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
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