This document discusses investment banks and their roles. It explains that investment banks generate funds through public offerings on the stock market or through private equity/venture capital. Their main activities include facilitating mergers and acquisitions, private placements of debt and equity, underwriting securities, managing capital issues, and providing various advisory services. The document also outlines the initial public offering process and discusses mergers and acquisitions, including different types of mergers and motives for mergers and acquisitions. It notes the impacts of mergers and acquisitions on employees, management, and shareholders.
The document discusses various methods of raising capital in the primary market, including the pure prospectus method, offer for sale method, private placement method, initial public offer, right issue method, bonus issue method, book-building method, and employee stock option schemes. It then defines the capital market and its key constituents, including the gilt-edged market for government securities and the industrial securities market comprising the primary market for new issues and the secondary market for existing securities traded on stock exchanges.
This document provides information on IPO grading in India. IPO grading is done by credit rating agencies registered with SEBI and provides a relative assessment of an IPO's fundamentals on a 5-point scale. Obtaining an IPO grade is now mandatory for companies filing draft offer documents. The grade considers factors like industry prospects, financial position, management quality, and risks. However, the grade does not consider issue price and is not a recommendation on subscribing to the IPO. Investors must also consider risk factors and price disclosed in the prospectus.
This document provides an overview of the primary market in India, including its key players and functions. It discusses the various intermediaries that facilitate capital raising in the primary market, such as merchant bankers, underwriters, bankers to an issue, brokers to an issue, registrars to an issue, debenture trustees, and portfolio managers. It outlines their registration requirements with SEBI, obligations and responsibilities, and potential penalties for non-compliance. Overall, the primary market deals with new security issuances and facilitates capital formation, which is crucial for corporate and economic growth.
This document discusses various methods of floating new issues or initial public offerings (IPOs) of company shares. It describes prospectus offerings, bought deal offerings, private placements, rights issues, and book building. A prospectus offering involves publishing details of the new issue and inviting public subscription through applications. Bought deals involve an investment bank purchasing shares from promoters and reselling them to the public. Private placements directly sell new shares to financial institutions and corporations. Rights issues offer existing shareholders the first opportunity to purchase new shares proportionate to their current holdings. Book building involves promoters collecting public feedback to determine pricing and structure of the new issue.
This document discusses various aspects of raising capital through a public issue in the primary market. It describes the objectives of issuing capital, parties involved like managers, registrars, underwriters, bankers, advertising agents, and government agencies. It also covers aspects considered in selecting underwriters, placement of issues through prospectus, rights issues, private placements, book building, and factors for investors to consider.
The primary market allows companies to issue new securities to raise capital directly from investors. It involves an initial public offering (IPO) process where a company issues shares on a stock exchange for the first time. The document discusses the key participants in the IPO process like merchant bankers and registrars. It also outlines the steps of preparing and filing an offer document with regulators, opening subscriptions, allocating shares, and ultimately listing the company's shares on a stock exchange. The primary market thus facilitates capital formation for companies through public issuances.
This document provides an overview of financial markets and the primary market. It defines financial markets as the institutional arrangement for dealing in financial assets and instruments. It then classifies financial markets into organized and unorganized markets. The organized market includes the capital market, which deals in long-term securities, and the money market, which deals in short-term securities. Within the capital market, it describes the primary market, where new securities are issued, and the secondary market, where existing securities are traded. It provides details on the key players and functions in the primary market, including origination, underwriting, and distribution of new securities.
The document discusses various methods of raising capital in the primary market, including the pure prospectus method, offer for sale method, private placement method, initial public offer, right issue method, bonus issue method, book-building method, and employee stock option schemes. It then defines the capital market and its key constituents, including the gilt-edged market for government securities and the industrial securities market comprising the primary market for new issues and the secondary market for existing securities traded on stock exchanges.
This document provides information on IPO grading in India. IPO grading is done by credit rating agencies registered with SEBI and provides a relative assessment of an IPO's fundamentals on a 5-point scale. Obtaining an IPO grade is now mandatory for companies filing draft offer documents. The grade considers factors like industry prospects, financial position, management quality, and risks. However, the grade does not consider issue price and is not a recommendation on subscribing to the IPO. Investors must also consider risk factors and price disclosed in the prospectus.
This document provides an overview of the primary market in India, including its key players and functions. It discusses the various intermediaries that facilitate capital raising in the primary market, such as merchant bankers, underwriters, bankers to an issue, brokers to an issue, registrars to an issue, debenture trustees, and portfolio managers. It outlines their registration requirements with SEBI, obligations and responsibilities, and potential penalties for non-compliance. Overall, the primary market deals with new security issuances and facilitates capital formation, which is crucial for corporate and economic growth.
This document discusses various methods of floating new issues or initial public offerings (IPOs) of company shares. It describes prospectus offerings, bought deal offerings, private placements, rights issues, and book building. A prospectus offering involves publishing details of the new issue and inviting public subscription through applications. Bought deals involve an investment bank purchasing shares from promoters and reselling them to the public. Private placements directly sell new shares to financial institutions and corporations. Rights issues offer existing shareholders the first opportunity to purchase new shares proportionate to their current holdings. Book building involves promoters collecting public feedback to determine pricing and structure of the new issue.
This document discusses various aspects of raising capital through a public issue in the primary market. It describes the objectives of issuing capital, parties involved like managers, registrars, underwriters, bankers, advertising agents, and government agencies. It also covers aspects considered in selecting underwriters, placement of issues through prospectus, rights issues, private placements, book building, and factors for investors to consider.
The primary market allows companies to issue new securities to raise capital directly from investors. It involves an initial public offering (IPO) process where a company issues shares on a stock exchange for the first time. The document discusses the key participants in the IPO process like merchant bankers and registrars. It also outlines the steps of preparing and filing an offer document with regulators, opening subscriptions, allocating shares, and ultimately listing the company's shares on a stock exchange. The primary market thus facilitates capital formation for companies through public issuances.
This document provides an overview of financial markets and the primary market. It defines financial markets as the institutional arrangement for dealing in financial assets and instruments. It then classifies financial markets into organized and unorganized markets. The organized market includes the capital market, which deals in long-term securities, and the money market, which deals in short-term securities. Within the capital market, it describes the primary market, where new securities are issued, and the secondary market, where existing securities are traded. It provides details on the key players and functions in the primary market, including origination, underwriting, and distribution of new securities.
This document discusses the various intermediaries involved in the new issue market for securities. It describes the roles of merchant bankers/lead managers, underwriters, bankers to the issue, registrars to the issue, debenture trustees, and brokers. Merchant bankers manage public issues and ensure regulatory compliance. Underwriters guarantee that unsold shares will be purchased. Bankers to the issue accept application money. Registrars design application forms and manage allotment. Debenture trustees safeguard debenture holders' interests. Brokers procure subscriptions from investors. Each intermediary plays an important but distinct role in facilitating the issuance of new securities.
This document provides an overview of financial markets and the primary and secondary markets. It defines financial markets and their role in economic development. It describes the structure of capital markets and the primary and secondary market segments. It outlines the various players in the primary market, including issuers, intermediaries, and investors. It also discusses the various instruments that can be traded in financial markets, including shares, debentures, warrants, IDRs, ADRs, and others.
The primary market deals with new security issues and helps transfer resources from savers to users. It involves various intermediaries like merchant bankers, underwriters, and registrars. The main functions of the primary market are origination, underwriting, and distribution of new securities. Origination involves evaluating project viability. Underwriting guarantees minimum subscription. Distribution involves selling securities to investors through brokers and agents. The primary market facilitates capital formation by bringing together investors and those seeking capital.
The document discusses the primary and secondary stock markets. The primary market is where companies issue new stock to raise funds through processes like initial public offerings (IPOs). The secondary market is where previously-issued stocks are traded on exchanges like the BSE and NSE. The document outlines the steps companies take for an IPO, including appointing an investment bank, filing with regulatory agencies, setting a price band for public subscription, and listing on an exchange. It also describes how individuals can apply for shares during an IPO's subscription window by using a demat account and applying through online or offline means.
This document provides an overview of the secondary market (stock market) in India, including:
- Definitions of key terms like stock exchange, secondary market, jobbers, brokers, etc.
- The historical development of stock markets in India from the 19th century to present day.
- The functions and roles of stock exchanges like facilitating capital formation, providing liquidity, price discovery, etc.
- The organizational structure of typical stock exchanges including governing boards, membership requirements, departments.
- The process for trading on stock exchanges including client registration, order placement, trade confirmation, settlement, etc.
Primary markets allow companies to raise fresh capital from investors. There are three main methods of raising funds in primary markets: public issues like IPOs and FPOs, rights issues which allow existing shareholders preemptive rights to purchase new shares, and private placements where companies directly sell new shares to select investors. Public companies, banks, financial institutions, and governments use primary markets to mobilize capital through securities like shares issued via prospectuses, right offers, or private placements to investors. Intermediaries help facilitate the sale and purchase of new securities in primary markets.
Capital Market is divided into two division; Primary Market and Secondary Market. Primary Market and its components are briefly described in this presentation.
The document discusses an IPO (Initial Public Offering) which is when a privately held company first offers shares of its stock to the public. It describes the process where a company hires an investment bank to sell shares and raise funds for operations. After the IPO, the stock trades between investors through brokers but the company does not receive more money, dispelling the myth that companies profit from stock trading after an IPO. The only times a company receives more money is through additional stock offerings to finance further expansion.
The document provides information on secondary markets and stock exchanges in India. It defines secondary markets and stock exchanges, and describes their key functions such as providing liquidity, mobilizing funds, and facilitating valuation of securities. It also outlines the evolution of stock exchanges in India from the pre-reform era to the modern, technology-driven exchanges established post-1991 reforms. Major Indian stock exchanges like BSE and NSE are introduced along with important concepts related to stock markets such as listing of securities, dematerialization, and depository organizations.
Primary capital market scenario in India, primary market intermediaries, primary market activities, methods of raising resources from primary market; secondary market scenario in India, reforms in secondary market, organization and management, trading and settlement, listing of securities, stock market index, steps taken by SEBI to increase liquidity in the stock market.
The secondary market allows investors who purchased shares during a company's IPO or FPO to sell those shares to other investors on a stock exchange. Trading occurs between general public investors according to supply and demand. This provides liquidity for shareholders and encourages new investment. Major functions of the secondary market are to provide regular security price information, observe bond prices and interest rates, offer liquidity to investors, and keep transaction costs low.
The document provides an overview of the IPO process. It begins by explaining what an IPO is, noting that it is the first sale of stock by a company to the public, allowing the company to raise money by issuing equity. It then discusses the steps involved in the IPO process over a 12 month period, including forming a professional team, conducting due diligence, drafting financial statements and prospectus, filing with regulatory agencies, and ultimately issuing and selling shares to investors. The document emphasizes the importance of proper planning and an experienced team to ensure a smooth IPO.
Initial Public Offerings (IPOs) allow private companies to sell shares to the public for the first time. IPO grading in India is done by credit rating agencies on a scale of 1 to 5 to assess the fundamentals and risks of companies issuing stock. An analysis found that an investor who put Rs. 10,000 in each of the 166 IPOs between 2008-2012 incurred an overall loss of Rs. 149,753, with the biggest losses coming in 2008-2009. While grades 1, 3 and 5 generally performed positively, grades 2 and 4 resulted in losses. Therefore, IPO grades alone do not reliably predict company performance.
The document discusses the primary market, which refers to the initial market for new security offerings. It involves three main participants: issuers like corporations and governments who issue new securities, intermediaries like merchant bankers and stock exchanges that facilitate the issuance and trading, and investors both individual and institutional who purchase the newly issued securities. The primary market allows for mobilization of savings, investment in new projects, entrepreneurship growth, and overall economic development.
process of floating of ipo and role of merchant bankerAbhishek Jain
The document discusses the role of merchant bankers in the initial public offering (IPO) process. It explains that when a company wants to raise funds through an IPO, it appoints a merchant banker to handle the process. The merchant banker assesses the company's performance and earnings potential to determine an appropriate issue price. It is responsible for completing all required documentation for regulatory approval. For large IPOs, a syndicate of merchant banks may work together with one leading the process. The key roles of the merchant banker include managing debt and equity offerings, placement and distribution of securities, providing corporate advisory services, assisting with project financing, loan syndication, and venture capital financing.
This document provides an overview of secondary markets, including:
1) It defines a secondary market as a market where securities are traded after being initially offered to the public, and describes how it comprises equity and debt markets.
2) Key characteristics of secondary markets are discussed, including trading on exchanges and over-the-counter, realizing capital gains, and providing liquidity.
3) The roles of brokers and sub-brokers in facilitating secondary market trades are outlined.
4) Risk management processes used by SEBI like varying margins and circuit breakers are summarized.
This presentation provides an introduction to capital markets, including the primary and secondary markets. The primary market deals with new security issuances from companies, governments, or institutions to obtain funding. It facilitates capital formation. The secondary market is where existing securities are traded between investors, rather than being newly issued. Major stock exchanges like the New York Stock Exchange and Bombay Stock Exchange serve as secondary markets. The presentation outlines key aspects of both markets like participants, regulations, and how transactions occur.
The primary market in India has seen significant growth over the past decades as a source for companies to raise capital. In 2015-16, 108 companies raised Rs. 58,166 crore through public and rights issues, compared to 88 companies raising Rs. 19,202 crore the previous year. Public sector organizations dominated primary market fundraising, with banks and financial institutions primarily responsible for the increasing amounts. National Highway Authority of India and TATA Motors were among the largest issuers. SEBI has taken steps to develop the primary market through initiatives like electronic IPOs and more favorable listing norms for startups and SMEs.
Venture capital involves investing in projects with substantial risk that typically include new or expanding businesses. It provides start-up funding for these high-risk, high-reward ventures. Venture capitalists typically invest through various stages of a company from seed funding to expansion funding. They take an active role in the management of companies and aim to exit their investments within 5-10 years through means such as IPOs or acquisitions in order to generate returns. In India, the venture capital industry was formally established in 1987 and venture funds invest using various financial instruments such as equity, quasi-equity, and convertible debentures.
The document outlines various business lines of an investment bank including IPO services, underwriting services, capital markets, mergers & acquisitions, corporate finance, equity research, asset management, custodian services, and corporate restructuring. IPO services involve assisting companies with initial public offerings. Underwriting services include purchasing new securities from an issuer and reselling them to investors. Capital markets allow companies and governments to raise funds by issuing securities like equity and debt. Mergers & acquisitions involve combining or acquiring businesses. Corporate finance provides advice on capital investments, financing, and returning capital to investors.
This document discusses the various intermediaries involved in the new issue market for securities. It describes the roles of merchant bankers/lead managers, underwriters, bankers to the issue, registrars to the issue, debenture trustees, and brokers. Merchant bankers manage public issues and ensure regulatory compliance. Underwriters guarantee that unsold shares will be purchased. Bankers to the issue accept application money. Registrars design application forms and manage allotment. Debenture trustees safeguard debenture holders' interests. Brokers procure subscriptions from investors. Each intermediary plays an important but distinct role in facilitating the issuance of new securities.
This document provides an overview of financial markets and the primary and secondary markets. It defines financial markets and their role in economic development. It describes the structure of capital markets and the primary and secondary market segments. It outlines the various players in the primary market, including issuers, intermediaries, and investors. It also discusses the various instruments that can be traded in financial markets, including shares, debentures, warrants, IDRs, ADRs, and others.
The primary market deals with new security issues and helps transfer resources from savers to users. It involves various intermediaries like merchant bankers, underwriters, and registrars. The main functions of the primary market are origination, underwriting, and distribution of new securities. Origination involves evaluating project viability. Underwriting guarantees minimum subscription. Distribution involves selling securities to investors through brokers and agents. The primary market facilitates capital formation by bringing together investors and those seeking capital.
The document discusses the primary and secondary stock markets. The primary market is where companies issue new stock to raise funds through processes like initial public offerings (IPOs). The secondary market is where previously-issued stocks are traded on exchanges like the BSE and NSE. The document outlines the steps companies take for an IPO, including appointing an investment bank, filing with regulatory agencies, setting a price band for public subscription, and listing on an exchange. It also describes how individuals can apply for shares during an IPO's subscription window by using a demat account and applying through online or offline means.
This document provides an overview of the secondary market (stock market) in India, including:
- Definitions of key terms like stock exchange, secondary market, jobbers, brokers, etc.
- The historical development of stock markets in India from the 19th century to present day.
- The functions and roles of stock exchanges like facilitating capital formation, providing liquidity, price discovery, etc.
- The organizational structure of typical stock exchanges including governing boards, membership requirements, departments.
- The process for trading on stock exchanges including client registration, order placement, trade confirmation, settlement, etc.
Primary markets allow companies to raise fresh capital from investors. There are three main methods of raising funds in primary markets: public issues like IPOs and FPOs, rights issues which allow existing shareholders preemptive rights to purchase new shares, and private placements where companies directly sell new shares to select investors. Public companies, banks, financial institutions, and governments use primary markets to mobilize capital through securities like shares issued via prospectuses, right offers, or private placements to investors. Intermediaries help facilitate the sale and purchase of new securities in primary markets.
Capital Market is divided into two division; Primary Market and Secondary Market. Primary Market and its components are briefly described in this presentation.
The document discusses an IPO (Initial Public Offering) which is when a privately held company first offers shares of its stock to the public. It describes the process where a company hires an investment bank to sell shares and raise funds for operations. After the IPO, the stock trades between investors through brokers but the company does not receive more money, dispelling the myth that companies profit from stock trading after an IPO. The only times a company receives more money is through additional stock offerings to finance further expansion.
The document provides information on secondary markets and stock exchanges in India. It defines secondary markets and stock exchanges, and describes their key functions such as providing liquidity, mobilizing funds, and facilitating valuation of securities. It also outlines the evolution of stock exchanges in India from the pre-reform era to the modern, technology-driven exchanges established post-1991 reforms. Major Indian stock exchanges like BSE and NSE are introduced along with important concepts related to stock markets such as listing of securities, dematerialization, and depository organizations.
Primary capital market scenario in India, primary market intermediaries, primary market activities, methods of raising resources from primary market; secondary market scenario in India, reforms in secondary market, organization and management, trading and settlement, listing of securities, stock market index, steps taken by SEBI to increase liquidity in the stock market.
The secondary market allows investors who purchased shares during a company's IPO or FPO to sell those shares to other investors on a stock exchange. Trading occurs between general public investors according to supply and demand. This provides liquidity for shareholders and encourages new investment. Major functions of the secondary market are to provide regular security price information, observe bond prices and interest rates, offer liquidity to investors, and keep transaction costs low.
The document provides an overview of the IPO process. It begins by explaining what an IPO is, noting that it is the first sale of stock by a company to the public, allowing the company to raise money by issuing equity. It then discusses the steps involved in the IPO process over a 12 month period, including forming a professional team, conducting due diligence, drafting financial statements and prospectus, filing with regulatory agencies, and ultimately issuing and selling shares to investors. The document emphasizes the importance of proper planning and an experienced team to ensure a smooth IPO.
Initial Public Offerings (IPOs) allow private companies to sell shares to the public for the first time. IPO grading in India is done by credit rating agencies on a scale of 1 to 5 to assess the fundamentals and risks of companies issuing stock. An analysis found that an investor who put Rs. 10,000 in each of the 166 IPOs between 2008-2012 incurred an overall loss of Rs. 149,753, with the biggest losses coming in 2008-2009. While grades 1, 3 and 5 generally performed positively, grades 2 and 4 resulted in losses. Therefore, IPO grades alone do not reliably predict company performance.
The document discusses the primary market, which refers to the initial market for new security offerings. It involves three main participants: issuers like corporations and governments who issue new securities, intermediaries like merchant bankers and stock exchanges that facilitate the issuance and trading, and investors both individual and institutional who purchase the newly issued securities. The primary market allows for mobilization of savings, investment in new projects, entrepreneurship growth, and overall economic development.
process of floating of ipo and role of merchant bankerAbhishek Jain
The document discusses the role of merchant bankers in the initial public offering (IPO) process. It explains that when a company wants to raise funds through an IPO, it appoints a merchant banker to handle the process. The merchant banker assesses the company's performance and earnings potential to determine an appropriate issue price. It is responsible for completing all required documentation for regulatory approval. For large IPOs, a syndicate of merchant banks may work together with one leading the process. The key roles of the merchant banker include managing debt and equity offerings, placement and distribution of securities, providing corporate advisory services, assisting with project financing, loan syndication, and venture capital financing.
This document provides an overview of secondary markets, including:
1) It defines a secondary market as a market where securities are traded after being initially offered to the public, and describes how it comprises equity and debt markets.
2) Key characteristics of secondary markets are discussed, including trading on exchanges and over-the-counter, realizing capital gains, and providing liquidity.
3) The roles of brokers and sub-brokers in facilitating secondary market trades are outlined.
4) Risk management processes used by SEBI like varying margins and circuit breakers are summarized.
This presentation provides an introduction to capital markets, including the primary and secondary markets. The primary market deals with new security issuances from companies, governments, or institutions to obtain funding. It facilitates capital formation. The secondary market is where existing securities are traded between investors, rather than being newly issued. Major stock exchanges like the New York Stock Exchange and Bombay Stock Exchange serve as secondary markets. The presentation outlines key aspects of both markets like participants, regulations, and how transactions occur.
The primary market in India has seen significant growth over the past decades as a source for companies to raise capital. In 2015-16, 108 companies raised Rs. 58,166 crore through public and rights issues, compared to 88 companies raising Rs. 19,202 crore the previous year. Public sector organizations dominated primary market fundraising, with banks and financial institutions primarily responsible for the increasing amounts. National Highway Authority of India and TATA Motors were among the largest issuers. SEBI has taken steps to develop the primary market through initiatives like electronic IPOs and more favorable listing norms for startups and SMEs.
Venture capital involves investing in projects with substantial risk that typically include new or expanding businesses. It provides start-up funding for these high-risk, high-reward ventures. Venture capitalists typically invest through various stages of a company from seed funding to expansion funding. They take an active role in the management of companies and aim to exit their investments within 5-10 years through means such as IPOs or acquisitions in order to generate returns. In India, the venture capital industry was formally established in 1987 and venture funds invest using various financial instruments such as equity, quasi-equity, and convertible debentures.
The document outlines various business lines of an investment bank including IPO services, underwriting services, capital markets, mergers & acquisitions, corporate finance, equity research, asset management, custodian services, and corporate restructuring. IPO services involve assisting companies with initial public offerings. Underwriting services include purchasing new securities from an issuer and reselling them to investors. Capital markets allow companies and governments to raise funds by issuing securities like equity and debt. Mergers & acquisitions involve combining or acquiring businesses. Corporate finance provides advice on capital investments, financing, and returning capital to investors.
The document discusses primary and secondary capital markets. The primary market issues new securities, allowing companies to raise funds. The secondary market allows investors to buy and sell existing securities from other investors. It also discusses the roles of investment banks in originating, underwriting, and distributing new securities issues through public offerings. The public offering process involves investment bank tasks like due diligence, negotiating the offering price, and distributing securities to investors.
Ipo process, how price band determined, role of merchant banker & underwriterBiswajit Bhattacharjee
The document discusses the IPO process and related topics in detail across multiple pages. It covers:
1) What an IPO is and its advantages/disadvantages for companies.
2) The various parties involved in an IPO like managers, registrars, underwriters, bankers, and regulators.
3) How IPOs can be placed through different methods like prospectus, bought deals, private placements, and book building.
4) How the price band for an IPO is determined and the roles of merchant bankers and underwriters.
What is Equity Market
How to understand trading in Equity market
How to invest in Equity Market
How to trade in Equity Market
How to earn in Equity Market
The document provides an overview of how companies raise capital through primary equity markets. It defines a primary market as the market where companies issue new securities to raise funds. The process involves companies filing an offer document with regulatory authorities, opening the issue to public subscription, allotting shares on a proportional or lottery basis, and finally listing the shares on a stock exchange. Primary markets play a crucial role in facilitating long-term capital formation for companies.
This document provides an overview of venture capital financing in India. It defines venture capital as money provided by outside investors to finance new, growing, or troubled businesses in exchange for equity. It then discusses the various stages of venture capital funding including early stage, expansion, and acquisition/buyout financing. The rest of the document outlines the venture capital investment process, including deal origination, screening, evaluation, deal structuring, post-investment activities, and exit planning. It also provides examples of venture capital funding deals in India and lists the top 5 early stage venture capital firms in the country.
Venture capital refers to equity investments made to launch or expand a business, while private equity provides capital to enterprises not publicly traded. Companies often need external financing like venture capital during periods of growth when cash flow is negative. The venture capital investment process is highly selective, with only about 3-4% of funding requests ultimately receiving investment after progressing through initial screening, meetings, and thorough due diligence evaluations.
This document provides an overview of how the primary stock market works. It discusses:
1) The primary market allows companies to raise capital by issuing new shares to investors. This helps companies fund new ventures, business expansions, or modernizations.
2) The process involves companies filing an offer document with regulators, opening the issue for public subscription, allotting shares, and ultimately listing the shares on a stock exchange.
3) Pricing can be done through a book building process, where investors bid for shares within a price band, or at a fixed price set by the company.
This book provides basic information about the stock market to the beginners. Your all doubts have been cleared after reading this book related to the stock market investment.
The document discusses mergers and acquisitions, providing definitions and examples. It describes the typical stages in an M&A deal including preliminary assessment, proposal, exit planning, and integration. Key factors driving M&A activity in India are also summarized such as increasing competition and globalization.
1. Merchant banking provides a wide range of financial services including underwriting shares, portfolio management, project counseling, and insurance for a fee.
2. Some key functions of merchant banking include project counseling, loan syndication, issue management, portfolio management, capital restructuring services, and arranging working capital finance.
3. Merchant bankers are also involved in public issues, lease financing, venture capital funding, and helping companies raise public deposits.
This document provides an overview of venture capital, including its meaning, characteristics, advantages, stages of financing, investment process, development in India, and rules and regulations. It defines venture capital as funds made available for startups and small businesses with high growth potential. Key points include: venture capitalists provide long-term equity financing and business assistance in exchange for equity; the investment process involves deal origination, screening, due diligence, structuring, and exit; and venture capital in India is regulated by SEBI and income tax acts which provide tax exemptions.
This document discusses mergers and acquisitions in the Indian banking sector. It begins by introducing mergers and acquisitions, defining mergers as a combination of two companies into one surviving company that acquires all assets and liabilities, while acquisitions involve one company purchasing a controlling stake in another. It then provides an overview of the Indian banking industry and its structure. The remainder of the document discusses the types, purposes, impacts, advantages and differences between mergers and acquisitions in depth.
Underwriting involves guaranteeing that shares offered to the public will be fully subscribed. Venture capital firms provide funding to start-ups and become involved in management. They aim to reduce information problems through long-term focus, board representation, staged funding, and diversification. Private equity buyouts involve taking public companies private to avoid regulation and attract talent while pursuing tax advantages.
Issue management intermediaries- P. SAI PRATHYUSHA (PONDICHERRY UNIVERSITY)SaiLakshmi115
This document provides an overview of merchant banking in India, including:
1. It defines merchant banking and discusses the major intermediaries in the new issue market such as merchant bankers, lead managers, underwriters, and others.
2. It explains the different categories of merchant bankers registered with SEBI and the registration process.
3. It outlines the various functions performed by merchant bankers such as issue management, portfolio management, corporate counseling, credit syndication, and others.
Here there is an overview of primary market in detail. Methods of raising funds, and SEBI guidelines to new issues in Primary market is the key concepts in this presentation
The document discusses venture capital finance and the venture capital process. It explains that venture capital is a form of financing provided to startups and growing companies. Venture capital investments go through several stages from seed funding to help get a company started, to multiple rounds of funding as the company grows and achieves milestones. The document outlines the typical stages a company goes through to acquire venture capital financing and the roles that venture capitalists play in supporting the growth of portfolio companies beyond just providing money.
The document discusses venture capital finance and the venture capital process. It explains that venture capital is a form of financing provided to startups and growing companies. Venture capital investments go through several stages from seed funding to help establish an idea, to multiple growth stages where capital is used to expand operations and marketing. The final stage is an initial public offering where the company sells shares to the public and founders can gain liquidity. In addition to funding, venture capital firms provide operational support and access to networks to help portfolio companies succeed.
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"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
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In a tight labour market, job-seekers gain bargaining power and leverage it into greater job quality—at least, that’s the conventional wisdom.
Michael, LMIC Economist, presented findings that reveal a weakened relationship between labour market tightness and job quality indicators following the pandemic. Labour market tightness coincided with growth in real wages for only a portion of workers: those in low-wage jobs requiring little education. Several factors—including labour market composition, worker and employer behaviour, and labour market practices—have contributed to the absence of worker benefits. These will be investigated further in future work.
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Vicinity Jobs’ data includes more than three million 2023 OJPs and thousands of skills. Most skills appear in less than 0.02% of job postings, so most postings rely on a small subset of commonly used terms, like teamwork.
Laura Adkins-Hackett, Economist, LMIC, and Sukriti Trehan, Data Scientist, LMIC, presented their research exploring trends in the skills listed in OJPs to develop a deeper understanding of in-demand skills. This research project uses pointwise mutual information and other methods to extract more information about common skills from the relationships between skills, occupations and regions.
Understanding how timely GST payments influence a lender's decision to approve loans, this topic explores the correlation between GST compliance and creditworthiness. It highlights how consistent GST payments can enhance a business's financial credibility, potentially leading to higher chances of loan approval.
3. CONCEPT INVESTMENT BANKS...
The banking scenario in India is itself huge, covering the
different facets of the economy.
By and large, investment banks in India are itself an
institution which generates funds in two different ways.
The first manner in which it works is by drawing public
funds via the capital market by way of selling stock in
their company.
The other way in which it operates is to seek for venture
capital or private equity, as a substitute for a stake in
their company
4. INTRODUCTION
An individual or institution which acts as an underwriter or
agent for corporations and municipalities issuing securities.
Most also maintain broker/dealer operations, maintain markets
for previously issued securities, and offer advisory services to
investors.
Investment banks also have a large role in facilitating mergers
and acquisitions, private equity placements and corporate
restructuring.
Unlike traditional banks, investment banks do not accept
deposits from and provide loans to individuals. also called
investment banker
5. ROLE OF AN INVESTMENT BANK
The major work of investment banks includes a lot of consulting.
For instance, they offer advices on mergers and acquisitions to
companies.
The role that an investment bank plays sometimes gets
overlapped with that of a private brokerage house.
The usual advice of buying and selling is also given by
investment banks.
There is no demarcating line between the investment banking
and other forms of banking in India.
This has been observed majorly of late.
All banks nowadays want to provide their customers the best of
services and create a niche for themselves and that is why apart
from investment banks, all other banks too are aiming at making it
big
7. TYPICALLY, AN INVESTMENT BANKING GROUP NOWADAYS PROVIDES, WORLD-WIDE SOME OR ALL OF THE FOLLOWING
SERVICES, EITHER IN DIVISIONS OF THE BANK OR IN ASSOCIATED COMPANIES WITHIN THE GROUP:-
1. Mergers and Acquisition Advisory
2. Private Placement of Debt and Equity
3. Securities Underwriting
4. Management of Capital issues
5. Management of Buyback and takeovers
6. Corporate Advisory Services
7. Project Advisory Services
8. Other services like Restructuring/Sales, Real
Estate, and Loan Syndication and so on...
8. THE CORE SERVICES PROVIDED BY THE INVESTMENT BANKS ARE IN THE AREAS OF DEBT MARKET, EQUITY MARKET AND
ADVISORY SERVICES:-
The phrase mergers and acquisitions refers to the
aspect of corporate strategy, corporate finance and
management dealing with the buying, selling and
combining of different companies that can aid,
finance.
In business or economics a merger is a combination
of two companies into one larger company.
Merger is a tool used by companies for the purpose
of expanding their operations often aiming at an
increase of their long term profitability.
An acquisition, also known as a takeover, is the
buying of one company (the ‘target’) by another. An
acquisition may be friendly or hostile
9. IPO PROCESS FOLLOWED BY AN INVESTMENT
BANKER WHILE GOING PUBLIC
I Issuer company- Initiate the IPO process
Appoint lead manager/merchant banker as book
runner
Appoint registrar of the issue
Appoint syndicate members
II Lead Manger- Pre-Issue Role
Prepare draft offer prospectus document for IPO
File draft offer prospectus with SEBI
Road shows for IPO
10. CONT…….
III SEBI- Prospectus Review
SEBI review draft offer prospectus
Revert it back to Lead Manager if need clarification or changes
SEBI approve the draft offer prospectus, the draft offer prospectus is
now become offer prospectus.
IV Lead Manger – Pre- Issue Role
Submit the offer prospectus to Stock Exchanges, registrar of the issue
and get it approved
Decide the issue date and issue price band with the help of issuer
company
Modify offer prospectus with date and price band. Document is now
called Red Herring Prospectus
Red Herring Prospectus& IPO Application Forms are printed and posted
to syndicate members; through which they are distributed to investors
11. CONT….
V Investor- Bidding for the public issue
Public issue open for investors bidding(minimum 5 to maximum
10 days)
Investors fill the application forms and place orders to the
syndicate members.
Syndicate member provide the bidding information to BSE/NSE
electronically and bidding status gets updated on BSE/NSE
Syndicate members send all the physically filled forms and
cheques to the registrar of the issue
Investor can revise the bidding by filling a form and submitting it
to syndicate member.
Syndicate members keep updating stock exchange with the latest
data
Public issue closes for investors bidding
12. CONT…..
VI Lead Manager- Price Fixing
Based on the bids received, lead manager evaluate the final issue price
Lead manages update the Red Herring Prospectus with the final issue
price and send it to SEBI and Stock Exchanges.
VII Registrar – Processing IPO applications
Registrar receives all application forms and cheques from syndicate
members.
They feed applicant data and additional bidding information on computer
systems
Send the cheques for clearance
Find all bogus application
Finalize the pattern for share allotment based on all valid bid received
Prepare ‘Basis of Allotment’
Transfer shares in the De-Mant account of investors
13. CONT…..
VIII Lead Manger- Stock Listing
Once all allocated shares are transferred in
investors accounts, Lead Manager with the
help of Stock Exchange decides Issue Listing
date
Finally share of the issuer company listed in
stock Market
14. MERGER AND ACQUISITION
WHAT IS MERGER?
A merger is a combination of two or more
companies where one corporation is
completely absorbed by another corporation.
WHAT IS ACQUISITION?
Acquisition essentially means ‘to acquire’ or
‘to takeover’. Here a bigger company will
take over the shares and assets of the
smaller company
15. HISTORY OF MERGER AND ACQUISITION
IN INDIA
The concept of merger and acquisition in India was not
popular until the year 1988.
The key factor contributing to fewer companies involved
in the merger is the regulatory and prohibitory provisions
of MRTP Act, 1969. (Monopolies and Restrictive Trade
Practices Act,1969)
The year 1988 witnessed one of the oldest business
acquisitions or company mergers in India.
As for now the scenario has completely changed with
increasing competition and globalization of business. It is
believed that at present India has now emerged as one of
the top countries entering into merger and acquisitions
16. MERGER AND ACQUISITION PROCESS
Preliminary Assessment or Business Valuation- In this
process of assessment not only the current financial performance
of the company is examined but also the estimated future market
value is considered
Phase of Proposal- After complete analysis and review of the
target firm's market performance, in the second step, the proposal
for merger or acquisition is given.
Exit Plan- When a company decides to buy out the target
Firm and the target firm agree, then the latter involves in Exit
Planning.
Structured Marketing- After finalizing the Exit Plan, the target
firm involves in the marketing process and tries to achieve
highest selling price.
Stage of Integration- In this final stage, the two firms are
integrated through Merger or Acquisition.
17. DIFFERENT TYPES OF MERGERS
A horizontal merger - This kind of merger exists between two companies who
compete in the same industry segment.
A vertical merger - Vertical merger is a kind in which two or more companies in
the same industry but in different fields combine together in business.
Co-generic mergers - Co-generic merger is a kind in which two or more
companies in association are some way or the other related to the production
processes, business markets, or basic required technologies.
Conglomerate Mergers - Conglomerate merger is a kind of venture in which
two or more companies belonging to different industrial sectors combine their
operations.
Friendly acquisition - Both the companies approve of the acquisition under
friendly terms.
Reverse acquisition - A private company takes over a public company.
Back flip acquisition- A very rare case of acquisition in which, the purchasing
company becomes a subsidiary of the purchased company.
Hostile acquisition - Here, as the name suggests, the entire process is done by
force
18. MOTIVES FOR MERGERS &ACQUISITIONS
Economies of large scale business
Large-scale business organization enjoys
both internal and external economies.
Elimination of competition
It eliminates severe, intense and wasteful
expenditure by different competing organizations.
Desire to enjoy monopoly power
M&A leads to monopolistic control in the
market.
Adoption of modern technology
Corporate organization requires large
resources
19. CONT…
Lack of technical and managerial talent
Industrialization, scarcity of entrepreneurial, managerial and technical talent
Impact of Mergers and Acquisitions
Employees:
Mergers and acquisitions impact the employees or the workers the most. It is a well known
fact that whenever there is a merger or an acquisition, there are bound to be layoffs.
Impact of mergers and acquisitions on top level management
Impact of mergers and acquisitions on top level management may actually involve a "clash
of the egos". There might be variations in the cultures of the two organizations.
Shareholders:
Shareholders of the acquired firm:
The shareholders of the acquired company benefit the most. The reason being, it is seen in
majority of the cases that the acquiring company usually pays a little excess than it what should.
Unless a man lives in a house he has recently bought, he will not be able to know its drawbacks.
Shareholders of the acquiring firm: hey are most affected. If we measure the benefits enjoyed
by the shareholders of the acquired company in degrees, the degree to which they were
benefited, by the same degree, these shareholders are harmed
20. STRATEGIES OF MERGER AND ACQUISITION
Then there is an important need to assess the
market by deciding the growth factors through
future market opportunities, recent trends, and
customer's feedback.
The integration process should be taken in line
with consent of the management from both the
companies venturing into the merger.
Restructuring plans and future parameters
should be decided with exchange of information
and knowledge from both ends.
21. TOP 5 INDIAN MERGERS AND ACQUISITIONS
The Reliance – BP deal
Essay exits Vodafone
GVK Power acquires Hancock Coal
Adyta Birla Group to acquire Columbian
Chemicals
The Vedanta – Cairn acquisition
22. PORTER’S FIVE FORCES
Rivalry: The industry seems to have low Barriers to entry for small, upstart players but
very high barriers to catapulting firms into bulge bracket Status.
Supplier Bargaining Power: Investment banking is essentially a relationships business,
and stronger the network of critical
Buyer Bargaining Power One investment bank to another seems to entail few costs. In
spite of this, statistical studies show that
Substitutes Historically, there were no clear substitutes for services such as IPOs,
underwriting,
Distribution, M&A advisory, etc. Technology, however, is changing that. Though still at a
germinal stage, it is generating unprecedented alternatives.
Threat of New Entrants Investment banks are also facing a competitive threat from firms
like OpenIPO
23. HDFC (GROUP COMPANIES)
Housing Development Finance Corporation
Limited (HDFC Ltd.) was established in 1977
with the primary objective of meeting a social
need of encouraging home ownership by
providing long-term finance to households
, HDFC has assisted more than 4.3 million
customers to own a home of their own, through
cumulative housing loan approvals of over Rs.
4.63 trillion and disbursements of over Rs. 3.74
trillion as at March 31, 2012.
24. SUBSIDIARIES AND ASSOCIATE COMPANIES
HDFC Bank HDFC Bank was incorporated in 1994 by Housing Development
Finance Corporation Limited (HDFC), India's largest housing finance company
HDFC Asset Management Company Ltd
HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies
Act, 1956, on December 10, 1999,
HDFC Standard Life Insurance Company Limited
It was established after private companies were allowed to enter the insurance industry in the
year 2000. HDFC holds 74% of the equity while Standard Life holds 26%
HDFC Sales
. HDFC Sales offers financial management solutions to individuals encompassing among other
products like Home Loans, Life Insurance, Mutual Funds, Fixed Deposits and property Solutions.
HDFC ERGO General Insurance Company ltd (formerly HDFC
General Insurance Company Ltd)
The insurance industry over the decade has gone through a fairly dynamic & an interesting
phase. Other than increasing number of players we have witnessed De-trifling in the market.
Increased competition & deregulation on the pricing front has laid to prices coming down;
practically across all line of products.
25. CONT….
HDFC Reality
Buying a dream house is one thing, but the entire process of finding and
acquiring your dream space in this world is an experience to be
cherished forever.
HDFC RED
HDFC RED is a digital information hub that helps you through every
stage of the house purchasing process
HDB Financial Services Ltd
The Housing Development Finance Corporation Limited (HDFC) was
amongst the first to receive an 'in principle' approval from the Reserve
Bank of India (RBI) to set up a bank in the private sector, as part of the
RBI's liberalization of the Indian Banking Industry in 1994
26. STATEMENT PURSUANT TO SECTION 2012 OF THE
COMPANIES ACT 1956, RELATING TO SUBSIDIARY
COMPANIES
27. SUBSIDIARIES AND ASSOCIATE COMPANIES
ICICI GROUP
ICICI Group 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
group companies and subsidiaries in the areas of personal banking, investment
banking, life and general insurance, venture capital and asset management. With a strong
customer focus, the ICICI Group Companies have maintained and enhanced their
leadership positions in their respective sectors
ICICI Bank
ICICI Bank is India's second-largest bank with total assets of Rs. 4,736.47 billion (US$ 93
billion) at March 31, 2012
ICICI Prudential Life Insurance
A leading international financial services group headquartered in the United Kingdom.
ICICI Prudential was amongst the first private sector insurance companies to begin
operations in December 2000 after receiving approval from Insurance Regulatory
Development Authority (IRDA).
28. CONT….
ICICI Lombard General Insurance Company,
ICICI Lombard GIC Ltd. is the largest private sector general insurance company
in India with a Gross Written Premium (GWP) of Rs. 6,420 crore for the year
ended March 31, 2013. The company issued over 91.8 lakh policies and settled
over 50.7 lakh claims as on March 31, 2013.
ICICI Securities Ltd
ICICI Securities Ltd is an integrated securities firm offering a wide range of
services including investment banking, institutional broking, retail broking,
private wealth management, and financial product distribution
ICICI Securities Primary Dealership Limited („I-Sec PD‟)
is the largest primary dealer in Government Securities. It is an
acknowledged leader in the Indian fixed income and money markets, with a
strong franchise across the spectrum of interest rate products and services -
institutional sales and trading, resource mobilization, portfolio management
services and research.
29. CONT…..
ICICI Prudential Asset Management
ICICI Prudential Asset Management Company Ltd. (IPAMC/ the Company) is the joint venture
between ICICI Bank, a well-known and trusted name in financial services in India and Prudential
Plc, one of UK’s largest players in the financial services sectors
ICICI Venture
ICICI Venture is a specialist alternative assets manager based in India. The firm is a wholly
owned subsidiary of ICICI Bank the largest private sector financial services group in India.
ICICI Foundation
ICICI Group has partnered India in its economic growth and development. Promoting
inclusive growth has been a priority area for the Group from both a social and business
perspective.
ICICI Home Finance Company Limited
ICICI Home Finance Company Limited ("ICICI Home Finance" or "ICICI HFC") is one of
the leaders in the Indian mortgage finance and realty space
30. BASEL NORMS
Bank Crisis In 1974
In the 699 days between 11 January 1973 and 6 December 1974, the New York Stock
Exchange's Dow Jones Industrial Average benchmark lost over 45% of its value, making it the
seventh-worst bear in the history of the index. 1972 had been a good year for the DJIA, with
gains of 15% in the twelve months. 1973 had been expected to be even better, with magazine
reporting, just 3 days before the crash began, that it was 'shaping up as a gilt-edged year'. In the
two years from 1972 to 1974, the American economy slowed from 7.2% real GDP growth to
−2.1% contraction, while inflation (by CPI) jumped from 3.4% in 1972 to 12.3% in 1974.
Worse was the effect in the United Kingdom, and particularly on the London Stock
Exchange's FT 30, which lost 73% of its value during the crash. From a position of 5.1% real
GDP growth in 1972, the UK went into recession in 1974, with GDP falling by 1.1%. At the
time, the UK's property market was going through a major crisis, and a secondary banking crisis
forced the Bank of England to bail out a number of lenders. In the United Kingdom, the crash
ended after the rent freeze was lifted on 19 December 1974, allowing a readjustment of property
prices; over the following year, stock prices rose by 150%. The definitive market low for the FT30
Index (a forerunner of the FTSE100 today), came on 6 January 1975 when the index closed at
146 (having reached a nadir of 145.8 intra-days). The market then practically doubled in just
over 3 months. However, unlike in the United States, inflation continued to rise, to 25% in
1975, giving way to the era of stagflation. The Hong Kong Hang Seng Index also fell from 1,800
in early 1973 to close to 300.
31. CONT…
About the BIS
Established on 17 May 1930
The BIS is the world’s oldest international financial organization
Head office is in Basel, Switzerland and representative offices in Hong Kong
SAR and in Mexico City.
The BIS currently employs around 550 staff from 50 countries.
Basel committee on Banking Supervision – (BCBS)
A set of agreements
Regulations and recommendations on Credit risk , market risk and
operational risk
Purpose – to have enough capital on account to meet obligations and
absorb unexpected losses
32. BASEL 1
In 1988, the Basel Committee (BCBS) in Basel, Switzerland, published a set of minimal capital
requirements for banks, known as 1988 Basel Accord or Basel 1.
Primary focus on credit risk
Assets of banks were classified and grouped in five categories to credit risk weights of zero ‘0’,
10, 20, and 50 and up to 100%.
Assets like cash and coins usually have zero risk weight, while unsecured loans might have a
risk weight of 100%.
0% - cash, central bank and government debt and any OECD government debt
0%, 10%, 20% or 50% - public sector debt
20% - development bank debt, OECD bank debt, OECD securities firm debt, non-OECD bank
debt (under one year maturity) and non-OECD public sector debt, cash in collection
50% - residential mortgages
100% - private sector debt, non-OECD bank debt (maturity over a year), real estate, plant and
equipment, capital instruments issued at other banks
The bank must maintain capital (Tier 1 and Tier 2) equal to at least 8% of its risk-weighted
assets. For example, if a bank has risk-weighted assets of $100 million, it is required to maintain
capital of at least $8 million.
33. PITFALLS OF BASEL I
Limited differentiation of credit risk
(0%, 20%, 50% and 100%)
Static measure of default risk
The assumption that a minimum 8% capital ratio is sufficient to protect banks
from failure does not take into account the changing nature of default risk.
No recognition of term-structure of credit risk
the capital charges are set at the same level regardless of the maturity of a
credit exposure.
Simplified calculation of potential future counterparty risk
the current capital requirements ignore the different level of risks associated with
different currencies and macroeconomic risk. In other words, it assumes a
common market to all actors, which is not true in reality.
Lack of recognition of portfolio diversification effects
in reality, the sum of individual risk exposures is not the same as the risk
reduction through portfolio diversification. Therefore, summing all risks might
provide incorrect judgment of risk
34. BASEL II
Definition of 'Basel II'
A set of banking regulations put forth by the
Basel Committee on Bank
Supervision, which regulates finance and
banking internationally. Basel II attempts to
integrate Basel capital standards with
national regulations, by setting the minimum
capital requirements of financial institutions
with the goal of ensuring institution liquidity.
35. BASEL III
in 2010, Basel III guidelines were released. These
guidelines were introduced in response to the
financial crisis of 2008. A need was felt to further
strengthen the system as banks in the developed
economies were under-capitalized, over-leveraged
and had a greater reliance on short-term funding.
Also the quantity and quality of capital under Basel II
were deemed insufficient to contain any further risk.
Basel III norms aim at making most banking activities
such as their trading book activities more capital-
intensive. The guidelines aim to promote a more
resilient banking system by focusing on four vital
banking parameters viz. capital, leverage, funding
and liquidity
36. "People think that Islamic Banking
system is based on faith, but it's based
on justice. The system is based on
justice for the two parties and how
you get to the justice is extracted
from Islamic faith"
INTEREST IS ONE OF THE MAIN SOURCE
OF BANK’S EARNING
A bank generates profit from the differential between the level of interest it
pays for deposits and other sources of funds, and the level of interest it charges
in its lending activities.
ISLAMIC BANKING
37. INTEREST PROHIBITED IN ISLAM
The word “Riba” is used in the Holy Quran 8 times. In
30:39,4:161,3:130, 2:276,2:278 and 3 times in 2:275.
“Those who devour usury will not stand except as stand one whom the
Evil one by his touch Hath driven to madness. That is because they say:
"Trade is like usury," but Allah hath permitted trade and forbidden usury.
Those who after receiving direction from their Lord, desist, shall be
pardoned for the past; their case is for Allah (to judge); but those who
repeat (The offence) are companions of the Fire: They will abide therein
(for ever).” (Quran 2:275)
“O ye who believe! Devour not usury, doubled and multiplied; but fear
Allah. that ye may (really) prosper.” (Quran 3:130)
38. DIFFERENCE BETWEEN ISLAMIC AND
CONVENTIONAL BANKING
Islamic banking only deals in “halal” products and services.
Thus, all transactions must be SHARIAH COMPLIANT i.e. must be
in accordance with the Islamic Jurisprudence.
consideration of collateral to be looked upon separately.
However, if the transaction is based on "joint-venture" basis, there
should not be any collateral;
In a default or termination situation, the Bank (or financier)
normally demand the outstanding sale price. Generally, the sale
price is fixed and comprise "principal and profits" predetermined
upfront before a contract is signed.
compounding calculation i.e. to conventional practice of "interest
upon interest" element is strictly prohibited under Islamic banking
system.
39. ISLAMIC BANKING TERMINOLOGY
1) Mudarabah (profit sharing)
Mudarabah is an arrangement between the bank, or a capital provider, and an
entrepreneur, whereby the entrepreneur can mobilize the funds of the former for
its business activity. Profits made are shared between the bank and the
entrepreneur according to predetermined ratio. In case of loss, the bank loses
the capital, while the entrepreneur loses his provision of labor. It is this financial
risk, according to the Shariah, that justifies the bank's claim to part of the profit.
The profit-sharing continues until the loan is repaid.
2) Musharakah (joint venture)
Musharakah is a relationship between two parties or more, of whom contribute
capital to a business, and divide the net profit and loss pro rata. This is often
used in investment projects, letters of credit, and the purchase or real estate or
property
3)Qard hassan/ Qardul hassan (good loan/benevolent loan)
This is a loan extended on a goodwill basis, and the debtor is only required to
repay the amount borrowed. However, the debtor may, at his or her
discretion, pay an extra amount beyond the principal amount of the loan (without
promising
40. CONCLUSION
From this Project I learnt the following points
Learnt the process how Investment banker approach
or deal IPO and M&A For their client
How important role they play for the economy.
Who is the Top banker in Global and in India?
Learnt about the Porter Five Forces.
And went through the Top 2 conglomerate companies
in India.
Learnt about how Basel Norms plays a vital role in
Indian banking against the Global standards.
How Islamic Banks function and their role