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CRISIL CRISIL is acronym for Credit Rating Information Services of India Limited.

CRISIL is India's leading Ratings, Financial News, Risk and Policy Advisory company. Since 1987 when CRISIL was incorporated, CRISIL has played an integral role in India's development milestones. CRISIL's majority shareholder is Standard & Poor's, the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. CRISIL's association with Standard & Poor's, a division of The McGraw-Hill Companies, dates back to 1996 when both companies started working together on rating methodologies and joint projects. CRISIL Ratings is the only ratings agency in India to operate on the basis of sectoral specialization. CRISIL Ratings plays a leading role in the development of the debt markets in IndiaThe main functions of CRISIL can be classified into following subheads: 1. Ratings CRISIL Ratings: It is the only ratings agency in India with sectoral specialization It has played a critical role in the development of the debt markets in India. The agency has developed new ratings methodologies for debt instruments and innovative structures across sectors. CRISIL Ratings provides technical know-how to clients all over the world and has helped set up ratings agencies in Malaysia (RAM), Israel (MAALOT) and in the Caribbean. 2. Research CRISIL Research: It provides research, analysis and forecasts on the Indian economy, industries and companies to over 500 Indian and international clients across financial, corporate, consulting and public sectors. CRISIL Fund Services: It provides fund evaluation services and risk solutions to the mutual fund industry. The Centre for Economic Research: It applies economic principles to live business applications and provide benchmarks and analyses for India's policy and business decision makers. Investment Research Outsourcing: CRISIL added equity research to its wide bouquet of services, by acquiring Irevna, a leading global equity research and analytics company. Irevna offers investment research services to the world's leading investment banks and financial institutions. 3. Advisory CRISIL Infrastructure Advisory: It provides policy, regulatory and transaction level advice to governments and leading organisations across sectors. Investment and Risk Management Services: CRISIL Risk Solutions offers integrated risk management solutions and advice to Banks and Corporates by leveraging the experience and skills of CRISIL in the areas of credit and market risk. Role of SEBI The role or functions of SEBI are discussed below. 1. To protect the interests of investors through proper education and guidance as regards their investment in securities. For this, SEBI has made rules and regulation to be followed by the financial intermediaries such as brokers, etc. SEBI looks after the complaints received from investors for fair settlement. It also issues booklets for the guidance and protection of small investors. 2. To regulate and control the business on stock exchanges and other security markets. For this, SEBI keeps supervision on brokers. Registration of brokers and sub-brokers is made compulsory and they are expected to follow certain rules and regulations. Effective control is also maintained by SEBI on the working of stock exchanges. 3. To make registration and to regulate the functioning of intermediaries such as stock brokers, sub-brokers, share transfer agents, merchant bankers and other intermediaries operating on the securities market. In addition, to provide suitable training to intermediaries. This function is useful for healthy atmosphere on the stock exchange and for the protection of small investors.

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To register and regulate the working of mutual funds including UTI (Unit Trust of India). SEBI has made rules and regulations to be followed by mutual funds. The purpose is to maintain effective supervision on their operations & avoid their unfair and anti-investor activities.

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To promote self-regulatory organization of intermediaries. SEBI is given wide statutory powers. However, self-regulation is better than external regulation. Here, the function of SEBI is to encourage intermediaries to form their professional associations and control undesirable activities of their members. SEBI can also use its powers when required for protection of small investors.

REGULATORY FUNCTION a). Registration of brokers and sub-brokers and other players in the market b). Registration of collective investments schemes and Mutual Funds c). Regulation of stock exchanges and other self-regulatory organizations (SRO) merchant banks etc d) Prohibition of all fraudulent and unfair trade practices e) Controlling Insider Trading and takeover bids and imposing penalties for such practices 2. DEVELOPMENT FUNCTIONS a) Investor education b) Training of intermediaries. c) Promotion of fair practices and Code of conduct for all S.R.O.s d). Conducting Research and Publishing information useful to all market participants
KEY FINANCIAL INTERMEDIARIES 1. BANK: A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly by loaning or indirectly through capital markets. A bank is the connection between customers that have capital deficits and customers with capital surpluses. Due to their influence within a financial system and an economy, banks are generally highly regulated in most countries. Most banks operate under a system known as fractional reserve banking where they hold only a small reserve of the funds deposited and lend out the rest for profit. They are generally subject to minimum capital requirements which are based on an international set of capital standards, known as the Basel Accords. Mutual Savings Banks As a depository institution, mutual savings banks are similar to savings and loans banks. These financial institutions issue deposit accounts that become liabilities when the bank grants loans. By granting loans, the financial institution can acquire assets through interest rates and charges. With the depositors owning the financial institution, mutual savings banks grant mainly mortgage loans. 3. Credit Unions Operated and owned by company employees through a one-member/one-vote association, credit unions are many ways similar to banks. These financial institutions, also known as thrift institutions, offer deposit accounts to members and uses the deposited funds for the members to take out loans. Most loans credit unions issue involve commercial loans for the purpose of buying cars and large ticket items.

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Life Insurance Companies Life insurance companies obtain funds through issuing contracts and collecting on policy premiums. These contractual savings institutions collect the premiums on periodic or regular intervals based on the contract terms. The life insurance company uses the collected funds to buy mortgages and corporate bonds along with some stocks.

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Finance Companies

As an investment intermediary, finance companies sell commercial papers, bonds and stocks between sellers and buyers. These companies make consumer loans and business loans based on risk-sharing and monitoring investment borrowers. 6. Mutual Funds Mutual fund companies sells shares to individuals while using the profits to buy bonds and stocks. These investment intermediaries allow for individual investors to pool their resources. In this manner, the individual investor can create a more diversified portfolio of assets through mutual fund companies.
functions of investment banks 1. Raising Capital Corporate Finance is a traditional aspect of Investment banks, which involves helping customers raise funds in the Capital Market and advising on mergers and acquisitions. Generally the highest profit margins come from advising on mergers and acquisitions. Investment Bankers have had a palpable effect on the history of American business, as they often proactively meet with executives to encourage deals or expansion. 2. Brokerage Services Brokerage Services, typically involves trading and order executions on behalf of the investors. This in turn also provides liquidity to the market. These brokerages assist in the purchase and sale of stocks, bonds, and mutual funds. 3. Proprietary Trading Under Investment banking proprietary trading is what is generally used to describe a situation when a bank trades in stocks, bonds, options, commodities, or other items with its own money as opposed to its customers money, with a view to make a profit for itself. Though Investment Banks are usually defined as businesses, which assist other business in raising money in the capital markets (by selling stocks or bonds), they are not shy of making profit for itself by engaging in trading activities. 4. Research Activities Research, is usually referred to as a division which reviews companies and writes reports about their prospects, often with buy or sell ratings. Although in theory this activity would make the most sense at a stock brokerage where the advice could be given to the brokerages customers, research has historically been performed by Investment Banks (JM Morgan Stanley, Goldman Sachs etc). The primary reason for this is because the Investment Bank must take responsibility for the quality of the company that they are underwriting Vis a Vis the prices involved to the investor. 5. Sales and Trading Often referred to as the most profitable area of an investment bank, it is usually responsible for a much larger amount of revenue than the other divisions. In the process of market making, investment banks will buy and sell stocks and bonds with the goal of making an incremental amount of money on each trade. Sales is the term for the investment banks sales force, whose primary job is to call on institutional investors to buy the stocks and bonds, underwritten by the firm. Another activity of the sales force is to call institutional investors to sell stocks, bonds, commodities, or other things the firm might have on its books. 6. Underwriting: To underwrite something means "to assume the risk of loss". In this case, the company that is issuing new shares needs to be assured that it will raise the amount of money necessary. It does not want to take the chance that only part of the available shares will be sold and the company will raise only part of the necessary funds. The investment banker assumes this risk by underwriting the securities offering. In a typical underwriting, the investment banker underwrites the issue by buying the entire block of securities at a discounted price from the company. The investment bank will then mark-up the securities to the full retail price and try to sell the securities to the investing public. Investment banking firms will place their own capital at risk by using their own money to buy the issue. In addition, it will frequently borrow money from commercial banks to raise part of the funds necessary for the purchase.

. Functions of RBI Traditional functions are those functions which every central bank of each nation performs all over the world. Basically these functions are in line with the objectives with which the bank is set up. It includes fundamental functions of the Central Bank. They comprise the following tasks. Issue of Currency Notes : The RBI has the sole right or authority or monopoly of issuing currency notes except one rupee note and coins of smaller denomination. These currency notes are legal tender issued by the RBI. Currently it is in denominations of Rs. 2, 5, 10, 20, 50, 100, 500, and 1,000. The RBI has powers not only to issue and withdraw but even to exchange these currency notes for other denominations. It issues these notes against the security of gold bullion, foreign securities, rupee coins, exchange bills and promissory notes and government of India bonds. Banker to other Banks : The RBI being an apex monitory institution has obligatory powers to guide, help and direct other commercial banks in the country. The RBI can control the volumes of banks reserves and allow other banks to create credit in that proportion. Every commercial bank has to maintain a part of their reserves with its parent's viz. the RBI. Similarly in need or in urgency these banks approach the RBI for fund. Thus it is called as the lender of the last resort. Banker to the Government : The RBI being the apex monitory body has to work as an agent of the central and state governments. It performs various banking function such as to accept deposits, taxes and make payments on behalf of the government. It works as a representative of the government even at the international level. It maintains government accounts, provides financial advice to the government. It manages government public debts and maintains foreign exchange reserves on behalf of the government. It provides overdraft facility to the government when it faces financial crunch. Exchange Rate Management : It is an essential function of the RBI. In order to maintain stability in the external value of ru pee, it has to prepare domestic policies in that direction. Also it needs to prepare and implement the foreign exchange rate policy which will help in attaining the exchange rate stability. In order to maintain the exchange rate stability it has to bring demand and supply of the foreign currency (U.S Dollar) close to each other. Credit Control Function : Commercial bank in the country creates credit according to the demand in the economy. But if this credit creation is unchecked or unregulated then it leads the economy into inflationary cycles. On the other credit creation is below the required limit then it harms the growth of the economy. As a central bank of the nation the RBI has to look for growth with price stability. Thus it regulates the credit creation capacity of commercial banks by using various credit control tools. Supervisory Function : The RBI has been endowed with vast powers for supervising the banking system in the country. It has powers to issue license for setting up new banks, to open new braches, to decide minimum reserves, to inspect functioning of commercial banks in India and abroad, and to guide and direct the commercial banks in India. It can have periodical inspections an audit of the commercial banks in India.

POWERS 1. Powers relating to stock exchanges & intermediaries SEBI has wide powers regarding the stock exchanges and intermediaries dealing in securities. It can ask information from the stock exchanges and intermediaries regarding their business transactions for inspection or scrutiny and other purpose. 2. Power to impose monetary penalties SEBI has been empowered to impose monetary penalties on capital market intermediaries and other participants for a range of violations. It can even impose suspension of their registration for a short period. 3. Power to initiate actions in functions assigned SEBI has a power to initiate actions in regard to functions assigned. For example, it can issue guidelines to different intermediaries or can introduce specific rules for the protection of interests of investors.

4. Power to regulate insider trading SEBI has power to regulate insider trading or can regulate the functions of merchant bankers. 5. Powers under Securities Contracts Act For effective regulation of stock exchange, the Ministry of Finance issued a Notification on 13 September, 1994 delegating several of its powers under the Securities Contracts (Regulations) Act to SEBI. SEBI is also empowered by the Finance Ministry to nominate three members on the Governing Body of every stock exchange. 6. Power to regulate business of stock exchanges SEBI is also empowered to regulate the business of stock exchanges, intermediaries associated with the securities market as well as mutual funds, fraudulent and unfair trade practices relating to securities and regulation of acquisition of shares and takeovers of companies PRIVATE PLACEMENT A private placement, which involves the selling of debt or equity to private investors, resembles both a public offering and a merger. A private placement differs little from a public offering aside from the fact that a private placement involves a firm selling stock or equity to private investors rather than to public investors. Also, a typical private placement deal is smaller than a public transaction. Despite these differences, the primary reason for a private placement -- to raise capital -- is fundamentally the same as a public offering. From an M&A point of view, a private placement is similar to a merger because it usually involves an institution (rather than numerous public investors) acquiring a stake (assets) in a company. Firms wishing to raise capital often discover that they are unable to go public for a number of reasons. The company may not be big enough; the markets may not have an appetite for IPOs, or the company may simply prefer not to have its stock be publicly traded. Such firms with solidly growing businesses make excellent private placement candidates. Often, firms wishing to go public may be advised by investment bankers to first do a private placement, as they need to gain critical mass or size to justify an IPO.
The Long-Term Finance may be Raised by the Companies from the following Sources :Capital Market: Capital market denotes an arrangement whereby transactions involving the procurement and supply of long-term funds takes place among individuals and various organisations. In the capital market, the companies raise funds by issuing shares and debentures of different types. When long-term capital is initially raised by new companies or by existing companies by issuing additional shares or debentures, the transactions are said to take place in the market for new capital called, as 'New Issue Market'. But, buying and selling of shares and debentures already issued by companies takes place in another type of market called as 'the Stock market'. Individuals and institutions which contribute to the share capital of the company become its shareholders. They are also known as members of the company. Before shares are issued, the directors of the company have to decide on the following matters:The amount of capital which is to be raised by issue of shares. The types of shares which will be issued. The time of issuing shares. When a company decides to issue additional shares at any time after its formation or after one year of the first allotment of shares, it is required under law that such shares must be first offered to the existing shareholders of the company. If the offer is declined by the existing shareholders, only then shares can be issued to the public. Such an issue is called 'rights issue' and these shares are known as 'right shares'. The Government controls the issue of shares and debentures under the Capital Issues (Control) Act, 1947.

Special Financial Institutions: A large number of financial institutions have been established in India for providing long-term financial assistance to industrial enterprises. There are many all-India institutions like Industrial Finance Corporation of India (IFCI); Industrial Credit and Investment Corporation of India (ICICI); Industrial Development Bank of India(IDBI) , etc. At the State level, there are State Financial Corporations (SFCs) and State Industrial Development Corporations (SIDCs). These national and state level institutions are known as 'Development Banks'. Besides the development banks, there are several other institutions called as 'Investment Companies' or 'Investment Trusts' which subscribe to the shares and debentures offered to the public by companies. These include the Life Insurance Corporation of India (LIC); General Insurance Corporation of India (GIC); Unit Trust of India (UTI) , etc. Leasing Companies: Manufacturing companies can secure long-term funds from leasing companies. For this purpose a lease agreement is made whereby plant, machinery and fixed assets may be purchased by the leasing company and allowed to be used by the manufacturing concern for a specified period on payment of an annual rental. At the end of the period the manufacturing company may have the option of purchasing the asset at a reduced price. The lease rent includes an element of interest besides expenses and profits of the leasing company. Retained Profits or Reinvestment of Profits: An important source of long-term finance for ongoing profitable companies is the amount of profit which is accumulated as general reserve from year to year. To the extent profits are not distributed as dividend to the shareholders, the retained amount can be reinvested for expansion or diversification of business activities. Retained profit is an internal source of finance. Hence it does not involve any cost of floatation which has to be incurred to raise finance from external sources. Short-Term Finance may be Raised by the Companies from the following Sources :Trade Credit: It is the credit which the firms get from its suppliers. It does not make available the funds in cash, but it facilitates the purchase of supplies without immediate payment. No interest is payable on the trade credits. The period of trade credit depends upon the nature of product, location of the customer, degree of competition in the market, financial resources of the suppliers and the eagerness of suppliers to sell his stocks. Installment Credit: Firms may get credit from equipment suppliers. The supplier may allow the purchase of equipment with payments extended over a period of 12 months or more. Some portion of the cost price of the asset is paid at the time of delivery and the balance is paid in a number of installments. The supplier charges interest on the installment credit which is included in the amount of installment. The ownership of the equipment remains with the supplier until all the installments have been paid by the buyer. Accounts Receivable Financing: Under it, the accounts receivable of a business concern are purchased by a financing company or money is advanced on security of accounts receivable. The finance companies usually make advances up to 60 per cent of the value of the accounts receivable pledged. The debtors of the business concern make payment to it which in turn forwards to the finance company. Customer Advance: Manufacturers of goods may insist the customers to make a part of the payment in advance, particularly in cases of special order or big orders. The customer advance represents a part of the price of the products that have been ordered by the customer and which will be delivered at a later date.

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