Role and policy measures relating to development banks and financial institution in India, products and services offered by IFCI, IDBI, IIBI, SIDBI, IDFCL, EXIM Bank, NABARD and ICICI Meaning and benefits of mutual funds, types of mutual funds, SEBI guidelines relating to mutual funds.

2.  Development banks are unique financial institution that act
as catalytic agents in promoting balanced development of
the country and thereby aid in the economic growth of the
country.
 Development Bank is a financial institution dedicated to
fund new and upcoming businesses and economic
development projects by equity capital or loan capital.
 Development banks are those financial institutions
engaged in the promotion and development of industry,
agriculture and other key sectors.
 Its main emphasis is the welfare of the people. For
example the Asian Development Bank's overarching goal
is to decrease poverty in Asia and the Pacific.

3.  A development bank is like a living organism
that reacts to the social-economic
environment and its success depends on
reacting most aptly to that environment”

5.  Development banks were set up in India at various points of time starting from the late 1940s to
cater to the medium to long term financing requirements of industry as the capital market in India
had not developed sufficiently. The endorsement of planned industrialization at the national level
provided the critical enticement for organization of Development banks at both all-India and state
levels.
 In order to perform their role, Development Banks were extended funds in the shape of Long
Term Operations (LTO) Fund of the Reserve bank of India and government guaranteed bonds,
which constituted main sources of their funds. Funds from these sources were not only available
at concessional rates, but also on a long term basis with their maturity period ranging from 10-15
years.
 On the asset side, their operations were marked by near absence of competition. A large variety
of economic institutions have come into existence over the years to perform a type of financial
actions While some of them operate at all-India level, others are state level institutions.
 Besides providing direct loans, financial institutions also extend economic assistance by way of
underwriting and direct contribution and by issuing guarantees. Recently, some Development
Banks have started extending short term/working capital finance, although long term lending
continues to be their major activity.

6.  The Industrial finance corporation of India
(IFCI)-1948.
 The industrial Development Bank of India
(IDBI)-1964.
 The Industrial Reconstruction Bank of India
(IRBI)-1971.
 The Industrial Credit and Investment
Corporation of India (ICICI)-1955 Etc.

7. DEVELOPMENT BANKS IN INDIA
NABARD ICICI IDBI
IFCISIDBI
COMMERCIAL
BANKS
STATE FINANCIAL
COOPERATIONS

8.  A development bank has the following features or characteristics:
 A development bank does not accept deposits from the public like commercial banks and other
financial institutions who entirely depend upon saving mobilization.
 It is a specialized financial institution which provides medium term and long-term lending
facilities.
 It is a multipurpose financial institution. Besides providing financial help it undertakes
promotional activities also. It helps enterprises from planning to operational level.
 It provides financial assistance to both private as well as public sector institutions.
 The role of a development bank is of gap filler. When assistance from other sources is not
sufficient then this channel helps. It does not compete with normal channels of finance.
 Development banks primarily aim to accelerate the rate of growth. It helps industrialization
specific and economic development in general
 The objective of these banks is to serve public interest rather than earning profits.
 Development banks react to the socio-economic needs of development.

9.  There are two sources:
 Long-Term Sources:
› Capitals in the form of equity/subordinate
debts/debentures/preference shares.
› Internal accrual generated out of profits.
› Long-term borrowings from financial institutions like
NABARD/SIDBI.
 Short-Term Sources:
› Market-linked borrowings from RBI.
› Sale of liquid certificate deposits in the open market.
› Borrowing from RBI under Repo (Repurchase option).
› Short-term borrowings from FIs by way of rated papers
placed, etc.

10. Role of development banks
in financial system
Providing
Funds
Infrastructura
l Facilities
Promotional
Activities
Development
of Backward
Areas
Planned
Develop
ment
Accelerating
Industrializat
ion
Employment
Generation

11.  Development banks have been started with the motive of increasing the pace of
industrialization. The traditional financial institutions could not take up this
challenge because of their limitations. In order to help all round industrialization
development banks were made multipurpose institutions. Besides financing they
were assigned promotional work also. Some important functions of these
institutions are discussed as follows:
1. Financial Gap Fillers
 Development banks do not provide medium-term and long-term loans only
but they help industrial enterprises in many other ways too. These banks
subscribe to the bonds and debentures of the companies, underwrite to their
shares and debentures and, guarantee the loans rose from foreign and domestic
sources. They also help 'undertakings to acquire machinery from within and
outside the country.
2. Undertake Entrepreneurial Role
 Developing countries lack entrepreneurs who can take up the job of setting
up new projects. It may be due to lack of expertise and managerial ability.
Development banks were assigned the job of entrepreneurial gap filling. They
undertake the task of discovering investment projects, promotion of industrial
enterprises, provide technical and managerial assistance, undertaking economic
and technical research, conducting surveys, feasibility studies etc. The
promotional role of development bank is very significant for increasing the pace of
industrialization.

12. 3. Commercial Banking Business
 Development banks normally provide medium and long-term funds to
industrial enterprises. The working capital needs of the units are met by
commercial banks. In developing countries, commercial banks have not
been able to take up this job properly. Their traditional approach in dealing
with lending proposals and assistance on securities has not helped the
industry.
 Development banks extend financial assistance for meeting working
capital needs to their loan if they fail to arrange such funds from other
sources. So far as taking up of other functions of banks such as accepting
of deposits, opening letters of credit, discounting of bills, etc. there is no
uniform practice in development banks.
4. Joint Finance
 Another feature of development bank's operations is to take up joint
financing along with other financial institutions. There may be constraints of
financial resources and legal problems (prescribing maximum limits of
lending) which may force banks to associate with other institutions for taking
up the financing of some projects jointly. It may also not be possible to meet
all the requirements of a concern by one institution, So more than one
institution may join hands. Not only in large projects but also in medium-size
projects it may be desirable for a concern to have, for instance, the
requirements of a foreign loan in a particular currency, met by one institution
and under writing of securities met by another.

13. 5. Refinance Facility
 Development banks also extend refinance facility to the lending institutions. In this scheme there is no
direct lending to the enterprise. The lending institutions are provided funds by development banks against
loans extended' to industrial concerns. In this way the institutions which provide funds to units are refinanced
by development banks. In India, Industrial Development Bank of India provides reliance against ('term loans
granted to industrial 'concerns by state financial corporations. commercial banks and state co-operative
banks.
6. Credit Guarantee
 The small scale sector is not getting proper financial facilities due to the clement of risk since these
units do not have sufficient securities to offer for loans, lending institutions are hesitant to extend them loans.
To overcome this difficulty many countries including India and Japan have devised credit guarantee scheme
and credit insurance scheme.
 In India, credit guarantee scheme was introduced in 1960 with the object of enlarging the supply of
institutional credit to small industrial units by granting a degree of protection to lending institutions against
possible losses in respect of such advances. In Japan besides credit guarantee, insurance is also provided.
These schemes help small scale concerns to avail loan facilities without hesitation.
7. Underwriting of Securities
 Development banks acquire securities of industrial units through either direct subscribing or
underwriting or both. The securities may also be acquired through promotion work or by converting loans
into equity shares or preference shares. So development banks may build portfolios of industrial stocks and
bonds. These banks do not hold these securities on a permanent basis. They try to disinvest in these
securities in a systematic way which should not influence market prices of these securities and also should
not lose managerial control of the units.
 Development banks have become worldwide phenomena. Their functions depend upon the
requirements of the economy and the state of development of the country. They have become well
recognized segments of financial market. They are playing an important role in the promotion of industries in
developing and underdeveloped countries.

14. 1. Commercial bank
2. Industrial Finance Corporations of India
(I.F.C.I.)
3. Industrial Development Bank of India (IDBI)
4. Industrial credit and Investment corporation of
India (ICICI)
5. Small Industries Development Bank of
India(SIDBI)
6. State Financial Corporations (SFCs)
7.Venture capital funding
8. Angle capitalist

15. Commercial Banks are banking institutions that accept deposits and grant short-term
loans and Advances to their customers. In addition to giving short-term loans,
commercial banks also give Medium-term and long-term loan to business enterprises.
Now-a-days some of the commercial Banks are also providing housing loan on a long-
term basis to individuals. There are also many Other functions of commercial banks.
The Banking products/function of commercial banks are of two types.
(A) Primary functions; and
(B) Secondary functions.
(A) Primary functions
The primary functions of a commercial bank include
a) Accepting deposits; and
b) Granting loans and advances.
(B) Secondary functions
a. Issuing letters of credit, travelers cheque, etc.
b. Undertaking safe custody of valuables, important document and securities by
providing safe deposit vaults or lockers.
c. Providing customers with facilities of foreign exchange dealings.
d. Transferring money from one account to another; and from one branch to another
branch of the bank through cheque, pay order, demand draft.

16. Public Sector Banks: These are banks where majority stake is held by the
Government of India or Reserve Bank of India. Examples of public sector
banks are: State Bank of India,
Private sectors Banks: In case of private sector
banks majority of share capital of the Bank is held by
private individuals. These banks are registered as
companies with limited Liability.
Nationalized banks Name
Allahabad Bank
Andhra Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
Indian Bank
Indian Overseas Bank
Oriental Bank of Commerce
Punjab & Sind Bank
Punjab National Bank
State Bank of India
State Bank of Mysore
State Bank of Patiala
State Bank of Travancore
Syndicate Bank
UCO Bank
Union Bank of India
United Bank of India
Vijaya Bank
1. Bank of Punjab Ltd. (since merged with Centurian
Bank)
2. Centurian Bank of Punjab (since merged with
HDFC Bank)
3. Development Credit Bank Ltd.
4. HDFC Bank Ltd.
5. ICICI Bank Ltd.
6. IndusInd Bank Ltd.
7. Kotak Mahindra Bank Ltd.
8. Axis Bank (earlier UTI Bank)
9. Yes Bank Ltd.

17. IFCI was established as a statutory corporation on 1st July 1948 by special Act of
Parliament, IFCI Act, 1948.Management of IFCI- 12 directors, 4 are nominated by
the IDBI.
It was converted into a public limited company on July 1, 1993.
Its main object is to provide medium and long term credit to eligible industrial
concerns in corporate sectors of the economy, particularly to those industries to
which banking facilities are not available.
Objectives
 (a) To provide long and medium-term credit to industrial concerns engaged in
manufacturing, mining, shipping and electricity generation and distribution.
 (b) The period of credit can be as long as 25 years and should not exceed that
period;
 (c) To grant credit to a single concern up to a maximum amount of rupees one
crore. This limit can be exceeded with the permission of the government under
certain circumstances;
 (d) underwrite and directly subscribe to shares and debentures issued by
companies;
 (e) assist in setting up new projects as well as in modernization of existing
industrial concerns in medium and large scale sector;

18. DIRECT
FINANCING
JOINT
FINANCING

19. The main functions of I.F.C.I. are as under:-
i) Granting loans and advances for the establishment, expansion, diversification
and modernization of industries in corporate and co-operative sectors.
ii) Guaranteeing loans raised by industrial concerns in the capital market, both in
rupees and foreign currencies.
iii) Subscribing or underwriting the issue of shares and debentures by industries.
Such investment can be held up to 7 years.
iv) Guaranteeing credit purchase of capital goods, imported as well as purchased
within the country.
v) Providing assistance, under the soft loans scheme, to selected industries such
as cement, cotton textiles, jute, engineering goods,etc.
vi) Providing technical, legal, marketing and administrative assistance to any
industrial concern for the promotion, management and expansion of the
industrial concern.
vii) Providing equipment to the existing industrial concerns on lease under its
‘equipment leasing scheme’.
viii) Procuring and reselling equipment to eligible existing industrial concerns in
corporate or co-operative sectors.
ix) Rendering merchant banking services to industrial concerns.
In 1995-96, 67% of the total financial assistance distributed by IFCI was in the form
of rupee term loans, while foreign currency loans accounted for approximately
17% of total financial assistance. Thus the two types of assistance accounted
for a total of 84% of the total financial assistance by IFCI. The remaining 16%
of financial assistance, was in the form of underwriting, direct subscription,
guarantees and equipment leasing.

20. The Industrial Development Bank of India was set up in July 1964 as
a wholly owned subsidiary of the Reserve Bank of India.
The purpose was to enable the new institution to benefit from the
financial support and experience of RBI.
After a decade of its working, it was delinked from RBI in 1976, when
its ownership was transferred to the Government of India.
assisting the development of such institutions and providing credit
and other facilities for the development of industry. Thus the role
of IDBI may be stated as under:
(1)As an apex financial institution, it coordinates the working of other
financial institutions.
(2) It assists in the development of other financial institutions.
(3) It provides credit to large industrial concerns directly.
(4) It undertakes other activities for the development of industry.

21. The main objectives of IDBI is to serve as the apex
institution for term finance for industry in India. Its
objectives include
(1) Co-ordination, regulation and supervision of the
working of other financial institutions such as
IFCI , ICICI, UTI, LIC, Commercial Banks and
SFCs.
(2) Supplementing the resources of other financial
institutions and thereby widening the scope of
their assistance.
(3) Planning, promotion and development of key
industries and diversifications of industrial
growth.

22. The IDBI has been established to perform the following functions-
(1) To grant loans and advances to IFCI, SFCs or any other financial institution by way of refinancing of
loans granted by such institutions which are repayable within 25 year.
(2) To grant loans and advances to scheduled banks or state co-operative banks by way of refinancing of
loans granted by such institutions which are repayable in 15 years.
(3) To grant loans and advances to IFCI, SFCs, other institutions, scheduled banks, state co-operative
banks by way of refinancing of loans granted by such institution to industrial concerns for exports
(4) To discount or rediscount bills of industrial concerns.
(5) To underwrite or to subscribe to shares or debentures of industrial concerns.
(6) To subscribe to or purchase stock, shares, bonds and debentures of other financial institutions.
(7) To grant line of credit or loans and advances to other financial institutions such as IFCI, SFCs, etc.
(8) To grant loans to any industrial concern.
(9) To guarantee deferred payment due from any industrial concern.
(10) To guarantee loans raised by industrial concerns in the market or from institutions
(11) To provide consultancy and merchant banking services in or outside India.
(12) To provide technical, legal, marketing and administrative assistance to any industrial concern or person
for promotion, management or expansion of any industry.
(13) Planning, promoting and developing industries to fill up gaps in the industrial structure in India.
(14) To act as trustee for the holders of debentures or other securities

23. The following are the subsidiaries of IDBI.
(1) Small Industries Development Bank of India
(SIDBI)
(2) IDBI Bank Ltd.
(3) IDBI Capital Market Services Ltd.
(4) IDBI Investment Management Company

24.  ICICI is an Indian diversified financial services company
headquartered in Mumbai, Maharashtra.
 It is the second largest bank in India by assets and third largest
by market capitalization. It offers a wide range of banking products and
financial services to corporate and retail customers through a variety of
delivery channels and through its specialized subsidiaries in the areas
of investment banking, life and non-life insurance, venture capital and
asset management.
 The Bank has a network of 2,630 branches and 8,003 ATM's in India,
and has a presence in 19 countries, including India.
 Industrial Credit and Investment Corporation of India was established
as a joint stock company in the private sector in 1955.
 Its share capital was contributed by banks, insurance companies and
foreign institutions including the World Bank.
 Its major shareholders now are Unit Trust of India, Life Insurance
Corporation of India and General Insurance Corporation and its
subsidiaries.

25. The ICICI has been established to achieve the
following objectives:
(I) To assist in the formation, expansion and
modernization of industrial units in the private
sector;
(ii) To stimulate and promote the participation of
private capital (both Indian and foreign) in such
industrial units;
(iii) To furnish technical and managerial aid so as
to increase production and expand employment
opportunities;

26. The primary function of ICICI is to act as a channel for providing development finance
to industry. In pursuit of its objectives of promoting industrial development, ICICI
performs the following functions:-
(i) It provides medium and long-term loans in Indian and foreign currency for importing
capital equipment and technical services. Loans sanctioned generally go towards
purchase of fixed assets like land, building and machinery
(ii) It subscribes to new issues of shares, generally by underwriting them;
(iii) It guarantees loans raised from private sources including deferred payment;
(iv) It directly subscribes to shares and debentures;
(v) It provides technical and managerial assistance to industrial units;
(vi) It provides assets on lease to industrial concerns. In other words, assets are owned
by ICICI but allowed to be used by industrial concerns for a consideration called
lease rent.
(vii) It provides project consultancy services to industrial units for new
projects.
(viii) It provides merchant banking services

27. 1.ICICI Securities and Finance Co. Ltd.
2. ICICI Assets Management Co. Ltd.
3. ICICI Investors Services Ltd.
4. ICICI Banking Corporations Ltd.
5. Credit Rating Information Services of India Ltd.
(CRISIL)
6. Technology Development and Information Company
of India Ltd.(TDICI)
7. Programmers for the Advancement of Commercial
Technology.
8. `Programmer for Acceleration of Commercial
Energy Research (PACER)

28.  To meet the financial needs of small and
medium enterprises, the government of India
passed the State Financial Corporation Act in
1951, empowering the State governments to
establish development banks for their
respective regions.
 Under the Act, SFCs have been established by
State governments to meet the financial
requirements of medium and small sized
enterprises.

29. (1) Provide financial assistance to small and medium industrial concerns. These
may be from corporate or co-operative sectors as in case of IFCI or may be
partnership, individual or joint Hindu family business. Under SFCs Act,
“industrial concern” means any concern engaged not only in the manufacture,
preservation or processing of goods, but also mining, hotel industry, transport
maintenance of machinery, setting up or development of an industrial area or
industrial estate, etc.
(2) Provide long and medium-term loan repayable ordinarily within a period not
exceeding 20 years.
(3) Grant financial assistance to any single industrial concern under corporate or
co-operative sector with an aggregate upper limit of rupees Sixty lakhs. In any
other case (partnership, sole proprietorship or joint Hindu family) the upper limit
is rupees Thirty lakhs.
(4) Provide Financial assistance generally to those industrial concerns whose paid
up share capital and free reserves do not exceed Rs.3 crore.
(5) To lay special emphasis on the development of backward areas and small scale
industries.

30. (1) Grant of loans and advances to or subscribe to debentures of industrial concerns repayable within
a period not exceeding 20 years, with option of conversion into shares or stock of the industrial
concern.
(2) Guaranteeing loans raised by industrial concerns which are repayable within a period not
exceeding 20 years.
(3) Guaranteeing deferred payments due from an industrial concern for purchase of capital goods in
India.
(4) Underwriting of the issue of stock, shares, bonds or debentures by industrial concerns.
(5) Subscribing to, or purchasing of, the stock, shares, bonds or debentures of an industrial concern
subject to a maximum of 30 percent of the subscribed capital, or 30 percent of paid up share
capital and free reserve, whichever is less.
(6) Act as agent of the Central government, State government, IDBI,IFCI or any other financial
institution in the matter of grant of loan or business of IDBI, IFCI or financial institution.
(7) Providing technical and administrative assistance to any industrial concern or any person for the
promotion, management or expansion of any industry.
(8) Planning and assisting in the promotion and development of industries.

31.  Established in 1990 under an Act of Indian
Parliament.
 Objective: Promotion, Financing &
Development of MSMEs and Co-ordinating
Functions of institutions engaged in similar
activities.
 Ownership : Public sector banks/FIs/Insurance
Cos owned or controlled by the Government of
India.
 Structural Linkage: With Ministry of Finance
and Ministry of SSI.
 Nodal Agency : For SME Schemes of GoI

32. FINANCING
PROMOTION
DEVELOPMENT
CO-ORDINATION

33. • Direct Finance Operations : MSMEs, Service sector,
Infrastructure etc.
• Indirect Finance : Resource support to Banks, NBFCs, SFCs,
other State & central financing/ development agencies.
• Micro Credit operations : Pioneers in micro credit movement
in the country. Developed several leading MFIs.
• Associate Institutions ISTSL & Credit Guarantee Fund, India
SME Asset: SIDBI Venture Capital Ltd, MSME Rating
Agency,Reconstruction Company Ltd.
• Nodal Agency : For several GoI schemes like
 TUFS, CLCSS and IDLSS
 Food Processing and Devp. Of Integrated Infrastructure
 Development (IID) Projects.

34. Enhancement in the flow of financial
assistance to SSIs
Enhancement in the capabilities of
SSIs at all levels
SIDBI,s assistance now covers:
Equity
Term loan
working capital for inventory

35.  Enterprise promotion
 Human resource development
 Technology upgradation
 Environmental and quality management
 Information dissemination
 Market promotion

36.  National Bank for Agriculture and Rural
Development (NABARD) is an apex development bank
in India having headquarters based in
Mumbai (Maharashtra) and other branches are all over the
country.
 It was established on 12 July 1982 by a special act by the
parliament and its main focus was to uplift rural India by
increasing the credit flow for elevation of agriculture & rural
non farm sector and completed its 25 years on 12 July
2007.
 It has been accredited with "matters concerning policy,
planning and operations in the field of credit
for agriculture and other economic activities in rural areas in
India".
 RBI sold its stake in NABARD to the Government of India,
which now holds 99% stake

37. OBJECTIVES OF NABARD
1 . To give financial assistance for increasing the agricultural production
2.To supply the long term needs of the rural areas
3.To supply loans by way of refinance
4.To help small industries ,cottage industries and also artisans
5.To achieve overall rural development
FUNCTIONS OF NABARD
 Credit functions
 Development functions
 Regulatory functions
 Apex institution for rural finance
 Refinance institutions
 Contribution of share capital
 Investment in securities
 Conversion and rescheduling facilities
 Financial help to non –agricultural sector
 Training programs
 Co-ordination of actvities
ACHIEVEMENT OF NABARD
 Short term assistance
 long term assistance
 Schematic lending
 Assistance to less developed states
 Assistance to non-farm sector
 Rehabilitation programme
 Assistance to research and development projects
 Credit plans under the new strategy
 Integrated rural development programme
 Regional rural banks

38.  The Industrial Investment Bank of India is a 100% government of India-
owned financial investment institution. It was established in 1971 by resolution
of the Parliament of Indiau/s 617 of the Companies Act.The bank was
headquartered at Kolkata and has presence in New
Delhi, Mumbai, Chennai, Bengaluru, Ahmedabad and Guwahati.
 The Industrial Reconstruction Corporation of India Ltd., set up in 1971 for
rehabilitation of sick industrial companies, was reconstituted as Industrial
Reconstruction Bank of India in 1985 under the IRBI Act, 1984. With a view to
converting the institution into a full-fledged development financial institution,
IRBI was incorporated under the Companies Act 1956, as Industrial Investment
Bank of India Ltd. (IIBI) in March 1997. IIBI offered a wide range of products
and services, including term loan assistance for project finance, short duration
non-project asset-backed financing, working capital/other short-term loans to
companies, equity subscription, asset credit, equipment finance and
investments in capital market and money market instruments.
 In 2005, a merger of IIBI, IDBI and IFCI was considered, but IDBI refused and
it was decided in 2006-2007 to close the bank. As of 2011, the bank operated
from its sole remaining office in Kolkata. Deloitte and Touche was appointed to
dispose of IIBI's Non-Performing assets.

39. •It is provider of financial, advisory and management services
in the infrastructure space
•The Company also has interests in Asset Management,
Investment Banking and Brokerage
•Incorporated on January 30, 1997 in Chennai on the
recommendations of the 'Expert Group on
Commercialization of Infrastructure Projects' under the
Chairmanship of Dr. Rakesh Mohan
 Initially IDFC focused on power , roads , ports and
telecommunications
 Now it has broaden its frame work to energy, information
technology, urban infrastructure, food and agribusiness
infrastructure

40.  Pursuit of four objectives
› Delivering Profitability
› Pursuing Innovation
› Growing its Asset base
› Promoting Thought Leadership
 Focus on four key sectors
› Transport
› Energy
› Telecommunications (Telecom) and IT
› Industrial and Commercial Infrastructure
 Delivery of four main products
› Project Finance
› Equity Finance
› Structured Products
› Advisory/ Investment Banking Services
 Exploration of four new frontiers
› Urban Services
› Rural Infrastructure
› Food Business Infrastructure
› Agri Business Infrastructure

41. About IDFC Project Finance
 The core business at IDFC Project Finance is lending to
infrastructure projects. The business is capital intensive
and focuses on managing the loan book
 While this creates a base income stream it also provides
us with the bridge to clients to build larger and wider
customer engagement
IDFC as Infrastructure Finance Co.
 Infrastructure Development Finance Company (IDFC)
the Reserve Bank has classified the company as an
infrastructure finance company, which will help the term
lender access cheaper resources.
 IDFC has been classified by the Reserve Bank of India as
infrastructure finance company within overall classification
of Non Banking Finance Company (NBFC), the term
lender informed the Bombay Stock Exchange.
 The status given to the company would allow it mobilize
funds at lower cost and get flexibility in the infrastructure
lending, sources said.

42. Objective : Providing and promoting private financing of Indian infrastructure.
Products under Project Finance:
› Senior Debt Financing
› Mezzanine Products
› Principal Investments
› Non-fund based Products
IDFC – Investment Banking
 Category-1 Merchant Bank
 Private placements of equity and debt, public offerings and project advisory to mergers and
acquisitions.
 Amongst the most prominent Indian brokers for institutional investors.
 Cater to a wide variety of investors including Pension Funds, Long-only Funds, Hedge Funds, Mutual
Funds, Banks, Insurance companies and Portfolio Management companies.
Alternate Asset Management- IDFC Private Equity
 Set up in 2002
 IDFC is India’s largest and most active private equity firm focused on infrastructure and manage a
corpus of
Rs. 60 billion (USD 1.3 billion).
 Through these funds, IDFC has invested in companies whose underlying assets range from ships,
airports, trucks, power plants and telecom towers to hotel rooms, amusement parks, roads and
bridges, gas pipeline, clean energy and rail container licenses.
 IDFC manages the India Infrastructure Fund (IIF), a SEBI- registered domestic venture capital fund
focused on infrastructure with a corpus of INR 38 billion(USD 927
million).
 IIF focuses on investing equity for the long-term in a diversified portfolio of infrastructure assets in
India.
 To identify and invest in exceptional mid-market growth-oriented private equity funds in the Asian
emerging markets of China, India, Central Asia, and Southeast
Asia.

43. Alternate asset management- IDFC Projects
 IDFC Projects delivers a strong value proposition in developing and implementing
infrastructure
projects.
 IDFC works in active collaboration with Central and State Governments as well as
private sectors to develop, finance, execute and manage infrastructure projects in
India.
Public Market Asset Management- IDFC Mutual Funds
 IDFC Mutual Fund was acquired in 2008-09.
 It manages different mutual fund products for institutional and retail investors.
 Generates income through asset management fees.
 Focuses on growing the assets under management by offering suitable products and
channeling private and corporate savings into the debt.
Risk Management
 Three kinds of risks:
› Market Risk
› Credit Risk
› Operational Risk
 Implements an Enterprise Risk Management (ERM) framework that adopts an
integrated approach to manage all the three types of risks.
 There is focus on loan portfolio assessment, Asset-Liability Management (ALM), and
loan pricing.
 On the credit risk front, there is a comprehensive portfolio review of all project assets
and equity investments of the Company on a semi-annual basis.
 Management of Market Risk involves measuring interest rate risk on a regular basis as
well as testing newer models for analysis.

44. Awards and Recognition
 Project Finance International Asia Pacific Awards 2009
 Private Equity International Awards 2009
 Asia Money Brokers poll
 Crisil Ratings
 Infrastructure Investor Awards 2009
 Lipper Fund Awards 2010
 ICRA Awards 2009
 Economic Times Quarterly Mutual Fund Tracker
Approvals and Disbursements
 Disbursements has almost doubled from 2006 to 2010
 Approvals have almost tripled from 2006 to 2010
0
10,000
20,000
30,000
40,000
Disbursements
Approvals

45.  Export import bank of India is the premier export finance
institution in India, established in 1982 under Export-
Import Bank of India Act 1981.
 Since its inception, Exim Bank of India has been both a
catalyst and a key player in the promotion of cross border
trade and investment.
 Exim bank of India, over the period, evolved into an
institution that plays an important role in partnering Indian
industries, particularly the Small and Medium Enterprises
 Headquarters :- Mumbai, India
 Key people :- Yaduvendra Mathur.

46. ORIGIN OF EXIM BANK
 Post WTO era resulted in dismantling of
protective barriers to trade and investment
 Increase in trade opportunities in global
markets
 Need for the country to enhance their domestic
competitiveness
 Absence of any specialised institution to
enhance foreign trade in country
Objectives
 For providing financial assistance to exporters and
for functioning as the principal financial institution
for coordinating the working of institutions engaged
in financing export and import of goods and
services with a view to promote the country’s
international trade.

47. Management
 Chairman and managing Director
 5 Directors : Government of India APPOINTED BY GOVERNMENT OF INDIA
 3 Directors : Scheduled Bank
 4 Directors : Professionals/ Experts
 1 Director nominated by RBI
 1 Director nominated by IDBI
 1 director nominated by ECGC

48. Domestic Offices Overseas Offices
 Ahemdabad
 Banglore
 Chandigarh
 Chennai
 Guwahti
 Hyderabad
 Kolkatta
 New Delhi
 Mumbai
 Pune
 Addis Ababa
 Dakar
 Dubai
 Durban
 London
 Singapore
 Washington D. C

49. Corporate Banking
Group
Project/Trade
Finance
Export Marketing
Group
Export Services
Group
Functions of
EXIM Bank

50.  Corporate Banking Group :- This group handles variety
of financing programmes for Export Oriented Units
(EOU’s), Importers, and overseas investment by Indian
companies.
 Project Finance/ Trade Finance :- This group handles
the entire range of export credit services such as
suppliers credit, pre-shipment Agri-business Group etc.
The group handles projects and export transactions in the
agricultural sector for financing.
 Export Services Group :- This group offers variety of
advisory and value-added information services aimed at
investment promotion.
 Export Marketing Group :- This group offers assistance
to Indian companies, to enable them to establish their
products in overseas markets.
 Support Services Group :- The services which are
rendered by this group includes the Areas of research and
planning, Corporate Finance, Loan Recovery, Internal
Audit etc.

51.  A trust that pools the savings of investors who share a common
financial goal is known as mutual fund. The money collected is
then invested in financial instruments such as shares,
debentures and other securities the income and capital
appreciation realized are shared by its unit holders in proportion
to the number of units owned by them.
 Investment in securities are spread over a wide cross section of
industries and sectors reducing the risk of the portfolio.
 Mutual funds are mobilizers of saving of the small investors in
instruments like stock and money market instruments.
 Mutual funds are corporation that accept money from investors
and use this money to buy stocks, long term bonds, short term
debt instruments issued by businesses or Govt.

52.  Mobilizing small savings: mutual funds mobilize funds by selling their own
shares known as units. This gives the benefit of convenience and satisfaction
of owning shares in many industries. Mutual fund invest in various securities
and pass on the returns to the investors.
 Investment Avenue: the basic characteristic of a mutual fund is that it
provides an ideal avenue for investment for investors and enables them to earn
a reasonable return with better liquidity. It offers investors a proportionate claim
on the portfolio of assets that fluctuate in value.
 Professional management: mutual fund provides investors with the benefit of
professional and expert management of their funds. Mutual fund employees
professionals/experts who manage the investment portfolios efficiently and
profitably. Investors are relieved from the responsibility of following the markets
on a regular basis.
 Diversified investment: mutual fund have the advantage of diversified
investment of funds in various industries and sectors. This is beneficial to small
investors who cannot afford to buy shares of established companies at high
prices. Mutual fund allow millions of investors who have investments in variety
of securities of different companies.
 Better liquidity: mutual fund have the distinct advantage of better liquidity of
investment. There is always a market available for mutual funds. In case of
mutual funds it is obligatory that units are listed and traded thus offering our
secondary markets for the funds. A high level of liquidity is possible for the fund
holders because of more liquid securities in the mutual fund portfolio.

53.  Reduced risks: the risk on mutual fund is minimum. This is because
of expert management diversification , liquidity and economies of
scale in transaction cost.
 Investment protection: mutual funds are regulated by guidelines and
legislative provisions put in place by regulatory agencies such as SEBI
in order protect the investor interest the mutual funds are obligated to
follow the provisions laid down by the regulators.
 Switching facility: mutual funds provide investors with the flexibility to
switch from one scheme to another, this flexibility enables investors to
switch from income scheme to growth scheme and from close ended
scheme to open ended scheme.
 Tax benefits: mutual funds offer tax shelter to the investors by
investing in various tax saving schemes under the provisions provided
by the income tax act.
 Low transaction cost: the cost of purchase and sale of MF’s is
relatively lower.
 Economic development: MF’s contribute to economic development
by mobilizing savings and channelizing them to more productive
sectors of the economy.
 Convenience: MF units can be traded easily with little or no
transaction cost.

54. First Phase – 1964-87
 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the
Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve
Bank of India.
 The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700
crores of assets under management.
Second Phase – 1987-1993 (Entry of Public Sector Funds)
 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life
Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).
 SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987.
Third Phase – 1993-2003 (Entry of Private Sector Funds)
 With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry,
giving the Indian investors a wider choice of fund families.
 In 1993 was the year in which the first Mutual Fund Regulations came into being, under which all
mutual funds, except UTI were to be registered and governed.
Fourth Phase – since February 2003
 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was divided into two
separate entities.
 One is the Specified Undertaking of the Unit Trust of India with assets under management of
Rs.29,835 crores as at the end of January 2003.
 The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with
SEBI and functions under the Mutual Fund Regulations.

56. TYPES OF MUTUAL FUNDs
Mutual
Funds
By Maturity
Period
By Investment
Objective
Equity
Income
Balance
fund
Money
market
Gilt
fund
Index
fund
Close
ended
Open
ended
by:GurmeetSingh

57. Operational classification:
 Open ended scheme: when a fund is accepted and liquidated on a continuous
basis by a MF manager, it is called as open ended scheme. The fund manager
buys and sells units constantly as demanded by the investors. The
capitalization of the funds changes constantly as it is always open for the
investors to buy or sell their units. The scheme provides excellent liquidity
facility to the investors. The buying and selling of units takes place at a declared
NAV(Net Asset Value)
 Close ended scheme: when a units of a scheme liquidated only after the
expiry of a specified period it is known as close ended fund. Such funds have
fixed capitalization and remain with the mutual fund manager, units of close
ended schemes are traded on stock exchange in the secondary market. The
price is determined on the basis of supply and demand. There are 2 prices for
such funds, one that is market determined and the other is NAV based the
market price may be above or below NAV. Managing a close ended scheme is
comparatively easy for the fund Manager. The fund can be liquidated after a
specified period.
 Interval scheme: it is kind of close ended scheme with a feature that it remains
open during a particular part of the year for the benefit of investors, to either off
load or to undertake purchase of units at a NAV.

58.  Income fund scheme: this scheme is customised to suit the needs of
investors who are particular about regular returns. The scheme offers
maximum current income where by the income earned by the units is
distributed periodically there are 2 types of such schemes, one that
earns a target constant income at relatively low risk while the other
offers maximum possible income.
 Growth scheme: it is a MF scheme that offers the advantage of
capital appreciation of the underlying investment such funds invest in
growth oriented securities that are capable of appreciating in the long
run. The risk attached with such funds is relatively higher.
 Conservative fund Scheme: a scheme that aims at providing a
reasonable rate of return, protecting the value of investment and
achieving capital appreciation is called a conservative fund scheme. It
is also known as middle of road funds as it offers a blend of the above
features. Such funds divide their portfolio in stocks and bonds in such
a way that it achieves the desired objective.

59.  Equity fund: such fund invest in equity shares they carry a high degree of risk
such fund do well in favorable market conditions. Investments are made in
equity shares in diverse industries and sectors.
 Debt funds: Such fund invest in debt instruments like bonds and debentures.
These funds carry the advantage of secure and steady income there is little
chance of capital appreciation. Such funds carry no risk. A variant of this type of
fund is called liquid fund which specializes in investing in short term money
market instruments.
 Balanced funds: such scheme have a mix of debt and equity in their portfolio
of investments. The portfolio is often shifted between debt and equity
depending upon the prevailing market conditions.
 Sectoral fund: Such fund invest in specific sectors of the economy. The
specialized sectors may include real estate infrastructure, oil and gas etc,
offshore investments, commodities like gold and silver.
 Fund of Funds: such funds invest in units of other mutual funds there are a
number of funds that direct investments into specified sectors of economy. This
makes diversified and intensive investments possible.

60.  Leverage funds: the funds that are created out of investments with not
only the amount mobilized from investors but also from borrowed money
from the capital markets are known as leveraged funds. Fund managers
pass on the benefit of leverage to the mutual fund investors. Additional
provisions must be made for such funds to operate. Leveraged funds
use short sale to take advantage of declining markets in order to realize
gains. Derivative instruments like options are used by such funds.
 Gilt fund : These funds seek to generate returns through investment in
govt. securities. Such funds invest only in central and state govt.
securities and REPO/ reverse REPO securities. A portion of the corpus
may be invested in call money markets to meet liquidity requirements.
Such funds carry very less risk. Their prices are influenced only by
moment in interest rates.
 Indexed funds: these funds are linked to specific index. Funds
mobilized under such schemes are invested in securities of companies
included in the index of any exchange. The fund performance is linked to
the growth in concerned index.
 Tax saving schemes: certain MF schemes offer tax rebate on
investments made in equity shares under section 88 of income tax act.
Income may be periodically distributed depending on surplus.
Subscriptions made Upto Rs.10000 are eligible for tax rebate under
section 88 for such scheme. The investment of the scheme includes
investment in equity, preference shares and convertible debentures and
bonds to the extent 80-100% and rest in money market instruments.

61.  Mutual Funds in India follow a 3-tier structure.
 The first tier is the sponsor who thinks of starting the fund.
 The second tier is the trustee. The Trustees role is not to
manage the money. Their job is only to see, whether the
money is being managed as per stated objectives.
Trustees may be seen as the internal regulators of a
mutual fund.
 Trustees appoint the Asset Management Company (AMC)
who form the third tier, to manage investor’s money. The
AMC in return charges a fee for the services provided and
this fee is borne by the investors as it is deducted from the
money collected from them

62.  Any corporate body which initiates the launching of a
mutual fund is referred to as “The sponsor”.
 The sponsor is expected to have a sound track record and
experience in financial services for a minimum period of 5
years and should ensure various formalities required in
establishing a mutual fund.
 According to SEBI, the sponsor should have professional
competence, financial soundness and reputation for
fairness and integrity. The sponsor contributes 40% of the
net worth of the AMC. The sponsor appoints the trustee,
The AMC and custodians in compliance with the
regulations.

63.  Sponsor creates a public trust and appoints trustees.
Trustees are the people authorized to act on behalf of the
Trust. They hold the property of mutual fund.
 Once the Trust is created, it is registered with SEBI after
which this trust is known as the mutual fund. The Trustees
role is not to manage the money but their job is only to
see, whether the money is being managed as per stated
objectives. Trustees may be seen as the internal
regulators of a mutual fund.
 A minimum of 75% of the trustees must be independent of
the sponsor to ensure fair dealings.
 Trustees appoint the Asset Management Company (AMC),
to manage investor’s money.

64.  A custodian’s role is keeping custody of the securities that are
bought by the fund manager and also keeping a tab on the
corporate actions like rights, bonus and dividends declared by
the companies in which the fund has invested.
 The Custodian is appointed by the Board of Trustees. The
custodian also participates in a clearing and settlement system
through approved depository companies on behalf of mutual
funds, in case of dematerialized securities.
 Only the physical securities are held by the Custodian. The
deliveries and receipt of units of a mutual fund are done by the
custodian or a depository participant at the instruction of the
AMC and under the overall direction and responsibility of the
Trustees. Regulations provide that the Sponsor and the
Custodian must be separate entities.

65.  Trustees appoint the Asset Management Company (AMC), to manage investor’s
money. The AMC in return charges a fee for the services provided and this fee is
borne by the investors as it is deducted from the money collected from them.
 The AMC’s Board of Directors must have at least 50% of Directors who are
independent directors. The AMC has to be approved by SEBI. The AMC
functions under the supervision of it’s Board of Directors, and also under the
direction of the Trustees and SEBI.
 It is the AMC, which in the name of the Trust, floats new schemes and manage
these schemes by buying and selling securities. In order to do this the AMC
needs to follow all rules and regulations prescribed by SEBI and as per the
Investment Management Agreement it signs with the Trustees.
 The role of the AMC is to manage investor’s money on a day to day basis. Thus it
is imperative that people with the highest integrity are involved with this activity.
 The AMC cannot deal with a single broker beyond a certain limit of transactions.
 The AMC cannot act as a Trustee for some other Mutual Fund.
 The responsibility of preparing the OD lies with the AMC.
 Appointments of intermediaries like independent financial advisors (IFAs),
national and regional distributors, banks, etc. is also done by the AMC.
 Finally, it is the AMC which is responsible for the acts of its employees and
service providers.

66.  The registrar and transfer agents are appointed by
the AMC. AMC pay compensation to these agents
for their services. They carry out the following
functions
 Receiving and processing the application forms of
investors
 Issuing unit certificates
 Sending refund orders
 Giving approval for all transfers of units and
maintaining records
 Repurchasing the units and redemption of units
 Issuing dividend or income warrents

67. Fund Accountants
 Fund accountants are appointed by the AMC. The are in charge
of maintaining proper books of accounts relating to the fund
transactions and management. The perform the following
functions
 Computing the net asset value per unit of the scheme on a daily
basis
 Maintaining its books and records
 Monitoring compliance with the schemes, investment limitations
as well as SEBI regulations
 Preparing and distributing reports of the schemes for the unit
holders and SEBI and monitoring the performance of mutual
funds custodians and other service providers.
Lead Manager
 Lead manager carry out the following functions:
› Selecting and coordinating the activities of intermediaries such as
advertising agency, printers, collection centers.
› Carrying out extensive campaign about the scheme and acting as
marketing associates to attract investors.
› Assisting the AMC to approach potential investors through meetings,
exhibitions, contacts, advertising, publicity and sales promotion.

68. Investment Advisors
 Investment advisors carry out market and security analysis.
 Advising the AMC to design its investment strategies on a continuous
basis.
 They are paid for their professional advice regarding fund investment
on the average weekly value of the fund’s net assets.
Legal Advisors
 Legal advisors are appointed to offer legal guidance about planning
and execution of different schemes.
 A group of advocates and solicitors may be appointed as legal
advisors.
 Their fee is not associated with net assets of the fund.
Auditors and Underwriters
 An auditor is appointed by the AMC and must undertake independent
inspection and verification of its accounting activities.
 Mutual funds also undertake the activities of underwriting issues. Such
activities generate an additional source of income for mutual funds.
Prior approval from SEBI is necessary for undertaking such activity

69.  Creating fund manager: A fund manager is responsible for
managing the funds of the AMC. The fund manager should be
an independent agency but in India a single fund manager
handles many schemes simultaneously. The basic function of
fund managers is to decide the rate, time, kind and quantum of
securities to be brought and sold. The fund manager ensures
the success of the fund scheme.
 Research and Planning: the research and planning cell of AMC
undertake research activities relating to securities as well as
prospective investors the results of the study are analyzed to
draft future policies governing investments.
 Creating dealers: Dealers having a deep understanding of
stock market operations may be created by the AMC in order to
execute sales and purchase transactions in the capital and
money market. Dealers should comply with all formalities of sale
and purchases through brokers.

70.  Setting investment goals: The first task of managing the portfolio of mutual
fund is to identify and set the goals for the proposed scheme the goal is set
keeping in mind the nature of the scheme, risk and return, market condition,
regulatory norms, size of the issue and investor protection.
 Identifying specific securities: Efforts are made to analyze and identify the
right securities where the fund should invest in. security analyses is carried out
and risk and return characteristics are evaluated.
 Portfolio designing: it involves making an ideal mix of debt and equity
securities of corporate, govt. etc. It is concerned with decisions regarding the
type of securities to be bought, the quantum and timing of issue. Portfolio
design is carried out on the basis of research and analyses of stock market and
devising investment strategies. The portfolio should be well diversified so as to
reduce the total risk of the portfolio.
 Portfolio revision: The portfolio must be reviewed periodically keeping in mind
the risk return characteristics, the revision of the portfolio is done by keeping in
mind the dynamic investment climate

71.  Mutual Funds give investors best of both the worlds. Investor’s money is managed by professional fund
managers and the money is deployed in a diversified portfolio. Mutual Funds help to reap the benefit of
returns by a portfolio spread across a wide spectrum of companies with small investments.
 A mutual fund analyses the investments for investors as fund managers assisted by a team of research
analysts analyze the market daily.
 Investors can enter / exit schemes anytime they want (at least in open ended schemes). They can invest
in an SIP, where every month, a stipulated amount automatically goes out of their savings account into a
scheme of their choice.
 There may be a situation where an investor holds some shares, but cannot exit the same as there are no
buyers in the market. Such a problem of illiquidity generally does not exist in case of mutual funds, as the
investor can redeem his units by approaching the mutual fund.
 As more and more AMCs come in the market, investors will continue to get newer products and
competition will ensure that costs are kept at a minimum.
 Investors can either invest with the objective of getting capital appreciation or regular dividends i.e.,
mutual fund are structured to suit the needs of all investors.
 An investor with limited funds might be able to invest in only one or two stocks / bonds, thus increasing his
/ her risk. However, a mutual fund will spread its risk by investing a number of sound stocks or bonds. A
fund normally invests in companies across a wide range of industries, so the risk is diversified.
 Mutual Funds regularly provide investors with information on the value of their investments. Mutual Funds
also provide complete portfolio disclosure of the investments made by various schemes and also the
proportion invested in each asset type.
 The large amount of Mutual Funds offer the investor a wide variety to choose from. An investor can pick
up a scheme depending upon his risk/ return profile
 All the Mutual Funds are registered with SEBI and they function within the provisions of strict regulation
designed to protect the interests of the investor

72.  Regulations ensure that schemes do not invest beyond a certain percent of their
NAVs in a single security. Some of the guidelines regarding these are given below
 No scheme can invest more than 15% of its NAV in rated debt instruments of a
single issuer. This limit may be increased to 20% with prior approval of Trustees.
This restriction is not applicable to Government securities.
 No scheme can invest more than 10% of its NAV in unrated paper of a single issuer
and total investment by any scheme in unrated papers cannot exceed 25% of NAV.
 No fund, under all its schemes can hold more than 10% of company’s paid up
capital
 No scheme can invest more than 10% of its NAV in a single company.
 If a scheme invests in another scheme of the same or different AMC, no fees will be
charged. Aggregate inter scheme investment cannot exceed 5% of net asset value
of the mutual fund
 No scheme can invest in unlisted securities of its sponsor or its group entities.
 Schemes can invest in unlisted securities issued by entities other than the sponsor
or sponsor’s group. Open ended schemes can invest maximum of 5% of net assets
in such securities whereas close ended schemes can invest upto 10% of net assets
in such securities
 Schemes cannot invest in listed entities belonging to the sponsor group beyond
25% of its net assets

73. The regulations governing the functioning of mutual funds in India
were introduced by SEBI in Dec 1996. The objectives of these
regulations was to bring in existence the regulatory norms for
the formation, operation and management of mutual funds in
India. The regulations also laid down the broad guidelines on
investment valuation, investment restriction, advertising code
and code of conduct for mutual funds and AMCs.
Registration of mutual funds
 Every mutual fund shall be registered with SEBI through an
application to be made by the sponsor in a prescribed format
accompanied by an application fee of Rs.25000.
 Every mutual fund shall pay Rs.25lakhs towards registration fee
and Rs:2.5lakhs per annum as service fees.
 Registration shall be granted by the board on fulfillment of
conditions such as sponsor’s, sound track record of 5yrs
integrity, net worth etc.

74. Regulations for the trust
 Mutual fund shall be constituted in the form of a trust under the provisions of Indian
Registrations Act and provisions laid down by SEBI.
 A trustee should be person of integrity, ability, and should not have been found guilty or
being convicted of any economic offence or violation of securities law.
 At least 50% of the trustees shall be independent trustees.
 The trustees and the AMC with SEBI’s prior approval shall enter into an investment
management agreement.
 The trustees shall ensure the AMC has the necessary infrastructure and personnel.
 The trustees shall ensure that AMC is monitoring security transaction with brokers.
 The trustees shall ensure that the EMC has been managing the scheme independently.
 The trustees should fulfill all its duties in order to protect the interest of the investors.
Regulations for AMC
 It should have a sound track record, reputation and fairness in transaction.
 The sponsor or trustee shall appoint an AMC with SEBI’s approval.
 The appointment of the AMC can be terminated by majority of trustees or by 75% of unit
holders.
 The directors of AMCs should have adequate professional experience.
 At least 50% of the director’s of the AMC should not be associated with the sponsors or it’s
subsidiaries or the trustees.
 The chairman of the AMC should not be trustee of any other mutual fund.
 The AMC shall have a minimum net worth of Rs.10 crores.
 The AMC shall not act as an AMC for any other mutual funds.

75. Regulations for custodians
 The mutual fund shall appoint a custodian to carry out the custodian services
for the schemes of the fund.
 The agreement with the custodian shall be entered into with prior approval of
trustees.
Regulations for Schemes of mutual funds
 All the schemes to be launched by the AMC should be approved by the
trustees and are to be filed with SEBI.
 The offer document should contain adequate disclosures to enable the
investors to make informed decisions.
 Advertisement of schemes should be in conformance with SEBI’s code.
 The listing of closed ended schemes is mandatory and it should be listed on a
recognized stock exchange within 6 months of its subscriptions.
 Units of close ended schemes can be opened for redemption at a fixed interval.
 The AMC shall specify in the offer document the minimum subscription to be
raised under the scheme.
 The AMC may repurchase, reissue the units of close ended schemes.
 The units of close ended schemes can be converted into open ended
schemes.
 Any scheme on mutual fund shall not be opened for subscription after 45 days.
 The mutual fund and AMC shall be liable to refund the application money to the
applicants if minimum subscription is not received.

76.  Exchange Traded Funds (ETFs) are mutual fund units which investors buy or sell
from the stock exchange, as against a normal mutual fund unit, where the investor
buys / sells through a distributor or directly from the AMC.
 ETFs have relatively lesser costs as compared to a mutual fund scheme
 The ETF structure is such that the AMC does not have to deal directly with
investors or distributors. It instead issues units to a few designated large
participants, who are also called as Authorized Participants (APs), who in turn act
as market makers for the ETFs.
 The Authorized Participants provide two way quotes for the ETFs on the stock
exchange, which enables investors to buy and sell the ETFs at any given point of
time when the stock markets are open for trading
 Exchange Traded Funds (ETFs) are mutual fund units which investors buy or sell
from the stock exchange, as against a normal mutual fund unit, where the investor
buys / sells through a distributor or directly from the AMC.
 ETFs have relatively lesser costs as compared to a mutual fund scheme
 The ETF structure is such that the AMC does not have to deal directly with
investors or distributors. It instead issues units to a few designated large
participants, who are also called as Authorized Participants (APs), who in turn act
as market makers for the ETFs.
 The Authorized Participants provide two way quotes for the ETFs on the stock
exchange, which enables investors to buy and sell the ETFs at any given point of
time when the stock markets are open for trading

77.  An Exchange Traded Fund (ETF) is essentially
a scheme where the investor has to buy/ sell
units from the market through a broker (just as
he would by a share).
 An investor must have a demat account for
buying and selling ETFs.
 An important feature of ETFs is the huge
reduction in costs. While a typical Index fund
would have expenses in the range of 1.5% of
Net Assets, an ETF might have expenses
around 0.75%

78. Various Mutual Funds in India
 State Bank of India mutual fund
 ICICI prudential mutual fund
 TATA mutual fund
 HDFC mutual fund
 Birla sun life mutual fund
 Reliance mutual fund
 Kotak Mahindra mutual fund etc..