Smbnk20088 Smbnk200 Banking and Financial Services Let us look into some basic concepts: A) Select the appropriate

answers: (1) Which is a fund based finance (a) letters of credit (b) inventory financing (c) bank guarantee (d) forward exchange contract (2) How will you classify a banks ATM based on the marketing mix: (a) Promotion (b) Product (c) Place (d) Profit (3) Pre shipment finance is given to an -----------(exporter/importer)
(4) A debt equity ratio indicates ----------- (short term/long term) solvency (5) A company can raise funds by issuing debentures. Debentures are traded in ------------- markets (money/capital) (6) If,CRR is applicable for banks liabilities,then what about SLR -----------------(banks assets/banks liabilities) (7) DICGC provides insurance cover to ((i) banks/(ii) depositors/(iii)both (i) and (ii) /(iv)neither (i) nor (ii)) (8) FIIs and FDIs need to register with SEBI (correct/incorrect) (9) Which of the following is a NPA (standard asset/doubtful asset) (10) Which is a stable investment, from the point of view of steady flow of income (shares/bonds)

B)Select the appropriate option: 1) The oldest Indian Bank is : (a) Allahabad Bank (b) Andhra Bank (c) Axis Bank (d) Apna Sahakari Bank Ltd

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2) Which of the following is not a non-fund based item? (a) Interest Rate Swap (b) Certificate of Deposit (c) Letters of Credit (d) Bank Guarantee 3) ---------------- a liability for a banker: (a) commercial paper (b) cash credit (c) certificate of deposit (d) consumer finance 4)Open ended is a term associated with---------(a) Merchant Banker (b) SEBI (c) Trade Finance (d) Mutual Fund 5) An exporter is granted per shipment credit. What type of loan an importer gets ---------(a)Working capital finance (b)Import loan (c)Bills discounting (d)Bills purchased 6) Which of the following statement is/are True? i) Bank rate is the rate at which RBI grants loans to commercial banks ii) Bank rate and Prime lending rate are one and the same iii) Credit risk and the default risk are one and the same iv) Call option and Put option are derivative products
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a)i b)i, iii, iv c)ii,iii d)ii,iii,iv 7) In which case both

(a) Certificate of Deposit (b) Commercial Paper (c) Fixed deposit (d) Current account 8) Capital Adequacy norms in banks are based on -----------(a) Banks liabilities (b) Banks assets (c) Both a and b (d) Neither a nor b 9) In stock markets the settlement of the transaction s are based on (a) T+0 (b) T+1 (c) T+2 (d) T+3 10) Interest rate and exchange rate risks are classified as: (a) Credit Risk (b) Market Risk (c) Operations Risk (d) Cross Border Risk Prepayment and loan is not allowed?

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Answers: (A) (i)b(2)c(3) exporter(4) long term (5) capital(6) banks liabilities (7)bank depositors (8)correct (9) doubtful asset (10) bonds (B) (1)a (2)b (3)c (4) d (5) b (6) b (7) a (8) b (9)c (10) b Fund Based/Non Fund Based Finance Bank Facilities: Fund Based Finance: Banks provide different financial assistance to their clients, which are broadly classified as fund based finance and non fund based facilities Fund Based Finance: Banks grant loans and advances like working capital finance, term finance consumer fianc, housing finance, educational loan etc., In these cases banks provide actual funds to the clients. Non fund based facilities: Banks provide to their clients facilities in such cases they provide a comfort level to their clients to enable the clients to carry on with their business activities in a better manner. In such cases, banks do not provide any funds to their clients, hence these type of facilities are called as Non fund bases facilities Ex: Issuance of letters of credit, bank guarantees, booking derivatives like forex contracts, futures etc.,

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Fund Based Finance: Working Capital Finance (WCF):

WCF is granted to bank customers as a fund based finance. A banker grants to his customer (Trader/Corporate) loans and advances to enable the customer to carry on with the trading and manufacturing activities. The working capital finance is granted as Pre-sales (production) stage and post sales (distribution) stage. Pre-sales finance is granted against the inventory and the post-sale Finance is grated against the receivables. Bank allows the client to draw down the finance upto a pre agreed Limit. The diagram on Working Capital Cycle, coves the different stages of movement of funds.

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Non-Fund Based Limits/Working Capital Cycle

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According to you, what should be the desirable level of skills the treasury manager/branch manager/finance manager (of different institutions) should possess? The desirable level of skills required are listed as under:
(a) good communication skills (internal and external) (b) proactive in forecasting (c) updated knowledge about various areas, in economic, political, regulatory changes (d) enhance his skill to mark to market (adapt to market changes) (e) ensures that effective and simple internal control and good management information system (f) good rapport with different divisions of the firm/organization/clients (g) motivates and trains his team members on an ongoing basis to achieve the targets (h) courage to take calculated risks

With the above skills, and if willing to take decisions from time to time, then the treasury manager/branch manager/finance manager (of different institutions) may be able to achieve the objectives of:
cost minimization profit maximization wealth maximization of the shareholders minimization of risks What is a risk? Risk can be defined as any event or possibility of an event which can impair corporate earnings or cash flow over short/medium/long-term horizon Credit Risk Interest Rate Risk Liquidity Risk Capital Risk Other Risks Failure in repayment of loans by the borrower on due date Affect the liquidity position of the Bank,

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Credit Risk measured in terms of NPAs to Total Loans as per stringent guidelines of RBI, The degree of risk tolerance is to be managed by the executive through their sagaciously designed policies, procedure and planning, Quality Lending is the first & foremost control factor to manage Credit Risk Liquidity Risk The inability to generate cash to cope with the deposit withdrawal or increase in business, It arise when bank funds long term asset with short term liabilities, Liquidity planning (under alternative scenario) is the most important facet of risk management, The management should view sagaciously the entire pattern in its liabilities and investment, credit, balance sheet item etc Capital Risk: The risk erosion of capital due to losses, Maintaining adequate capital on continuous basis is necessary to ensure that the bank has capital to assimilate losses occurred due to normal risk, RBI has issued stringent guideline Narasimham Committee II has recommended that capital adequacy norms should be raised in stages to strengthen the health of banking industry. Interest Rate Risk The tolerance of impact of unexpected changes in market interest rate to the cost of liabilities and earning of asset is called Interest Rate Risk Such changes usually affect securities inversely and can be reduced by diversifying (investing in fixed-income securities with different durations) or hedging. Identification & Quantification of interest rate helps to risk position Other Risks Operations Risk Processing of the transaction Legal Risk Legal implication

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Market Risk Adverse movement in markets Exposure Risk Failure on the part of the borrower How a finance manager needs to work out his investment strategy?

Factors influencing capital budgeting Availability of funds Structure of capital Taxation policy Government policy Lending policies of financial institutions Immediate need of the project Earnings Capital return Economical value of the project Working capital Accounting practice Trend of earnings Ratio Analysis: Its a tool which enables the banker or lender to arrive at the following factors : Liquidity position Profitability Solvency Financial Stability Quality of the Management Safety & Security of the loans & advances to be or already been provided 9-24

SMIF20388
Please note, that this study material may be used as a reference material in addition to the other resources and your method of preparing for the exams. I) Highlight features of the Indian Stock Market: Stock Markets consists of two important segments Equity and Debt Markets Corporates can raise funds through stock markets equity and debt instruments (shown in the diagram) Corporates wishing to rise funds through capital markets should get necessary approval from the regulator, SEBI to rise equity and debt and to get them listed on stock exchange/s There are different participants in stock exchange activities (refer diagram)

The various participants of stock markets are: (a) Merchant Bankers (b) Brokers (c) Mutual Funds (d) FIIs (e) Depositories (f) Registrars (g) Corporate Companies

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II) What are the various types of risks?

(A) Credit Risk : This type of risk arises out of non payment by the counter party, borrower. It could arise out of a banks dealings with various clients such as individuals (retail customers), traders, corporate customers, correspondent bankers, counter party bankers, NRIs, Government agencies, etc., Credit Risk can take place due to: (i) Lending : Principal and/or interest amount not repaid (ii) Letters of Credit/Guarantees: Banks are required to honor their commitments, (a) in case of letter/s of credit to make payments on the due date/s and/or (b) in case of bank guarantee/s to make payment whenever the guarantee is invoked. Upon on making payment, as mentioned above, and if the bank/s is/are not able to recover the amount from the client/s (iii) Securities Trading: Non settlement/delivery of funds/securities by the buyer/seller (iv) Forex Operations: In case of forex deals/contracts, non receipt of funds from the counterparties, on the delivery date/s or on date of settlement (v) Cross-border exposure: The non repayment of loans/funds by international clients, restrictions on movement of funds across the borders, due to various reasons, including PESTEL factors.

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(B) Liquidity Risk: The immediate effect of credit risk, is the liquidity risk. Liquidity risk effectively creates a short of funds situation. While credit risk is the startup stage in the risk cycle, liquidity risk can be considered as the forerunner for other risks, mainly different types of market risks. (C) Market Risk: Post liberalization scenario, banks in India are exposed to many risks, due to changes in interest rates, forex rates, stock market price movements, etc., These are examples of market risk/s. The adverse movements in the markets not only affect the profitability, but also put pressure on banks performance as well. (D) Operational Risk: The faster growth of economies, the various uncertainties faced by the nations, due to systemic failure, non observance of internal control systems and corporate governance practices, and cross border risks on account of legal and regulatory compliance requirements are some of the reasons for occurrence Operational Risk. III) Derivatives & Risk Management 1) What is a Risk? A risk is an uncertain event which might result either in Lower income or loss 2) How do you classify various risks? As per Basel II accord risks are broadly classified into: (a)Credit Risk (b) Market Risk (c) Operations Risk

3) Why forex markets are volatile like many other markets? Highlight the features of forex and other international markets, with special reference to derivatives. The features of the International (forex) Markets are: (a) Markets are operating on 24x7 basis in different time zones (b) Handles volumes in terms of forex trades/deals and other trades/deals (c) Vibrant markets supported by active participants like Banks, Financial Institutions, Fund Managers, Exporters, Importers of goods and services, Investors, Stock and Other Markets, Regulators, Speculators, Arbitragers, etc., (d) Mainly due to the demand and supply factors that: (i) causes movement of prices/interest rates and foreign exchange rates,

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(ii) creates opportunities in the markets, (iii) exposes the financial centers and markets to many risks. While risks can not be avoided, the impact of risks can be minimized/mitigated by using different options and tools. One of the important risk management tool is the derivative products. 4) What is a derivative? What are different types of derivatives? As the future happenings can not be predicted with certainty, in our daily life activities, we hedge(protect) ourselves by our pro active methods to cover against future risks. e.g., : Travel plans are made and the journey tickets are booked well in advance to avoid risks. Similarly, in financial markets to hedge against future uncertainties the derivative products(instruments) are used. A derivative is a financial instrument, whose value is derived from the value of the underlying asset. Derivatives are used to hedge i.e., to protect/cover against the future uncertainty.

5) Highlight the features of derivatives: Let us take the example of Forward Exchange Contract: To hedge against exchange rate risk a forward exchange contract is booked by the exporter and or importer with the banker. If an exporter, wants to hedge against his future (3months) export receivables he can book a forward exchange contract with his banker. On the date of the transaction (T) the banker books a forward exchange contract as per the agreed forward rate and delivery date (3months).If the banker quotes a rate of 1 US$ = `.53.00 on the date of contract i.e., 10/10/2012 it means that on the due date 10/01/2013 the contact would be settled at that rate, even if the market rate on 10/01/2013 may not be 1 US$ = `.53.00. Even if the value is 1 US$

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= `.50.00 or 1 US$ =`.56.00, both the counterparties (bank and the exporter) would settle the amount as per agreed rate of 1 US$ = `.53.00 only. 6) Working Capital: The manufacturing unit requires funds for their production activities. The funds should be available on a regular basis to enable them to carry on with their production and operations. Banks provide financial assistance in the form of loans to companies, manufacturing units based on various assessment of the borrowers credibility, financial analysis of balance sheets, profit and loss statements and other financial reports, ratio analysis and other types of analysis like SWOT,PESTEL analysis etc. These loans depending upon the requirement can be classified into short term and long term. One type of short term finance provided by banks is called as Working Capital Finance. The bank provides funds (cash) which is used by the manufacturing unit converting the cash into raw materials for production. At different stages the raw material is converted into semi finished products and at the end the final product is produced. The goods produced is sold on credit basis and eventually the sale proceeds are received and the loan amount is repaid to the bank. The entire process happens in a cyclical form which can be easily understood from the diagram: This diagram is called as Operating Cycle or Working Capital Cycle. The diagram clearly indicates that the starting point and ending point is cash (at the start of the cycle, the borrower draws down cash from the bank (working capital limit) and uses the cash to convert the cash into raw material, semi finished and finished goods and eventually received payment from his clients, which he repays to the bank as cash, hence working capital finance can be recognized as C to C. Inventory Financing: The working capital cycle consists of (i) inventory financing and (ii) receivables financing. When cash is converted into raw material,semi finished goods and finished goods, and against which the bank finances in the form of CC (hypothecation/pledge) it is called as inventory financing. This can be recognized as pre sales financing as well. In case such financing is granted to an exporter for exports it is called as pre-shipment finance(ii) After sale of goods, the bank finances the company/client till he receives the payment from his clients, such financing is called as receivables financing, this can be in the form of bills discounting as well and/or overdraft against assignment of receivables. This type of financing is also called as post sales financing. In case such financing is granted to an exporter for exports it is called as pre-shipment finance(ii In case such financing is granted to an exporter for exports it is called as post-shipment finance

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7) Write short notes on: (a) Certificate of Deposits (CDs) (b) Bonds (c) International Investments ADRs/GDRs/IDRs (d) SEBI 7 (a) Certificate of Deposits (CDs): (i) Certificate of Deposit (CD) is a Money Market instrument (ii) CD is issued at discount to mature for the face value at maturity (iii) Minimum amount for a CD is Rs.100,000.00(Rs.One lakh only) (iv) Minimum and maximum period a CD with banks are 7 days and 365 days respectively (v) TDS is not applicable (vi) Except minors others can including NRIs and Corporate clients can invest in CD Differs from Banks Fixed Deposit (FD) as under (a) Prepayment is not allowed (b) Loan cannot be availed against CD 7 (b) Bonds are classified as coupon, zero coupon and convertible bonds.

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(i) Coupon Bonds: When an investor invests in a bond, he is entitled to his return on investment, based on the coupon rate (interest/yield at a pre fixed rate) Based on the maturity period, the bonds are recognized for Example, a 10 year bond is issued in 2009, it is called as GOI Sec 2019. Bonds are traded in the secondary market at yield to maturity. Yield to Maturity (YTM) is based on the market interest rates. (ii)Zero Coupon Bonds: A bond which is issued at a discount and repaid at a face value is called a Zero Coupon Bond. No periodic interest is payable, and the investor on the date of redemption (repayment), gets the difference between the face value and the issue price, this difference is the return on investment for the investor. (iii)Convertible Bonds: The investor gets an option to convert the bond into equity at a fixed conversion price. 7 (c) International Investments ADRs/GDRs/IDRs: (i)What is a depository receipt? + A depository receipt is a transferable financial instrument + Traded in another countrys stock exchange + Backed by the security of domestic shares + If listed/ traded in US stock exchanges called as ADRs and if listed/traded in European stock exchanges called as GDRs and if listed/traded in Indian stock exchanges called as IDRs (ii) Highlight the features of GDR: Global Depository Receipt (GDR) is an international financial instrument > GDRs are issued in US$, but traded on a stock exchange in Europe. A bank in Europe acquires shares of the foreign companies and issues their own receipts or certificates to the investors. The bank is called as a depository and the certificates so issued are called GDRs 7 (d) Securities and Exchange Board of India (SEBI): SEBI was formed as a regulating authority for the capital Markets in 1992. The purpose of setting up of SEBI (i) to protect the interests of investors in securities (ii) to promote the development of and (iii) to regulate the securities markets and handle issued related to retail investors/ and various other aspects Some of the roles/functions of SEBI are depicted in the diagram:

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8) Differentiate between any two derivatives: Forward Exchange Contract/Futures Contract: Forward Exchange Contract is used to hedge the exchange rate risk, and Futures Contract is used to hedge the credit risk. Some of the distinguishing features are as follows: Forward Exchange Contract (a)Traded in the Over the counter Market (OTC) (b)To hedge exchange rate risk (c)Once covered no cash flow till delivery/settlement date (d)Exposed to default/credit risk Futures Contract (a) Traded in an exchange (b) To hedge credit risk (c) Margin is required (d) Exchange acts as an intermediary

9) Briefly write the features of other derivatives: (a) Options (b) Swaps (c) Other features of forex markets (a) Options: Options are contracts that allows its holder/owner the right but not the

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obligation to buy /sell a specified security at a specified price on/before a given date. Options are classified into: Call option and Put option. Call option allows the right to buy an asset, and put option allows the right to sell an asset. Depending upon the market (price) movements, these options can be used to hedge the risks. (b) Swaps: A swap is an agreement between two parties to exchange the cash flows in the future. The agreement defines the dates when the cash flows are to be paid and the way in which they have to be calculated. These swaps are used to hedge against interest rate movements and to avail of opportunities available in different markets. The swaps are classified into (a) Interest Rate Swap and/or (b)Currency Swap (c) Other features of forex markets: Forex markets give opportunities to many participants because of risks and large volumes involved. Some of the participants like hedgers, speculators and arbitrators play crucial role in the movement of market rates and also through their skills and risk appetite are able to make money on the volatile markets ( risks can be positive and negative as well, hence when these participants try to make money/profits due to various risks and the volumes traded in the international markets they also stand to loose significantly) Hedgers use derivatives to reduce risk that they face from potential future movements in market variables. Speculators use derivatives to bet on the future direction of a market variable. For example, a speculator may buy a put option on a stock, if he thinks that the price of the stock will go down. If he thinks that the price of the stock will go up then he will buy a call option, and depending upon the market situations he may exercise his option. Arbitragers tries to take advantage of price/interest differential in two different markets for the same stock/currency/funds. Example(a) (i) Naresh Gupta, buys at a lower price in one market and simultaneously sells at a higher price in another market, and makes his profit (ii) Anita Singh, borrows money from X market @ 5% p.a., and simultaneously lends in Y market @ 7% p.a., makes her profit(money) on account of interest differentials.
Acknowledgment: This study material, could not have been possible, but for the support and assistance of many management students/associates of different management institutes/business schools, through their presentations and assignments Thanks for their time, research & creativity

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Smiflc20
Letter of credit:(i) How a letter of credit (LC) can be defined? (ii) Who are the parties to a LC? (iii) Which banks are involved in a LC? (iv) What are the various types of LCs? (v) Briefly discuss on the advantages and disadvantages of LC? (vi) Which are the documents used in a LC transaction? (i) How a letter of credit (LC) can be defined?: A letter of credit (LC) can be defined as a commitment in writing is issued by a bank at the request of its customer (importer) in favour of the beneficiary (exporter). The undertaking given by the bank (importers bank) advising the beneficiary (exporter) that the documents submitted as per the terms and conditions of LC, by the beneficiary (exporter) would be honored, if the exporter submits all the required documents strictly as per the terms and conditions of the LC. ii) Who are the parties to a LC? (a) Importer who applies to the bank also called as applicant and request the bank to issue the LC (b) Exporter in whose favour the LC is issued also called as beneficiary (c) Different types of banks depending upon their role are parties to the LC (iii) Which banks are involved in a LC?

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(a) Importers banker: The first banker is the opening bank (a bank which issues the LC at the request of its customer [importer]). Also called as issuing bank (b) Advising banker: The 2nd banker involved is the advising bank (the issuing bankers correspondent who advices the LC to beneficiarys banker and/ or beneficiary) (c) Exporters banker: The beneficiarys banker, known as negotiating bank (the exporters bank) which handles the documents submitted by the exporter. The bank also finances the exporter against the documents submitted under a LC) (d) Reimbursing banker: As per LC terms, the bank which (reimburses the LC amount to the negotiating/ confirming bank) (e) Confirming banker: At the request of the exporter or exporters banker a banker adds confirmation to the LC (the bank that confirms the credit) (iv) What are the types of LCs? (a) Sight LC : Under this LC, documents are payable at sight/ on demand/ upon presentation (b) Term LC: Under this type of LC, the payment would be made only on the due date, as per the Bills of Exchange which are drawn, payable after a period, are also known as acceptance LC. (c) Revocable and/or Irrevocable L/C : In case of a LC if the terms and conditions can be amended or cancelled by the issuing banker, without giving any advance notice to the exporter, it is called as revocable LC. On the other hand, in case of an irrevocable LC, the terms and conditions cannot be amended/cancelled without the consent of the beneficiary. In view of this, the exporters prefer to deal with irrevocable LCs. (d) Confirmed L/C : At the request of an exporter and/or the exporters banker, when a banker other than the Issuing bank, adds its own name as confirmation to the credit. Only rrevocable LCs are allowed to be confirmed. (e) Red Clause L/C: When a LC contains a special clause which allows the exporter to avail of a pre-shipment advance, such LC is called Red Clause L/C: This special clause used to be printed (highlighted in red color, hence it is called Red Clause Credit. The issuing bank undertakes to repay such advances, even if shipment does not

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take place.

(f) Green Clause L/C : When a LC allows an

advance for storage (warehouse) facilities of goods, to the exporter, such LCs are called as Green Clause L/Cs. The entitlement of such advance is only when the goods to be shipped have been warehoused, and against an undertaking by the exporter that the transportation documents would be delivered as per the terms and conditions. (g) Transferable L/C: A Transferable L/C is one in which the exporter can transfer his rights to third parties. Such LC should clearly indicate that it is a Transferable LC (h) Back-to-Back L/C: Under this type of L/C , the beneficiary requests his banker to issue an inland LC in favour of his supplier to procure raw materials, goods on the basis of the export LC received by him. Since the inland LC is issued against the export LC it is called as Back-to-Back L/C (v) Briefly discuss on the advantages and disadvantages of LC?

(a) In international trade, due to various risks involved and to protect against delivery of goods by the exporter to the importer, and receipt of payment against goods delivered by the exporter from the importer, LC acts as a medium of safe route. (b) In view of the geographical distances, time zone difference, banks are involved in LC transactions to facilitate exporters and importers of different nations to overcome many risks especially the credit risks (c) LC is used as a medium for transfer of funds against goods exported and imported. The advantages: Importer(Applicant) - Importer can make pay only against receipt of all the required documents as per the terms and conditions of LC. is assured of payment. Exporter(Beneficiary) Exporter can take credit risk on importers bank, which is a better option. Exporter can arrange for export finance (pre-shipment credit and post-shipment credit) against the LC from his banker. Banks: Depending upon the role of the banker, each type of bank is benefited. (a)Opening banker, since it is a non fund based facility, need not worry to make arrangement for funds at the time of issuance of LC. Can charge the importer for commission for issuance of LC

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(b)Beneficiarys banker, as negotiating bank (exporters bank) takes credit risk on the issuing banker and not on the importer. For negotiation can recover handling documents Also arrange for forward exchange contracts. Disadvantages: Arranging to issue a LC is a long drawn process, though it is a non fund based facility, banks would undertake all the relevant appraisals, before granting the LC facility. It also Involves submission, scrutiny of a number of documents (in case of small deviations also), possibility of dishonoring is possible. (vi) Which are the documents used in a LC transaction? Payments against LCs are subject to not only submission of various documents, but such documents needs to be submitted strictly as per the terms and conditions of credit (LC) i.e., in required formats, the number of copies, the manner in which such documents to be drawn, contents of documents are all important factors. Hence, documents play a crucial role in trade transactions. Documents have become integral part of LCs . The banks involved in LC transactions deal only with documents and on the evidence of the correct and proper documents only the paying banks (opening bank/confirming bank) shall honor payment. Documents under LCs are broadly classified as charges for

Documents - LCs

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Bill of Exchange: Bill of exchange, is drawn by the beneficiary (exporter) on the LC issuing bank. Banks handling LCs (negotiating banker, confirming banker and importers banker) should be careful in ensuring that the Bills of Exchange are drawn strictly as per the terms and conditions of the credit.

Commercial Invoice: The exporter prepared the commercial invoice. Generally a commercial invoice consist of (a) importers name and address, LC number and details about goods in terms of value, quantity, weights (gross/net), (b) Commercial invoice should include the inco terms clearly indicating fob, c&f, cif etc., (c) It should clearly and correctly mention the description of the goods as specified in the letter of credit. Transportation Documents: One of the most important document called for in a lc is the shipping document. Shipping document is issued by the transport company evidencing the movement of goods (shipment) from one center to another center. Goods can be transported by means of a singly mode of transport or by more than one mode involving one or more transport systems. If multi modal methods are used a single transport document is be used called as Multi modal transport document. Bill of Lading (B/L): The B/L is the popular transportation document, evidencing the movement of goods from the exporter countrys port of acceptance to the importer countrys port of destination. It is a receipt, signed and issued by the shipping company or authorized agent. It should be issued in sets (as per the terms of credit).

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Among

other

details,

bill

of

lading

should

consist

(a) Description of goods shipped, as per the invoice/letter of credit (b) Status of goods whether in good condition or damaged condition (c) Indicate the gross and net weight (d) Whether freight is prepaid or to pay (e) Date of shipment and other relevant details Insurance Policy: This document is also known as risk covering document. It is be issued by the insurance company or their authorized agents. It should be issued in the same currency in which the LC has been issued. Insurance policy should be issued to cover All Risks. The description of the goods in the policy/certificate should be as per the terms of the credit. All other important details need to be clearly indicated. Regulatory/Other documents: As per the terms of LC, all required documents have to be submitted by the exporter. Exporters need to ensure all compliance and regulatory documents have to be submitted as per the terms and conditions and in the required formats.

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Bombay Stock Exchange BSE Capital Markets

Indian Stock Markets are one of the oldest in Asia At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the "Native Share and Stock Brokers' Association" (which is alternatively known as " The Stock Exchange "). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated.
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September 27th and 28th 2011

Over The Counter Exchange of India (OTCEI)

To provide improved services to investors, the country's first ringless, scripless, electronic stock exchange - OTCEI - was created in 1992 by country's premier financial institutions - Unit Trust of India, Industrial Credit and Investment Corporation of India, Industrial Development Bank of India, SBI Capital Markets, Industrial Finance Corporation of India, General Insurance Corporation and its subsidiaries and CanBank Financial Services.
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Over The Counter Exchange of India (OTCEI)

Trading through OTCEI: Advantages : trading is possible across the country provides better liquidity greater transparency and accuracy of prices is possible due to the screen-based scripeless trading. OTCEI provides a superior trading mechanism coupled with information transparency
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National Stock Exchange - NSE

National Stock Exchange (NSE) In view of the LPG mantra, on the basis of the recommendations of high powered Pherwani Committee, the National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations, selected commercial banks and others.
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National Stock Exchange - NSE

Trading at NSE can be classified under two broad categories: (a) Wholesale debt market and (b) Capital market. Wholesale debt market operations are similar to money market operations - institutions and corporate bodies enter into high value transactions in financial instruments such as government securities, treasury bills, public sector unit bonds, commercial paper, certificate of deposit, etc.
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National Stock Exchange - NSE

Recognized members of NSE are called trading members who trade on behalf of themselves and their clients. Participants include trading members and large players like banks who take direct settlement responsibility. Trading at NSE takes place through a fully automated screen-based trading mechanism which adopts the principle of an order-driven market. Trading members can stay at their offices and execute the trading, since they are linked through a communication network. interested in capital market operations. And capital market being one of the major source of long-term finance for industrial projects, India cannot afford to damage the capital market path. In this regard NSE gains vital importance in the Indian capital market system.
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National Stock Exchange - NSE

The prices at which the buyer and seller are willing to transact will appear on the screen. When the prices match the transaction will be completed and a confirmation slip will be printed at the office of the trading member.

Intermediaries in Markets National Stock Exchange - NSE

NSE Advantages: NSE brings an integrated stock market trading network across the nation. Investors can trade at the same price from anywhere in the country since inter-market operations are streamlined coupled with the countrywide access to the securities. Delays in communication, is avoided. The trading mechanism has improvised the operational efficiency, transperancy.
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Some tips for investing in markets

Why one should invest their money in stock markets? > To earn income from investments > To avail of tax benefits , if any > To increase the value of their assets > To manage their future liquidity

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Important factors

Start up stage
Initially start buying between one and five stocks. Buy those stocks which have been paying regular dividend. Review the newspaper/s that lists the companies on the BSE/NSE. Select a group of companies and start creating your own data bank.

Research through internet

Go to bseindia.com Enter the name of the company in the search lot. Give preference to companies that are paying a dividend. Make a note of the dividend percentage yield. From the menu of items on the left, select key statistics and competitors.

Investment objective Period of investment Risks in investment Return on investment Other factor s

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Make sure basics are clear

Evaluation of the data on each company Compare the companies and select the one that has the best qualifications. Check the chart for each company at bseindia.com, moneycontrol.com, The economictimes.com Based on your view points/perception it would be a good idea for you, to enter into a bullish uptrend before making your first purchase.
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Make sure basics are clear

Dont buy a stock in a downtrend. Wait until the stock price forms a bottom pattern and starts an uptrend before you purchase it. Dont open a margin a/c and borrow money from the broker to buy shares. Be wary of advertisements promoting quick trades or day trading. Dont speculate on stocks without any fundamental and technical analysis.
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Important market related terms

Market Capitalisation: The market price of a company calculated by multiplying the number of shares outstanding by the price per share. Coupon: The interest rate on a fixed income security (bond) fixed at the time of issuance and expressed at a percentage of par value or face value NAV: Net Asset Value, the value of a mutual fund unit based on the value of the underlying assets of the fund minus the liabilities/expenses, 18 divided by the number of units outstanding

Thanks
My thanks to students ,associates and friends of management institutes , business schools but for their efforts , research skills this work shop could not have been possible My thanks to the management ,faculty and other staff members of SIOM, Nasik for giving me an opportunity to conduct this work shop

All the best

My contact details are: T.M.C.VARADARAJAN E mail: tmc_varadarajan@yahoo.co.in : tmc.varadarajan@gmail.com 022-25638965 o9869134706
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