One of the important central banking functions of the Reserve Bank of India (RBI) is the maintenance of the external value of the rupee. As such it has been given the custody of foreign exchange reserves and sole agency for the administration of exchange controls in India. All receipts and payments in and out of India require general or special permission of the RBI. The dealings in foreign exchange and foreign securities in India, payments to person resident outside India and export and import of currency notes, bullion or precious stones etc., are subject to general or special permission of RBI or are prohibited. The RBI with the help of authorized dealers, and moneychangers carries on the administration of controls. The types of transactions, which are controlled by the RBI and the government are in general those which have international financial implications and include inter alia the following important items. Continue reading
Financial Institutions
Merchant Banking Services: Management of Capital Issues
The capital issue are managed are category-1 merchant banker and constitutes the most important aspects of their services. The public issue of corporate securities involves marketing of capital issues of new and existing companies, additional issues of existing companies including rights issue and dilution of shares by letter of offer. The public issues are managed by the involvement of various agencies i.e. underwriters, brokers, bankers, advertising agency, printers, auditors, legal advisers, registrar to the issue and merchant bankers providing specialized services to make the issue of the success. However merchant banker is the agency at the apex level than that plan, coordinate and control the entire issue activity and direct different agencies to contribute to the successful marketing of securities. The procedure of the managing a public issue by a merchant banker is divided into two phases, viz; Pre-issue management Post-issue management Pre-Issue Management: Steps required to be taken to Continue reading
Securities and Exchange Board of India (SEBI)
Securities and Exchange Board of India (SEBI) is the nodal agency to regulate the capital market and other related issues in India. It was established in 1988 as an administrative body and was given statutory recognition in January 1992 under the SEBI Act 1992 which came into force on January 30. The Act charged the SEBI, the first national regulatory body in India with comprehensive statutory powers over practically all aspects of capital market operations, “to protect the interests of the investors and to promote the development of, and to regulate the securities markets by such measures as it thinks fit.” SEBI has been vested most of the functions and powers under the Securities Contract Regulation (SCR) Act, which brought stock exchanges, their members, as well as contracts in securities which could be traded under the regulations of the Ministry of Finance. It has also been delegated certain powers under Continue reading
Merchant Banking Services: Credit Syndication
Credit syndication also known as credit procurement and project finance services. The main task involved in credit syndication is to raise to rupee and foreign currency loans with the banks and financial institutions both in India and abroad. It also arranges the bridge finance and the resources for cost escalations or cost Overruns. Broadly, the credit syndications include the following acts; Estimating the total costs. Drawing a financing plan for the total project cost-conforming to the requirements of the promoters and their collaborators. Financial institutions and banks, government agencies and underwriters. Preparing loan application for financial assistance from term lenders/financial institutions/banks and monitoring their progress including the pre-sanction negotiations. Selecting the institutions and banks for participation in financing. Follow-up of the term loan application with the financial institutions and banks and obtaining the satisfaction for their respective share of participation. Arranging bridge finance. Assisting in completion of formalities for drawl Continue reading
Indian Financial Network (INFINET) and It’s Impact on Indian Banking System
It had been widely felt earlier that one of the biggest bottlenecks in the banking system in the country was the lack of a system that ensures fast, safe and secure intra-bank and inter-bank communication. In fact, this deficiency had been hampering to a large extent the development of a modern, integrated payment system in the nineties. Most of the cases of complaint against banks, in those days related to the time taken for transfer of funds across banks and between cities and to the delays in the collection of outstation cheques. Clearly, the non-availability of a reliable communication backbone had been one of the main contributors to this state of affairs. The functioning of the terrestrial line networks was hardly optimal in terms of efficiency, although of late, there has been some change in this area for the better. But, the wide geographical spread of branches of banks and Continue reading
How Financial Markets Helps Savers and Borrowers?
What are financial markets and why it is important for savers and borrowers? A financial market is a system that includes individuals and institutions, and procedures that together borrowers and savers and it is no matter where is the location between the savers and borrowers. The main role of the financial market is to facilitate the funds from the individuals and businesses that have the majority fund to individuals, businesses, and governments to fulfill their needs of income. The financial institution is a process used by an organization that provides various types of financial services to their customers. The government authorities have controlled and supervised the institution according to the rules and regulations. The financial institution is giving different types of economic ideas for an organization to carry out their business. A financial institution is an establishment that gives financial services. Financial institutions based on banks, credit unions, asset management Continue reading