Indian financial system : Markets, institutions and services /
Bharati V. Pathak
- 5th ed.
- New Delhi : Pearson, 2018.
- 876 pages ; 25 cm.
Cover -- Contents -- Preface -- Part I: Financial System -- Chapter 1: The Financial System: An Introduction -- Introduction -- Formal and Informal Financial Sectors -- The Indian Financial System -- Components of the Formal Financial System -- Financial Institutions -- Financial Markets -- Financial Instruments -- Financial Services -- Interaction Among Financial System Components -- Functions of a Financial System -- Key Elements of a Well-Functioning Financial System -- Financial System Designs -- Nature and Role of Financial Institutions (Intermediaries) and Financial Markets -- Financial Markets -- Money Market and Capital Market -- Primary Capital Market and Secondary Capital Market -- Characteristics of Financial Markets -- Functions of Financial Markets -- Key Terms -- Summary -- Review Questions -- References -- Chapter 2: The Financial System and the Economy -- Introduction -- Types of Economic Units -- A Macro-Economic Framework Analysis for Exploring the Role of the Financial System in the Economy -- National Income Accounts -- Classification of the Indian Economy -- Flow of Funds Accounts -- Flow of Funds-based Indicators of Financial Development -- Trends in Saving and Investment -- Why Study Saving and Investment -- Saving and Investment in India -- Household Sector Financial Saving -- Saving and Investment in the Long Run -- Conclusion -- Relationship Between the Financial System and Economic Growth: Some Theoretical and Empirical Evidence -- Empirical Research Evidence on Relationship Between the Financial System and Economic Growth -- Key Terms -- Summary -- Review Questions -- References -- Chapter 3: Reforms in the Financial System -- Background -- Indian Financial System in the Pre-reforms Period -- Objectives of Financial System Reforms -- Financial Efficiency, Stability, and Integration -- Conclusion -- Key Terms -- Summary. Review Questions -- References -- Part II: Financial Markets -- Chapter 4: The Money Market -- Introduction -- Functions of the Money Market -- Benefits of an Efficient Money Market -- The Indian Money Market -- Role of the Reserve Bank of India in the Money Market -- Steps to Develop the Money Market in India -- Money Market Centres -- Money Market Instruments -- Treasury Bills -- Features of T-Bills -- Types of T-Bills -- Importance of T-Bills -- Development of the T-Bills Market -- Participants in the T-Bills Market -- Sale of T-Bills -- Types of Auctions -- 91-Day T-Bills -- Size of the 91-Day T-Bills Market -- Competitive Bids and Non-Competitive Bids -- 364-Day T-Bills -- Size of the 364-Day T-Bills Market -- 182-Day T-Bills -- 14-Day T-Bills -- Size of the 14-Day T-Bills Market -- Implicit Yield at Cut-off Prices -- Conclusion -- Commercial Paper -- The Process for Issuing a CP -- Guidelines Relating to CPs -- Summary of Guidelines for Issuance of a CP -- Stamp Duty on CP -- Size of the CP Market -- Secondary Market in CPs -- Factors Inhibiting the Growth of the CP Market -- Commercial Paper: A Comparative Position -- Commercial Bills -- Types of Commercial Bills -- Features of Commercial Bills -- Measures to Develop the Bills Market -- Size of the Commercial Bills Market -- Certificates of Deposit -- Measures to Develop the CD Market -- Guidelines for Issue of Certificates of Deposit (CDs) -- Secondary Market for CDs -- Size of the CD Market -- Factors Inhibiting the Growth of CDs -- Comparison of Certificates of Deposit and Commercial Papers -- Call/Notice Money Market -- Introduction -- Why Call Money -- Participants in the Call Money Market -- Reporting of Call/Notice Money Transactions -- Role of the Reserve Bank in the Call Money Market -- Link Between the Call Money Market and Other Financial Markets -- Call Rate -- Mibor. Call Rates Volatility -- Factors Influencing Call Money Market Rate -- Measures for Curbing High Volatility -- Steps to Convert the Call Money Market into a Pure Inter-bank Market -- Term Money Market -- Collateralised Borrowing and Lending Obligation (CBLO) -- Link Between the Money Market and the Monetary Policy in India -- Tools for Managing Liquidity in the Money Market -- Reserve Requirements -- Interest Rates -- Bank Rate -- Refinance from the Reserve Bank -- Repos -- Money Market Derivatives -- Interest Rate Swap -- Plain Vanilla Interest Rate Swaps -- Applications of Interest Rate Swaps -- Forward Rate Agreements -- Plain Vanilla Forward Rate Agreements -- Participants in the IRS/FRA Market -- Guidelines Relating to IRSs/FRAs -- Introduction of New Derivative Instruments -- An Overview of the Money Market -- Key Terms -- Summary -- Review Questions -- References -- Chapter 5: The Capital Market -- Introduction -- Functions of a Capital Market -- Primary Capital Market and Secondary Capital Market -- History of the Indian Capital Market -- A Brief History of the Rise of Equity Trading in India -- Capital Market Scams -- Introduction -- The 1991 -- 92 Securities Scam (The Harshad Mehta Scam) -- The 2001 Scam (Ketan Parekh Scam) -- Comparison of the Harshad Mehta Scam and the Ketan Parekh Scam -- Conclusion -- Reforms in the Capital Market -- The Primary Capital Market -- Secondary Capital Market -- Key Terms -- Review Questions -- References -- Chapter 6: The Primary Market -- Introduction -- Intermediaries to an Issue -- Free Pricing Regime -- Book Building-A New Issue Mechanism in India -- The Book Building Process -- Bidding Process -- Determination of Price -- Registering of Prospectus with Registrar of Companies -- Applications Supported by Blocked Amount (Asba) Process -- Allotment/Allocation in Book Built Issue -- Anchor Investor. Benefits of Book Building Method -- Limitations of the Book Building Method -- Auction-based Book Building -- Reverse Book Building -- Conclusion -- Green-Shoe Option -- On-Line IPOs -- Primary Issues -- Public Issue -- Rights Issue -- Indian Depository Receipts (IDRs) -- Private Placement Market -- Preferential Issue -- Qualified Institutions Placement (QIP) -- Resource Mobilisation from the Primary Market -- Non-government Public Limited Companies (Private Sector) -- Mega Issues Floated by Non -- government Public Limited Companies -- Absorption of Private Capital Issues -- Banks and Financial Institutions in the Public Sector -- Mutual Funds -- Resource Mobilisation from International Markets -- Factors Leading to an Increase in the Popularity of International Markets -- Global Depository Receipts (GDRs) -- American Depository Receipts (ADRs) -- Organising Euro Issues -- Guidelines Relating to International Issues -- Resources Raised Through Euro Issues -- External Commercial Borrowings (ECBs) -- Foreign Currency Convertible Bonds (FCCBs) -- Foreign Currency Exchangeable Bonds (FCEBs) -- End-use of FCEB Proceeds -- Promoter Group Companies -- Parking of FCEB Proceeds Abroad -- Conclusion -- Key Terms -- Summary -- Questions for Discussion -- Review Questions -- References -- Chapter 7: Disinvestment of Public Sector Undertakings -- Introduction -- Disinvestment -- Disinvestment Machinery -- The PSU Sell-off Methods -- Strategic Sales Techniques -- Proceeds Realised from Disinvestment -- PSU Disinvestment: Summary of Receipts from Disinvestment: 1991-92 to 30-9-2009 -- Evaluating the Disinvestment Programme -- Disinvestment of PSUS in Different Countries -- Conclusion -- Key Terms -- Summary -- Review Questions -- References -- Chapter 8: The Secondary Market -- Introduction -- Functions of the Secondary Market. Development of the Stock Market in India -- Post-reforms Market Scenario -- Regulation of Stock Exchanges -- Organisation, Management and Membership of Stock Exchanges -- Demutualisation of Stock Exchanges -- Listing of Securities -- Central Listing Authority -- The SEBI (Central Listing Authority) Regulations, 2003 -- Risk Management -- Trading Rules and Regulations -- Circuit Breakers -- Trading Arrangements -- Trading and Settlement -- Dematerialisation of Securities -- Internet Trading -- Stock Market Index -- Methodologies for Calculating the Index -- Global Stock Market Indices -- Major Indices in India -- Stock Exchanges -- The Bombay Stock Exchange -- BSE Milestones -- Carry Forward Deals, or Badla -- Badla Mechanism -- Advantages -- Listing Categories -- BSE Indices -- Trends in Turnover on the BSE -- Conclusion -- The National Stock Exchange of India -- Membership Pattern on the NSE -- Indices -- National Securities Clearing Corporation Limited -- Margin Requirements -- Capital Market Segment of the NSE -- Conclusion -- The Over the Counter Exchange of India (OTCEI) -- Trading Documents on the OTCEI -- Advantages of OTCEI -- Steps to Improve Turnover on the OTCEI -- Conclusion -- The Inter-Connected Stock Exchange of India LTD -- Regional Stock Exchanges -- Indo Next -- Measures to Boost Liquidity in the Secondary Market -- Investment by Foreign Institutional Investors in the Indian Stock Market -- Depositories -- Buy Back of Shares -- Conclusion -- Market Making System -- Stock Lending and Borrowing (SLB) -- Conclusion -- Rolling Settlement -- Conclusion -- Straight Through Processing (STP) -- Margin Trading -- Conclusion -- Impact of Reforms and Measures on Secondary Market Activities -- Conclusion -- Key Terms -- Summary -- Review Questions -- References -- Chapter 9: The Derivatives Market -- Introduction.
The Indian Financial System: Markets, Institutions and Services is a comprehensive reference book about the financial system. This book is meant for students, professionals, and academicians. It seeks to help the readers hold their own in the modern business scenario. The book is divided into five units. The first unit introduces the economy and the financial system. The second unit covers various concepts of financial markets such as the capital market, the derivatives market, and the debt market. Unit III discusses financial institutions and topics like insurance and mutual funds. The fourth unit focuses on concepts like investment banking, credit rating, housing finance, and micro-finance. The fifth and final chapter discusses financial regulation. Four new chapters, several case studies, chapter summaries, multiple choice questions, and review questions are some of the highlights of this edition. This edition, the third edition, also introduces new concepts like foreign currency exchangeable bonds, auction-based building method, and anchor investors. The content reflects changes in the financial system up to July 2010.