Entities who propose to invest their proprietary funds or on behalf of “broad based” funds (fund having more than twenty investors with no single investor holding more than 10 per cent of the shares or units of the fund) or of foreign corporate and individuals and belong to any of the under given categories can be registered for Foreign Institutional Investors (FII’s). Pension Funds Mutual Funds Investment Trust Insurance or reinsurance companies Endowment Funds University Funds Foundations or Charitable Trusts or Charitable Societies who propose to invest on their own behalf Asset Management Companies Nominee Companies Institutional Portfolio Managers Trustees Power of Attorney Holders Banks Foreign Government Agency Foreign Central Bank International or Multilateral Organization or an Agency thereof Some of the above mentioned types are described below: Pension funds: A pension fund is a pool of assets that form an independent legal entity that are bought with the contributions Continue reading
Investment Regulations
Effective Communications in Investor Relations
Corporations worldwide work daily to increase the value of their stock for the investing public. In order to exploit this value, businesses must constantly make every effort to extensively communicate to their investors and potential investors. In view of this, investor relations are a vital part of business strategy, principally in the area of communication. Corporate departments involved with investor directions must make a necessary connection between efficient communication and company goals. Since communication is starting to play such an important role in investor relations, corporate communication programs are being created not only to participate in financial areas, but also to take part in media relations and other public communication. Ultimately, the best way for corporations to understand communications for investor relations is to look at an overview of the investor relations function, know how to organize investor relations, learn about investor relations programs and be informed on investor relations Continue reading
Regulations for investment’s by FII’s in India
FII Regulations in India: Investment by Foreign Institutional Investors (FII’s) is regulated under SEBI (FII) Regulations, 1995. Following are some of important regulations by SEBI and RBI: The total investments in equity and equity related instruments (including fully convertible debentures, convertible portion of partially convertible debentures and tradable warrants) made by a Foreign Institutional Investor in India, whether on his own account or on account of his sub- accounts, should be at least seventy per cent of the aggregate of all the investments of the Foreign Institutional Investor in India, made on his own account and through his sub-accounts. The cumulative debt investment limit for FII investments in Corporate Debt is USD 15 billion. The amount was increased from USD 6 billion to USD 15 billion in March 2009. USD 8 billion will be allocated to the FIIs and Sub-Accounts through an open bidding platform while the remaining amount is Continue reading
Understanding the Insurance Underwriting Process
In order for the insurance companies to make profit and charge the appropriate rate for an insured, they undergo the underwriting process. In simpler words, insurance underwriting is a process of risk classification. The purpose of insurance underwriting is to spread risk among a pool of insured in a way that is both profitable for the insurer and fair to the customer. Insurance companies need to make a profit like many other businesses. Therefore, it doesn’t make sense if they sell insurance for everyone who applies for it. They may not want to charge an excessive high rate to the customer and also it is not good for them to charge the same premium to every policyholder. Insurance underwriting enables the company to weed out certain applicants and to charge the remaining applicants premiums that are commensurate with their level of risk. The insurance underwriting process consist of evaluating several Continue reading
Madoff Scandal – How Bernie Madoff’s Ponzi Scheme Worked?
Bernard L. Madoff, simply known as Bernie is an American allegedly the operator of what is known as the largest Ponzi scheme in history. Bernie before his capture, acted as the stock broker, investment adviser and non-executive chairman of the NASDAQ stock market. It was not later than 2009 when Madoff pleaded guilty; he was guilty for turning his wealth management business into a massive Ponzi scheme. This scheme according to various sources defrauded thousands of investors billions of dollars. In 1960, Bernard Madoff founded one of the biggest firms in Wall Street. He was the chairman of his company “Madoff Investment Securities LLC”, until his arrest was warranted on the December of 2008. Before his arrest, the Madoff Investment Securities emerged as one of the top market maker businesses on the Wall Street. After his arrest, Madoff explained to his children as a confession that most of his asset Continue reading
Factors Conducive to the Growth of Mutual Funds
On observing the past trends, it can be seen that certain factors are essential for the growth of the mutual funds industry. These factors are: Investor Base: A mutual fund makes it possible for investors to earn a higher return on their capital by pooling the capital of a large number of small investors and investing the pooled sum in a diversified manner. As the small investors cannot diversify on their own, their presence acts as a catalyst for the mutual funds to grow. As different investors have different investment requirements, their presence also acts as an incentive for the mutual funds to come up with new schemes, thus helping in further evolution of the industry. Returns On Market: Mutual funds invest in a diversified manner; the returns generated by them are generally reflective of the market returns. Higher the market returns, higher the expected returns from mutual funds. Higher Continue reading