from time8to #t is the lowest one in the entire structure of interest rates in the country because of short8term maturity and high degree of li7uidity and security. T4-'s # T%'as8%4 3ills #n #ndia, there are two types of treasury bills viz., :i; ordinary or regular and :ii; @ad hoc@ known as @ad hoes@. )rdinary treasury bills are issued to the public and other financial institutions for meeting the short8term financial re7uirements of the +entral ,overnment. These bills are freely marketable and they can be bought and sold at any time and they have secondary market also. )n the other hand @ad hocs@ are always issued in favour of the .4# only. They are not sold through tender or auction. They are purchased by the .4# on tap and the .4# is authorised to issue currency notes against them. They are not marketable in #ndia. However, the holders of these bills can always sell them back to the .4#. d hocs serve the ,overnment in the following ways= :i; They replenish cash balances of the +entral ,overnment. Gust like 0tate ,overnments get advance :ways and means advances; from the .4t the +entral ,overnment can raise finance through these ad hocs. :ii; They also provide an investment medium for investing the temporary surpluses of 0tate ,overnments, 0emi8,overnment departments and foreign central banks. )n the basis of periodicity, treasury bills may be T6'4 a%'+ :i; <5 days treasury bills, :ii; 56H days treasury bills, and :iii; F?K days treasury bills. $inety one days treasury bills are issued at a fixed discount rate of KL as well as through auctions. F?K days bills do not carry any fixed rate. The


classified into three.


discount rate on these bills are 7uoted in auction by the participants and accepted by the authorities. 0uch a rate is called cut off rate. #n the same way, the rate is fixed for <5 days treasury bills sold through auction. <5 days Treasury bills :tap basis; can be rediscounted with the .4# at any time after 5K days of their purchase. 4efore 5K days a penal rate is charged. The participants in this market are the following= :i; :ii; .4# and 04# +ommercial banks

:iii; 0tate ,overnments :iv; %FH# :v; 0T+#

:vi; Financial institutions like -#+, ,#+, 3T#, #%4#, #+#+#, #F+#, $ 4 .%, etc. :vii; +orporate customers :viii; *ublic Though many participants are there, in actual practice, this market is in the hands of the banking sector. #t accounts for nearly <JL of the annual >ale of T4s

CHAPTER NO. 3 NE9 ISS(E MARKET MEANIN: The industrial securities market in #ndia consists of $ew #ssue (arket and 0tock &xchange. The new issue market deals with the new securities which


were not previously available to the investing public, i.e., offered to the investing public for the first time. available a new block of securities for issue market deals with raising of for consideration other than cash.

the securities that are

The market, therefore, makes

public subscription. #n otherwords, new

fresh capital by companies either for cash or

The new issue market encompasses all institutions dealing in debentures, rights issues, deposits etc. issue market. F(NCTIONS OF NE9 ISS(E MARKET

fresh claim.

These claims may be in the form of e7uity shares, preference shares, ll financial institutions which contribute, underwrite and directly subscribe to the securities are part of new

The main function of a new issue market is to facilitate transfer of resources from savers to the users. The savers are individuals, commercial banks, insurance companies etc. The users are public limited companies and the government. The new issue market plays an important role of mobilising the funds from the savers and transfer them to borrowers for production purposes, an important re7uisite of economic growth. #t is not only a platform for raising finance to establish new enterprises but also for expansion E diversification E modernisations of existing units. #n this basis the new issue market can be classified as= 5. (arket where firms go to the public for the first time through initial public

offering :#*M;.

(arket where firms which are already trading raise additional capital :0&a;. The main function of a new issue market can be divided into a triple

through seasoned e7uity offering S'%2i!' 8$!"i#$s+ 5. )rigination H. 3nderwriting



F. %istribution O%i)i$a"i#$ )rigination refers to the work of investigation, analysis and processing of new pro"ect proposals. )rigination starts before an issue is actually floated in the market. There are two aspects in this function= :i; careful study of the technical, economic and financial viability to ensure soundness of the pro"ect. This is a preliminary investigation undertaken by the sponsors of the issue.


dvisory services which improve the 7uality of capital issues and ensure its success.

T6' a*2is#%4 s'%2i!'s i$!l8*'+ :a; Type of #ssue. This refers to the kind of securities to be whether e7uity share, preference share, debenture or debenture. :b; :c; :d; :e; :f; (agnitude of issue Time of floating an issue *ricing of an issue 8 whether shares are to be issued at par or premium. (ethods of issue Techni7ue of selling the securities The function of origination is done by merchant bankers who may be commercial banks, all #ndia financial institutions or private firms. #nitially this service was provided by specialised division of commercial banks. t present, financial institutions and private firms also perform this service. Though this service is highly important, the success of the issue depends, to a large extent, on the efficiency of the market. The origination itself does not guarantee the success of the issue. 3nderwriting, a specialised service is re7uired in this regard.

issued convertible



M'"6#*s # Fl#a"i$) N'5 Iss8's The various methods which are used in the floatation of securities in the new issue market are= :i; :ii; :iii; :iv; *ublic issues )ffer for sale *lacement .ights issues

Pu,lic Issues 3nder this method, the issuing company directly offers to the general publicEinstitutions a fixed number of shares at a stated price through a document called prospectus. This is the most common method followed by "oint stock companies to raise capital through the issue of securities. The prospectus must state the following= 5. H. F. K. >. ?. I. 6. <. $ame of the company ddress of the registered office of the company &xisting and proposed activities -ocation of the industry $ames of %irectors uthorised and proposed issue capital to the public %ates of opening and closing the subscription list (inimum subscription $ames of brokersEunderwritersEbankersEmanagers and registrars to the issue. 5J. statement by the company that it will apply to stock exchange for 7uotations of its shares. ccording to the +ompanies ct, 5<>? every application form must be of the

accompanied by a prospectus. $ow, it is no longer necessary to furnish prospectus along with every application form as per the +ompanies

mendment ct, 5<66. $ow, an abridged prospectus, is being annexed to every



share application form. Merits o- Issue t.rou#. Pros*ectus 5. H. F. 0ale through prospectus has the advantage of inviting a large section of the investing public through advertisement. #t is a direct method and no intermediaries are involved in it. 0hares, under this method, are allotted to a large section of investors on a non8discreminatory basis. This procedure helps in wide dispersion of shares and to avoid concentration of wealth in few hands. /'7'%i"s 5. #t is an expensive method. The company has to incur commission, expenses on printing of prospectus, advertisement, bank@s commission, legal charges, stamp H. +--er o- Sale The method of offer of sale consists in outright sale of securities through the intermediary of #ssue Houses or sharebrokers. #n otherwards, the shares are not offered to the public directly. This method consists of tw J stages= The first stage is a direct sale by the issuing company to the Fsue House and brokers at an agreed price. #n the second stage, the intermediaries resell the above securities to the ultimate investors. The #ssue Houses or stock brokers purchase the securities at a negotiated price and resell at a higher price. The difference in the purchase and sale price is called turn or spread. #t is otherwise called 4ought )ut %eals :4)%;. The advantage of this method is that the company is relieved from the problem of printing and advertisement of prospectus and making allotment of shares. )ffer of sale is not common in #ndia. This method is used generally in two instances= :i; :ii; )ffer by a foreign company of a part of it to #ndian investors. of stock *romoters diluting their stake to comply with re7uirements


duty listing fee and registration charges.

This method is suitable only for large issues.

exchange at the time of listing of shares.


Placement 3nder this method, the #ssue Houses or brokers buy the securities outright with the intention of placing them with their clients afterwards. the brokers act as almost wholesalers selling them in retail to the public. The brokers would make profit in the process of reselling to the public. The #ssue Houses or brokers maintain their own list of clients and through customer contact sell the securities. There is no need for a formal prospectus as well as underwriting agreement. Pla!'7'$" 6as "6' #ll#5i$) a*2a$"a)'s+ 5. Timing of issue is important for successful floatation of shares. #n a depressed market conditions when the issues are not likely to get public response through prospectus, placement method is a useful method of floatation of shares. H. F. This method is suitable when small companies issue their shares. #t avoids delays involved in public issue and it also reduces the expenses involved in public issue. Here

Ri#.ts Issue .ights issue is a method of raising funds in the market by an existing company. right means an option to buy certain securities at a certain privileged price within a certain specified period. 0hares, so offered to the existing shareholders are called rights shares. .ights shares are offered to the existing shareholders in a particular proportion to their existing share ownership. The ratio in which the new


shares or debentures are offered to the existing share capital would depend upon the re7uirement of capital. The rights themselves are transferable and saleable in the market. A*2a$"a)'s 5. The cost of issue is minimum. There is no underwriting, brokerage, advertising and printing of prospectus expenses. H. #t ensures e7uitable distribution of shares to all existing shareholders and so control of company remains undisturbed as proportionate ownership in the company remains the same. F. #t prevents the directors from issuing new shares in their own name or to their relatives at a lower price and get controlling right.

CHAPTER NO.4 SEC(RITIES AN/ E;CHAN:E 3OAR/ OF IN/IA<SE3I=+ 0tock market regulation was a pre8independence phenomenon in %uring the ## 2orld 2ar period, in the %efence .ules of lndia, #ndia.

5<KF, provi sions

were made to check the flow of capital into production of capital commodities. These rules, which were promulgated as a temporary measure continued after the war and culminated into the +apital #ssues :+ontrol

; ct, 5<KI.


This legislation had the following ob"ectives= 5. H. F. K. To further the growth of companies with sound capital structure. To avoid undue congestion or overcrowding of public issues in a particular period. To ensure that investment takes place in conformity with the ob"ectives of Five 1ear *lan. To ensure orderly and healthy growth of capital markets with protection to investors. CONTROLLER OF CAPITAL ISS(ES <CCI= For the purpose of achieving the above ob"ectives, an office of the +ontroller of +apital #ssues was set up. #t was entrusted with the responsibility of regulating the capital issues in the country. The ++# was vested with the powers to approve the. kind of instruments, size, timing and premium of issue. SECURITIES A/& EXC0A/ E '+AR& +% I/&IA Hence, government felt the need for setting up of an apex body to develop and regulate the stock market in #ndia. &ventually, the 0ecurities and &xchange 4oard of #ndia :0&4#; was set up on pril 0&4# was set up as a non8statutory body. #t took almost four years for the government to bring about a separate legislation in the name of 0ecurities and &xchange 4oard of #ndia ct, conferring statutory powers. The O01'!"i2's ccording to the preamble of the 0&4# ct, the primary ob"ective of the 0&4# is to promote healthy and orderly growth of the securities market and secure investor protection. For this purpose, the 0&4# monitors the activities of not only stock exchanges but also merchant bankers etc.


5H, 5<66. To start with,


ct, charged to 0&4# with comprehensive

powers over practically all aspects of capital market operations.

The ob"ectives of


0&4# are as follows= To protect the interest of investors so that there is a stead flow of savings into the capital market. To regulate the securities market and ensure fair practices by the issuers of securities so that they can raise resources at minimum cost. F8$!"i#$s 0ection 55 of the 0&4# ct specifies the functions as follows= 1. :a; :b; R')8la"#%4 F8$!"i#$s+ .egulation of stock exchange and self regulatory .egistration and regulation of stock brokers, registrar to all issue, merchant bankers, underwriters, managers and such other intermediaries who are securitie> market. :c; :d; :e; :f; 2. :a; :b; :c; :d; .egistration and regulation of the working of collective investment schemes including mutual funds. *rohibition of fraudulent and unfair trade practices relating to securities market. *rohilition of insider trading in securities. .egulating substantial ac7uisitions of shares and take companies. /'2'l#-7'$"al F8$!"i#$s+ *romoting investor@s education. Training of intermediaries. +onducting research and published information useful to all participants. *romotion of fair practices. +ode of conduct for self8regulatory organisations.

To promote efficient services by brokers, merchant bankers and

other intermediaries so that they become competitive and professional.

organisations. sub8brokers, portfolio associated with

over of




*romoting self8regulatory organisations.

P#5'%s + 0&4# has been vested with the following powers= 5. H. F. K. >. ?. I. 6. <. 5J. *ower to call periodical returns from recognised stock *ower to call any information or explanation from *ower to direct en7uiries to be made in relation to exchanges or their members. *ower to grant approval to bye8laws of recognised stock exchanges. *ower to make or amend bye8laws of recognised stock exchanges. *ower to compel listing of securities by public companies. *ower to control and regulate stock exchanges. *ower to grant registration to market intermediaries. *ower to levy fees or other charges for carrying out the purpose of regulation. *ower to declare applicability of 0ection 5I of the 0ecurities +ontract :.egulation; securities. O%)a$isa"i#$ +hapter ## of the 0&4# ct deals with establishment, incorporation, ct administration and management of the 4oard of %irectors etc. The 0&4# ct is any state or area to grant licences to dealers in affairs of stock exchanges.

recognised stock exchanges or their members.

provides for the establishment of a statutory board consisting of six members. The chairman and two members are to be appointed by the +entral ,overnment, one member to be appointed by the .eserve 4ank and two members having experience of securities market to be appointed +entral ,overnment. 0ection ## deals with the powers of 4oard. 0&4# has divided its activities into four operational department namely primary market department, issue management and intermediaries department, secondary market department and institutional department each headed by an &xecutive %irector. part from these there are two other departments viz.,

by the


-egal %epartment and #nvestigation %epartment, a headed by officials of the rank of &xecutive %irectors. Primary M arket &e*artment : *rimary market department deals with all policy matters and regulatory issues relating to primary market, mar intermediaries and matters pertaining to 0.)@s and redressel of investor grievances. Issue M ana#ement and Intermediaries &e*artment : This department concerned with vetting of offer documents and other things like registration, regulation and monitoring of issue related to intermediaries. Secondary M arket &e*artment( #t looks after all the policy and regulatory issues for the secondary marketN administration of the ma"or stock exchanges and other matters related to it. Institutional In!estment &e*artment : This department is concerned with framing policy for foreign institutional investors, mutual funds publications, membership in international organisations etc. 0&4# has two dvisory +ommittees, one each for primary ar @ secondary markets. The committees are constituted from among the market players, recognised investor associations and eminent persons associated with the capital market. They provide advisory inputs in framing policies and regulations. These committees are non8statutory in nature and 0&4# not bound by the committees. a. other matters like

CHAPTER NO. 5 FINANCIAL SER>ICES I$"%#*8!"i#$ The #ndian Financial services industry has undergone a metamorphosis since 5<<J. %uring the late seventies and eighties, the #ndian financial services industry was dominated by commercial banks and other financial institutions which cater to the re7uirements of the #ndian industry. #nfact the capital market played a secondary role only. The economic liberalisation

h a s brought in a


complete transformation in the #ndian financial services industry. *rior to the economic liberalisation, the #ndian financial service sector was characterised by so many factors which retarded the growth of this sector. However, after the economic liberalisation, the entire financial sector has undergone a sea8saw change and now we are witnessing the emergence of new financial products and services almost everyday. Thus, the present scenario is characterised by financial innovation and financial creativity and before going deep into it, it is imperative that one should understand the meaning and scope of financial services. MEANIN: OF FINANCIAL SER>ICES #n general, all types of activities which are of a financial nature could be brought under the term @financial services@. The term AFinancial 0ervice in a broad sense means Amobilising and allocating savingsA. Thus, it includes all activities involved in the transformation of saving into investment. CLASSIFICATION OF FINANCIAL SER>ICES IN/(STR. The financial intermediaries in #ndia can be traditionally classified. into two= :i; +apital market intermediaries and :ii; (oney market intermediaries. The capital market intermediaries consist of term lending institutions and investing institutions which mainly provide long term funds. )n the other hand, money market consists of commercial banks, co8operative banks and other agencies which supply only short term funds. Hence, the term @financial services industry@ includes all kinds of organisations which intermediate and facilitate financial transactions of both individuals and corporate customers. SCOPE OF FINANCIAL SER>ICES Financial services cover a wide range of activities. They can be broadly classified into two namely=


:i; :ii;

Traditional activities (odern activities Traditionally, the financial intermediaries have been rendering a wide

T%a*i"i#$al a!"i2i"i's range of services encompassing both capital and money market activities. They can be grouped under two heads vizN :i; Fund based activities and :ii; $on8fund based activities. F u n d 0as'* a!"i2i"i's The traditional services which come under fund based activities are the following= :i; :ii; 3nderwriting of or investment in shares, debentures, bonds %ealing in secondary market activities. papers, etc. seed etc. of new issues :primary market activities; :iii; *articipating in money market instruments like commercial certificate of deposits, treasury bills, discounting of bills :iv; :v; capital etc. %ealing in foreign exchange market activities. Financial intermediaries provide services on the basis of non8fund activities also. This can also be called Afee basedA activity. Today, customers whether individual or corporate are not satisfied with mere provision of finance. They expect more from financial service companies. Hence, a wide variety of services, are being provided under this head. They include the following= :i; (anaging the capital issues, i.e., management of pre8issue and issue activities relating to the capital issue in accordance guidelines and thus enabling the promoters to :ii;

#nvolving in e7uipment leasing, hire purchase, venture capital,

N#$, F8$* 0as'* a!"i2i"i's

post8 8 with the 0&4#

market their issues.

(aking arrangements for the placement of capital and debt


instruments with investment institutions. :iii; :iv; rrangement of funds from financial institutions for the clients@ pro"ect cost or his working capital re7uirements. ssisting in the process of getting all ,overnment and other clearances. M#*'%$ a!"i2i"i's 4esides the above traditional services, the financial intermediaries render innumerable services in recent times. (ost of them are in the nature of non8 fund based activity. #n view of the importance, these activities have been discussed in brief under the head @$ew financial products and services@. However, some of the modern services provided by them are given in brief hereunder= :i; .endering pro"ect advisory services right from the preparation pro"ect report till the raising of funds for starting the pro"ect necessary ,overnment approval. :ii; (iii) :iv; :v; *lanning for mergers and ac7uisitions and assisting for their carry out. .ecommending suitable changes in the management structure management style with a view to achieving better results. 0tructuring the financial collaborationE"oint ventures by identifying suitable "oint venture partner and preparing "oint .ehabilitating and reconstructing sick companies through scheme of reconstruction and facilitating the scheme. :vi; Hedging of risks due to exchange rate risk, interest rate risk, economic risk and political risk by using swaps and other derivative products. :vii; (anaging the portfolio of large *ublic 0ector +orporations. :viii; 3ndertaking service relating to the capital market such as= :a; +learing services,

the with smooth and

venture agreement. appro priate implementation of the


:b; .egistration and transfers, :c; 0afe8custody of securities, :d; +ollection of income on securities. :ix; *romoting credit rating agencies for the purpose of rating which want to go public by the issue of debt S#8%!'s # %'2'$8' ccordingly, there are two categories of sources of income for a financial service company namely= :i; fund8based and :ii; fee8based. Fund8based income comes mainly from interest spread :difference between the interest paid and earned;, lease rentals, income from investments in capital market and real estate. )n the other hand, fee8based income has its sources in merchant banking, advisory services, custodial services, loan syndication etc. #n fact, a ma"or part of the income is earned through fund8 based activities. t the same time, it involves a large share of expenditure also in the form of interest and brokerage. #n recent times, a number of private financial companies have started accepting deposits by offering a very high rate of interest. 2hen the cost of deposit resources goes up, the lending rate should also go up. #t means that such companies should have to compromise the 7uality of its investments. CHAPTER NO. 6 MERCHANT 3ANKIN: INTRO/(CTION The term merchant banking is used differently in different countries and so there is no precise definition for it. #n -ondon, merchant banker refers to those who are members of 4ritish (erchant 4anking and 0ecurities House ssociation who carry on consultation, leasing, portfolio services, assets management, euro credit, loan syndication etc. #n merica, merchant banking is concerned with mobilising savings of people and directing funds to business enterprise. /EFINITION




There is no universal definition for merchant banking. #t assumes diverse functions in different countries. 0o merchant banking may be defined as, institution which covers a wide range of activities such as counselling, insurance etc. SER>ICES OF MERCHANT 3ANKS The services of merchant bankers are described in detail in the following section. <i= Cor*orate Counselin# +orporate counseling covers the entire field of merchant banking activities viz. pro"ect counseling, capital restructuring, pro"ect management, public issue management, loan syndication, working capital, fixed deposit, lease financing, acceptance credit etc. The scope of corporate counseling is limited to giving suggestions and opinions to the client and help taking actions to solve their problems. #t is provided to a corporate unit with a view to ensure better performance, maintain steady growth investors. (ii) Pro1ect Counsellin# *ro"ect counselling includes preparation of pro"ect reports, deciding upon the financing pattern to finance the cost of the pro"ect and appraising pro"ect to report with the financial institutions or banks. *ro"ect reports are prepared obtain government approval, get financial assistance from institutions and plan for the public issue. The financing mix is to be decided keeping financial institutions. (iii) "oan Syndication -oan syndication refers to assistance rendered by merchant banks to banks to get mainly term loans for pro"ects. 0uch loans may be obtained from


management of

customer services, portfolio management, credit syndication, acceptance credit,

and create better image among

in view the

rules, regulations and norms prescribed by the government or followed by


a single development finance institution or a syndicate or consortium. (erchant 4ankers commercial banks. :iv ; Issue Mana#ement (anagement of issue involves marketing of corporate securities viz., e7uity shares, preference shares and debentures or bonds by offering them to *ublic. (erchant banks act as intermediary whose main "ob is to transfer capital from those who own it to those who need it. . The issue function may be broadly dividend into pre8issue management and post issue management. #n both the stages, legal re7uirements have to be complied with and several activities connected with the issue have to be co8 ordinated. (!) Under2ritin# o- Pu,lic Issue 3nderwriting is a guarantee given by the underwriter that in the event of under subscription the amount underwritten, would be subscribed by him. #t is an insurance to the company which proposes to make *ublic risk of under subscription. The issues packed by well known company to sell securities 7uickly. (!i) Mana#ers3 Consultants #% Ad!isers "# t.e Issue The managers to the issue assist in the drafting of prospectus, application forms and completion of formalities under the +ompanies ct, appointment of .egistrar for dealing with share applications and transfer agencies + 5 0managers to the issue. and listing of shares of the company on the stock exchange. +ompanies free to appoint one or more 0 & 4 #guidelines insist that all issues should be managed by atleast one authorized merchant banker. )rdinarily, not more than two merchant bankers should be associated as lead managers, advisers and consultants to a public issue. #n issues of over .s. 5JJ crores, upto a maximum of four merchant bankers could be associated as managers. (!ii) Port-olio Mana#ement

help corporate clients to raise syndicated loans from

offer against underwritters

generally receive a high premium from the public. This enables the issuing


(erchant bankers provide portfolio management service to their clients. Today the investor is very prudent. &very investor is interested in safety , li7uidity and profitability of his investment. 4ut investors cannot study and choose the appropriate securities. They need expert guidance. economic surveys to know. i; ii; iii; iv; v; (onetary and fiscal policies of the government. Financial statements of various corporate sectors in which the 0econdary market position, i.e., how the share market is moving. +hanging pattern of the industry. the competition faced by the industry with similar type of industries. merger is a combination of two or more companies into a single company where one survives and others lose their corporate existence. take over is the purchase by one company ac7uiring controlling in capital of another existing company. (erchant bankers setting negotiation between the offeree and offeror. 4eing a are the middlemen in professional 8 the share (erchant bankers have a role to play in this regard. They have to conduct regular market and

investments have to be made by the investors.

(!iii) Ad!isory Ser!ice Relatin# to Mer#ers and Takeo!ers

expert they are apt to safeguard the interest of the shareholders in both the companies. )nce the merger partner is proposed, the merchant banker appraises mergerEtakeover proposal with respect to financial viability and technical feasibility. He negotiates purchase consideration mode of payment. He gets approval from the governmentE.4#, scheme of amalgamation and obtains approval from financial institutions. (i)) +-- S.ore %inance The merchant bankers help their clients in the following involving foreign currency. :i; long8term foreign currency loans :ii; "oint venture abroad :iii; financing exports and imports and


:iv; foreign collaboration arrangements. The bankers render other financial services such as negotiations and compliance with procedural and legal aspects. ()) /on$Resident In!estment .@ The services of merchant bankers include investment advisory services to $.# in terms of identification of investment opportunities, selection of securities, investment management etc. They also take care of the operational details like purchase and sale of securities, securing necessary clearance from .4# for repatriation of interest and dividend.

CHAPTOR NO. 7 HIRE P(RCHASE ? LEASIN: M'a$i$) + Hire purchase is a method of selling goods. #n a hire purchase transaction the goods are let out on hire by a finance company :creditor; to installments during a given period. The ownership FEAT(RES OF HIRE P(RCHASE A:REEMENT 5. 3nder hire purchase system, the buyer takes possession of goods immediately and agrees to pay the total hire purchase price in installments. H. F. K. &ach installment is treated as hire charges. The ownership of the goods passes from buyer to seller on the payment of the installment. #n case the buyer makes any default in the payment of any seller has right to reposses the goods from the

@#f hire purchase

customer :hirer;. The buyer is re7uired to pay an agreed amount in periodical ~le property remains with creditor and passes onto hirer on the payment of last installment.

installment the and forfeit the



amount already received treating it as >.

hire charge.

The hirer has the right to terminate the agreement any time before the property passes. The is, he has the option to return the goods in which case he need not pay installments falling due thereafter. However, he can not recover the sums already paid as such sums legally represent hire charge on the goods in 7uestion.

HIRE P(RCHASE A:REEMENT There is no prescribed form for a hire purchase agreement but it has in writing and signed by both parties to the agreement. hire purchase agreement must contain the following particulars :i; :ii; :iii; :iv; The description of goods in a manner sufficient to identify The hire purchase price of the goods. The date of commencement of the agreement. The number of installments in which hire purchase price is to be paid, them. to be

the amount, and due date. L'asi$) CONCEPT OF LEASIN: -easing, as a financing concept, is an arrangement between two parties, the leasing company or lessor and the user or lessee, whereby the former arranges to buy capital e7uipment for the use of the latter for an agreed period of time in return for the payment of rent. The rentals are predetermined and payable at fixed intervals of time, according to the mutual convenience of both the parties. However, the lessor remains the owner of the e7uipment over the primary period. 4y resorting to leasing, the lessee company is able to exploit the economic value of the e7uipment by using it as if he owned it without having to pay for its capital cost. -ease rentals can be conveniently paid over the lease period out of profits earned from the use of the e7uipment and


the rent is cent percent tax deductible. A L'as' is /' i$'* as #ll#5s+ ,/i!"i#$a%4 # 38si$'ss a$* Ma$a)'7'$" 8 @-ease is a form of contract transferring the use or occupancy of land space, structure or e7uipment, in consideration of a payment, usually in the form of a rent.@ ,@a7's C. >a$ H#%$', @-ease is a contract whereby the owner of an asset :lessor; grants to another party :lessee; the exclusive right to use the asset usually for an agreed period of time in return for the payment of rent.@ ,EA8i-7'$" L'asi$) Ass#!ia"i#$ # (K , @ +ontract between lessor and lessee for the hire of a specific asset selected from a manufacturer or vendor of such assets by the lessee. The lessor retains the ownership of the asset. The lessee has possession and use of the asset on payment of specified retain over the period.@ Thus in a contract of lease there are two parties involved :i; lessor the lessee. The lessor can be a company, a co8operative society, a partnership firm or an individual in manufacturing or allied activities. The lessee can be even a doctor or any other specialists who use e7uipment for the practice of his profession. L'asi$) as a S#8%!' # Fi$a$!' -easing is an important source of finance for the lessee. companies finance for= 5. (odernisation of business. H. 4alancing e7uipment. F. +ars, scooters and other vehicles and durables. K. #tems entitled to 5JJL or >JL depreciation. >. ssets which are not being financed by banksEinstitutions STEP IN>OL>E/ IN LEASIN: TRANSACTION The steps involved in a leasing transaction are summarised as





follows= 5. First, the lessee has to decide the asset re7uired and select supplier. He has to decide about the design specifications, the price, warranties, terms of delivery, servicing etc. H. The lessee, then enters into a lease agreement with the lessor. The agreement contains the terms and conditions of the lease such as, :a; The basic lease period during which the lease is irrecoverable. the lease lease

:b; The timing and amount of periodical rental payments during period. :c; %etails of any option to renew the lease or to purchase the end of the period. :d; %etails regarding payment of cost of maintenance and

asset at the

repairs, taxes,

insurance and other expenses. F. fter the lease agreement is signed the lessor contacts the and re7uests him to supply the asset to the the lessee. CHAPTOR NO. 8 >ENT(RE CAPITAL M'a$i$) # >'$"8%' Ca-i"al Venture capital is long8term risk capital to finance high technology pro"ects which involve risk but at the same time has strong potential for growth. Venture capitalist pool their resources including managerial abilities to assist new entrepreneurs in the early years of the pro"ect. )nce the reaches the stage of profitability they sell their e7uity holdings at high premium. /' i$i"i#$ # a >'$"8%' Ca-i"al C#7-a$4 venture capital company is defined as Aa financing institution which "oins

manufacturer The lessor makes


payment to the manufacturer after the asset has been delivered ! accepted by



an entrepreneur as a co8promoter in a pro"ect and shares the risks and rewards of the enterprise.A F'a"8%'s # >'$"8%' Ca-i"al 0ome of the features of venture capital financing are as under= 5. H. F. Venture capital is usually in the form of an e7uity participation. #t may also take the form of convertible debt or long term loan. #nvestment is made only in high risk but high growth potential pro"ects. Venture capital is available only for commercialisation of new ideas or new technologies and not for enterprises which are engaged in trading, booking, financial services, agency, liaison work or research and development. K. Venture capitalist "oins the entrepreneur as a co8promoter in pro"ects and share the risks and rewards of the enterprise. >. There is continuous involvement in business after making an investment by the investor. ?. )nce the venture has reached the full potential the venture capitalist disinvests his holdings either to the promoters or in the market. The basic ob"ective of investment is not profit but capital appreciation at the time of disinvestment. I. Venture capital is not "ust in"ection of money but also an input needed to set8up the firm, design its marketing strategy organise and manage it. 6. #nvestment is usually made in small and medium scale enterprises. The ob"ective of venture capitalist s to sell of the investment mace him at substantial capital gains. The disinvestment options available in developed countries are= :i; :ii; *romoter@s buy back *ublic issue

/isi$2's" M'!6a$is7


:iii; :iv; :v;

0ale to other venture capital Funds 0ale in )T+ market and (anagement buyouts.

S!#-' # >'$"8%' Ca-i"al Venture capital may take various forms at different stages of th e pro"ect. There are four successive stages of development of a pro"ect viz. development of a pro"ect idea, implementation of the idea, commercial production and marketing and finally large scale investment to exploit the economics of scale and achieve stability. Financial institutions and bank usually start financing the pro"ect only at the second or third stage but rarely from the first stage. 4ut venture capitalists provide finance even from the first stage of idea formulation. The various capital are described below= <1= /'2'l#-7'$" # a$ I*'a , S''* Fi$a$!'+ #n the initial stage venture s"a)'s in the financing of venture

capitalists provide seed capital for translating an idea into business proposition. A" this stage investigation is made indepth which normally takes a year or more. <2= I7-l'7'$"a"i#$ S"a)' , S"a%" 8- Fi$a$!'+ 2hen the firm is set up to manufacture a product or provide a service, start up finance is provided by the venture capitalists. The first and second stage capital is used for full scale manufacturing and further business growth. <3= Fl'*)i$) S"a)' , A**i"i#$al Fi$a$!'+ #n the third stage, the firm so

made some headway and entered the stage of manufacturing a product but faces teething problems. #t may not be able to generate ade7uate funds and additional round of financing is provided to develop the marketing infrastructure.


<4= Es"a0lis67'$" S"a)' , Es"a0lis67'$" Fi$a$!'+

t this stage the firm is

established in the market and expected to expand at a rapid pace. #t needs further financing for expansion and diversification so that it can reap economies of scale and attain stability. t the end of the establishment stage, the firm is listed on the stock exchange and at this point the venture capitalist disinvests their shareholdings through available exit routes. 4efore investing in small, new or young hi8tech enterprises, the venture capitalists look for percentage of key success factors of a venture capital pro"ect. They prefer pro"ects that address these problems. for these success factors has been presented in Table 5. IMPORTANCE OF >ENT(RE CAPITAL Venture capital is of great practical value to every corporate enterprise in modern times. I. A*2a$"a)'s "# I$2's"i$) P80li! 5. The investing public will be able to reduce risk significantly unscrupulous management, if the public invest in turn will invest in e7uity of new field and continuous to stop H. against n idea developed

venture fund who in

business. 2ith their expertise in the

involvement in the business they would be able

malpractices by management.

#nvestors or have no means to vouch for the reasonableness of the claims made by the promoters about profitability of the business. The venture funds e7uipped with necessary skills will be able to analyse the prospects of the business.


The investors do not have any means to ensure that the affairs of the business are conducted prudently. The venture representatives on the 4oard of directors of the overcome it. fund +ompany having would

II. A *2a$"a)'s "# P%#7#"'%s




The entrepreneur for the success of public issue is re7uired to convince tens of underwriters, brokers and thousands of investors but to obtain venture capital assistance, he will be re7uired to sell his idea to the officials of the venture fund.


*ublic issue of e7uity shares has to be preceeded by a lot of viz. necessary statutory sanctions, underwriting and arrangement, publicity of issue etc. The new difficult to make underwriting effort. Venture fund leaving of business. brokers


entrepreneurs find it very

arrangements re7uire a great deal of

assistance would eliminate those efforts by

entrepreneur to, concentrate upon bread and butter activities


+osts of public issues of e7uity share often range between 5J percent to 5> percent of nominal value of issue of moderate size, which are often even higher for small issues. The company is re7uired, in addition to above, to incur recurring costs for maintenance of share registry cell, stock exchange listing fee, expenditure on printing and posting of annual reports etc. . These items of expenditure can be ill afforded by the business when it is new. such expenditure. ssistance from venture fund does not re7uire

III. :'$'%al 5. H. developed venture capital institutional set8up reduces the between a technological innovation and its time lag commercial exploitation.

#t helps in developing new processesEproducts in conducive atmosphere, free from the dead weight of corporate bureaucracy, helps in exploiting full potential.


Venture capital acts as a cushion to support business as bankers and investors will not lend money of e7uity capital.


with inade7uate margin easy for


)nce venture capital funds start earning profits, it will be very


them to raise resources from primary capital market in the form of


e7uity and debts. Therefore, the investors

would be able to invest in

new business through venture funds and, at the same time, they can directly invest in existing business when venture fund disposes its own holding. This mechanism will help to channelise investment in new high8tech business or the existing sick business. >. venture capital firm serves as an intermediary between investors looking for high returns for their money and entrepreneurs in search of needed capital for their start ups. ?. #t also paves the way for private sector to share the responsibility with public sector.

CHAPTER NO.9 M(T(AL F(N/S INTRO/(CTION )f late, mutual funds have become a hot favourite of millions of people all over the world. The driving force of mutual funds is the @safety of principal@ guaranteed, plus the added advantage of capital appreciation together with the income earned in the form of interest or dividend. *eople prefer (utual Funds to bank deposits, life insurance and even bonds because with a little money, they can get into the investment game. )ne can own a string of blue chips like #T+ T#0+), .eliance etc., through mutual funds. Thus, mutual funds act as a gateway to enter into big companies hitherto inaccessible to an ordinary investor with his small investment /EFINITION The securities and &xchange 4oard of #ndia :(utual Funds; .egulations,


5<<F defines a mutual fund as Aa fund established in the form of a trust by a sponsor, to raise monies by the trustees through the sale of units to the public, under one or more schemes, for investing in securities in accordance with these regulationsA. Thus, mutual funds are corporations which pool funds by selling their own shares and reduce risk by diversification. T.PES OF F(N/SBCLASSIFICATION OF F(N/S (utual fund schemes can broadly be classified into many types as given on next page= <A= Cl#s' ,'$*'* F8$*s 3nder this scheme, the corpus of the fund and its duration are prefixed. #n other words, the corpus of the fund and the number of units are determined in advance. )nce the subscription reaches the pre8detennined levee the entry of investors is closed. fter the expiry of the fixed period, the entire corpus is disinvested and the proceeds are distributed to the various unit holders in proportion to their holding. Thus, the fund ceases to be a fund, after the final distribution. <3= O-'$,'$*'* F8$*s #t is "ust the opposite of close8ended funds. 3nder this scheme, the size of the fund andE or the period of the fund is not pre8determined. The investors are free to buy and sell any number of units at any point of time For instance, the unit scheme :5<?K; of the 3nit Trust of #ndia is an open ended one, both in terms of period and target amount. nybody can buy sell it also at any time at his discretion. O$ "6' 3asis # I$!#7' <A= I$!#7' F8$*s+ s the very name suggests, this Fund aims at generating this unit at any time and

and distributing regular income to the members on a periodical basis. #t concentrates more on the distribution of regular income and it also sees that


the average return is higher than that of the income from bank deposits. <3= P8%' :%#5"6 F8$*s <:%#5"6 O%i'$"'* F8$*s= = 3nlike the #ncome

Funds, ,rowth Funds concentrate mainly on long run gains, i.e., capital appreciation. They do not offer regular income and they aim at capital appreciation in the long run. Hence, they have been described as A$est &ggsA investments. <C= 3ala$!'* F8$*s+ This is otherwise called Aincome8cum8growthA fund. #t is nothing but a combination of both income and growth funds. #t aims at distributing regular income as well as capital appreciation. This is achieved by balancing the investments between the high growth e7uity shares and also the fixed income earning securities. </= S-'!ialis'* F8$*s = 4esides the above, a large number of specialised

funds are in existence abroad. They offer special schemes so as to meet the specific needs of specific categories of people like pensioners, widows etc. There are also Funds for investments in securities of specified areas. For instance, Gapan Fund, 0outh /orea Fund etc. #n fact, these funds open the door for foreign investors to invest on the domestic securities of these countries. <E= M#$'4,Ma%&'" M8"8al F8$*s <MMMFs= + These funds are basically

open ended mutual Funds and as such they have all the features of the )pen ended Fund. 4ut, they invest in highly li7uid and safe securities like commercial paper, banker@s acceptances, certificates of deposits, Treasury bills etc. These instruments are called money market instruments They take the place of shares, debentures and bonds in a capital market They pay money market rates of interest. These funds are called @money funds@ in the 3.0. . and they have been functioning since 5<IH. #nvestors generally use it as a Aparking placeA or Astop gap arrangementA for their cash resources till they finally decide about the proper avenue for their investment, i.e., long8term


financial assets like bonds and stocks. <F= TaCa"i#$ F8$*s+ taxation fund is basically a growth oriented fund. 4ut,

it offers tax rebates to the investors either in the domestic or foreign capital market. #t is suitable to salaried people who want to en"oy tax rebates particularly during the month of February and (arch. n investor is entitled to get HJL rebate in #ncome Tax for investments made under this fund sub"ect to a maximum investment of .s. 5J,JJJE8 per annum. The Tax 0aving (agnum of 04# +apital (arket -imited is the best example for the domestic type. 3T#@s 30 O?J million #ndia Fund, based in the 30 , is an example for the foreign type.

C0APT+R /+456 /ISCO(NTIN: FACTORIN: AN/ FORFAITIN: /ISCO(NTIN: ,enerally, a trade bill arises out of a genuine credit trade transaction. The supplier of goods draws a bill on the purchaser for the invoice price of the goods sold on credit. #t is drawn for a short period of F to ? months and in some cases for < months. The buyer of goods accepts the same and binds himself liable to pay the amount on the due date. #n such a case, the supplier of goods has to wait for the expiry of the bill to get back the cost of the goods sold. #t involves locking up of his working capital which is very much needed for the smooth running of the business or for carrying on the normal production process. #t is


where the commercial banks enter into as a


The commercial banks provide immediate cash by discounting genuine trade bills. They deduct a certain charge as discount charges from the amount of the bill and the balance is credited to the customer@s account, and thus, the customer is able to en"oy credit facilities against discounting of bills. )f course, this discount charges include interest the unexpired period of the bill plus some service charges. 4ill financing is the most li7uid one from the banker@s point of view since, in time of emergencies, they can take those bills to the .eserve 4ank of #ndia of rediscounting purposes. #nfact, it was viewed primarily as a scheme of accommodation for banks. $ow, the situation is completely changed. To8day it is viewed as a kind of loan backed by the security of bills. 4ill financing is superior to the conventional and traditional system of cash credit in many ways. :i;First of all, it offers high li7uidity, in the sense, funds could be promptly and 7uickly through rediscounting. :ii;#t offers 7uick and high yield. The banker gets income in the discount charges at the time of discounting the bills. :iii; :iv; gain, there is every opportunity to earn the spread between the rates of discount and rediscount. (oreover, bills drawn by business people would never the dishonored and they are not sub"ect to any fluctuations in :v; +umbersome procedures to create the security and the obligations to maintain it are comparatively very fewer. :vi; &ven if the bill is dishonored, there is a simple legal The banker has to simply note and protest the bill the customer@s account. 4ills are always drawn with recourse hence, all the parties on the instrument are liable till the discharged. :vii; bove all, these bills would be very much useful as a base for

recycled form of

their values. positive remedy. and debit and is finally the bill


maintenance of reserve re7uirements like +.. and


#t is for these reasons, the .eserve 4ank of #ndia has been trying its best to develop a good bill market in #ndia. The .eserve 4ank of #ndia introduced a 4ill (arket 0cheme as early as 5<>H itself and thereafter, with some modifications. #t has lowered the effective rate of interest on bill finance by 5 L below the cash credit rate. %espite many efforts of the .eserve 4ank of #ndia to promote and develop a good bill market, bill financing forms barely >L of the total credit extended by banks. The latest step of the .eserve 4ank of #ndia to promote the bill market is the launching of the factoring service organisations.

FACTORIN: MEANIN: The word @Factor@ has been derived from the -atin word@Facere@ which means @to make or to do@. #n other words, it means @to get things done@. ccording to the 2ebster %ictionary @Factor@ is an agent, as a banking or insurance company, engaged in financing the operations of certain companies or in financing wholesale or retail trade sales, through the purchase of account receivables. s the dictionary rightly points out, factoring is nothing but financing through purchase of account receivables. Thus, factoring is a method of financing whereby a company sells its trade debts at a discount to a financial institution. #n other words, factoring is a continuous arrangement between a financial institution, :namely the factor; and a company :namely the client; which sells goods and services to trade customers on credit. s per this arrangement, the factor purchases the client@s


trade debts including accounts receivables either with or without recourse to the client, and thus, exercises control over the credit extended to the customers and administers the sales ledger of his client. The client is immediately paid 6J per cent of the trade debts taken over and when the trade customers repay their dues, the factor will make the remaining HJ percent payment. To put it in a layman@s language, a factor is an agent who collects the dues of his client for a certain fee. /EFINITION .obert 2. Gohnson in his book @Financial (anagement@ states, Afactoring is a service involving the purchase by a financial organisation, called a factor, of receivables owned to manufacturers and distributors by their customers, with the factor assuming full credit and collection responsibilitiesA . F(NCTIONS s stated earlier the term P factoringQ simply refers to the process of selling trade debts of a company to a financial institution. 4ut, in practice, it is more than that. Factoring involves the following functions= i; ii; iii; iv; v; *urchase and collection of debts. 0ales ledger management. +redit investigation and undertaking of credit risk. *rovision of finance against debts, and .endering consultancy services.

T.PES O FACTORIN: The type of factoring services varies on the basis of the nature of transactions between the client and the factor, the nature and volume of client@s business, the nature of factor@s security etc. #n general, the factoring services can be classified as follows = :i; Full service factoring or without recourse factoring :ii; 2ith .ecourse Factoring


:iii; (aturity Factoring :iv; 4ulk Factoring :v; #nvoice Factoring :vi; gency Factoring :vii; #nternational Factoring FORFAITIN: Forfeiting is another source of financing against receivables like factoring. This techni7ue is mostly employed to help an exporter for financing goods exported on a medium term deferred basis. The term @a forfait@ is a French word denoting @to give something @give up one@s rights@ or @relin7uish rights to something@. #n fact, under forfaiting scheme, the exporter gives up his right to receive payments in future under an export bill for immediate cash payments by the forfaitor. This right to receive payment on the due date passes on to the forfaitor since, the exporter has already surrendered his right to the forfaitor. Thus the exporter is able to get 5JJL of the amount of the bill minus discount charges immediately and get the benefits of cash sale. Thus, it is a uni7ue medium which can convert a credit sale into a cash sale for an exporter. The entire responsibility of recovering the amount from the importer rests with the forfaitor. Forfeiting is done without any recourse to the exporter, i.e. in case the importer makes a default, the forfaitor cannot go back to the exporter for the recovery of the money. /' i$i"i#$ Forfeiting has been defined as Cthe non 9 resource purchase by a bank or any other financial institution, of receivables arising from an export of goods and services.D 3'$' i"s # F#% 'i"i$) + i; ii; *rofitable and -i7uid 0imple and Flexible


iii; iv; v; vi; vii; viii; /%a50a!&

voids &xport +redit .isks voids &xport +redit #nsurance +onfidential and 0peedy 0uitable to all kinds of &xport %eal +ent per cent Finance Fixed .ate Finance

5; $on 9 availability for 0hort and -ong *eriods. H; $on 9 availability for Financial weak +ountries. F; %ominance of 2estern +urrencies. K; %ifficulty in procuring international 4ankQs ,uarantee.

CHAPTOR NO. 11 SEC(RITISATION OF /E3T 0ecuritisation of debt or asset refers to the process of li7uidating the illi7uid and long term assets like loans and receivables of financial institutions like banks by issuing marketable securities against them. #n other words, it is a techni7ue by which a long term, non8negotiable and high valued financial asset like hire purchase is converted into securities of small values which can be tradable in the market "ust like shares. Thus, it is nothing but a process of removing long term assets from balance sheet of a lending financial institution and replacing them with cash through the issue of securities against them. 3nder securitisation, a financial institution pool, its illi7uid, non8negoitable and long term assets, creates securities against them, gets them rake= them to investors. #t is an



ongoing process in the sense that assets are converted into securities, securities into cash, cash into assets into securities and so on. 5

,enerally, extension of credit by banks and other financial institutions in the form of bills purchase or discounting or hire purchase financing appears as an asset on their balance sheets. 0ome of these assets are long nature and it implies that funds are locked up unnecessarily for an under long period. 0o, to carryon their lending operations without much interruptions, they have to rely upon various other sources of finance which are not only costly but also not available easily. gain, they have to bear the risk of the credit outstandings. $ow, securitisation is a readymade solution for them. 0ecuritisation helps them to recycle funds at a reasonable with. less credit risk. #n other words, securitisation helps to remove assets from the balance sheets of financial institutions by providing li7uidity through tradable financial instruments. #t is worthwhile to note that the entire transaction relating securitisation is carried out on the asset side of the 4alance 0heet. That is one asset :ill8 li7uid; is converted into another asset:cash;. /' i$i"i#$+, s stated earlier, securitisation helps to li7uify assets mainly cost and these term in

medium and long term loans and receivables of financial institutuions. The concept of securitisation can be defined as follows= A carefully structured process whereby loans and other receivable are

packaged, underwritten and sold in the form of asset backed securities.D 1et another simple definition is as follows= A0ecuritisation is nothing but li7uifying assets comprising loans and receivables of an institution through systematic issuance of financial instrumentsA .



CHAPTOR NO.12 /ERI>ATI>ES #t is very difficult to define the term derivatives in a comprehensive way since many development have taken place in this field in recent years. (oreover, many innovative instruments have been created by combining two or more of these financial derivatives so as to cater to the specific, re7uirements of users, depending upon the circumstances. #nspite of this, some attempts have been made to define the term @derivatives@. )ne such definition is, "Derivatives involve payment/receipt of income generated by "Derivatives are a special type of off balance the underlying asset on a notional principal". ccording to another definition, sheet instruments in !hich no principal is ever paid".



KIN/S OF FINANCIAL /ERI>ATI>ES s already discussed, the important financial derivatives are :i; Forwards, :ii; Futures, :iii; )ptions, and :iv; 0waps t==Gle@ following=

CHAPTOR NO. 13 CRE/IT RATIN: MEANIN: +, To understand the meaning of credit rating, let us look at some definitions offered by well known rating agencies. M##*4sD = ""atings are designed e#clusively for the purpose of grading bonds according to their investment $ualities". A8s"%alia$ Ra"i$)s+ "% &orporate &redit rating provides lenders !ith a simple

system of gradation by !hich the relative capacities of companies to ma'e timely repayment of interest and principal on a particular type of debt can be Iloted" . %U/CTI+/S +% CRE&IT RATI/ S( (uperior Information


)o! &ost Information *asis for a Proper "is' "eturn +rade ,ff -ealthy Discipline on &orporate *orro!ers .ormulation of Public Policy /uidelines on Institutional Investment. 3ENEFITS OF CRE/IT RATIN: a. -ow +ost #nformation b. Muick #nvestment %ecision c. #ndependent #nvestment %ecision d. #nvestors *rotection



CHAPTER NO. 14 CRE/IT CAR/ credit card is a card or mechanism which enables cardholders to purchase goods, travel and dine in a hotel without making immediate payments. The holders can use the cards to get credit from banks upto K> days. The credit card relieves the consumers from the botheration of carrying cash and ensures safety. #t is a convenience of extended credit without formality. Thus credit card is a passport to, Asafety, convenience, prestige and creditA. T.PES OF CRE/IT CAR/ 5; +redit +ard H; +harge +ard



F; #n 8 0tore +ard NE9 T.PES OF CRE/IT CAR/S 5. +orporate +redit +ards H. 4usiness +ards F. 0mart +ards K. %ebit +ards >. T( +ard

?. Virtual +ard PARTIES TO A CRE/IT CAR/ There are three parties to a credit card 8 the card holder 8 the issuer and the member establishments.
5. Issuer: The banks or other card issuing organisations. H. &ardholders: #ndividuals, corporate bodies and non8individual and

non8corporate bodies such as firms.

F. 0ember 1stablishments: 0hops and service organisations enlisted by

credit card issuer who accept credit cards. The member establishments may be a business enterprise dealing in goods and services such as retail outlets, departmental stores, restaurants, hotels, hospitals, travel agencies, petrol bunks, etc. (ember establishments have to pay a certain percentage of discount on the credit card transactions to the issuer. 0ome organisations charge a specified sum as service charge. For instance, #ndian .ailways levy a service charge of .e. 5 per ticket in addition to the fare.


C0APTER /+4 57 CASE ST(/. ON IFCI The #ndustrial Finance +orporation of #ndia :#F+#; was established on 5st Guly, 5<K6 under #ndustrial Finance +orporation ct, 5<K6 as the first development financial institution in the country to make the medium ! long term finance more readily available to industrial concerns in #ndia. #F+# is the first financial institution to be converted into a public limited company. C+).*). T& +.&%)D 4eing a leader in the #ndian Financial 0ector, consistent with its role as a %evelopment Finance #nstitution, providing total solutions at competitive cost, with +ore strengths in long term lending and related advisory activities by = %eveloping long term relationship with creditworthy corporate and institutional client. &ntering other business to capitalize on emerging opportunities. #ncreasing operational flexibility.


&nhancing shareholders value and &mpowering employees. MAIN O3@ECTS OF THE COMPAN. The main ob"ect of the company include inter alia = *roviding financial assistance to industrial and service sector in the form of 0hort, (edium ! -ong term loans or 2orking +apital facilities or &7uity *articipation, To carry on the business of -easing and Hire purchase finance company, To pioneer institutional credit to medium and large industries, and To make dedicated efforts towards industrial development and economic prosperity of the nation. %I/A/CIA" SERVICES A/& MERC0A/T 'A/8I/ = number of schemes are offered by #F+# like &7uipment -easing, &7uipment *rocurement, &7uipment +redit, #nstallment +redit, 0uppliers +redit, 4uyers +redit and finance to leasing and hire purchase concerns. )ther services offered are pro"ect counseling, credit syndication, corporate counseling, for financial reconstruction and rehabilitation of old, or sick industrial units, riskE venture capital. &EVE"+PME/TA" A/& PR+M+TI+/A" ACTIVITIES ( The promotional activities of a development bank like #F+#, reflects its social commitment as also the policies and priorities influencing its field of operations. The ma"or of #F+# in this area continued to be on providing support to the Village and 0mall #ndustries:V0#; sector through specially designed schemes aimed at development of consultancy services, development of entrepreneurship and management skills, improvement of labour productivity, rural development, backward area development, support to risk capital, venture capital and technology

assistance in

the negotiations of foreign collaboration technology finance and arrangement for


finance, activities.

tourism and tourism related activities,

development of capital market,

science ! technology parks, research and development:.!%; and research oriented )ver the years, identified several gaps in the in its developmental and promotional role, #F+# had institutional infrastructure and promoted various .isk Tourism Finance

specialized institutions, e.g. , (anagement %evelopment #nstitute :(%#; , +apital and Technology Finance +orporation -imited :.+T+;, +orporation of #ndia -imited :TF+#;, #nvestment #nformation and

.ashtriya ,ramin Vikas $idhi :.,V$;,

+redit .ating gency of #ndia -imited :#+. ;,

Tourism dvisory and Financial 0ervices +orporation )f #ndia -imited :T F0#-; and #nstitute of -abour %evelopment :#-%;.

#n addition, #F+# is also a co8promoter of various other organizations

such as

0tock Holding +orporation )f #ndia -imited, &ntrepreneurship development #nstitute of #ndia, )T+ &xchange of #ndia -imited, $ational 0tock &xchange of #ndia -imited, 0ecurities Trading +orporation of #ndia -imited, 4 home Finance -imited, -#+ Housing Finance -td.,,#+ Vitta -imited,and 5I Technical +onsultancy )rganisation in various 0tates. #F+# has also decided to set up #F+# 4ank and a +learing House of 0ecurities. #ndiaQs financial system, retention capable and of services sector has entered a phase of structural reforms that promises the emergence of an efficient, competitive and well diversified meeting the demand of a growing free market economy. where customer .esultantly, in the fiercely competitive financial market place,

complementality of services have become key factors for survival, (a"or *layers

expansion through associated diversification has became a matter of necessity as a pre8re7uisite to becoming a conglomerate of financial super market. like your +ompany have to provide the whole focusing on enlarging the network of institutions that can provide it a strategic edge in the redefined market place which is increasingly becoming global.


C+/C"USI+/ ( #F+# has cumulative sanctioned .s. KI,KH> crore and .s. F>,>5K crore till end (arch, 5<<<, with )utstandings at crore. The share of non8 performing assets s a result, stood higher stood #F+#Qs return on average networth disbursed .s. HH,>FH at 5.> per cent in

at H5 per cent.

5<<68<<, as compared to H>.? per cent in 5<<>8<?. $ecessitated by increasing completion, #F+# envisages a gradual shift towards operating as a universal emphasizing on a few select bank with a ma"or focus on corporate banking,

and sunrise industries having strong potential for growth.

'I'"I+ RAP0Y '++8S I/&IA/ %I/A/CIA" SYSTEM 9 &EVE"+PME/T 4y V 0 $T %&0 # I/&IA/ %I/A/CIA" SYSTEM 4y %#T# . 4H1 $/ . I/&IA/ 'A/8I/ 9 %I/A/CIA" SYSTEM 4y 4.*. ,3*T MA/A EME/T +% %I/A/CIA" SERVICES 4y 4.0. 4H T# ! ,.0.4 T. :E'SITES

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