01. Financial instruments of the capital market are classified into the following two categories namely; government or gilt edged securities and corporate securities.
02. The financial instruments of corporate sector are: shares, debentures, public deposits and loans from institutions.
03. Financial intermediaries are those institutions which collect savings from those who save and make it available to the investors for their use.
04. The financial intermediaries or institutions are mainly classified into two categories namely; institutional or organized; non institutional or unorganized.
05. Institutional or organized are mainly divided into two parts namely; banking institutions and non banking financial intermediaries.
06. The financial regulatory authorities in India are: Reserve Bank of India, Securities and Exchange Board of India and Insurance Regulatory and Development authority.
07. SEBI – securities and exchange board of India
08. IRDA – Insurance Regulatory and Development Authority
09. IRDA was established in 1990
10. IRDA has its headquarters at Hyderabad
11. The financial institutions perform a number of functions: promoting savings, mobilizing savings and allocate it among different users and facilitating capital formation, production and economic development
12. The financial markets in the country can be divided into money markets and capital markets
13. Money market refers to that market wherein short term monetary assets are bought and sold
14. Financial institutions can be either in the organized sector or unorganized sector
15. RBI, Commercial Banks, Cooperative Banks are in organized sector
16. Indigenous banks, money lenders, chit funds etc are in the unorganized sector.
17. Financial instruments include bills, treasury bills, promissory notes, hundies, certificate of deposits etc.
18. The important terms which relate to money market are: money market, call money, notice money, term money, held till maturity, yield to maturity, coupon rate, treasury operations and gild edged security
19. Under call money market, funds are transacted on overnight basis and under notice money, market funds are transacted for the period between 2 days and 14 days.
20. The participants in call/notice money market currently include banks, primary dealers, development finance institutions, insurance companies and select mutual funds.
21. Treasury bills are money market instruments used to finance the short term requirements of the Government of India.
22. There are different types of treasury bills based on the maturity period and utility of the issuances like, ad-hoc treasury bills, 3 months, 6 months and 12 months treasury bills
23. Treasury bills etc. in India at present are issued for the following periods namely; 91 days, 182 days and 364 days
24. Call money is an amount borrowed or lent on demand for very short period
25. When the period of call money is more than one day; however, lesser than 14 days, it is called as notice money
26. Certificate of deposit is a negotiable promissory note, secure and short term of up to a year in nature.
27. Commercial paper is freely negotiable by endorsement and delivery.
28. An inter corporate deposit or ICD is an unsecured loan extended by the corporate to another.
29. Ready forward contracts are transactions in which two parties agree to sell and repurchase the same security.
30. Bills of exchange are negotiable instruments drawn by the seller or drawer of the goods on the buyer or drawee of the goods for the value of the goods delivered.
31. Pass through certificate is an instrument with cash flows derived from the cash flow of another underlying instrument or loan.
32. Pass through certificates have two to three year maturity because the issuance stamp duty rate makes shorter duration PTCs unviable.
33. A bill market is the market which deals in short term bills.
34. The bills may be of two types i) bills of exchange or commercial bills and ii) finance bills or treasury bills.
35. Bill market scheme was introduced by Reserve Bank of India in 1952.
36. New Bill market scheme was introduced by RBI in 1970.
37. The gilt edged market refers to the market for government and semi government securities, backed by RBI.
38. The industrial securities market refers to the market which deals in equities and debentures of the corporate.
39. Industrial securities market is divided into primary market and secondary market.
40. Securities and Exchange Board of India was established 1988
41. In India, there are 23 stock exchanges
42. Securities and Exchange Board of India got its legal status in 1992.
43. CRISIL – Credit Rating Information Services of India – was established in 1988
44. ICRA – Investment Information and Credit Rating Agency of India Limited – was established on 1991
45. CARE – Credit Analysis and Research Limited – was established in 1991
46. IEPF – Investors Education and Protection Fund was set up by SEBI in 2001
47. NSE has introduced the derivatives trading in the equities in November, 2001
48. IRDA – Insurance Regulatory and Development Authority was set up in 2000
49. CCIL – Clearing Corporation of India Limited
50. OTCEI – Over the counter exchange of India – was incorporated in 1990 under the companies act 1956