PRESENTATION

ON

FINANCIAL INSTITUTION & MARKET

DEBTMARKET

PRESENTED BY:

Sudhir jha Ashish Gupta

Rahul MahajanAbhishek Srivastava

Vibhaw Sinha

Gour Sunder Paul

Features of Government Securities

•Issued at face value

•No default risk as the securities carry sovereign guarantee.

•Ample liquidity as the investor can sell the security in the secondary market

•Interest payment on a half yearly basis on face value

•No tax deducted at source

•Can be held in Demat form.

•Rate of interest and tenor of the security is fixed at the time of issuance and is not subject to change (unless intrinsic to the security like FRBs - Floating Rate Bonds).

•Redeemed at face value on maturity

•Maturity ranges from of 2-30 years.

•Securities qualify as SLR (Statutory Liquidity Ratio) investments (unless otherwise stated).

1. Higher Risky2. High Rate of Return3. Taxable Bonds issued by

corporations or government are usually taxable Bonds issued by state governments or municipalities are usually exempt from tax.

4. Maturity5. INTEREST RATES

Features of Bond Instruments

FEATURES OF CERTIFICATE OF BONDS

1. Certificate of deposits is considered as risk-less because default risk in them is almost negligible and hence its safe bet for investors.

2. Certificate of deposits is highly liquid and marketable and hence investors can buy or sell it whenever they desire to do so.

3. They are transferable from one party to another which cannot be done with term deposits and hence it is an added advantage for investors who are willing to invest in it.

FEATURES OF COMMERCIAL PAPERS

1. It is a negotiable instrument.

2. It is an unsecured instrument as it is not backed by any assets of the company.

3. It can be sold by the issuing company, directly to the investors

TO BE CONTINUED:

PARTICIPANTS & PRODUCTS IN DEBT MARKET

Issuer Instrument Maturity

Investors

Central Government

Dated Securities 2-20 Years RBI,Banks,Insurance Co., PFs, MFs, PDs,

Central Government

T-Bills 91/364 days RBI,Banks,Insurance Co., PFs, MFs, PDs,Individuals

State Government

Dated Securities 5-10 Years Banks,Insurance Co.,PFs.

PSUs Bonds 5-10 Years Banks,Insurance Co., PFs, MFs, PDs,Individuals, Corporates

Corporates Debentures 1-12 Years Banks, Mutual Funds, Corporates,Individuals

Corporates,PDs

Commercial paper

3 months to 1 Year

Banks, Mutual Funds, FI s, Corporates,Individuals

Banks Certificates of Deposit

3 months to 1 Year

Banks, Corporates

PRIMARY ISSUANCE PROCESS

ISSUE THROUGH AUCTION

ISSUE OF SECURITIES WITH PRE ANNOUNCED COUPON RATE

ISSUE OF SECURITIES THROGH TAP SALE

ISSUE IN CONVERSION OF T BILLS

ISSUANCE PROCESS OF T BILLS

STATE GOVERNMENT SECURITIES

• It is that market in which shares, debentures and other securities are sold for the first time for collecting long term capital.

• This market is concerned with new issues. Therefore the primary market is also called “new issue market”.

• In this market, the flow of funds is from savers to borrowers. Hence, it helps directing in the capital formation of the country

PRIMARY MARKET

Secondary Market Segments