INVEST INDIA:
Invest India is the official investment promotion and facilitation agency of the department of industrial policy and promotion mandated to facilitates the investment into India. The team of domain and functional experts of the agency provide sector and state specific inputs and hand holding support to investors through the entire investment cycle from preinvestment decision making to aftercare.

The agency assessed with the location identification expediting regulatory approvals facilitating meetings with relevant Government and corporate officials and also provide after care services that includes initiating remedial action on the problems faced by the investors.
All facilitation and handholding support to the investors under the make in India programme is being provided by the invest India.

■ eBIZ PROJECT:

eBIZ is is one of the integrated services projects and part of the 31 mission mode projects under the national e-governance plan of the Government of India.the eBiz platform has also launched two services viz., ‘Issuance of Industrial License’ and ‘Issue of Industrial Entrepreneur Memoranda’ issued by DIPP on 20 January 2014.
The focus of eBIZ is to improve the business environment in the country by enabling fast and efficient acess to government to business services through an online portal this will help in reducing unnecessary delays in various regulatory processes required to start and run business.

E-Biz will serve as 24 hours online single-window system for providing efficient and convenient Government to Business services to the business community in India .Since, business users will get services from single contact point it will result in savings of time, effort and cost. The benefits will accrue across all sectors, including, Manufacturing, Information Technology, construction services among others.
This project aims at creating an investor friendly business environment in India by making all regulatory information starting from the establishment of a business through its ongoing operations and even its possible closer easily available to the various stakeholders concerned in effect it aims to develop a transparent efficient and convenient interface through which the government and business can interact in a timely and cost-effective manner in the future.
☆ vision:
The vision of a business eBIZ is to be the entry point of all the individuals businesses and organisations which would like to do business or have any existing business in India by creating a one stop shop of convenient and efficient online services to the business community by reducing the complexity in obtaining the information and services related to the starting business in India.

■SPECIAL ECONOMICS ZONES:

A special economic zone  is an area in a country that is subject to different economic regulations than other regions within the same country. The SEZ  economic regulations tend to be conducive to–and attract–foreign direct investment . FDI refers to any investment made by a firm or individual in one country into business interests located in another country.
The special economic zones Policy was announced in April 2000 with a view to overcome the shortcoming experienced on account of the multiplicity of controls and clearance absence of the world-class infrastructure and an unstable physical fiscal regime and with a view to attract largest foreign investment in the India.
When a country or individual conducts business in an SEZ, there are typically additional economic advantages for them, including tax incentives and the opportunity to pay lower tariffs. The special economic zones is specially delineated duty free and enclave and shall be deemed to be foreign territory for the purposes of trade operations and duties and tariffs.

In other words social economic zones is a geographical region that has economic loss different from a country typical economic laws usually the goal is to increase foreign investment.
The social economic zones concept recognises the issues related to economic development and provides for developing self sustaining industrial Township so that the increased economic activity does not create pressure on the existing infrastructure.
Today there are approximately 3,000 social economic zones operating in 120 countries which accounted for over US dollar 600 million in exports and about 50 million jobs.
☆ objectives of social economic zones in India:

1. Single window clearance for setting up to a SEZ and a unit in social economic zones.
2. Single window clearance on matters relating to Central as well as State Government.
3. Easy and simplified compliance procedures and documentation.
4. Generation of additional economic activity .

5.promotion of exports of goods and services.

1. Promotion of investment from domestic and foreign sources.
2. Creation of employment.
3. Development of infrastructure facilities.
4. Simplified procedures for development operation and maintenance of the social economic zones and for setting up units and conducting business.

☆ SEZ Act 2005 and SEZ rules 2006:

The Government of India has enacted the Special Economic Zone Act, 2005
which has come into force from 10th February 2006. In exercise of the powers conferred by Section 55 of
the SEZ Act, 2005, Ministry of Commerce & Industry has notified the SEZ Rules, 2006 on 10th February, 2006.
To instil confidence in investors and signal the governments commitment to a stable social economic zones policy regime and with a view to impart stability to the social economic zones resume thereby generating greater economic activity and Employment through the establishment of social economic zones and comprehensive special economic zones act 2005 which received presidential assent on the 23rd June 2005.
The SEZ Act has been enacted by the Parliament and has received the assent of the President on 23rd June 2005. The SEZ Rules have already been notified. The SEZ Act along with SEZ Rules have become operative w.e.f. 10th February, 2006. The SEZ Act, 2005 contains
provisions relating to fiscal exemptions in Section 26 & Section 27. Now all the activities relating to the SEZ shall be guided by the provisions contained in the SEZ Act, 2005 and the SEZ Rules, 2006.
The main objective of the social economic zone at are:
Generation of additional economic activity promotion of exports of goods and services promotion of investment from domestic and foreign sources creation of employment opportunities and development of infrastructure facilities however the social economic zones Act does not require environmental impact assessment as part of the application for new units this is because social economic zones are only permitted to contain not populating industries and facilities the social economic zones rules 2006 provided for:

1. Single window clearance for setting up of and social economic zones;
2. Simplified procedures for development operation and maintenance of the special economic zones and for setting up units and conducting business in social economic zones;
3. Single window clearance for setting up unit in special economic zone;
4. Single window clearance on matter relating to Central as well as State Government;
5. Simplified compliance procedures and documentation with an emphasis on self certification.

☆ approval mechanism of SEZs:

The developer submit the proposal of establishment of social economic zone to the concerned state government the state government has to forward the proposal with recommendation within 45 days from the date of receipt of such a proposal to the board of approval the applicant also has the option to submit the proposal directly to the board of approval the board of approval has been constituted by the central government in exercise of the powers conferred under the social economic zone act all the decisions are taken in the board of approval by consensus there are altogether 19 members in the board of approval.

☆ administrative setup:

The functioning of the social economic zone is governed by a three-tier administrative setup the board of approval is the Apex body and is headed by the secretary department of Commerce approval committee at the zone level deals with approval of units in the social economic zones and other related issues each zone is headed by a development commissioner who is the ex officio chairperson of the approval committee.
Once an social economic zone’s has been approved by the board of approval and Central Government has notified that the the area of the social economic zones units are allowed to be set up in the social economic zones on the proposals for setting up of the units in the social economic zones are approved at the zone level by the approval committee consisting of development commissioner customs authorities and representatives of the state government all post approval clearance including grant of imported exporter code number change in the name of the company or implementing agency broad banding diversification and many more are given at the zone level by the development Commissioner.

☆ incentives and facilities offered to the social economic zones:

The incentives and facilities offered to the units in social economic zones for attracting investment into the social economic zones including foreign investment includes:

1. Hundred percent income tax exemption on export income for social economic zones units under section 10A A of the Income Tax Act for first five years 50 percent for next 5 years thereafter and 50 percent of the ploughed it back export profit for next 5 years.
2. Exception for minimum alternate tax under section 115JB of the Income Tax Act.
3. Duty free import or domestic procurement of goods for development operation and maintenance of social economic zone unit.
4. Exception from state sale tax and other levies as extended by the respective state government.
5. Single window clearance for Central and state level approvals.
6. Exception from Central sales tax.
7. exemption from service tax.
8. External commercial borrowing by social economic zone unit of to us dollar 500 million in A Year Without any maturity restriction throughout recognised banking channels.

In September 2016 the number of formal approval was 408 and the number of notified social economic zones was 328 plus. Total investment in social economic zone on 31st March 2016 was rupees 376494 crore.
7 Central Government social economic zones are located at Santa Cruz ,cochin ,kandla and Surat , Chennai, Visakhapatnam ,falta and Noida in India

☆ argument against social economic zones :

1. Create powerful and regional private monopolies.
2. Shift focus on exports from serving the local markets.
3. Loss in revenue of government due to special incentives offered.
4. May result in land scams.
5. Too many small social economic zones in China has few of large social economic zones.
6. Main force non social economic zones units to shift to social economic zones.

■ INDUSTRIAL PARK IN INDIA:

An industrial Park means a project in which plots of developed space or built up stairs or a combination with common facilities and qualities infrastructure facilities is developed and made available to the units for the purpose of industrial activity or commercial activities.
The industrial parks are usually promoted by the SIDC or such other government agency or statutory authority. The projects are planned, approved, developed, managed and regulated by a governmental agency with minimal private sector participation.
Objectives to be fulfilled by and industrial Park are:

1. No single unit shall occupy more than 50 percent of the allocable industrial area.
2. Investment on infrastructure to be not less than 50 percent of the total project cost in the case of an industrial model Town industrial park or growth centre and 60 percent of the total project cost in the case of an industrial park on growth centre.
3. Allocated area for industrial use to be not less than 60 percent of the total allocable area.
4. Area for commercial use to be not more than 10 percent of the total allocable area.
5. Industrial model town for the development of industrial infrastructure for carrying out integrated manufacturing activities including research and development by providing plots or Assets and common facilities within its precincts.
6. Minimum area required to be thousand acres with minimum 50 units in case of industrial model town and varied area requirement with a minimum of 30 units in case of industrial park and growth centre.
7. An industrial park for development of infrastructural facilities for build up space with common facilities in any area allotted for a year marked for the purpose of industrial use.
8. A growth Centre under the growth Centre scheme of the Government of India provided that the scheme referred in this Clause is implemented by an undertaking and the growth Centre is distinctly developed as a separate profit centre.

The industrial estates are meant to curb the scattered growth of industrial activity and encourage industrial growth within Geography kal locations centrally linked by transport communication water power supply and many more.

■ MODIFIED INDUSTRIAL INFRASTRUCTURE UPGRADATION SCHEME:

Industrial Infrastructure Upgradation Scheme was launched in 2003 with the objective of enhancing industrial competitiveness of domestic industry by providing the quality infrastructure through public-private partnership in selected functional clusters/locations which have potential to become globally competitive. The Scheme was recast in February 2009 on the basis of an independent evaluation to strengthen the implementation process. Key objective of the modify IIUS continuous to be the enhance competitiveness of industry by providing quality industrial growth in Employment generation and Technology upgradation the central assistance of rupees 203.1 8 crore has been released 22 projects in March 2017 under modified industrial infrastructure up upgradation scheme.

■ INDIA’S FIRST DEFENCE INDUSTRIAL PARK:

The union government DIPP in July 2015 approved a proposal from the kerala industrial infrastructure development corporation ,KINFRA stand for Kerala Industrial Infrastructure Development Corporation, KINFRA aims at bringing together all the suitable resources available in the state and developing infrastructure to promote industrial growth of the State,to set up the country first defence industrial park at ottapalam. The proposed Park which will be established at part of the make in India, make in Kerala project, will have modern common infrastructure facilities and at attracting component manufacturers in the defence industry first of the union government has agreed to bring it under the MIIUS. The total expenditure for the defense park is estimated at $231.25 crores. KINFRA will invest $181.35 crore, while the rest of the amount is being accepted as grant from the union government.

● significance :-
It is estimated that the defence components manufacturing sector has demand estimated at rupees 700 million a year from India and other countries having friendly relationship with it. In India there is a 15% gap between demand and supply. The defence Park can bridge the gap apart from providing the country and opportunity in defence related export of products from small and medium sized Enterprises.The Indian government has approved setting up of India’s first Defence Industrial Park at Ottappalam in Palakkad district of Kerala. The Rs. 231 crore park will be established with the help of Central and State governments. … 50 crore while the rest of the amount would be met by the State government. Ottapalam was selected for the defence Park keeping in view its strategic location as far as connectivity was concerned. Apart from common facilities such as dedicated power and water supply, the park will have a research and development centre.

■INDUSTRIAL SICKNESS:-

Industrial sickness is defined in India as at industrial company registered for not less than 5 years which has at the end of any financial year, accumulated losses equal to or exceeding. Its entire Network and has also suffered cash losses in such financial year and the financial year immediately preceding such financial year.Industrial sickness has become a major problem of the Indian corporate industrial sector. Of late, it has assumed serious proportions. A close look reveals that there are, at least, five major causes of industrial sickness, viz., promotional, managerial, technical, financial, and political.
According to Companies Act 2002, sick industrial company means and industrial company which has-

1. Failed to repair its Dept within any three consecutive quarter on demands made in writing for its the payment by a creditor or creditors of such company.
2. The accumulated losses in any financial year is equal to 50% or more of its average net worth during 4 years immediately preceding such financial year.

■REASON FOR SICKNESS IN COMPANIES:-

There are different factors as a reason for industrial sickness.
Industrial causes-
• defective plant and machinery.
• management problems.
• entrepreneurial incompetence .
• demand forecasting- the Company production schedule is completely based on demand forecasting.
• financial problems .
• labour problems.
• gestation period.

External causes-
•demand and credit restrain .
•erratic supplier of input / power cuts.
• Revival and Rehabilitation measures.
• government policy.
In the wake of sickness in the country industrial climate prevailing in the eighties, the government of India set up in 1981,a committee, of experts under the chairmanship of T.Tiwari to examine the matter and recommend suitable remedies therefore. Based on the recommendation of the committee, the government of India enacted a special legislation namely the sick industrial companies act,1985. The SICA stands for The Sick Industrial Companies Act,which received presidential assent on 8th January 1986.
The main objective of SICA was to determine sickness and expedite the revival of potentially viable units of closer of unviable units. It was expected that by Revival ideal investments in sick units will become productive and by closer the Locked Up Investments in an viable units would get released for productive use elsewhere.
The board of experts named the BIFR stands for The Board for Industrial and Financial Reconstruction ,was an agency of the Government of India, part of the Department of Financial Services of the Ministry of Finance.was set up in January 1987 and functional with effect from 15 may 1987. Appellate authority for Industrial and financial reconstruction was constituted in April 1987. Government companies were brought under the purview of SICA in 1991 ,when extension of changes were made in the Act including, inter-alia changes in the criteria for determining industrial sickness. SICA applies to companies both in public and private sector owning industrial undertaking.

The criteria to determine sickness in an industrial Company were given below:

1. It should have 50 or more workers on any day of the 12 months preceding the end of the financial year with reference to which sickness is claimed .
2. It should have a factory licence.
3. The accumulated losses of the company to be equal to or more than its network that is it paid up capital plus it’s free reserves.
4. The company should have completed 5 years after incorporation under the Companies Act 1956.

☆ SICA Repealed:

The Sick Industrial Companies Repeal Act, 2003 shall come in force from December 01, 2016 vide notification issued in official gazette on November 25, 2016. The ministry also dissolved the BIFR and AIFR.
The Companies Act 2002 inserted sections 424A to 424L that deal with sick companies to the administrated by the Tribunal in the Companies Act 1956 .the repeal act also was passed in 2004 however neither of the amendments was notified or become operative.
Insolvency and bankruptcy code 2016 received the president assent on 28 may 2016 and is to be become operative from the notified date administrative provisions under the insolvency act were notified on different dates from august to November relevant operative provisions were notified on 30 November 2016 the insolvency as amended the companies act 2013 to delete the provisions relating to sick companies it is also admitted the repeal act to allow companies having pending proceedings proceeding under the sica to approach the National Company Law Tribunal under the provision of the insolvency act within the specified time without payment of fees.

The repeal act Inter alia provides for the following:
• provides power to the central government to make rules for the implementation of the repealed act.

• no fees would be charged on abated appeals or references referred to the nclt within the prescribed time.

• repeal of the SICA and providing that such repeal shall not affect the order passed under the SICA.

• dissolution of the BIFR and the AIFR.

• Such terminated appeals of references may be referred to the nclt constituted under the Companies Act 2013 under the provision of the insolvency act within 180 days from the commencement of the insolvency act.

• abatment of reference or inquiries appeals and all other proceedings that were pending before the BIFR OR AIFR.

These notification settlement the long-term uncertain prevailing around existence of the SICA and provisions regulating sick companies the insolvency act is expected to provide faster resolution and is in line with effort to promote the ease of doing business in India.

■ INSOLVENCY AND BANKRUPTCY CODE,2016.-

The objectives of the new law is to promote entrepreneurship, availability of credit and balance the interest of all stakeholders by consolidating and amending the laws relating to recognization and insolvency resolution of Corporate persons from a partnership forms and individuals in a time bound manner and for maximization of value of Assets of such person and matters connected there with an incidental thereto.
The law aims to consolidate the the laws relating to insolvency of companies and limited liability and unlimited liability partnerships and other and titles with limited liability and limited liability partnership and individuals,presently contained a number of legislation , into single legislation. Such consolidation will provide for a greater clarity in law and facilitate the application of consistent and coherent provision to different stakeholders affected by Business failure or inability to pay Debts.

•the sailent future of the law are as follows:-

1. Enabling provisions to deal with cross border ine solvency.
2. Insolvency professionals wood handle the commercial aspects of insolvency resolution process insolvency professional Agencies will develop professional standards code of ethics and be first level regulator for insolvency professional members leading to development of a competitive industry for such professionals.
3. Debt recovery Tribunal and NCLT to act as adjudicating authority and deal with the cases related to insolvency, liquidation and bankruptcy process in respect of individuals and unlimited partnership firms and in respect of companies and Limited liabilities entities respectively.
4. Clear, coherent and speedy process for early identification of financial distress and resolution of companies and limited liability and entities if the underlying business is found to be viable.
   5.Two distinct processes for resolution of individuals namely the fresh start and insolvency resolution.
5. Establishment of a insolvency and bankruptcy board of India to exercise regulatory oversight over insolvency professionals, insolvency professionals Agencies and information utilities.
6. Information utility would collect collate, authenticate financial information to be used in insolvency and liquidation and bankruptcy proceedings.

■ DISINVESTMENT IN INDIA:-

Investment refers to the conversion of money or cash into securities, debentures bonds or any other claim on money as follows ,disinvestment involves the conversion of money claims for securities and into money or cash for stop disinvestment can also be defined as the action of an organisation selling for liquidating an asset for subsidy in India contact details investment typically refers to sale from the government to the partly or fully. Of a government owned and enterprise.
Privatization implies a change in ownership resulting in a change in management. However disinvestment need not always and imply change in management. disinvestment is actually delusion of the state of the government in a public enterprise. If the delusion is less than 50% the government retains management even though disinvestment takes place. It is not privatised. But if the delusion is more than 50% there is transfer of ownership and management it will be called privatisation.Disinvestment in Public sector undertakings in India, is a process of public asset sales done by the President of India on behalf of the Government of India. It can be directly offered for sale to the public or indirectly done through a bidding process.
■ Reason for disinvestment:-
It is believed that the private ownership leads to better use of resources and their more efficient allocation.The division is no longer aligned with the core business.
Sustained lack of profitability, or margins continue to lag other parts of the business.
Capital is needed to grow other parts of the business.Company is over-leveragedtoo much debt.A previous acquisition isn’t working out. The proliferation of market based economy resulted in the fact that state could no longer meet the growing demands of the economical stop globalisation and WTO commitments need quick restructuring of the public sector undertakings. If they are not able to adapt to this,they would not be able to survive. There were two major reasons offered by the government for disinvestment. One was the to provide fiscal support and the other was to improve the efficiency of the Enterprises.

■ objectives of of disinvestment:-

The the following are the main objectives of this investment policy of the government-

1. To introduce competition and market discipline.
2. to D politicise the essential services.
3. To find growth.
4. To improve public finances.
5. To diversify the ownership of PSU for enhancing efficiency of individual Enterprises.
6. To encourage wider share of ownership.p
7. To introduce competition and market discipline.
8. To reduce the financial burden on government.

● DISINVESTMENT PROCESS IN INDIA:-

The Following Are the three methods adopted by the government of India for investing the public sector undertakings.

1. Minority disinvestment.- a minority disinvestment is one such that at the end of 8 the government retains a majority stake in the company typically greater than 51% thus insuring management control.Disinvestment means sale or liquidation of assets by the government, usually Central and state public sector enterprises, projects, or other fixed assets. Examples of minority sales we are auctioning to Institutions go back into the early and mid 1990. Some of them were Andrew yule and co.ltd,CMC Ltd etc.examples of minority sales include recent shoes of power Grid Corporation of India Limited rural electrification Corporation Limited NTPC Limited NHPC Limited and many more.
2. Majority disinvestment :

A majority disinvestment is one in which the government post disinvestment retains a minority stake in the company that is it sells of a majority stake.
Majority disinvestment took place in the sale of modern fruits to Hindustan lever BALCO to starlite, CMC to TCS etc.

1. Complete privatisation:

Complete privatisation is a form of majority disinvestment where 100% control of the company is passed onto a buyer for example of this include 18 hotel properties of ITDC and 3 hotel properties of HCI disinvestment and privatisation are often loosely used interchangeably.

☆ methods of of disinvestment of Central Public Sector Enterprises:

1. Initial public offering: offer of shares by an unlisted cpse or the the government out of its shareholding or a combination of both to the public for subscription for the first time.
2. Further public offering: offer of shares by a listed CPSC of the government out of its share holding or a combination of both to the public for subscription.
3. Offer for sale of shares by promoters through stock exchange mechanism:method allows auction of shares on the platform provided by the stock exchange extensively used by the government since 2012.
4. Strategic sale:
   Sale of substantial portion of the government share holding of a cpse of up to 50% or higher percent along with transfer of Management control.
5. Institutional placement programme: only institution can participate in the offering.
6. Cpse exchange traded fund: disinvestment through ptf route allows simultaneous sale of government stake in in various CPSE across diverse sector through single offering it provides a mechanism for the government to monetize its share holding in those CPSE which form part of the e t f basket.

The post INVEST INDIA AND SPECIAL ECONOMICS ZONES appeared first on Vinay IAS Academy.

■ INDUSTRIAL POLICY OF 1977:

The Industrial Policy Statement 1977 was announced by Janata Government led by Morarji Desai on 23 December, 1977. This policy was later replaced by incumbent Congress Government in 1980.
This was the first time when a non-congress government was ruling dispensation at centre. The Janata Government had a different approach and planning philosophy from Congress, and it reflected in its Industrial policy also.
Industrial policy of 1977 classified the small sector into 3 categories first one is Cottage and household industries number to is tiny sector and number 3 is small scale industries.
The purpose of the classification was to design policy measure of for each category the industrial policy of 1977 at Temple define the role of large scale sector by declaring them number one basic industries for providing infrastructural items like cement nonferrous Steel coil at Vini War 2 small industries and others number 2 capital good Industries required by small scale industries number 3 high Technology industry is widely required by small scale and Agriculture sector number 4 Other industries the industrial policy of 1977 is specified that the public sector would not only be the producer of important and strategic goods of basic nature but it would also be used effectively as a stabilizing force for maintaining essential supplies for the consumers the strategy of industrial policy of 1977 depend on the enforcement of foreign exchange Regulation Act.
■ INSUTRIAL POLICY OF1980:

Industrial Policy of 1980 sought to promote the concept of economic federation, to raise the efficiency of the public sector and to reverse the trend of industrial production of the past three years and reaffirmed its faith in the Monopolies and Restrictive Trade Practices Act and the Foreign Exchange Regulation Act .
The industrial policy statement of July 1980 spells out the following social economic objectives ︎optimum utilisation of installed capacity,︎ maximum production and achieving higher productivity,︎ higher Employment generation,︎ correction of regional imbalances ,︎ strengthening of the agriculture based through based industries and promotion of optimum inter-sectoral relationship,︎ promotion of export oriented industries,︎ promotion of economic federalism through equitable spread of investment and dispersal of Return and,︎ consumer protection against high prices and bad quality.

■ INDUSTRIAL POLICY OF 1991:

The long-awaited liberalised industrial policy was announced by the Government of India in 1991 in the midst of severe economic instability in the country. The objective of the policy was to raise efficiency and accelerate economic growth.

☆ major objectives:

1. Dismantling of the regulatory system development of the capital market and increasing competitive for the benefits of the common man.
2. Development and utilisation of indigenous capabilities in technology and manufacturing as well as its up-gradation to worlds standard.
3. Promoting workers participation in management in handling their welfare and equipping them to deal with inevitability of technological change.
4. Running of the public sector on business lines.

To fulfill the above objectives the government introduced a series of initiatives in the new industrial policy in the following areas:

1. Industrial licensing policy:
   Industrial licensing has been abolished for all the project except for a short list of industries in related to the security and strategic concerns, social reason hazardous Chemicals and overriding environmental reasons ,and items of elitist consumption. now licensing is compulsory for only five Industries they are alcohol ,cigarettes, hazardous, chemical electronic aero scope, defence equipment and industrial explosives.
2. Foreign investment:

• automatic permission will be given for foreign Technology agreement in high priority industries.

• the foreign investment promotion board has been constituted to negotiate with the number of large International firms and approve direct foreign investment.

• automatic approval will be given for direct foreign investment up to 51 percent equity in high priority industries.

1. Public sector policy:

• public Enterprises which are chronically sick and which are unlikely to be e turned to normal health will be referred to the board of Industrial and financial reconstruction for advice about rehabilitation and reconstruction.

• in order to raise resources and encourage wider public participation apart of the government share holding in the public sector would be offered to Mutual Funds Financial Institutions general public and workers.

• the policy reduced the number of industries reserved for the public sector for free Industries they are atomic energy minerals and rail transport.

• Board of public sector companies would be made more professional and give greater powers.

1. MRTP act:
   The monopolies and restrictive trade parties act has been abolished Emphasis was placed on controlling and regulating monopolistic destructive and unfair trade practices.
2. Abolition of phased manufacturing programs and removal of mandatory convertibility clause and liberalization of location policy and many more and are some other provisions of this policy.

■ NATIONAL MANUFACTURING POLICY 2011:

The need to reach the Global competitiveness of the Indian manufacturing sector is imperative for the country long-term growth the national manufacturing policy is by far the most comprehensive and significant policy initiative taken by the government the policy is the first of its kind for the manufacturing sector as it addresses area of regulation infrastructure skill development Technology availability of Finance exit mechanism and other pertinent factors related to the growth of the sector.
☆ vision of the policy:

1. Ensuring sustainability of growth particularly with regard to environment.
2. Enhancing the Global competitiveness of the Indian manufacturing centre.
3. An increase in domestic value addition and Technology Dept in manufacturing.
4. An increase in manufacturing sector growth to 12 to 14 percent per annum over the medium term.
5. An increase in the share of manufacturing in the country gross domestic product from 16 to 25 percent by 2022.
6. To create hundred million additional jobs by 2022 in manufacturing sector.
7. Creation of appropriate skill sets among the ruler migrant and the urban poor for inclusive growth.

The policy focuses following sector:

1. Industries with strategic significance like Aerospace shipping IT hardware and electronics telecommunication equipment defence equipment and solar energy.
2. Employment intensive Industries like Textiles and garments leather and footwear Gems and Jewellery and food processing industries.
3. Capital goods industries like machine tools heavy electrical equipment Highway Transport Earth moving and mining equipment.
4. Public sector enterprises.
5. Small and medium enterprises.
6. Industries where India enjoying competitive advantages such as automobiles pharmaceuticals and medical equipment.

■ NATIONAL INVESTMENT AND MANIFACTURONG ZONES:

The national investment and manufacturing Jones have been conceived as giant industrial Greenfield townships to promote world Trance manufacturing activities the minimum size is 5000 actors where in the processing area has to be at least 30 percent.

The Central Government shall, by notification in the Official Gazette, notify an investment and manufacturing zones An SPV. will be constituted to exercise the powers conferred on, and discharge the functions assigned to it under this Policy to manage the affairs of the National investment and manufacturing zones. Every SPV shall be a legal entity by the name of the National investment and manufacturing zones. This SPV can be a company, including a Section 25 company depending upon the MOU between stakeholder. The indication of land will be undertaken by State Government State Government will be responsible for the water requirement power connectivity physical infrastructure utility link ages environmental impact studies and bearing the cost of resettlement and rehabilitation packages for the owners of acquired land the state government will also play a role in its acquisition if necessary in government purchase preference will be given to units in the national investment and manufacturing zones the central and state government are to provide exemptions from rules and regulations related to labour environment and many more a single window clearance would be provided for units in National investment and manufacturing zones.

☆ incentives:
Transfer of assets:
In case a unit is declared sick the transfer of assets will be facilitated by the company managing the affairs of NIMZ.

Green technology and practice– 5% interest in reimbursement 10% capital subsidy for the production of equipment / machines / devices for controlling pollution, reducing energy consumption and water conservation.green technology” encompasses a continuously evolving group of methods and materials, from techniques for generating energy to non-toxic cleaning products. … “Cradle to cradle” design – ending the “cradle to grave” cycle of manufactured products, by creating products that can be fully reclaimed or re-used.
Technology development-
Incentives for the production of equipment, machines, devices, for controlling pollution, reducing energy consumption and water conservation. Small and medium enterprises will be given access to the patent pool and part of reimbursement of technology acquisition costs up to a maximum of 5 years.

Special benefits to SMEs -rollover relief from long term capital gains tax to individuals on sale of residential of sale consideration. Status for venture capital funds with focus onSMES in the manufacturing sector.

The NIZMs identified underDMIC are:–
Ahmedabad- dholera investors region, Gujarat,shendra bidkin industrial park city near aurangabad, Maharashtra;manesar-bawal investment region, haryana;, khushkera- bhiwadi -nee-mrana investment ration, Rajasthan; pithampur-dhar- mhow investment region, madhya pradesh;,dadri-Noida-gaziabad investment region, utter pradesh ,dighi-port industrial areas, maharashtra and jodhpur-pali – marwar region in Rajasthan.
National investment and manufacturing Jones identified outside DM IC are kuhi and umred Taluka in Maharashtra, Tumkur in Karnataka Chittoor in Andhra Pradesh ,medak in Telangana Prakasam in Andhra Pradesh, Gulbarga in Karnataka, kolar in Karnataka, bihar in Karnataka and kalinganagar in Odisha.

NATIONAL MANUFACTURING COMPETITIVES PROGRAM:
On 8 December 2014 the Government of India was announced for regulation of a nmcp with an aim to support the micro small and medium enterprises in the endeavour to become competitive. The objective of nmcp is to develop Global competitiveness among Indian m s m e s.The National Manufacturing Competitiveness Programme (NMCP) is a program launched by the Government of India to improve global competitiveness among the Indian MSMEs. Conceptualized by the National Manufacturing Competitiveness Council, the program was started in during the financial year 2007. This program target at enhancing the entire value chain of the m s m e sector through its nine components.

1. Lean manufacturing competitiveness scheme for MSMEs .
2. Design clinics came for MSMEs.
3. Barcode under market development assistance scheme.
4. Marketing assistant and Technology upgradation theme for MSMES.
5. Enabling manufacturing sector to be competitive through quality management standards and quality Technology tools.
6. Technology and quality upgradation support to MSMEs.
7. Promotion of Information and Communication tools in MSME sector.
8. Support for interpuriel and managerial development of SMES through incubators.
9. National campaign for building awareness on intellectual property right.

■ MAKE IN INDIA:-

The make in India initiative was launched by the prime minister in September 2014 as part of a wider set of nation building initiatives. Devised to transform India into a global design and manufacturing hub. The initiative aimed at promoting India as an important investment in destination and a global hub for manufacturing design and innovation. The make in India initiative does not forget manufacturing sector alone but also AIMS at promoting entrepreneurship in the country. The initiative is for the aimed at creating a conductive environment for investment, modern and efficient Infrastructures, opening up new sectors for foreign investment and foreign partnership between Government and industry through positive mindsetIndian government has launched the ‘Make in India Initiative’ in order to give thrust to the manufacturing sector’s growth rate to 12-14 percent per annum, but after five years, the initiative has failed to achieve its objective due to the various parameters.
The initiative is based on four pillars which have been identified to give a boost to entrepreneurship in India, not only in manufacturing but also in other factors.

︎The four pillars are as follows:-

1. New mind set– in order to partner with industry in economic development of the country government shall act as a facilitator and not a regulator.
2. New sectors :
   Foreign direct investment has been opened up in defence production insurance medical devices, construction and Railway infrastructure in a big way.
3. New infrastructure:
   The government intends to develop Industrial Corridor and smart cities create world class and structure with state-of-the-art technology and communication Innovation and treated through a fast and improve infrastructure for IPR registration the requirement of skill of industry are to be identified and according to the development of workforce to be taken up.
4. New processes:
   Make in India recognises ease of doing business as the single most important factor to promote entrepreneurship . A number of initiatives have already been undertaken to ease business environment .
   Components of the initiatives are equally available to all regions of the country in all 25 sectors have been included in the programme.

■ PRADHAN MANTRI KAUSHAL VIKAS YOJANA:

Pradhan Mantri Kaushal Vikas Yojana is the flagship scheme of the Ministry of Skill Development and Entrepreneurship . The objective of this Skill Certification Scheme is to enable a large number of Indian youth to take up industry-relevant skill training that will help them in securing a better livelihood. Individuals with prior learning experience or skills will also be assessed and certified under Recognition of Prior Learning . Under this Scheme, Training and Assessment fees are completely paid by the Government. The union Cabinet on 20 March 2015 give its approval for the Pradhanmantri Kaushal Vikas Yojana with an outlay of Rupees 1500 crore for skill training of youth through the national Skill Development Corporation it is a flagship scheme of the MSDE.

The objective of the skill certification scheme is to enable a large number of Indian youth to take up industry relevant skills training that will help them in securing a better livelihood. individuals with prior learning experience for skills will also be assessed and certified under recognition of prior learning.
Under this scheme training and assessment fees are completely paid by the government:
Key Components of the scheme are:

1. Short term training.
2. Special projects.
3. RPL.
4. Kaushal and Rozgar Mela.
5. placement guidelines.
6. Monitoring guidelines.

■ PRADHAN MANTRI KAUSHAL KENDRA:

Vocational training needs to be made aspirational to transform India into the skill capital of the world. In line with the same, Ministry of Skill Development and Entrepreneurship intends to establish visible and aspirational Model Training Centres in every district of the country. NSDC is the implementation agency for the project.
These training centres will be state-of-the-art Model Training Centres, called as Pradhan Mantri Kaushal Kendra . These centre would offer advanced training and also courses in foreign languages this will help those of our youth who seek job opportunities outside the country.

1. Transform from a mandate driven Footloose model to sustainable institutional model.

2 . Focus on elements of quality sustainability and connect with stakeholders and skills delivery process.

1. Create benchmark institutions that demonstrate aspirational value for competency based skill development training.

■ TRANSFORM POLICY FOR SKILL DEVELOPMENT AND ENTREPRENEURSHIP, 2015.
The union government on July 1st 2015 gave its approval for the India’s first integrated national policy for skill development and Entrepreneurship 2015. the policy acknowledges the need for an effective road map promotion of entrepreneurship as a key to a successful skills development.

The objective of the National Policy on Skill Development and Entrepreneurship, 2015 will be to meet the challenge of skilling at scale with speed and standard . It will aim to provide an umbrella framework to all skilling activities being carried out within the country, to align them to common standards and link the skilling with demand centres. In addition to laying down the objectives and expected outcomes, the effort will also be to identify the various institutional frameworks which can act as the vehicle to reach the expected outcomes. The national policy will also provide clarity and coherence on how skill development efforts across the country can be aligned within the existing institutional arrangements.This policy will link skills development to improved employability and productivity.

☆ vision:
To create and ecosystem of empowerment by Skilling a large scale At speed with high standard and to promote a culture of innovation based entrepreneurship which can generate wealth and Employment so as to livelihoods for citizens in the country.
☆ mission:
The mission is to create a demand for a skilling across all over the country correct and align skilling with required competencies connect the supply of skilled human resources with sectoral demands certified and assess in alignment with Global and national standards and catalyse an ecosystem where in productive and innovative entrepreneurship germinates sustains and grows leading to the creation of a more dynamic entrepreneurial economy and more formal wage employment.
☆ objectives:

The core objective of the policy is to empower the individual by enabling him or her to realise that their full potential through a process of lifelong learning where competencies are accumulated we are instruments such as credible certifications credit accumulation and transfer and many more and individuals grow the society and Nation also benefit from their productivity and growth.
This will involve:

1. Promote commitment and ownership of all stakeholders towards skill development and create an effective coordination mechanism.
2. Operationalize a well defined Quality Assurance Framework aligned with Global standard to facilitate mobility of labour.
3. Promote National standard in the skilling space to active involvement of employers in setting occupational standards helping develop curriculum providing apprenticeship opportunities and participating in assessments and providing gainful employment to skilled workforce with adequate compensation.
4. Promote increased participation of women in the workforce through appropriate Skilling and gender mainstreaming of training.
5. Ensure that the skilling needs of the the socially and geographical disadvantages and marginalized Groups like SC ST OBC minorities differentially abled persons and many more are appropriately take care of.
6. Recognise the value of of on the job training by making apprenticeship in actual work environment and integral part of all skill development effort.
7. Leverage modern technology to ensure scale assess and outreach in addition to ease of delivering content and monitoring result.
8. Established and it based information system for and supply of skilled workforce which can help matching and connecting supply with demand.
9. Make quality vocational training aspirational for both youth and sees it as a matter of choice and employer acknowledges the productivity linked to skilled workforce by paying the required requisite premium.
10. Address human resource needs by analysing supply of skilled workers with sectoral requirements of industry and the country’s strategic priorities including flagship programmes like make in India.
11. Increase the capacity and quality of training infrastructure and trainers to ensure equitable and easy access to every citizen.
12. Focus on an outcome based approach towards quality is skilling that on one hand result in increased employability and better livelihoods for individuals and on the other hand translates into improve productivity across Primary secondary and territories actors.
13. Ensure both vertical and horizontal Pathways to skilled workforce for further growth by providing seamless integration of skill training with formal education.
    ■ NATIONAL SKILL DEVELOPMENT MISSION:
    The national Skill Development Mission was approved by the Union Cabinet on 1st July 2015 and officially launched by the prime minister on 15 July 2015 on the occasion of World Youth skill day.The National Skill Development Mission will provide a strong institutional framework at the Centre and States for implementation of skilling activities in the country.The Mission will have a three-tiered, high powered decision making structure. At its apex, the Mission’s Governing Council, chaired by the Prime Minister, will provide overall guidance and policy direction. The Steering Committee, chaired by Minister in Charge of Skill Development, will review the Mission’s activities in line with the direction set by the Governing Council.  the key institutional mechanism for achieving the objectives of the mission have been divided into three tiers:1. A governing Council for policy guidance at Apex level,2. A steering committee and,3. A mission directorate as the executive arm of the mission.
    Mission directorate will be supported by three other institution. 1. National Skill Development Agency,2. NSDC,3. Directorate General of training.
    7 submissions have been proposed initially to act as building blocks of achieving overall objective of the mission they are:
14. Institutional training,2. Infrastructure,3. Convergence,4. Trainers,5. Overseas employment,6. Sustainable livelihood and,7. Leveraging public infrastructure.

☆ mission objectives:

1. Maintain a national database known as the labour market information system which will act as a portal for matching the demand and supply of skilled workforce in the country .
2. Propagate aspirational value of scaling among youth by creating Social awareness on value of skill training.
   3.support weaker and disadvantaged sections of security through focused outreach programs and targeted skill development activities.
3. Promote convergence and co-ordination between skill development efforts of all central ministers are States or departments or implementations agency.
4. Offer a passage for Overseas employment through specific programs mapped to global job requirement and benchmark to International standard.
5. Enable Pathways for transitioning between the vocational training system and the formal education system through a Credit transfer system.
6. Leverage existing public infrastructure and industrial facilities for scaling up skill training and capacity building efforts.
7. Develop a network of quality instructors for trainers in the skill development ecosystem by establishing high quality teacher training institutions.
8. Ensure sufficient high quality options for long-term scaling benchmark to internationally acceptable qualification standard which will ultimately contribute to the creation of a highly skilled work face.
9. Bed capacity for skill development in critical on unorganised sectors as the construction sector where there are few opportunities for skills and provided Pathways for reskilling and upskilling workers in these identified sectors to enable them to transition into formal sector employment.
10. Align employer or industry demand and workforce productivity with trainers aspirations for sustainable livelihood by creating a Framework for outcome focused training.
11. Create an end to end implementation Framework for skill development which provides opportunities for lifelong learning this includes Incorporation of scaling in the school curriculum providing opportunities for quality long and short term skill training by providing gainful employment and ensuring career progression that meets the aspiration of trainers.
12. Established and info cross-sectoral nationality and internationally acceptable standards for skills training in the country by creating a sound quality assurance Framework for killing applicable to all ministers state and private training providers.
    ■ NATIONAL SKILL DEVELOPMENT CORPORATION:

The National Skill Development Corporation India was setup as a one of its kind, Public Private Partnership Company with the primary mandate of catalysing the skills landscape in India. National skill development is a unique model created with a well thought through underlying philosophy based on the following pillars:

1. Create: Proactively catalyse creation of large, quality vocational training institutions.
2. Fund: Reduce risk by providing patient capital. Including grants and equity.
3. Enable: the creation and sustainability of support systems required for skill development. This includes the Industry led Sector Skill Councils.

The main objectives of the NSDC are to:

• Enhance, support and coordinate private sector initiatives for skill development through appropriate Public-Private Partnership models; strive for significant operational and financial involvement from the private sector

• Upgrade skills to international standards through significant industry involvement and develop necessary frameworks for standards, curriculum and quality assurance

• Prioritize initiatives that can have a multiplier or catalytic effect as opposed to one-off impact.

• Play the role of a “market-maker” by bringing financing, particularly in sectors where market mechanisms are ineffective or missing.

■ SKILL LOAN SCHEME:

Skill loan scheme was launched by the union government on 15th July 2015 to provide a loan facility to aspirants wanting to do skill development course aligned to National skill qualification framework.

The important features of the scheme are as follows:

1. Simple rate of interest at the rate hundred percent and 12 percent per annum is charged during the period of study.
2. Amount of loan ranges from rupees 5000 rupees 150000 depending on the course having a repayment period of three to seven years.
3. Any Indian national who has secured admission in a course run by industrial training institutes polytechnics are in a school recognised by the central or state education board or in a college affiliated to recognise University training partners affiliated to National Skill Development Corporation or as stated skill mission and stated skill Corporation can avail loans for the purpose.
4. No processing fee is charged by banks.
5. Risk of banks covered through credit guarantee fund scheme for skill development.
6. No specific restriction with regard to age.
7. No minimum course duration.
8. The loan is sanctioned without any collateral security or third party guarantee.

■ SKILL ACQUISITION AND KNOWLEDGE AWARENESS FOR LIVELIHOOD PROMOTION PROGRAMME :

Skills Acquisition and Knowledge Awareness for Livelihood Promotion aims to strengthen institutional mechanisms at both national and state levels, build a pool of quality trainers and assessors, establish robust monitoring and evaluation system for skill training programs, & provide access to skill training opportunities to the disadvantaged sections.
The union Finance Minister announced that in the financial year 2017-2018 a program Sankalp will be launched at a cost of rupees 4000 crore Sankalp will provide market relevant training to 3.5 crore youth. The objective is to enhance the employability potential of the youth to the maximum extent possible it is indeed a good answer to the situation of unemployment among youth prevailing in our country that is preventing the economic and social development.

There are two phases to this Scheme-the first is the initial Rs 4000 crore and the second phase starts with Rs 2200 crore. The second stage is termed as Skill Strengthening for Industrial Value Enhancement.

■ UDAAN:
UDAAN is a special industry initiative for Jammu and Kashmir in the nature of partnership between the corporate of the India and ministry of home affairs and implemented by National Skill Development Corporation.
The scheme was initially upto the 2015 to 2016 which has been extended to 2019 to 2020 the programme aims to provide skills training and enhance the employability of unemployed youth of Jammu and Kashmir the scheme covers graduates post graduates and 3 year engineering diploma holders.
It has two objectives:

1. To provide corporate India and exposure to the rich talent pool available in the state.
2. Provide an exposure to the unemployed graduates to the best of Corporate India.

The scheme aims to cover 40,000 youth of Jammu and Kashmir over a period of 5 years and rupees 750 crore has been earmarked for the implementation of the scheme over a period of 5 years to cover the other incidental expenses such as travel cost boarding and lodging stipend and trainers and administrative cost.
VOCATIONALIZATION OF EDUCATION:

Vocational education is education that prepares people to work as a technician or to take up employment in a skilled craft or trade ie tradesperson or artisan. Vocational education is sometimes referred to as career and technical education. A vocational school is a type of educational institution specifically designed to provide vocational education.
☆ school education:
The centrally sponsored scheme of vocationalisation of Secondary Education of Ministry of HRD list out a crucial role for National Skill Development Corporation and its SSC in implementation of an n s q f the trainings conducted in the schema based on the national professional standards set by NSDC through its SSC.
Stakeholders in the implementation are state government NSDC SSC and NSDC training partner.
☆ higher education:
In order to bridge the industry Academy a gap NSDC has developed a unique model to integrate skill based training into the academic cycle of the university’s NSDC is working with 21 University is UGC and a i t e e catering to more than 1200 colleges and 400 community colleges across the country.

The post INDUSTRIAL POLICY OF 1977 appeared first on Vinay IAS Academy.

■ INDUSTRIAL SECTOR IN INDIA:
The industrial sector in India, including construction, is an important contributor to the growth with the sector accounting for 31.1 % of the total gross value added in 2016 to 2017. A strong and robust industrial and manufacturing sector helps in promoting domestic production exports and Employment all of which can be catalyst for higher growth in the economy.

■ INDUSTRIAL POLICIES IN INDIA:

At the time of Independence, the Indian economy was facing severe problems of illiteracy, poverty, low per capita income, industrial backwardness, and unemployment. After India attained its Independence in 1947, a sincere effort was made to begin an era of industrial development. The government adopted rules and regulations for the various industries. This industrial policy introduction proved to be the turning point in Indian Industrial history. The industrial policies of India were also framed to meet the challenges as an end and to give direction to obtain economic development and growth through industrialization after independence.
■ INDUSTRIAL POLICY RESOLUTIONS, 1948.

The first important industrial policy statement was made in the industrial policy resolution, 1948 .the main thrust of the IPR was to lay down the foundation of mixed economy whereby the private and public sector was accepted as important components in the development of industrial economy of India.
The policy divided the industries into four broad categories-

1.industries with exclusive state monopoly-
It included Industries engaged in the activity of Atomic Energy, Railways and arms and ammunition.

1. Industries in the mixed sector- it included the industries where private and public sector were allowed to operate. the government was allowed to review the situation to acquire any existing private undertaking.
2. Industries with government control- it included the the industries of national importance and so needs to be registered. Eighteen such industries were put under this category for example fertilizers, heavy chemical, heavy machinery, etc.

Industries under private sector– Industries that not covered by the above categories fill in this category in order to regulate the industry and to promote plant Industrial Development according to the IPR 1948, the industrial development and Regulation Act in 1951 was passed to arm the government with sufficient power.

INDUSTRIAL POLICY RESOLUTION, 1956-
the IPR of1956 was meant to give a concrete shape to the mixed economy model and the ideology of socialist pattern of society.
The important provisions were as follows-
1.the IPR, 1956, divided the industries into the following three categories-

1. Schedule A industries-the Industries that were the Monopoly of state or Goverment. It included 17 Industries. The private sector was allowed to operate in these Industries is national interest so required. The reserved industries were arms and ammunition and allied items of defence equipment atomic energy iron and steel heavy casting and foregoing of iron and steel heavy plant and machinery required for iron and steel production for mining for machine to manufacture and for such other basic industries as may be specified by the central government, heavy electric plant including large hydraulic and steam turbines ,coal and lignite gypsum, sulphur, gold and diamond. and processing of copper ,lead ,zinc ,Dinam and wool farm, mineral specified in the schedule to the atomic energy. Order 1953 aircraft ,air transport, railway transport, commercial buildings ,telephone cables, telegraph and wireless apparatus and generation and distribution electricity.
2. schedule B industries:
   In this category of industry state was allowed to establish new units but the private sector was not denied to set up or expand existing units in this category 12 industries were included for example chemical industry Fertilizer industry synthetic rubber and ammonium and many more.
   3.schedule C industries:
   Industries are not mentioned in the above two categories formed part of a scheduled c the IPR 1956 emphasised the mutual existence of public and private sector industries.
3. Encouragement to small scale and cottage industry:
   In order to strengthen the small-scale sector supportive measures were suggested in terms of cheap credit subsidies reservation etc.
4. Emphasized on reduction of regional disparities:
   Fiscal concession were granted to open industries in backward region public sector enterprises were given greater role to develop These areas.

The post INDUSTRIAL SECTOR IN INDIA appeared first on Vinay IAS Academy.

1.Define terms related to financial market.

TERMS RELATED TO FINANCIAL MARKET:

• Arbitrageurs :
Arbitreasury are traders who simultaneously buy and sell the same assets in an effort to profit from unrealistic price differentials they attempt to make profit by locking in a riskless trading by simultaneously entering into transactions into two or more markets. that try to earn riskless profit from discrepancies between futures and spot prices and among different future prices.

• Arbitration:
Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court. It is provided by a stock exchange for resolving disputes between the trading members and their clients in respect of trade done on Exchange.

• Auction:
The exchange purchase the requisite quantity in the auction market and give them to the buying trading members. Auctions are popular because buyers and sellers believe they will get a good deal buying or selling assets. The shortage are made through auction process and the difference in the price indicated in contract note and price received through auction is paid by the member to the exchange which is then liable to be recovered from the client.

• averaging:
The process of gradually buying and more securities in a declining market in order to level out the purchase price.

• backwardation /ulta Badla /undha Badla:

The payment of money charges made by a seller of shares which he borrows to deliver against his sale. These charges become payable only when there are more sellers who are not in a position to deliver against their sale. These charges become payable to the buyer, when the seller is not in a position to deliver the documents to the buyers who demand delivery.

• Badla:
Carrying forward for transaction from one settlement period to another settlement period without effective delivery this is permitted only in specified securities and is done at the making a price which is usually the closing price of the last day of settlement.

• Basis:
In future markets on the basis is defined as the cash price of whatever is being traded minus its future price for the contacted in question. it is very important because changes in the relationship between cash and future prices affect the values of using future as a hedge.a hedge,is however will always reduce risk as long as the volatility of the basis is less than the volatility of the price of whatever is being hedge.

• bear market:
Bear market it is a market in which a week or falling market characterized by the dominance of sellers. It typically describes a condition in which securities prices fall 20 percent or more from recent highs amid widespread pessimism and negative investor sentiment. Bear markets are often associated with declines in an overall market or index like the S&P 500, but individual securities or commodities can also be considered to be in a bear market if they experience a decline of 20 percent or more over a sustained period of time—typically two months or more. 

• bear trap:
A false signal indicating that the rising trend of a stock or index has reversed when in fact it has not.The trap is thus a false reversal of a declining price trend. Bear traps can tempt investors into taking long positions based on anticipation of price movements which do not end up taking place. This can occur during a bear market reversal when short sellers believe the market will sink back to its declining ways in the market continues to rise the shorters get trapped and are forced to cover their position at Higher prices.

• Blue chip:
A blue chip is a nationally recognized, well-established, and financially sound company. Blue chips generally sell high-quality, widely accepted products and services. Blue chip companies are known to weather downturns and operate profitably in the face of adverse economic conditions, which helps to contribute to their long record of stable and reliable growth. This is the best rate shares with the highest status and investment based on the return, yield, safety, marketability and liquidity.

• Bond:
Are negotiable certificate evidencing in debteness and a debt security or IOU issued by a company municipality or government agency. Bond investor lends money to the issue and in exchange the Issuer promise to repay the loan amount on a specified maturity date. and the issuer usually pays the bondholder periodic interest payment over the life of the loan.

• bonus shares:

Bonus Shares commonly known as scrip dividends are company’s accumulated earnings which instead of being given out in the form of dividends are converted into additional or free shares to be given to current shareholders in proportion to each shareholder’s stake without any additional cost.
However shares issued by the companies to their shareholders is free of cost by capitalisation of accumulated reserves from the profits earn in the earlier years.

• Boom:
Condition of the market denoting increased activity with rising prices and higher volume of the resulting from Greater demand of securities it is a state where enlarged business both investment and speculative has been taking place for a sufficiently reasonable period of time.

• broker:
Member of a stock exchange who acts as an agent for clients and buy and sell shares on their behalf in the market.Because securities exchanges only accept orders from individuals or firms who are members of that exchange, individual traders and investors need the services of exchange members. Brokers provide that service and are compensated in various ways, either through commissions, fees or through being paid by the exchange itself. he is enrolled as a member with the concerned exchange and is registered with the securities and exchange Bank of India those strictly a stock broker is an agent yet for the performance for as part of the contract boat in the market and with the client he is deemed as a principal a Peculiar position of dual responsibility.

• BSE indonext:
Regional stock exchanges (RSEs) have registered negligible business during the last few years and thus small and medium-sized companies listed there find it difficult to raise fresh resources in the absence of price discovery of their securities in the secondary market. As a result, investors also do not find exit opportunity in case of such companies.  BSE IndoNext has been formed to benefit such small and medium size companies .the investors in these companies and capital markets at large. It has been set up as a separate trading platform under the present BSE Online Trading system of the BSE. It is a joint initiative of BSE and the Federation of Indian Stock Exchanges .

• bubble:
It is a speculative share rise in share prices which like the bubble is expected to suddenly burst.
• Bull market:
A rising of market with abundance of buyers and relatively few sellers.

• bull:
A market player who believes in prices will rise and would therefore purchase a financial instrument with a view to selling it at a higher price opposite of the bear.

• buy back:
The repurchase by a company of it’s own stock or bond.

• call option:
Agreement it that gives an investor the right but not the obligation to buy an instrument at a non price by a specified date for this privilege the investor pays a premium usually a fraction of the price of the underlying security.

• Chinese wall:
Artificial barriers to the flow of information setup in a large farms to prevent the movement of sensitive information between departments.
• close ended fund:
A type of investment company that has fixed number of shares which are publicly e traded the price of a closed and share fluctuates based on investors supply and demand closed ended funds are not required to redeem shares and have managed portfolios.

• corporate bonds:

A corporate bond is a type of debt security that is issued by a firm and sold to investors. The company gets the capital it needs and in return the investor is paid a pre-established number of interest payments at either a fixed or variable interest rate. When the bond expires, or “reaches maturity,” the payments cease and the original investment is returned. Such as issues of the bond is offered to the public shall be required to complete with the securities and exchange bike of India in 2000 .

• corporatization of Stock Exchange:
corporatization is a process of converting the organizational structure of the stock exchange from a noncorporate structure to corporate structure some of the stock exchanges in India was established as a association of person for example the stock exchange Mumbai ,Ahmedabad stock exchange ,and Madhya Pradesh stock exchange. corporatization is of such exchanges is the process of converting them into the incorporated companies

• coupon:
The interest paid on a bond expressed as a percentage of the face value in a bond carries a fixed coupon then the interest is paid on an annual or semi annual basis the term also describes the detachable certificate entitling in the bearer to payment of the interest .the interest rate is stated on the face of the coupon is called as coupon rate.

• credit rating:
Credit rating measures aborrower credit worthiness and provider and international Framework for comparing the credit quality of issuer and rated debt securities rating Agencies are allocated three kinds of rating issuer credit ratings ,long term debt and short term debt .

• Dabba trading:
Trading of securities outside the stock exchange is the broken Instead of routing the trade of his clients in the system of stock exchange Matches and executes the trades of its clients in a system provided by him outside the stock exchange.

• day trading:
Day trading refers to buying or selling of securities within the same trading day such that all positions will be closed before the market close of the trading day in the Indian securities market on the retail investors are allowed to day trade.

• Demutualization of stock exchanges:
The mutualisation refers to the transition process of an exchange from a mutually owned association to a company owned by the shareholders .on the other hand transforming the legal structure of an exchange from a mutual form to a business corporation form is referred to as demutualization the above is an effect means that after Demutualization the ownership the management and the trading right at the exchange are segregated from one another.

• depository:
a system of organization which keeps records of securities deposited by its depositor.It can refer to an organization, bank, or institution that holds securities and assists in the trading of securities.
The term also refers to an institution that accepts currency deposits from customers such as a bank or a savings association. A DP can offer depository service only after it gets proper registration from the security and exchange Bank of India
• derivative:
A security derived from a debt instrument, share ,plan whether secured or unsecured, risk instrument or contract for differences or any other form of security a contract which derives its value from the prices for index for prices, of underlying securities derivative markets are markets such as futures and options markets that are developed to satisfy specific needs arising in traditional markets. These markets provide the same basic functions as forward markets but trading usually takes place on standardized contracts.

•DMA– DMA is a facility which allows the brokers to offer clients direct access to the exchange trading system through the broker infrastructure without manual intervention by the broker. Some of the advantages offered by DMA are direct control of clients over orders, faster execution of clients order reduced risk of errors associated with manual order and greater transparency, increase liquidity, low impact cost for large orders, Better audit trails and better use of hedging and arbitrage opportunities through the use of decision support tools algorithm for trading to stop presently,DMA facility is available for institutional investors.Direct memory access (DMA) is a feature of computer systems that allows certain hardware subsystems to access main system memory.
• discount– when a security is quoted at a price below its nominal or face value it is said to be at a discount.discount refers to an amount or percentage deducted from the normal selling price of something. If you wait until after the holiday, you can often buy goods at a steep discount — just make sure you need all that stuff. The noun discount means a reduction in price of a good or service.

• dividend– payment made to shareholders, usually once or twice a year out of a company’s profit after tax .Dividend refers to a reward, cash or otherwise, that a company gives to its shareholders. Dividends can be issued in various forms, such as cash payment, stocks or any other form.Dividend is usually a part of the profit that the company shares with its shareholders. Diffident payments do not distribute the entire net profit of a company, a part of substantial part of which is held back as reserved for the company’s expansion. Dividend is declared on the face value or par value of a share, and not on its market price.

• exchange traded derivative– those derivative instruments that are traded via derivative exchange of other exchange.Exchange-traded derivative contracts are standardized derivative contracts such as futures and options contracts that are transacted on an organized futures exchange. They are standardized and require payment of an initial deposit or margin settled through a clearing house.  a derivative exchange is a market where individual trade standardized contracts that have been defined by the exchange. Derivative exchange acts as an intermediary to all related transactions and takes initial margin from both sides of the trade to act as a guarantee.

• haircut– the margin for, more frequently, the capital tied up when a financial intermediary takes a position.haircut is the difference between the current market value of an asset and the value ascribed to that asset for purposes of calculating regulatory capital or loan collateral. The amount of the haircut reflects the perceived risk of the asset falling in value in an immediate cash sale . A Commission or fee for execution of a transaction.

• hedge– an asset, liability or financial commitment that protects against adverse changes in the value of or cash flows from another investment or liability. And unhedged investment or liability is called and exposure.A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment. A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, gambles.
Perfectly match hedge will gain in value what the underlying exploser loses or what the the underlying exposure gain.

• hedgers– hedgers Arthur those who use derivative to reduce the risk that day face from potential Movement. In a market variable and they want to avoid exposure to adverse movements.A trader or commodity producer who places a trade in order to protect against price fluctuations in commodities or financial instruments. A hedger may be someone who owns Treasury bonds and is concerned that prices might decline. In the price of an asset majority of the participants in derivative market belongs to this category.

• insider trading– practice of Corporate agents buying or selling their Corporation securities without disclosing to the public significant information which is known to them but which has not yet affected the price. Institutional investors organisations does invest, including insurance companies, depositary Institutions, pension funds investment companies and individuals and endowments fund. Insider is any person who is or was connected with the company or is Deemed to have been connected with the company, and who is reasonably expected to have access connections, to unpublished price sensitive information in respect of securities of a company, for who has received or has had access to such unpublished price sensitive information.

• intangible assets– an item of value whose work is hard or almost impossible to determine such as Goodwill reputation patent and so on.An intangible asset is an asset that lacks physical substance; in contrast to physical assets, such as machinery and buildings, and financial assets such as government securities. An intangible asset is usually very hard to evaluate. Examples are patents, copyright, franchises, goodwill, trademarks, and trade names. 

•jobber– member brokers of a stock exchange who specialise by giving two way quotations, in buying and selling of securities from and to fellow members.Jobber is an end-to-end business management system for your home service company. The software handles everything from customer relationship management, to quoting, scheduling, job tracking, invoicing, and a whole lot more. Joobers do not have any direct contact with the public but they serve the useful function of imparting liquidity to the market.

• kitting– the act of mystery presenting the value of a financial instrument for the purpose of extending credit obligations or increasing financial leverage.Kiting is the fraudulent use of a financial instrument to obtain additional credit that is not authorized. Kiting encompasses two main types of fraud: Issuing or altering a check or bank draft for which there are insufficient funds. Kitting generally occurs when securities forms fail to deliver securities involved in buy and sell transactions in a timely manner when this occurs, the firm failing receive the securities is required to purchase the shortage on the open market and charged the delinquent from any associated fees.

•long position– position throwing a purchase or a greater number of purchases than sales in anticipation of a rise in prices., a long position in a financial instrument means the holder of the position owns a positive amount of the instrument. The holder of the position has the expectation that the financial instrument will increase in value. This is known as a bullish position. A long position can be closed out through the sale of an equivalent amount.

• margin trading– margin trading is trading with borrowed funds / securities. It is essentially a liberating mechanism which enables investors to take exposure in the market over and above what is possible with their own resources.SEBI been prescribing eligibility conditions and procedural details for allowing the margin trading facility from time to time.
Corporate brokers with network of at least rupees 30000000 are eligible for providing margin trading facility to their clients subject to their entering into an agreement to that effect. Before providing margin trading facility to a client, the member and the client has been mandated to sign an agreement for this purpose in the format specified by S E B I. It has also been specified that the client shall not availed the facility from more than one broker at any time. The facility of margin trading is available for group 1 securities and those securities which are offered in the initial public offer and meet the conditions for inclusion in the derivative segment of the stock exchanges. For providing the margin trading facility, broker main use his own funds or borrow from scheduled commercial banks of nbfcs regulated by the RBI. Broker is not allowed to borrow funds from any other source.
• Naked option:
An Option that is written without corresponding security or option position as protection in seller account .

• net asset value:
The net asset value represents the net value of an entity and is calculated as the total value of the entity’s assets minus the total value of its liabilities. Most commonly used in the context of a mutual fund or an exchange-traded fund  the NAV represents the per share or unit price of the fund on a specific date or time. 
The fund net asset value is calculated by taking the fund total assets securities cash and Any accured earning deducting liabilities and dividing the remainder by the number of units outstanding.
• pay in day and pay out day:
Pay in day is a day when the broker shall make payment or delivery of securities to the exchange. pay out day is the day when the exchange make payment or delivery of security to the broker settlement cycle is on T+2 rolling settlement basis on April 01, 2003. The exchanges have to ensure that the pay out of funds and securities to the clients is done by the broker within 24 hours of the payout the exchanges will have to issue press releases immediately after payout.
• Ponzi scheme:

A classic contrick that has been repeated many times both before and since Charles ponzi give it its name in the 1920s.the scheme begins with a crook setting up as a deposit taking Institutions. the crook invites the public to take place deposit with the Institutions and offer them a generous rate of interest in the interest is then paid out of new depositors money and the crook lives well of the old deposit the whole scheme collapse when they are not enough new deposit coming into cover the interest payment due to the old ones.

•Portfolio:
a collection of securities found by an individual or an institution that may include stock Bond and money market securities.

• preferred stock:
Owners of this kind of stock ok are entitled to a fixed dividend to be paid regularly before dividend can be paid on common stock they also exercise claims to asset in the event of liquidation senior to holders of common stock but junior to bondholders holders of preferred stock normally do not have a voice management.

• premium:

If an investor buys a security for a price above its eventual value at maturity he has paid a premium for it.

• price Discovery: a General term for the process by which financial market attain and equilibrium price especially in the primary market usually refers to the incorporation of information into the price.

• prospectus:
Any document described or issued as a prospectus and includes any notice or circular or advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in are debentures of a body corporate.

• public issues: an invitation by a company to public to subscribe to the securities offered through a prospectus.

• put option:
An option that gives the right to sell a fixed number of securities at a specific price within a specified period of time.

• redemption price:
The price at which a bond is redeemed.

• reserve booking building:
Booking building is similar to the process of book building which is aimed at securing the optimum price for a company share in rivers book building the investor aim is to sell the share to exit the company.

• securities transaction tax:
Securities transaction tax  is a tax levied at the time of purchase and sale of securities listed on stock exchanges in India.
Securities are tradable investment instruments such as shares, bonds, debentures, equity-oriented mutual funds and so on and are issued either by companies or by the Indian government.
Pursunant to the enactment of the finance act 2004 the Government of India notified securities Transaction Tax rules 2004 and Security Transaction Tax came into affection from October 1st 2004.The rate of STT differs based on the type of security traded and whether the transaction is a purchase or a sale.

• securitization:
The process of hormonizing and packaging financial instrument into a new fungible one acquisition classification collateralization ,composition ,pooling and distribution are functions with this process.

• selling short:
A manner in which an investor sells securities he does not possess in the hope of buying them back later at a lower price.

• share transfer agent:
Any person who on behalf of anybody corporate maintains the record of holders of securities issued by the Such body corporate and deals with all matter connected with the transfer and redemption of its 66 securities.

• short covering:
Buying of stocks by seller to complete his previous commitments.

• short position:
In future the short has sold the commodity or security for future delivery in options the short has sold the call for the put and is obligated to take a future position if he or she is assigned for exercise.

• short selling:

Short selling is an investment or trading strategy that speculates on the decline in a stock or other securities price. It is an advanced strategy that should only be undertaken by experienced traders and investors. Short selling can be done by borrowing the stock through clearing Corporation for clearing house of a stock exchange which is registered as approved intermediaries short selling can be done by retail as well as institutional investors.
The investor then sells these borrowed shares to buyers willing to pay the market price. Before the borrowed shares must be returned, the trader is betting that the price will continue to decline and they can purchase them at a lower cost. The risk of loss on a short sale is theoretically unlimited since the price of any asset can climb to infinity. Securities lending and borrowing mechanism allows short seller to borrow securities for making delivery securities in the f&o segment are eligible for short selling.

• speculators:
Speculators are trades who buy or sell the Asset only to sell or buy them back profitably at a later point in time.speculator utilizes strategies and typically a shorter time frame in an attempt to outperform traditional longer-term investors. Speculators take on risk, especially with respect to anticipating future price movements, in the hope of making gains that are large enough to offset the risk. They can increase both the potential gains and potential users by usage of derivative in a speculator venture.

• sub broker:
A ‘Sub-Broker’ is any person who is not a Trading Member of a Stock Exchange but who acts on behalf of a Trading Member as an agent or otherwise for assisting investors in dealing in securities through such Trading Members.

• underwriter:
Underwriting is a common practice used in the commercial, insurance and investment banking industries. An underwriter works for mortgage, loan, insurance or investment companies. During the underwriting process, they do everything from evaluate your health to assess your financial status. Based on their findings, underwriters help companies determine if they should take on an applicant’s contract or not based on their associated level of risk. Underwriting is an agreement with or without condition to subscribe to the securities of a body corporate when the existing shareholders of such body corporate or the public the not subscribe to the securities offered to them.

• ventures capital:
Professionals money co invested with the entrepreneur usually to fund an early stage more risky venture capital can provide large sums of money, advice and prestige by their mere presence. Just the fact that you’ve obtained venture capital backing means your business has, in venture capitalists’ eyes, at least, considerable potential for rapid and profitable growth.
Venture capitalist not only bring some money as equity capital but also brings on to the table extremely valuable domain knowledge business contact brands equity strategic advice and many more he is a fixed interval investor whom the entrepreneurs approach without the risk of takeover.

• volatility:
Stock market volatility is arguably one of the most misunderstood concepts in investing. Simply put, volatility is the range of price change security experiences over a given period of time. If the price stays relatively stable, the security has low volatility. A highly volatile security hits new highs and lows quickly, moves erratically, and has rapid increases and dramatic falls.the is that future volatility is hard to predict and measure of past volatility can ,themselves, be variable depending on how frequently returns are measured for and for how long.
• volume of trading:
The total number of shares which changes hands in a particular company securities. This information is useful in explaining and interpreting fluctuations in share prices.
• warrant :
Option contract option sold with another security. For instance, corporate bonds may be sold with warrants to buy common stock of that corporation. Warrants are generally detachable.
• wolf :
Speculators who make a kill in the market.
• writer: A person who issues an option. The individual who at the end of the day has to buy or sell the asset on which the option is written, should the person who holds the options wish to exercise his rights.
• X ex-dividend :
A term meaning without dividend. A stock bought on or after the X dividend day will not pay the purchaser the dividend already declared.

The post TERMS RELATED TO FINANCIAL MARKET: appeared first on Vinay IAS Academy.

1.Write about money market in india.

MONEY MARKET IN INDIA:

The Money market in India in India is a correlation for short-term funds with maturity ranging from overnight to one year in India including financial instruments that are deemed to be close substitutes of money. Money market deals in financial securities period of maturity is in the range of one day to one-year money market financial security or asset are near substitute of money in the money market the commercial banks are the major landers of the money the central bank is the controlling authority of the money market.The Indian money market consists of diverse sub-markets, each dealing in a particular type of short-term credit. The money market fulfills the borrowing and investment requirements of providers and users of short-term funds, and balances the demand for and supply of short-term funds by providing an equilibrium mechanism. It also serves as a focal point for the central bank’s intervention in the market.
☆ components of Indian money market:.

The Indian money market is divided into two parts namely the organised and the unorganised money market interest rate are different in both the market and there is no relationship what’s over between the two markets. The organised money market is the the formal market for money regulated by the central bank with commercial bank being the main player foreign banks Cooperative Bank discount and Finance house of India Finance Companies provident fund securities Trading Corporation of India PSU and mutual funds are the other Institutions which operate in the formal Indian money market. Bank of India is the Monetary Authority controlling the formal money market.
The unorganised sector consists of indigenous bankers money lenders and un regulated non-bank financial intermediaries such as Finance Company chit funds and nidhis. farmers artians and other small time Producers and traders borrow money from the unorganised money market.
Formal Indian money market is well organised and integrated. Mumbai , Kolkata , Delhi ,Chennai, Ahmedabad and Bangalore are the main centres of the organised sector. out of these the Mumbai money market is the largest.
☆ the organised sector of the Indian money market:
The components of the organised Indian money market are as follows:

1. The call money market.
2. The treasury Bill market.
3. The Repo market.
4. The commercial bill market.
5. The certificate of deposit market.
6. The commercial paper market.
7. Money market mutual funds.
   These components are explained below:
8. The call money market: in this market, borrowing and lending transactions are carried out for one day. These loans are called cal loans. They may not be renewed on the following day.
   It is also called as the inter bank call money market .
   The money market is a market for short-term financial assets that are close substitutes of money. The most important feature of a money market instrument is that it is liquid and can be turned into money quickly at low cost and provides an avenue for equilibrating the short-term surplus funds of lenders and the requirements of borrowers.
   The unit Trust of India,The Life Insurance Corporation of India, the General Insurance Corporation of India ,the Industrial Development Bank of India and the National Bank of agricultural and rural development also operate in the Indian money market as lenders.
   The call money market is a mechanism whereby temporary surplus of some of the banks is made available to other who have a temporary deficit. it is a very sensitive market and hence reflects the liquidity conditions of the money market .the Reserve Bank of India monitors the call money market to make day-to-day adjustment in its own monetary policy.
9. The treasury Bill market:

Treasury Bills are the short-term money market instrument, issued by the central bank on behalf of the government to curb temporary liquidity shortfalls. Treasury bills also known as T-bills, have a maximum maturity of a 364 days. Hence, they are categorized as money market instruments. Treasury bills are usually held by financial institutions including banks. Treasury bills are issued for meeting temporary deficits which a government faces due to its excess of of Expenditure over revenue treasury bills are issued at a minimum amount of rupees 25000 and in multiples of rupees 25000 they are issued at a discount to face value and are redeemed at par.
Treasury bills were first issued in India in 1917. They are issued via auctions conducted by the Reserve Bank of India (RBI) at regular intervals. Individuals, trusts, institutions and banks can purchase T-Bills. But they are usually held by financial institutions. They have a very important role in the financial market beyond investment instruments. Banks give treasury bills to the RBI to get money under repo. Similarly, they can also keep it to fulfil their Statutory Liquid Ratio (SLR) requirements. From 1st April 1997 Ad Hoc treasury bills have been replaced by ways and means advances for financing the central government temporary deficits .the treasury Bill market in India is in a state of underdevelopment. The Reserve Bank of India A captive holder of the bills issued by the central government. the Reserve Bank of India rediscounts treasury bills present by the other banks this has resulted in monetization of public debt and has become a cause of expansions of money supply and raise of the prices.

1. The Repo market:

Repo is a a repurchase agreement in which the seller sells a security under an agreement to repurchase at a predetermined date and predetermined rate. It is a money market weather instruments which enables the short term borrowing and lending through sale and purchase operations the Repo was introduced in the year of 1992 the reverse repo was introduced in the year of 1994 by the Reserve Bank of India.
Although an asset is sold outright at the start of a repo, the commitment of the seller to buy back the asset in the future means that the buyer has only temporary use of that asset, while the seller has only temporary use of the cash proceeds of the initial sale. Thus, although repo is structured legally as a sale and repurchase of securities, it behaves economically like a collateralised or secured deposit. Repose helps to manage the conditions of the liquidity they used to provide opportunities to the banks to invest funds generated by the capital inflows during this time of foreign exchange volatility repose have been used to prevent speculative activity as the funds tend to flow from the money market to the foreign exchange market.

1. The commercial bill market:

The commercial bill market is the market for short-term bills of three months duration. It provides short term finance to trade industry the commercial bills are used to finance the transaction of good taking place between different companies.
A Commercial Bill arises out of a genuine trade transaction. A bill of exchange is an important commercial bill which is drawn by the seller on the buyer for the amount due to him. The maturity period of bill may vary from three to six months. The company is who sell the goods can wait till the specified date or can make use of commercial bill of exchange the seller of the goods draws the bill and the buyer accepts it once the bill is accepted it become a marketable instrument the draw the seller of goods can approach a commercial bank and get the bill discounted.

1. The certificate of deposit market:
   The certificate of deposit is a short term money market instrument introduced in the year 1989. Certificate of deposit are issued by the banks against the deposit kept by individual companies and institutions. Certificate of deposits is a safer and more conservative investment than stocks and bonds, offering lower opportunity for growth, but with a non-volatile, guaranteed rate of return.
   Virtually every bank, credit union, and brokerage firm offers a menu of options of certificate of deposit.The top nationally available CD rates are typically three to five times higher than the industry average for every term, so shopping around delivers significant gains.
   Certificate of deposit are marketable and negotiable instrument the certificate of deposit were issued by scheduled commercial banks in multiple of rupees 25 lakh subject to the minimum size of an issue being Rupees 1 crore and the maturity ranged between 3 months and 1 year.
2. The commercial paper market:

Commercial Paper in India was considered the beginning of financial reforms in India. Post liberalization the Indian government introduced many short-term instruments to tackle the various financial needs and situations of financial crisis one of which was Commercial papers. The commercial paper was introduced by the Reserve Bank of India in March 1989 and was made effective in January 1990. Commercial paper were introduced to provide companies with good credit rating as a source of short term borrowing the commercial paper issued in the form of unsecured usance promissory notes by the companies with good credit rating at a discount and the discount rate is market determined there are freely Transferable and negotiable.
Commercial papers are usually issued at a high value. It is unsecured money market instrument issued in the form of a promissory note and transferable between Primary Dealers and the All-India Financial Institutions .
According to the Reserve Bank of India guidelines our company will have to obtain P2 rating from credit rating information services of India Limited or A2 rating for from Investments information and credit rating agency of India Limited maturity period of commercial paper issued by various companies ranged from 3 months to 6 months and effective interest rates were in the range of 9.35 to 20.9 percent per annum.

1. Money market mutual funds:-the scheme of money market mutual funds was introduced by the RBI in April 1 january1992. A money market fund is an open-ended mutual fund that invests in short-term debt securities such as US Treasury bills and commercial paper. Money market funds are managed with the goal of maintaining a highly stable asset value through liquid investments, while paying income to investors in the form of dividends. the objective of the scheme was to provide one more short term Avenue to the individual investors banks,public and private financial institutions were allowed to set up MMMFs in 1995.
   Resources mobilized by MMMFs are required to be invested in call money, CDs,CPs,commercial Bill’s arising out of genuine trade transactions, treasury bills and government dated securities having an unexpired maturity upto 1 year .
   Banks are now allowed to setup MMMFS only a separate entity in the form of a trust.

■unorganized sector of the Indian money market:-
The constituent of the unorganized sector of Indian money market are as follows:-

1. non banking financial companies:
   These companies assumes that the various forms some of the prominent form of national banking financial companies are loan or Finance Companies chit funds and nidhis. These companies offer loans to retailers wholesale traders 8 iitians and self employed person they charge very high rate of and self employed person they charge very high rate of interest ranking from 36 to 48 percent.
   However they are restricted from taking any form of deposits from the general public. These organizations play a crucial role in the economy, offering their services in urban as well as rural areas, mostly granting loans allowing for growth of new ventures.
   Non banking financial companies are also provide a wide range of monetary advices like chit-reserves and advances. Hence it has become a very important part of our nation’s Gross Domestic Product and NBFCs alone count for 12.5 percent raise in Gross Domestic Product of our country. Most people prefer NBFCs over banks as they find them safe, efficient and quick in assisting with financial requirements. Moreover, there are various loan products available and there is flexibility and transparency in their services.
   2.indigenous bankers:- individual bankers are individuals or private firms that receive deposits and give loans. These bankers have been engaged in the banking business from ancient times.
   However they are restricted from taking any form of deposits from the general public. These organizations play a crucial role in the economy, offering their services in urban as well as rural areas, mostly granting loans allowing for growth of new ventures.

NBFCs also provide a wide range of monetary advices like chit-reserves and advances. Hence it has become a very important part of our nation’s Gross Domestic Product and NBFCs alone count for 12.5% raise in Gross Domestic Product of our country. Most people prefer NBFCs over banks as they find them safe, efficient and quick in assisting with financial requirements. Moreover, there are various loan products available and there is flexibility and transparency in their services.
There are four main subgroups of indigenous bankers:g Gujarati Shroff, or shikarpuri Shroff ,chettires and Marwari kaya. The Gujarati Shroff the most prosperous bankers.

1. Moneylenders– there are three types of money lenders: money lenders, itinerant money lenders like pathans and Kabulis and non professional moneylenders.!

The post MONEY MARKET IN INDIA appeared first on Vinay IAS Academy.

TRADING IN CENTRAL GOVERNMENT SECURITIES:-

trading in government securities was introduced in January 2003. It can be carried out through a nationwide, anonymous, order drive, screen base trading system of stock exchange.Government securities come with a promise of the full repayment of invested principal at maturity of the security. Some government securities may also pay periodic coupon or interest payments. retail investors are allowed to buy and sell government securities in stock exchange individual, firms, companies, corporate bodies, Institutions, trust and, other and it is approved by the RBI are allowed to participate in the retail market.

ROLLING SETTLEMENT:-

rolling settlement improves the efficiency and integrity of the securities market. Under the rolling settlement all traders executed on a trading day are settled after certain days.A rolling settlement is the process of settling security trades on successive dates based upon the specific date when the original trade was made so that trades executed today will have asettlement date one business day later than trades executed yesterday. This is called t + n rolling settlement since 1 April ,2002, traders are settled under t + 3 rolling settlement.
The NSE has introduced t + 2 rolling settlement from 1 April 2003,. Under it each order has a unique settlement date. Specified at the time of order entry. It is mandatory for trades to be settled on the predetermined settlement date.

■ EASTABLISHMENT OF CREDITORS RATING AGENCIES:
Mehandi there are three credit rating agencies the investment information and credit rating agency of India Limited the credit rating Information Service of India Limited and credit analysis and Research Limited were set up in the order to assess the financial health of different Financial Institutions and Agencies related to the stock market activities it is very helpful for the investor’s also in evaluating the risk of their Investments.
■ INVESTORS PROTECTION:
The security and exchange Bank of India was established by the the central government of India for the purpose of investors and education and protection fund in 2001. it works in advocating and guiding investors it tries to protect the interest of the small investors from frauds and malpractices in the capital markets.
■ GROWTH OF DERIVATIVE TRANSACTIONS:
Since June 2010 Aisi has introduced the derivatives trading in the activities in November 2001 it also introduced the future and options transactions please innovative products have give variety for the investment leading to the increase of the capital markets. NSE alone accounts for 99 percent of the derivatives trading in Indian markets. The introduction of derivatives has been well received by stock market players. Trading in derivatives gained popularity soon after its introduction. In due course, the turnover of the NSE derivatives market exceeded the turnover of the NSE cash market. For example, in 2008, the value of the NSE derivatives markets was Rs. 130, 90,477.75 Cr. whereas the value of the NSE cash markets was only Rs. 3,551,038 Cr.

■ COMMODITY TRADING:

Commodity trading is as old as the financial markets, and perhaps even older than that. The first example of an organised exchange for trading commodities dates back to Amsterdam in 1530. These days there are a whole host of markets available to trade with just a few clicks of a mouse or taps on your mobile device, but some commodities remain as popular as ever. along with the trading of ordinary securities that trading in commodities is also recently encouraged.
In 2002 , the government of India allowed the reintroduction of commodity future in India.
The multi commodity exchange is setup the volume of such transactions is growing at a splendid rate. as of now apart from numerous regional exchanges India has six National commodity exchange namely MCX started on 10 November 2003 ,national commodity and derivative exchanges National multi commodity Exchange India commodity exchange the ACE derivative exchange and the universal commodity exchange.
commodities are still exchanged throughout the world. A commodities exchange refers both to a physical location where the trading of commodities takes place and to legal entities that have been formed in order to enforce the rules for the trading of standardized commodity contracts and related investment products.
The regulatory body is Forward Market commission which was set up in 1953 as of September 2015 the FMC was merged with the securities and exchange Bank of India.

■ MANDATORY PAN REQUIREMENT :

Government of India has amended the rules for quoting of PAN for certain high value transactions. These rules emphasize the vital importance of having and quoting of PAN. Basically these changes deal with mandatory quoting of PAN in respect of certain transactions which exceed a specific limit. in order to maintain a good audit trail of transaction in the securities market and to strength the know your client concept then has been made compulsory with effect from 1st January 2007.
■ STOCK EXCHANGES PERMITTED TO SET TRADING HOURS:
In 2009 to 2010 the stock exchange bar permitted to set the trading hours in the cash and derivative segment subject to the condition that the trading hours are being between 9 a.m. to 5 p.m. and the stock exchange has a risk management system and infrastructure commensurate with the trading hour.
■ REITS/INVITS:
Real estate investment trust infrastructure investment trust is a form of alternative investment vehicle conceptualized in 2008 the working mechanism of and real estate investment trust involves purchase of commercial properties and then providing them on rent 2 3 and the funding is done through the issuance of units to public which are available on stock exchange is the main advantage of a real estate investment trust structure is grounded on the tax exemptions that it receives.
REITs are modelled after mutual funds and provides their investors with all types of income stream as well as the benefits of long term capital appreciation. A0n REIT also trades on major stock exchange and provides investor with a highly liquid stake in real assets typically offering high yields.
InVITs, on the other hand, are a globally popular financial instrument. Scoring points due to its tax efficient nature and higher yields compared to global market. InVITs are instruments that work like mutual funds. InVITs are designed to pool small sums of money from number of investors to invest in asserts that it is cash flow over a period of Time. Part of this cash flow would be distributed as dividend for investors often, Infrastructure Projects such as roads and highways take some time to generate study cash flows . Mean while the infrastructure company has to pay interest to the banks for the loans taken by it . and is essentially give the company the leave a to fulfill its Dept obligations quickly.

DERIVATIVE MARKET:-
A derivative contract between two parties with derives its value / price from an underlying asset. Originally, underlying Corpus is first created which can consist of one security or a combination of securities.
The derivatives market is the financial market for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets. The market can be divided into two, that for exchange-traded derivatives and that for over-the-counter derivatives. the value of the underlying asset is bound to change as the value of the underlying assets keep changing continuously. Generally, stocks, bonds, currency, commodities and interest rates for the underlying assets.
As derivatives are nearly contracts between two or more parties, anything like weather data or amount of rain can be used as underlying assets. The derivative can be classified as future contracts, forward contract, options swap and credit derivatives.
︎ financial derivatives in India-
At present, the Indian stock markets are not having any risk hedged instruments that would allow the investor’s to manage and minimise the risk. In industrialized countries apart from money market and capital market securities, a variety of other securities known as derivatives have now become available for investment and trading.
The most common types of derivatives are futures, options, forwards and swaps. Description: It is a financial instrument . A derivative is a financial product which has been derived from another financial product or commodity.

︎ characteristics–
Accounting standard SFAS133 define a derivative instrument is a financial derivative or other contract which will compromise of all three of the following characteristics-

1. Its terms require a permit net settlement. It can be readily settled net by a means outside the contract or it provides for delivery of an asset that puts the receipt in a position not substantially different from net settlement.
2. It has one or more underlying asset coma and one or more National amount for payments provisions or both. Those terms determine the amount of the settlement or settlements.
3. There’s no initial net investment or an initial net investment that is smaller than would be required for other types of contract that would be expected to have a similar response to changes in market factors.
   From the aforementioned, derivative refer to securities or to contract that derives from another is value depends on other contract or effort. As such the financial derivatives are financial instruments whose prices our values are derived from the prices of other underlying financial instruments or financial assets.Derivatives have a maturity or expiry date post which they terminate automatically.Derivatives have a maturity or expiry date post which they terminate automatically. The underlying instruments may be an equity share, stock, Bond, debenture, treasury bill, foreign currency or even another derivative asset. Hence, financial derivatives are financial instruments whose prices are derived from the process of other financial instruments. As defined above ,its value is entirely derived from the value of the underlying assets.

¤ uses of financial derivatives-
Some of the uses and applications of financial derivatives can be enumerated as following-

1. Management of risk– one of the most important services provided by the derivative is to control, avoid, Swift and manage efficiently different types of risk through various strategies like hedging, arbitrating, spreading.Financial risk management is the practice of protecting economic value in a firm by using financial instruments to manage exposure to risk: operational risk, credit risk and market risk, foreign exchange risk, shape risk, volatility risk, liquidity risk, inflation risk, business risk, legal risk. Derivative assits the holders to shift or modified suitably there is characteristics of the portfolio. These are especially useful in highly volatile financial conditions. Like a erratic trading, highly flexible interesting, rates, volatile exchange rates and monetary chaos.
2. Price discovery- the important application of financial derivative is the price Discovery which means revealing information about future cash market prices through the future market. Derivative markets provide a mechanism by which diverse and scattered opinions of future are collected into one readily discriminable number which provides a consensus of knowledgeable thinking.The price discovery process is the process of determining the price of an asset in the marketplace through the interactions of buyers and sellers. The futures and options market serve important functions of price discovery.
3. Hedging– hedge or mitigate risk is the underlying ,by entering into a derivative contract whose value moves in the opposite direction to their underlying position and cancels part or all of it out. Hedging also occurs when an individual or institution by an asset and sells it using a future contract. They have access to the asset for a specified amount of time and can then sell it in the future at a specified price according to the Future contract of course this allows them the benefit of holding the Asset
4. Liquidity and reduced transaction cost–
   As we see that in derivative trading, no immediate full amount of the transaction is required since most of them are based on margin trading. As a result large number of trading, and arbitrageurs operate in such markets. So, derivative trading and enhances liquidity and reduces transaction cost in the market of underlying assets.
5. Develop the complete markets- it is observed that derivative trading develop the market to work complete market. Complete market concept refers to that situation where no particular investor be better off than others, on patterns of returns of all additional securities are spanned by the already existing securities in it, or there is no further the scope of additional securities.
6. Measurement of market-derivatives for as the parameters of the future trends in prize which result in the discovery of new prices both on the spot and future market. Their help in getting different information regarding the future market trading of various commodities and securities to the society which enables to discover or form suitable for correct or through equilibrium price in the markets as a result the assets will be in an appropriate and superior allocation of resources in the society.
7. Efficiency in trading-financial derivative allow for free trading of risk components and that leads to improving market efficiency. Traders can use a position in one or more financial derivative as a substitute for opposition in underline instrument. In many instances traders find financial derivatives to be a more attractive instrument than the underlying security. This is mainly because of the greater amount of liquidity in the market of a bi derivatives as well as the low transaction costs associated with trading a financial derivative as compared to the cost of trading the underlying instruments in cash market.
8. Speculation and arbitrage- derivative can be used to acquire risk rather than to hedge against risk.thùs, some individuals and Institutions will enter into a derivative contract to speculate on the value of the underlying asset, betting that the party seeking insurance will be wrong about the future value of the underlying asset. Speculator look to buy an asset in the future at a low prices according to a derivative contract when the future Market price is high, or to sell and acid in the future at a high price according to derivative contact when the future Market price is low. Individuals and Institutions may also look for arbitrage opportunities, as when the current buying price of an asset Falls below the price specified in a futures contract to sell the asset.
9. Price stabilisation function– derivative market helps to keep a stabilizing influence on spot prices by reducing the short term fluctuation in other words, derivative reduce both take and depth and lens to price stabilization effect in the cash market for underlying asset.Price stabilisation. Related Content. Also known as stabilisation. The process whereby the market price of a security is manipulated in order to achieve a successful offer.
10. Gearing of value– special care and attention about financial derivatives provide leverage such that a small Movement in the underlying value can cause a large difference in the value of the derivative.A gearing ratio is a general classification describing a financial ratio that compares some form of owner equity (or capital) to funds borrowed by the company.
11. Other uses the other uses of derivatives are observed from the derivative trading in the market that the derivative have smooth and out price fluctuations, squids the price spread, integrated prices structure at different points of time and removes gloves and shortage in the markets. The derivatives also assist the investor’s, traders and managers of large pools of funds to device such strategies so that they may make proper asset allocation to increase the hills and achieve other investment goals.

■ major derivatives-

1. Forward contract-
   Forward contract is a customised contract between the buyer and the Cello where settlement takes place on a specific date in future at a price agreed to today., a forward contract or simply a forward is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed on at the time of conclusion of the contract, making it a type of derivative instrument. In case of forward contract, the price with his Ltd / received by the parties is decided at the time of entering into contract. It is simplest form of derivative contract mostly entered by individuals in day to day life the holder of a long forward contract has an agreement to buy an acid at a certain time in the future for a certain prize which is agreed upon today. The buyer a forward .
2. Acquires a legal obligation to buy an asset known as the underlying asset.
3. At a price which is fixed today.
4. At some specific future date.
5. Future contract:
   Future contract is an agreement between two parties to buy or sell a specified quantity of an asset at a specified price and at a specified time and place .future contract are normally traded on an exchange with sets the certain standardized norm for trading in future contracts the feature of a future contracts may be specified are as follows:
   • future contract required to have standard contract terms.
   • future are traded only in organised exchanges.
   • future trading required margin payment and daily settlement.
   • future exchange is associated with clearing house.
   • future position can be closed.
   • the future contracts are executed on expiry date .
   • future market are regulated by regulatory authorities like the securities and exchange Bank of India.
   • future prices are expressed in currency units with the minimum price movement called a tick size.
6. Option contract:
   An options contract is an agreement between two parties to facilitate a potential transaction on the underlying security at a preset price, referred to as the strike price, prior to the expiration date.
   In theory option can be written on almost any type of underlying security. equity is the most common but there are also several types of non equity options based on securities such as bonds ,foreign currency Indices for commodities such as gold or oil. the person who buys an option is normally called as the buyer or holder. conversely the seller is also known as the seller or writer .we can say an option is a particular type of a contract between two parties where one person gives the other person the right to buy or sell a specific asset at a specified price within a specified time period.
   In general, call options can be purchased as a leveraged bet on the appreciation of a stock or index, while put options are purchased to profit from price declines. The buyer of a call option has the right but not the obligation to buy the number of shares covered in the contract at the strike price. Today options are traded on a variety of instruments like commodities, financial asset as diverse as foreign exchange, Bank time deposit, treasury securities ,stock, stock indexes ,petroleum product ,food grains, metals, and many more. the main characteristics of options are following:
   • options ho holders do not receive any dividend on interest .
   • option holders can enjoy a tax advantage.
   • option yields only capital gains.
   • option enables the investor to gain a better returns with a limited account of investment .
   • options can reduce the total portfolio transaction cost .
   • option holder can enjoy a much wider risk-return combinations.
   • option create the possibility of gaining a windfall profit .
   • option holders can control their rights on the underlying asset.
   • option are trade on otc and in all recognised stock exchanges.
7. Swap contracts:
   Swap contracts are financial derivatives that allow two transacting agents to the swap revenue streams arising from some underlying assets held by each party. Swap are the agreements between two parties to exchange asset at a predetermined intervals. seaps are generally customised transactions the swaps are innovative financing which reduces borrowing cost and increases control over interest rate risk and FOREX exposure . the swap includes both the spot and forward transaction in a single agreement. swap are the centre of the global financial Revolution .swaps are useful in avoiding the problems of unfavorable fluctuations in FOREX market. the parties that agree to the swap are known as counter parties. the two commonly used swaps are interest rate swap and the currency swap interest rate swap entail swapping only the interest related cash flows between the parties in the same currency .currency swap entail swapping both principal and interest between the parties with the cash flows in One Direction being in a different currency that the cash flows in the opposite direction.

■ COMMODITIES MARKET/COMMODITIES FUTURES:
A commodity market is a physical or virtual marketplace for buying, selling, and trading raw or primary products. There are currently about 50 major commodity markets worldwide that facilitate trade in approximately 100 primary commodities.
One can also do commodity trading using future contracts. and a future contract is an agreement between the buyer and the seller where in the buyer promises t pay the agreed upon sum at the moment of the transaction when the seller delivers the commodity at a tree decided that in the future.
Commodities can be invested in numerous ways. An investor can purchase stock in corporations whose business relies on commodities prices or purchase mutual funds, index funds, or exchange-traded funds that have a focus on commodities-related companies.
A farmer can does buy wheat futures to fix a price at which he would want to sell a certain amount in future. a trader might buy or sell wheat futures for delivery on a future date at a price decided now .like a stock one can invest in a commodity through the commodity bourses.india has six commodity exchanges such as MCX,NCDEX,NMCE,ICEX,ACE,and the UCX.

■ SCHEMES RELATED TO CAPITAL MARKETS IN INDIA :
The Rajiv Gandhi Equity savings scheme is a new equity tax advantage Saving Scheme for equity investors in India with the stated objective of encouraging the saving of the small investors in domestic capital markets.
The scheme is designed exclusively for the first time individual investors in securities market, whose gross total income for the year is below a certain limit. In 2013-14, the income ceiling of the beneficiaries was raised to Rs. 12 lakh from Rs. 10 lakh specified in 2012-13. The investor would get under Section 80CCG of the Income Tax Act, a 50 percent deduction of the amount invested during the year, upto a maximum investment of Rs. 50,000 per financial year, from his or her taxable income for that year, for three consecutive assessment years.
It was approved by The union finance minister Shri P Chidambaram on 21st September 2012 it is exclusively for the first time written investors in security markets.
☆ salient features of the scheme:

1. The tax deduction allowed will be over and above the rupees 100000 limit permitted allowed under Section 80c of the Income Tax Act.
2. The scheme is open To new retail investors identified on the basis of their PAN.
3. IPO of PSU which are scheduled to get listed in the relevant financial year and whose annual turnover is not less than four thousand crores for each of the immediate past 3 year will also be eligible.
4. In addition to the 50 percent tax deduction for investment ,dividend income is also tax free .
   5.stock listed under BSE 100 or CNX 100 or stocks of PSU that are Navratnas, Maharatnas and miniratnas will be eligible under the scheme .follow on public officers of these companies will also be eligible.
5. for investment upto rupees 50,000 in the sole RGESS demat account, if the investor opts for a basic service demand account annual maintenance charges for the demat account are zero and for investment upto rupees 2 lakh,and rupees 100.
6. To benefit the small investors investment are allowed in installments in the year in which tax claim are made.
7. exchange traded funds and MF that have RGESS- eligible securities as their underlying and are listed and traded in the stock exchanges and settled through a depositary mechanism have also been brought under the RGESS to provide the advantage of diversification and consequent risk minimization.
8. Investors would have a be required to maintain their level of investment during the two years at the amount for which they have claimed income tax benefit or at the value of the portfolio before initiating a sale transaction Which ever is less for at least 270 days in a year.
   10 . The total lock in period for investment will be three years including an initial blanket lock-in of one year.
9. After the first year investor will be allowed to trade in the securities investors are free to trade or churn there portfolios for around 90 days in each of the Year following the first year of the investment.
10. In this case the investor fails to meet the conditions stipulated the tax benefit with will be a withdrawn.
11. The general principle under which trading is allowed is that whatever is the value of stock or units sold by the investor from the RGESS portfolio RGESS complaint securities of at least the same value or credit back into the account subsequently however the investor is allowed to take benefit of the appreciation of his RGESS portfolio provided its value remains above the investment for which he has claimed Income Tax benefit.

■ GOLD RELATED SCHEMES:
On 5th November 2015 the union government launched three gold related schemes gold monetisation scheme, sovereign gold Bond scheme ,and gold coin or bullion scheme.The coins will be available in denominations of 5 and 10 grams. A 20 gram bar or bullion will also be available. About 15,000 coins of 5 gm, 20,000 coins of 10 gm and 3,750 gold bullions will be made available through MMTC outlets.

• Gold Monetisation Scheme

Resident indians deposits under the scheme. The minimum deposit at any one time will be raw gold equivalent to 30 grams of the precious metal of 995 fineness. There is no maximum limit for deposit under the scheme and the metal will be accepted at the Collection and Purity Testing Centres certified by the Bureau of Indian Standards. However the deposit outstanding under the gold deposit scheme were allowed to run till maturity unless the depositors prematurely withdrawal them .
The objective of introducing the modification in the schemes is to make the existing scheme more effective and to broaden the Ambit of the existing schemes from merely mobilizing gold held by households and institutions in the country to putting the gold into productive use. Interest on deposits under the scheme will start accruing from the date of conversion of gold deposited into tradable gold bars after refinement or 30 days after the receipt of gold at the Collection and Purity Testing Centres or the bank’s designated branch, as the case may be and whichever is earlier. The principal and interest of the deposit under the scheme will be denominated in gold.The gold received under MLTGD will be auctioned by the agencies notified by the government and the sale proceeds will be credited to government’s account held with Reserve Bank of India.
The RBI has fixed the public issue price of sovereign gold bonds at Rs 2,684 per gram. These bonds will be issued in denominations of 5, 10, 50 and 100 grams of gold orotherdenominations.Applications for the bond will be accepted from November 5-20. The Bonds will be issued on November 26. The Bonds will be sold through banks and designated post offices as may be notified.
The borrowing through issuance of Bond will form part of market borrowing programme of Government.bonds can be used as collateral for loans. The loan-to-value ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.
3.gold coins:
Indian Gold Coin Scheme is the third scheme launched by the Government of India. The Indian Gold Coin is the first national gold coin which will have the image of Ashok Chakra minted on one side and the face of Mahatma Gandhi on the other side. The coin is currently available in denominations of 5gm, 10gm and 20gm. This allows even those with a small appetite to Buy Gold under this scheme.gold schemes indiaThe Indian gold coin and bullion is a part of the gold monetization program. The Indian gold coin and bullion are of 24 carat clarity and 999 find all coins and Bullions are hallmarked as per the BIS standards. and are minted by the Security Printing and Minting corporation of India limited.

The price of these coins is fixed by the Metals and Minerals Trading Corporation of India. It is believed that the coin is 2-3 percent cheaper than the ones manufactured by most of the established corporate sellers.

The post TRADING IN CENTRAL GOVERNMENT SECURITIES appeared first on Vinay IAS Academy.

1.Define terms of capital market. 2.Write about capital market reforms.

TERMS RELATED TO CAPITAL MARKET:-

¤ corporate bonds :

The term corporate bonds reffered includes all debts securities issued by institution such as banks ,PUSs ,municipal corporation,bodies corporates and companies having a tenure of more than 365days .A corporate bond is a bond issued by a corporation in order to raise financing for a variety of reasons such as to ongoing operations, M&A, or to expand business. The term is usually applied to longer-term debt instruments, with maturity of at least one year. Such an issue of bonds , if offered to the public ,shall require to comply with theSEBI ,2000.

¤Broker:

A broker is a member of a recognized stock exchange, who is permitted prades on the screen based trading system of different stock exchanges, who is permitted to do trades on the screen based trading system of different stock exchanges he is enrolled as a member with the concerned exchange and is registered with the SEBI. In other words an agent who buys or sells for a principal on a commission basis without having title to the property. a person who functions as an intermediary between two or more parties in negotiating agreements, bargains, or the like.

¤ sub-broker:

A sub broker is aperson who is registered with theSEBI as such and is affiliated to a member of a recognized stock exchange. A ‘Sub-Broker’ is any person who is not a Trading Member of a Stock Exchange but who acts on behalf of a Trading Member as an agent or otherwise for assisting investors in dealing in securities through such Trading Members.

¤ Risk disclouser document :

In order to acquint the investers in the markets of the various risks involved in trading in stock market, the members of the exchange have been required to sign a risk disclosure document with their client. Informing them of various risk like risk of volatility, risks of lower liquidity, risk of higher spread, risk of new announcements, risk of rumours ,etc,.

¤ securities transaction tax:

securities transaction tax is a task being lived on all transactions Dun on the stock exchanges at rates described by the central government from time to time.Securities Transaction Tax is a tax payable in India on the value of securities transacted through a recognized stock exchange. Pursuant to the enactment of the finance act ,2004, the Government of India notified the Security Transaction Tax rules 2004, and STTcame into effect from 1 October 2004.

¤ account period settlement:

an account period settlement is a settlement where the trades pertaining to A period stretching over more than one day are settled. An account period settlement is asettlement where the trades pertaining to a period stretching over more than one day are settled.For example, trade for the period Monday to Friday are settle together . The obligation for the account period are settled on a net basis. Account period settlement has been discontinued since 1 January2002. Pursuant to SEBI directives.

☆ Rolling settlement:
In a rolling settlement trades executed during the day are settled based on the net obligations for the day.presently the trades pertaining to the rolling settlement are settled on a T+2 day basis where T stands for the trade day . and Trades executed on a Monday had typically settled on the following Wednesday. the funds and securities pay in and payout are carried out on T+2 day.
☆ pay in day and pay out day:
Pay in day is the day when the brokers shall have make payment or delivery of securities to the exchange. pay out day is the day when the exchange makes the payment for the delivery of securities to the broker. settlement cycle is on the T+2 rolling settlement basis with effect from 1st April 2003 .the exchanges have to ensure that the payout of funds and securities to the clients is done by the broker within 24 hours of the pay out. the exchanges will have to issues press releases immediately after the payout.

☆ Auction:
The exchange purchases the requisite quantity in the auction market and gives them to the buying trading members .the shortages are met through auction process, and the differences in the price indicates that the contract note and price received through auction is paid by the member to the exchange which is then liable to be recovered from the client.
☆ margin trading facility:
Margin trading is a trading with borrowed funds and securities .it is essentially leveraging mechanism which enables investors to take the exposure in the market over and above what is possible with their own resources.
you can invest in stocks of value higher than what you can afford at that given time. You bring in the 50% and we lend you the other 50%.the SEBÌ has been prescribing eligibility conditions and procedural details for allowing the margin trading facility from time to time.
The margin can be given in the form of cash or shares as collateral depending upon the availability with the respective investor. In short, it can be termed as leveraging a position in the market with cash or collateral by the investor. In this transaction the broker funds the balance amount. Corporate brokers with net worth of least rupees 3 Crore eligible for providing margin trading facility to their clients subject their entering into an agreement to that effect before providing margin trading facility to a client the member and the client have been mandated to sign an agreement for this purpose in the format specified by the SEBI it has also been specified that the client shall not avail the facility from more than one broker to anytime.
The facility of the margin trading is available for the group 1 securities and 2 securities which are offered in the initial public offer and meet the conditions for entry inclusion in the derivative segment of the stock exchange.
For providing the margin trading facility a broker should use his own funds aur borrow from the scheduled commercial banks or nbfcs regulated by the Reserve Bank of India. A broker is not allowed to borrow the funds from any other source.
☆ SEBI risk management systems:

The primary focus of risk management by Securities and exchange board of India has been to address the market risks, operational risks and systemic risks. To this effect, Securities and exchange board of India has been continuously reviewing its policies and drafting risk management policies to mitigate these risks, thereby enhancing the level of investor protection and catalyzing market development.

☆ Short selling:
Short selling means selling of a stock that the seller does not own at a time of trade .
It is an advanced strategy that should only be undertaken by experienced traders and investors. Short selling can be done by borrowing the stock through clearing corporation or clearing house of a stock exchange with is registered as approved intermediaries short selling can be done by retail as well as institutional investors.
Traders may use short selling as speculation, and investors or portfolio managers may use it as a hedge against the downside risk of a long position in the same security or a related one. Speculation carries the possibility of substantial risk and is an advanced trading method. Hedging is a more common transaction involving placing an offsetting position to reduce risk exposure. All the short sales must result in delivery and information on shot sale has to be disclosed to exchange by End of day by retail investors and at the time of trade For institutional investors. The securities lending and borrowing mechanism and allows short sellers to borrow securities for making delivery securities in the f&o segment are eligible for the short selling.
☆ Arbitration:
Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court. The trading members and their clients in respect of trades done on the exchange.
☆ BSE indo next :
Regional stock exchanges have registered negligible business during the last few years and thus small and medium-sized companies listed there find it difficult to raise fresh resources in the absence of price discovery of their securities in the secondary market. As a result, investors also do not find exit opportunity in case of such companies. BSE IndoNext has been formed to benefit such small and medium size companies , the investors in these companies and capital markets at large. It has been set up as a separate trading platform under the present BSE Online Trading system of the BSE. It is a joint initiative of BSE and the Federation of Indian Stock Exchanges.

☆ corporatization of stock exchanges:
Corporatization is the process of converting the organisational structure of the stock exchange from an on corporate structure to the corporate structure traditionally some of the stock exchanges in India was established as association of person for example BSE and the bar Stock Exchange and Madhya Pradesh stock exchange corporatization of the exchange is the process of converting them into incorporated companies.
☆ Demutualization of stock exchanges:
Demutualization refers to the transition process of an exchange from a mutually owned association to a company owned by shareholders .in other words transforming the legal structure of exchange from a mutual form or to a business corporation form is referred to as Demutualization the above in effect means that after Demutualization the ownership the management and the trading rights at exchange are secreted from one another.
☆ Day trading:
Day trading refers to the buying and selling of the securities within the same trading day such that all position will be closed before the market close of the trading day in the Indian security market only retail investors are allotted to day trade.
☆ direct market access:
Direct market access refers to access to the electronic facilities and order books of financial market exchanges that facilitate daily securities transactions. Direct market access requires a sophisticated technology infrastructure and is often owned by sell-side firms. Rather than relying on market-making firms and broker-dealers to execute trades, some buy-side firms use direct market access to place trades themselves. Some of the advantages offered by the direct market access are direct control of clients over orders faster execution of client order reduced risk of errors associated with manual order entry greater transparency increased liquidity lower impact cost for large orders better audit trails and better use of hedging and arbitrage opportunities through the use of decision support tools or algorithms for tradingExchanges are organized marketplaces where stocks, commodities, derivatives, and other financial instruments are traded. Some of the most well-known exchanges are the New York Stock Exchange , the Nasdaq, and the London Stock Exchange .

■ CAPITAL MARKET REFORMS:
Capital market reforms initiated by government after 1991.Inducement for investor claims through consume courts and redressal forum of investor associationsPermission of the foreign equity participationWith the permission of Reserves bank of India, NRIs were permitted to invest in the equity shares and debenturesNorms relaxed for the Indian firms to raise financial resources.
☆ Introduction of dematerialization:

Dematerialization is the move from physical certificates to electronic bookkeeping. Actual stock certificates are then removed and retired from circulation in exchange for electronic recording. It share certificates printed on paper resulting in operational cost and risk. Theft and counterfeiting of share certificates gave rise to criminal activities. In order to solve this problem the national securities Depository services Limited was set up in November 1996 the depositary maintains a computer record of ownership of securities and dispenses with physical share certificate this form of trading is known as Demat.
☆ Derivatives trading:
Derivatives are contract whose values is derived from the underlying assets the underlying asset can be equity or foreign exchange or any other financial asset derivatives help in transferring the price is either partially or fully by locking in asset prices. By doing so derivatives minimise the impact of asset price fluctuations on profitability and cash follow status of investors who are averse To risk. Derivatives meeting in equities begin in India in June 2004 equity derivatives product in India they are stock option stock future index option and its features derivatives trading take place only in the NSE and the BSE.

The post TERMS RELATED TO CAPITAL MARKET appeared first on Vinay IAS Academy.

1.Write about stock exchange and it’s functions. 2.Write the advantage and limitations of stock exchange.

STOCK EXCHANGE:
Stock Exchange market is a vital component of a stock market. It facilitates the transaction between traders of financial instruments and targeted buyers.
They are organised and regulated financial market where securities are bought and sold at prices governed by the forces of demand and supplies. In another word and exchange is an institution or organisation or Association which host a market where stock bonds options and futures and commodities are traded.A stock exchange in India adheres to a set of rules and regulations directed by Securities and Exchange Board of India or SEBI. The said authoritative body functions to protect the interest of investors and aims to promote the stock market of India.
Stock exchange basically serve as:

Primary markets where corporations governments municipalities and other incorporated bodies can raise capital by channelling saving of the investor into productive ventures and

secondary markets were investors can sell their securities to other investors for cash, do reducing the risk of investment and maintaining liquidity in the system.
Stock Exchange market is a vital component of a stock market. It facilitates the transaction between traders of financial instruments and targeted buyers. A stock exchange in India adheres to a set of rules and regulations directed by Securities and Exchange Board of India or SEBI. The said authoritative body functions to protect the interest of investors and aims to promote the stock market of India.Mostly, a stock exchange in India works independently as no ‘market makers’ or ‘specialists’ are present in them.
The entire process of trading in stock exchange in India is order-driven and is conducted over an electronic limit order book.In such a set-up, orders are automatically matched with the help of the trading computer. It functions to match investors’ market orders with the most suitable limit orders.The major benefit of such an order-driven market is that it facilitates transparency in transactions by displaying all market orders publiclyBrokers play a vital role in the trading system of the stock exchange market, as all orders are placed through them.Both institutional investors and retail customers can avail the benefits associated with direct market access or DMA. By using the trading terminals provided by stock exchange market brokers, investors can place their orders directly into the trading system.Earlier the trade in exchanges were conducted on the floor which is called as trading floor of the exchange itself by shouting Orders and instructions which is called as open outcry system now at exchanges trades are conducted over telephone or online. almost all exchange are auction exchanges where buyers enter competitive bids and seller enter competitive order through a trading day.

☆ functions of stock exchange:

Stock exchange serves as an economic barometer of a country that perform several economic functions and render in valuable services to the investor’s companies and to the economy as a whole the play an important role in the economic development of a nation.
Major functions are as follows:

Marketability of securities:
Stock exchange provides a market for the purchase and sale of securities. As a result any person holding there securities can get back his or her money which they have in invested in the the securities in the form of of shares,debentures, government Bond, etc. By selling them through the brokers of a stock exchange at the market price. Similarly, a person willing to make investment in securities or conduct specialisation in securities can do so with the help of these stock market.

Liquidity to investment:-
People readily invest in the industrial security is as the money block in these securities can be released by selling them in stock exchange. In the absence of these stock exchanges form of the public would not have freely invested in the industrial and government securities. As a result ,the industry and government would have staff for the capital for stop does stock exchanges provide liquidity for the industrial securities and help the industry to for the development of a country.

Supply of long term funds-
money that has been borrowed for a period of ten years: Venture capitalists provide equity and other types of long term funds to unlisted companies. The securities traded in stock market are negotiable. They can be transferred with minimum formalities from one person to another. As a result of this facility people readily invest in the industrial securities and companies receive a good response for their public issue of shares and debentures whenever they need find. Thus, they are as short a long-term availability of funds due to existence of stock markets.

Evaluation of securities-
The process of determining how much a security is worth. Security valuation is highly subjective, but it is easiest when one is considering the value of tangible assets, level of debt, and other quantifiable data of the company issuing a security is called evaluation of security. Stock exchange keeps a record and makes a public declaration of prices at which securities are traded. On the basis of these prices for the securities quoted in the market, the investors and speculators can evaluate the values of securities held by them.

Motivation for the companies for improvement in the performance–
Motivation is about the ways a business can encourage staff to give their best. Motivated staff care about the success of the business and work better.
The performance of a company is reflected through the prices quoted for the securities in the stock markets. With the improvement in the performance of a company, the prices of shares in the market increase, enhancing the Goodwill of the company.thus, stock market indirectly motivate the companies to improve their financial performance through continual increase in productivity and profitability.

Assistance of capital formation–
Stock market insurance liquidity industrial securities, it also ensures the appreciation of funds investment in the securities with the improvement in the performance of companies and increase in the demand for their companies securities. Capital formation is a term used to describe the net capital accumulation during an accounting period for a particular country. The term refers to additions of capital goods, such as equipment, tools, transportation assets, and electricity. Countries need capital goods to replace the older ones that are used to produce goods and services.thus, Dev motivate the public to invest their savings in the capital of the company’s. These savings are channelized in the productive activities of the company’s, resulting in the capital formation which is essential for the economic development of a nation.

Protection of investors-
Investor protection means that up to a certain limit, you receive your money back if the broker goes into bankruptcy or commits fraud. It is an important factor to consider when you open an account with an online broker. When you open a trading account at a brokerage, you usually get investor protection. Stock market conduct the trade insecurities subject to certain rules and regulations. These rules prevent over trading for a legitimate speculation and charging of Texas Commission on trading by the brokers in order to protect the interest of common investors.thus, stock exchanges safeguard The Innocent investors from the Mal practices of clever brokers in security. This strengthens the investor confidence and promote large investment.

Encouragement of savings-
Stock exchanges provide an attractive Avenue for investor visa in they can invest their small savings in industrial securities and obtain a regular return on investment as well as capital appreciation. Thus,they encourages savings habits among the public.

Listing of securities-
Listing of Securities. Listing means the admission of securities of a company to trading on a stock exchange. Listing is not compulsory under the Companies Act. It becomes necessary when a public limited company desires to issue shares or debentures to the public. Stock exchanges do the listing of securities of various companies. Only listed securities are traded on stock exchanges. Listening of a security means permission to the security to court officially on trading floor of the exchange. Share or debentures of a particular company can be listed and traded at stock exchange only if the company fulfills certain standard norms fixed by the exchange.

Maintaining business information–
Business information comes in general surveys, data, articles, books, references, search-engines, and internal records that a business can use to guide its planning, operations, and the evaluation of its activities. Such information also comes from friends, customers, associates, and vendors. Companies whose securities are listed on stock exchange are required to furnish the financial statements and other reports and settlements. The stock exchange maintains a detailed record of the various companies whose securities are traded on its floor.

Raising capital for businesses-
Raising capital essentially means getting the money you need to grow your business from investors. Raising capital is another way of talking about financing your business. You can raise capital through investors, or you can take out debts, like loans or credit cards, to finance your business venture.  stock exchanges help joint stock companies to capitalise by selling shares to the investing public.

☆ Advantages of listing securities in stock exchange:

Facilities marketing of securities:
If a company does the listing of its share on recognised stock exchanges, its shareholders will be able to release their investment in the shares at market price whenever they want by selling these shares of stock exchanges .
An investor who wants to purchase the shares of that company may buy those shares at market price in those stocks exchanges.constant marketing facilities are availed to the securities that are listed on the exchange of the stock.

Assures finance to the companies:
Whenever a company offer its shares to the public, it receives proper response from the investor’s only if such shares are listed on recognised stock exchanges. this is the reason for that listing enables the investor to release his money in the shares by selling those on stock exchange and listing enabled the companies to raise the necessary finance by the issue of the the its security to the public.

Ensures liquidity:
The price of the listed securities are quoted daily in the share markets. the listed of securities can be readily converted into the cash at the quoted price. the listing ensures liquidity of securities.

. Enables the investors to borrow the funds:
Banks and other financial institution accepted the listed securities as Collateral securities against their loans and the advances because these securities have a ready market.and though the people holding the list security can raise their loan against such securities without facing any difficulty.

Protect investors:
The companies that have already listed their security on the have to follow the rules and regulations of the stock market and the security and exchange Board of India they have to maintain that transparency in their working and have to disclose their financial information and policies. All these rules and regulations and transparency aim at protection of interest of small investor should not be deceived or put to loss.

Offers wide publicity:

Names of the companies whose securities are listed on the stock exchange are mentioned regularly in stock market reports, TV,news paper ,radios and many more .thus, listed securities offer wide advertising and publicity to the companies concerned.

The companies have the convenience to decide upon the size price and timing of the issues.

The companies whose securities have been listed on stock exchange they enjoy a better goodwill and credit standing than other companies because they are support to be financially sound .as a result of enhanced goodwill and higher demand, the value of their securities increases and their bargaining power in collective ventures, mergers, is enhanced.

The volume of activity at the stock exchanges and the movement of the share prices reflect the changing economic health.

Since the government securities are also trade and the stock exchanges the government borrowing is highly facilitated. the bonds issued by the government, electricity boards, municipal corporation and public sector understakings are found to be on a offer quite frequently and generally successful.

The investors enjoy the ready availability of facility and convenience of buying and selling the securities at will and at an opportunity time .availability of regular information on price of securities trade at the stock exchange help them and deciding on the timing of their purchase and sale. it becomes easier for them to raise these loans from banks against their Holdings in securities trade at the stock exchange because banks prefers for them at the Collateral on account of their liquidity and convenient valuation.

The availability of lucrative avenues of the investment and the liquidity there of induces people to save and invest in the long term securities. this leads to the increased capital formation in the country.

☆ Limitations of stock exchanges:

The common evils associated with stock exchange operation is the excessive speculations implies buying or selling securities to take the advantage of price differential at different times. the speculators generally do not take or give delivery and pay or receive full payment. they settle their transactions just as by paying the differences and their prices. Normally, speculation is considered as a healthy practice and it is necessary for successful operation of the stock exchange activity.but when it becomes excessive ,it leads to the wide fluctuations in the price and various malpractices by the vested interest .in the process genuine investors suffer and are driven out of the markets.
The price security may be fluctuate due to the unpredictable political social and economic factors as well as on account of rumours spread by the interested parties this makes it more difficult to assess the movement of prices in future and build appropriate Strategies for investment and securities however these days good amount of vigilance in exercised by stock exchange authorities and SEBI to control activity and the stock exchange and ensure their healthy functioning.

■ PRODUCTS DEALT IN THE SECONDARY MARKETS :

Following are the main financial products/instruments dealt in the Secondary market which may be divided broadly into Shares  and Bonds: Shares:

Rights Issue/ rights shre:

The issue of new securities to existing shareholders at a ratio to those already held, at a price. For  e.g. a  2:3 rights issue at Rs. 125, would entitle a shareholder to receive 2
shares for every 3 shares held at a price of Rs. 125 per share.

.Bonus Shares:

Shares issued by the companies to their shareholders free of cost based on the number of shares the  shareholder owns. The capitalisation of accumulated reserves from the profits earned in the earlier years.

Preference shares:

Owners of these kind of shares are entitled to a fixed dividend or dividend calculated at a fixed rate to be  paid  regularly before dividend can be paid in respect of equity share. They also enjoy priority over the equity shareholders in  payment of surplus. But in the event of liquidation, their claims rank below the claims of the company’s creditors,  bondholders or debenture holders.

Cumulative Preference Shares:

  A type of preference shares on which dividend accumulates if remained unpaid.  All arrears of  preference dividend have to be paid out before paying dividend on equity shares.

Cumulative Convertible Preference Shares:

A type of preference  shares where the dividend payable on the same accumulates,  if not paid.  After a specified date, these shares will be converted into equity capital of the company.

Participating preference share :

the right of certain preference shareholders to participate in the profits after a specified fixed dividend and contracted for is paid. participants right is linked with the quantum of dividend paid on the equity shares over and above a particular specified level.

Security receipts:

Security receipts means a receipt or other security, issued by a securitization company or reconstruction company to any qualified institutional buyer pursuant to a scheme ,evidencing the purchase or acquisition by the holders thereof ,of an undivided right, title or interest in the financial asset involved in securitization.

Government securities:

These are sovereign coupon bearing instruments which are approved by the Reserve bank of India on behalf of the Government of India,in lieu of the central government market Borrowing programme.these securities have a fixed coupon that is paid on specific dates on basis of half yearly basis. These securities are available in a wide range of maturity dates,from short dated to long dated .

Debentures:

Bonds issued by the company bearing fixed rate of interest usually payable half yearly on a specific dates and principal amount repayable on particular date on redemption of the debentures .debentures are normally secured or charged against the Asset of the company in the favour of debenture holders.
10. Bond: a negotiable certificate evidencing indebtness .it is normally unsecured . that a debt security is generally issued by the company, municipality or government agency , or government agency. A Bond investor lends money to the issuer , and in exchange ,the issuer promises to repay the loan amount on a specific maturity date. the issuer usually pays the bondholder periodic interest payments over the life of the loan.
The various types of bonds are as follows:

a. Zero- coupon bond:-
Bond issied at a discount and repaid at a face value. A zero-coupon bond is a debt security that does not pay interest but instead trades at a deep discount, rendering a profit at maturity, when the bond is redeemed for its full face value. … Because they offer the entire payment at maturity, zero-coupon bonds tend to fluctuate in price, much moreso than coupon bonds . No periodic interest is paid. The difference between the issues price and redemptions price presents The returned to the holder will stop the buyer of this bond receives only one payment, at the maturity of the bond.

b. Convertible Bond -A convertible bond is a fixed-income corporate debt security that yields interest payments, but can be converted into a predetermined number of common stock or equity shares. The conversion from the bond to stock can be done at certain times during the bond’s life and is usually at the discretion of the bondholder. Karbonn giving the interested the option to convert the bond into equity at a fixed conversion price.

Commercial paper-

A short term promise to repay of fixed amount that is placed on the market either directly or through specializedintermediary.
Commercial paper, also called CP, is a short-term debt instrument issued by companies to raise funds generally for a time period up to one year.
It is usually issued by companies with high credit standing in the form of promissory note redeemable at par to holder on maturity therefore, it doesn’t require any e guarantee. Commercial paper II is a money market instrument issued normally for tenure of 90 days.

Treasury bills-

The treasury bills are the short- term barrier discount security.A Treasury Bill  is a short-term debt obligation backed by the U.S. Treasury Department with a maturity of one year or less. Treasury bills are usuall

The post STOCK EXCHANGE AND IT’S FUNCTION appeared first on Vinay IAS Academy.

1.Write about financial markets in india.

2.Define the terms:- capital market money market

FINANCIAL MARKETS IN INDIA:Financial markets:

A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, and precious metals. It is a broad term used for a Marketplace where trading of securities including equities bonds currencies and derivatives is done.
It plays a crucial role in allocating limited resources, in the country’s economy. It acts as an intermediary between the savers and investors by mobilising funds between them. Money market is a market for debt securities that pay off in the short term usually less than one year for example the market for 91 days treasury bills this market encompasses the trading and issuance of short-term non equity debt instruments including treasury bills commercial papers bankers acceptance certificate and deposits and many more.
The financial market provides a platform to the buyers and sellers, to meet, for trading assets at a price determined by the demand and supply forces. Capital market is a market for long term debt and equity shares in this market the capital funds comprising of both equity and debt issued and trade this is also includes private placement sources of debt and equity as well as organised market live stock exchanges.
☆ capital market in India:

The capital market provides the support to the system of capitalism of the country. The Securities and Exchange Board of India , along with the Reserve Bank of India are the two regulatory authority for Indian securities market, to protect investors and improve the microstructure of capital markets in India.
Capital market can be divided into primary and secondary markets:
Primary market:
A primary market issues new securities on an exchange for companies, governments, and other groups to obtain financing through debt-based or equity-based securities. Primary markets are facilitated by underwriting groups consisting of investment banks that set a beginning price range for a given security and oversee its sale to investors. Corporations National and local governments and other public sector institution can get financing through the sale of new stock or bonds issued through the primary market but simply the primary market create new securities and offers them for sale to the public. Face value is the original cost of the security as shown in the certificate instrument most equity shares have a face value of Rupee 1 Rupee 5 rupee 10 for rupees hundred and do not have much bearing on the actual market price of the stock. When issuing securities they may be offered at a discount or at premium when the securities offered at a price higher than the face value it is called a premium when the securities offered at a price lower than the face value it is called a discount.

Other types of primary market offerings for stocks include private placement and preferential allotment. Private placement allows companies to sell directly to more significant investors such as hedge funds and banks without making shares publicly available. While preferential allotment offers shares to select investors at special price not available to the general public.
Following are the features of primary market:

1. Primary issues are used by companies for the purpose of modernizing the existing business or opening new business, etc.
2. The primary market are the markets for new long-term equity capital.
3. The financial assets sold can only be redeemed buy the original holder.
4. The new issue market doesn’t include certain other sources of new long term external finance ,such as loans from financial institution.
5. The securities are issued by the company directly to the investors.
6. The primary market perform the crucial function of capital formation in economy.
7. Borrower in the the new issue market maybe racing capital for converting private capital into public capital.
   ☆ secondary market:
   The secondary market refers to a market where securities are trade after being initially offered to the public in the primary market and all listed on the stock exchange.It is what most people typically think of as the “stock market,” though stocks are also sold on the primary market when they are first issued.  secondary market comprises of equity market and the debt market .equity is the stock capital of a company. Debt consists of the loans taken by the business.
8. 
   Though stocks are one of the most commonly traded securities, there are also other types of secondary markets. For example, investment banks and corporate and individual investors buy and sell mutual funds and bonds on secondary markets. For the general investors , the secondary market provides an efficient platform for trading of his securities .for the management of the company, secondary equity markets serve as a monitoring and control conduit by facilitating value enhancing control activities, enabling implementation of incentive based management and aggregating information that guides the management decisions.
   Transactions that occur on the secondary market are termed secondary simply because they are one step removed from the transaction that originally created the securities in question. For example, a financial institution writes a mortgage for a consumer, creating the mortgage security. The bank can then sell it to Fannie Mae on the secondary market in a secondary transaction.
   ☆ difference between primary market and secondary market:
   • In primary market securities are offered to public for subscription for the purpose of raising capital of fund but in secondary market is and equity trading Avenue in which already existing securities are trade among investors.
   • primary market are also called as New Issue Market ,wheres secondary markets are called as After Issue Market .

• role of primary market is a Market where stocks are issued for the first time.whereas, secondary markets are Market where stocks are traded once issued.
• primary market intermediaries is Investment banks and secondary market intermediaries is Brokers..
• sale of securities in primary market is directed by Directly by companies to investors.and sale of securities in secondary markets is to Sold and purchased amongst investors and traders.
• prices of shares in primary markets is Fixed at per value,whereas in secondary markets prices of shares is to the Changes depending on the supply and demand of shares.

The post FINANCIAL MARKETS IN INDIA AND STOCK EXCHANGE appeared first on Vinay IAS Academy.

1.What are the causes of NPAs.
2.What are the Advantages of financial inclusion.
3.What is demonetization?
4.what are the merits and de merits of demonetization.
5.What is cashless economy? 6.Write the Advantages and disadvantages of cashless economy.

SARFAESI 2002:
The SARFAESI ACT is a kind of act which was established in the year 2002. This act allows the banks and financial institutions to auction properties which was either commercial or residential.After this landmark judgement by the Supreme Court, banks can now seize and sell the properties of the defaulters to recover their dues.A five-judge bench of the Supreme Court headed by Justice Arun Mishra gave the judgement in a case where the Parliament’s decision to amend Section 2(c) of the Sarfaesi Act was challenged.
The acts give the power of seize banks Bank can give a notice in writing to the defaulting borrower requiring it to discharge its liabilities within 60 days. if the borrower fails to comply with the note is the bank may take Re course to one or more of the following measures:
• sale or lease or assign the right over the security and
• take possession of the security for the loan;
• manager the same or appoint any person to manage the same.
The act provides for sale of financial assets by banks and Financial Institutions to asset reconstruction the of the company’s the Reserve Bank of India has issued guidelines to the banks on the process to be followed for sales of Finance assets to assets reconstruction companies.

■ ARBITRATION AND CONCILIATION ACT ,2015.
The arbitration and conciliation amendment act was established in the year, 2015.these act was notified in the official Gazette on 1 January 2016 . For making arbitration a preferred mode settlement of commercial disputes. By making it more user-friendly and cost effective and leading to expedituos disposal of cases.
Thesettlingofdisputesespecially labor dispute between two parties by an impartial third party, whose decide the contending parties agree to accept. Arbitration is often used to resolve conflict diplomatically to prevent a more serious confrontation.
Conciliation is an ADR process where an independent third party, the conciliator, helps people in a dispute to identify the disputed issues, develop options, consider alternatives and try to reach an agreement.
This act facilitates quick enforcement of contracts, easy recovery of monetary claims, reduce the pendency of cases in courts. And it also hastens the process of dispute resolution through arbitration so as to encourage foreign investment by projecting India’s an investor-friendly country having a sound legal framework and ease doing business in india.

■ INSOLVENCY AND BANKRUPTCY CODE ,2016:
The insolvency and bankruptcy code 2016 was passed by the Parliament on 11th May 2016 received president assent on 28 may 2016 and was notified in the official gazette on the same day. The code seeks to ensure time Bond settlement of insolvency faster turnaround of Business and create a unified database of serial defaulters.
It is the reconceptualised the framework for insolvency resolution in India. It provides a mechanism for the insolvency resolution of debtors in a time bound manner to enable maximisation of the value of their assets, with a view to promote entrepreneurship, availability of credit and balance the interests of all the
stakeholders.
The code create time bound process for insolvency resolution of companies and individual. this process will be complete within 180 days. of insolvency cannot be resolved, the Assets of the borrowers may be sold to repay creditors.
The bankruptcy code is a one stop solution for resolving insolvencies which previously was a long process that did not offer an economically viable arrangement. The code aims to protect the interests of small investors and make the process of doing business less cumbersome.
Information utilities will be established to collect ,collate and disseminate financial information to facilitate insolvency resolution .the National Company Law Tribunal will adjudicate insolvency resolution for companies .that DRT will adjudicate insolvency resolution for individuals.
including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental there too. The insolvency and bankruptcy board of India will be set up to regulate functioning of IPs IPAs , and IUs.
■ BANKING REGULATIONS BILL,2017.

The Banking Regulation Bill, 2017 was introduced in Lok Sabha by the Minister of Finance, Mr. Arun Jaitley, on July 24, 2017.  It seeks to amend the Banking Regulation Act, 1949, and replace the banking regulations ordinance, 2017. The empowers of The Reserve Bank of India to resolve the problem of stressed assets . It allows the Reserve Bank of India to initiate insolvency resolution process on specified stressed assets.The RBI may, from time to time, issue directions to banks for resolution of stressed assets.  the recovery proceedings will be carried out under the insolvency and bankruptcy code 2016 that provides for a time bound process to resolve its defaults.
The Bill inserts a provision to state that it will also be applicable to the State Bank of India, its subsidiaries, and Regional Rural Banks.
■ MARGINAL COST OF FUNDS- BASED LENDING RATE .
I in April 2016 all banks move to a new lending rate resign called the MCL aa which stands for marginal cost of funds based lending rate. The new rate Regime was likely to improve the translation rates to the end consumers.The Reserve Bank of India introduced the MCLR methodology for fixing interest rates from 1 April 2016. It replaced the base rate structure, which had been in place since July 2010.The Reserve Bank of India introduced the MCLR methodology for fixing interest rates from 1 April 2016. It replaced the base rate structure, which had been in place since July 2010. M c l r is the new benchmark lending rate at which banks will now lend to new borrowers.
Till 31 March 2016, banks used base rate as the benchmark rate to land. While the mclr are will be the benchmark rate for new borrowers, form for the existing borrowers, the base rate Regime will be continued.
RBI expects the new formula to make floating lending rates more responsive, to its policy rate cuts . ratings agency ICRA.ICRA stands for Information and Credit Rating Agency of India Limited) was set up in 1991 by leading financial/investment institutions, commercial banks and financial services companies as an independent and professional investment Information and Credit Rating Agency.
ICRA that the norms will improve policy transmission for new borrowings. The mclr is closely linked to the actual deposit rates. Banks have to publish at least five MCLR rates. Banks are also free to to set rate for or longer duration such as two or three years.
■ NON PERFORMING ASSET:

Nonperforming assets are listed on the balance sheet of a bank or other financial institution. After a prolonged period of non-payment, the lender will force the borrower to liquidate any assets that were pledged as part of the debt agreement. If no assets were pledged, the lender might write-off the asset as a bad debt and then sell it at a discount to a collection agency. According to the reserve bank of India an asset,including leased asset ,including leased asset,become non performing when it cease to generate income for the bank.an NPA was defined as a credit facility in respect of which the interest and or installment of principal has remained past due for a specified period of time.
In most cases, debt is classified as nonperforming when loan payments have not been made for a period of 90 days. While 90 days is the standard, the amount of elapsed time may be shorter or longer depending on the terms and conditions of each individual loan. A loan can be classified as a nonperforming asset at any point during the term of the loan or at its maturity. Accordingly with effect from 31 March 2004 ,and NPA shall be a loan or an advance where interest and installment of principal remain overdue for a period of more than 90 days in respect of a term loan; account remains out of order for a period of more than 90 days, in respect of an overdraft or cash credit the bill remains overdue for a period of more than 90 days in that case of bill purchase and discounted ,interest for installment of principal remains overdue for two harvest season but for a period not exceeding two half years in the case of an advanced granted for agriculture purpose and any amount to be received remains overdue for a period of more than 90 days in respect to the other account accounts.
Banks are required to classify nonperforming assets into one of three categories according to how long the asset has been non-performing: sub-standard assets, doubtful assets, and loss assets.

sub-standard asset is an asset classified as an NPA for less than 12 months. A doubtful asset is an asset that has been non-performing for more than 12 months. Loss assets are loans with losses identified by the bank, auditor, or inspector that need to be fully written off. They typically have an extended period of non-payment, and it can be reasonably assumed that it will not be repaid. Stressed accounts are the ones that show incipient science of becoming npa like bounced cheque no on submitting financial data stocks shortage request for frequent over drawoval of accounts and many more overall net stressed loans defined as a net npa plus outstanding standard reconstruction loans reconstructed assets or loans are that assets which got an extended repayment period, reduced interest rate,converting a part of the loan into the equity, providing all the additional financing or some combinations of these measures .hence, under reconstructing a bad loan is modified as a new loan. the real problem is that it was actually an NPA. the reconstructed loan is also a week loan. and NPA and reconstructed loans together show the low asset quality of banks. Hence these together are hence called stressed assets.

☆ Cause of NPAs:
The following factors were identified by the Reserve Bank of India which contributes to creation of NPAs:

1. Internal factors:
   • slackness in Credit Management and its monitoring.
   • lack of coordination among the leading institution.
   • management inefficiency.
   • inappropriate Technology for technical problems.
   • cost overrun.
   • business failure.
   • diversion of funds.
2. External factors:
   • changes in government policies.
   • economic recession.
   • volatility in exchange rates.
   • natural calamities.
   • power shortage.
   • input price escalation.
   Other factors are as follows:
3. High interest rates or cost of funds.
   2.wilful defaulters diverting the funds for other than the declared purpose .
4. Utilisation of short term loans for acquisition of fixed assets.
5. Over optimistic promoters losing interest when their expectations fail .
   5.highly geared borrowers failure to meet adverse economic development.
6. Liberalization of economy,easing of restriction ,lowering of Tariff, and many more.
7. Lack of post Sanction following up and monitoring and failure to recognise early warning signals.
   ☆ Legal measures:
   The following legal and regulatory measures are initiated by the banks for recovery of its NPAs:
   1.DRTs: these tribunals are empowered to entertain cases For recovery of debts on fast track basis.
8. The lok adalats help to resolve disputes between parties by conciliation mediation compromise and amicable settlement.
   3.SARFAESI Act:
   The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 allows banks and other financial institutions to seize and sell residential or commercial properties of the defaulters to recover loans.
   This act empowers the secured creditors to take over the possession of secured Assets of the borrower including right to transfer by way of lease, assignment of sale ,and many more. this act have removed the real legal hurdles and help the bank in resolving large number of NPAs expeditiously.
   Www.vinayiasacademy.com
9. Compromise settlement scheme.

☆ perfect mechanism:
Bank have already preferred to address the problems of stressed loans through restructuring of debt Under The aegis of corporate debt restructuring. While the corporate debt restructuring mechanism was used extensively e the objective seems to have been to provide temporary relief to the borrower rather than to make active efforts to revive business the corporate debt restructuring have met with Limited success in reviving stressed loans owing evaluation of business variability and lack of effective monitoring.
☆ recommended measures:
1.Bad Bank: a Bank may be set up to by the bad loans of a bank with significant npa as at market price by transferring the bad Assets of an institution to the bad Bank the banks clear their balance sheet of toxic assets but would be forced to take right downs. Shareholders and bondholders stand to lose their money for the from the solution banks that become insolvent as a result of the process can be recapitalised nationalized or liquidated.

1. Fund for stressed assets:
   The government is looking to set up special fund to tackle the issues of the stressed assest . this is expected to be part of the national investment and infrastructure fund which would be like Indian sovereign wealth fund. although banks are seeing a slow down and growth of fresh NPAs they are grappling with a huge of Bad debts due to the problems in certain companies and some sector such as metals and inability of several infrastructure projects to take off.
   ■ FINANCIAL INCLUSION IN INDIA:
   The term financial inclusion was used for the first time in April 2005 in the annual policy statement presented by Y Venugopal Reddy then the governor of The Reserve Bank of India.
   Financial inclusion may be defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost. The kind of services provided include banking, easy credit investment opportunity and insurance on 25th June 2013, CRISIL India’s leading credit rating and Research company launched and index to measure the status of financial inclusion in India. Measures taken by the Reserve Bank of India to promote financial inclusion are opening of non frills accounts relaxation on know your customer norms for engaging business correspondents use of Technology adoption of electronic benefit transfer revised general credit card intended to cover all enterpreneurial credit for example artisan credit card ,Laghu udyami card ,swarojgar Credit Card ,and weaver Card, and many more simplified branch authorisation opening of branches in and unbanked ruler centres ,tapping the technology is platform like mobile banking, and Aadhaar enabled payment system and allowing opening of the payments banks and small banks like Bandhan bank and IDFC bank.
   Corporate sector efforts for financial inclusion include Working of nbfc and opening of white ATMs.

☆ advantages of financial inclusion:

1. Access to finance by the poor and vulnerable groups is a prerequisite for poverty reduction and social cohesion.
2. It helps making the direct benefit transfer.
3. Providing access to finance is a form of empowerment of the vulnerable groups.
4. Financial inclusion has become an integral part of the efforts to promote inclusive growth.
5. It promotes women empowerment.

■ DEMONETIZATION:

Demonetization is the act of stripping a currency unit of its status as legal tender. The opposite of demonetization is a Remonetization, in which a form of payment is restored as a legal tender.
It occurs whenever there is a change of national currency: The current form or forms of money is pulled from circulation and retired, often to be replaced with new notes or coins. Sometimes, a country completely replaces the old currency with new currency.
The reason why a nation demonetized because its local unit of currency may be combating inflation combating corruption and crime discouraging a cash dependent economy and facilitating trade.
On 8 November 2016, the Government of India announced that the demonetization of all 500 and 1000 banknotes of the Mahatma Gandhi series. The government has stated that the objective behind the demonetisation policies are first one is to attempt to make India corruption free.
Second one is that is done to curb black money and counterfeit currency, third one is to control escalating price rise, fourth one is to stop fund flow to illegal activity and terrorism ,fifth is to make people accountable for every rupee they posses and pay income tax return. finally ,the last one is an attempt to make a cashless society and create a digital India.
☆ Merits of demonetization:

1. It will help the government to track all the black money. those individuals who have unaccounted cash are now required to show income and submit PAN for any valid financial transactions. the government can get income tax return for the income one which tax has not been paid.
2. It will help India to become corruption free .those indulging in taking bribe will refrain from corrupt practices as it will be hard for them to keep their unaccounted cash.
3. It will stop the circulation of fake currency. most of the fake currency put in circulation is the the high value notes.
4. It will also curb the menace of money laundering. now such activity can easily be tracked and Income Tax Department can catch such people who are in the business of money laundering.
5. It will stop funding to the the unlawful activities that are thriving due to unaccounted cash flow. banning high value currency will rein in criminal activities like naxalism and terrorism.
6. This move has generated interest among those people who had opened Jan Dhan accounts under the Prime Minister Jan Dhan Yojana they can now deposit their cash under this scheme and this money can be used for the developmental activity of the country.
7. It will encourage digitalization of currency.
8. It will force people to pay income tax returns most of the people who have been hiding their incomes are now forced to come forward to declare that their income and pay tax on the same.
9. It will make India cashless society all the monetary transaction has to be through out the banking method method and individual have to be accountable for each penny they possess.
   ☆ demerits of demonetisation:
10. It has deeply affected business due to the cash crunch the entire economy has been made to come to a standstill.
11. It has caused huge inconvenience to the people.
12. The government fought hard to implement these policies .it has to bear the cost of printing of the new currency notes it also found it difficult to put new currency into circulation the 2000 rupee note become a burden on the people as no one like to do transaction with such high value currency. some critics think it will only help people to use black money easily in future.
13. Many poor daily wage workers were left with no jobs and their daily income was stopped because employee as unable to pay their daily wage
14. India’s economy growth faced slowdown.
    Earlier on 16th January 1978 rupees 1000 and rupees 5000 and rupees 10000 currency notes were scrapped to an ordinance impacting 0.6 % of the total currency in the circulation at the time. But before that India has experienced team on a titration of high value currency in 1946 January on both the occasions it impacted only a Minuscule segment of the society and economy.
    Www.vinayiasacademy.com
    ■ CASHLESS ECONOMY:
    Cashless economy is a situation in which the flow of cash within an economy doesn’t actually exist and all the transaction takes place digitally for internet banking debit card or credit card and apps like PayTM recharge Google pay and so on.
    Cashless economy is cost effective, growth friendly, business friendly, pro-financial inclusion, etc. Government is promoting it through BHIM app, AEPS, Digishala etc. Cashless economy requires robust digitalization. It has various challenges-escaping attitudes of people, poor transaction security mechanism, insufficient infrastructure etc. it is boon to industries like UBER and OLA. Further analysis will be done on secondary data.
    India is majorly cash driven economy where people prefer to carry cash instead of cards however India is moving towards “less cash economy” -a phase of cultural-economic transition. It is important to curb shadow economy, corruption, terror -financing, human and drug trafficking, counterfeit-currency and many more.
    ☆ advantages:
    Following advantages are expected to accrue:
15. It is not necessary to be physical present to conduct cashless transaction there is also no limitation on timing of transaction as it can be done at anytime and from anywhere.
16. Carrying high amount of cash is always a security hazard. for other modes like credit or debit cards, in the event of loss or robbery , one can block the card. it may also reduce pickpocketing and highway robbery.
17. Increasing the shares of cashless will improve government revenue as online transaction leader trail of events that can be traced to find out tax evasion if any.
18. The electronic payment will help the entrepreneurs to increase their customer base and breach the geographical limitations.
19. As the people increasingly started using cashless transaction it will help in increasing the tax base. it will be easy for the public as well to explain the tax authorities their past expenditure.
20. Since the cashless transaction are more visible, it will help in curbing the black money.
21. If subsidy aur wages for the welfare schemes MGNREGA are paid online through bank transfer instead of cash it would also help in plugging the leakages and helps in ensuring that subsidies are better targeted.
22. There is high cost of printing correct currency notes switching to cashless transaction will decrease this cost.
23. One can also trace the funding of terror activities as online transaction Live a trial.
24. Problem of counterfeit currency will also be reduced in online transaction.
25. Cashless transaction do away with the need of change. one can pay in exact amount even in fraction of rupee aur paise through card payment online transaction.
26. It will also be easy to ward off the borrower’s if you are cashless.
27. Being cashless also include its budget discipline.
    ☆ disadvantages:
28. A cashless society needs a proper infrastructure the banks need to be fully equipped to handle the surge in e transaction infrastructure is also needed in terms of opening more accounts in the banks. Despite its drawbacks the cashless system is in needed and improvement over the traditional cash based system it is practically not possible but reducing the amount of cash and increasing the cashless transaction will definitely improved the transparency in business transactions and therefore is good for the country and economy in fact A cashless society is a welcome idea but not without preparations.
29. There are additional charges that are levied by the vendors when they offer an online payment facility.
30. Network connectivity issue must be resolved before dreaming about a cashless society.
31. The internet cost in India is still substantially high.
32. With the recent hack of 32 lakh rupay and Visa debit cards there is a doubt in cyber security of India banking before going for completely cashless economy India needs to strength its cybersecurity first.
33. The biggest fear is the risk of Identity theft one can also become a victim of phishinhg trap.
34. Since mobile phone had become an important element of cashless economy, loss of phone maybe become a double whammy as many financial details Can be retrieved from it.
35. With the literacy level of 74.0 4% India is likely to face the obvious hurdles on its way to achieve a total digitalization of its transactions.
36. If we take into account the proportion of non tech savvy population the practical implementation of cashless economic will take enormous effort.

The post DEMONETIZATION AND CASHLESS ECONOMY appeared first on Vinay IAS Academy.