Project on Capital Market Reforms

8/3/2019 Project on Capital Market Reforms

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PROJECT REPORT

ON

Capital Market Reforms

SUBMITTED IN PARTIAL FULFILLMENT OF Degree of

Master of Business Administration

Submitted by:

Under Supervision of:

Nitish Dipankar

Department of Management Studies

JAMIA HAMDARD

NEW DELHI


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Jamia Hamdard Page 2

TABLE OF CONTENTS

1) Acknowledgement

2) Executive Summary

3) Declaration

4) Bank Introduction

a) History

b) Business and Strategy

5) Product Details- Saving Accounts

6) Insurance Details- Mutual Funds

7) Research Methodology

8) Project Title- Capital Market Reforms

a) Introduction

b) Market Structure and Dimensions

c) Reforms in Government Securities market

d) Recent Initiatives

9) Data Analysis

10) Findings and recommendations

11) Annexure 1

12) Bibliography


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ACKNOWLEDGEMENT

I express my heartiest gratitude to my supervisor Nitish Dipankar for giving me an

opportunity to prepare a report on the project assigned to me. Under his guidance I

undertook this project, for extending the advice and direction that is required to carry on a

study of this nature, and for helping me with the intricate details of the project at every

step. Without his support and able guidance, it would have been very difficult to finish

this work in the way I have done it.

However, I accept the sole responsibility of any possible errors of omission.


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DECLARATION

I , student of Jamia Hamdard University, hereby declare that the project work entitled

Capita Market Reforms has been carried out under the guidance of my supervisor

Nitish Dipankar at Standard Chartered Bank, New Delhi.

It is an original bonafide work undertaken by me as a part of the course curriculum of

M.B.A, FMIT (Jamia Hamdard University)

The information provided in the study is authentic to the best of knowledge and the result

embodied in this study has not been submitted to any other University or Institute for the

ward of degree.


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EXECUTIVE SUMMARY

This project at Standard Chartered Bank was undertaken during the period of 6 Weeks

(May 22nd '09 to July 15th09) as part of my summer training.

My Summer Training included the following-

Learning the basic Banking and Financial terms. Process of various products of the bank Ascertaining the matters related to the topic i.e. Capital Market Reforms in India Interacting with the respondents about the questionnaire Acquiring the Insurance related details of the Standard Chartered Bank


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Introduction

The significant transformation of the Capital Market in India is clearly evident from the

changes that have occurred in the Stock market. The developments have facilitated

greater choice for investors, who have become more discerning and demanding.

Currently, the most important factor shaping the world is globalization. The

benefits of globalization have been well documented and are being increasingly

recognized. Integration of domestic markets with international financial markets has been

facilitated by tremendous advancement in information and communications technology.

But, such an environment has also meant that a problem in one country can sometimes

adversely impact one or more countries instantaneously, even if they are fundamentally

strong.

There is a growing realization that the ability of countries to conduct business

across national borders and the ability to cope with the possible downside risks would

depend on the soundness of the Capital market. This has consequently meant the adoption

of a strong and transparent, prudential, regulatory, supervisory, technological and

institutional framework in the sector on par with international best practices is necessary.All this necessitates a transformation: a transformation in the mindset, a transformation in

the business processes and finally, a transformation in knowledge management. This

process is not a one shot affair; it needs to be appropriately phased in the least disruptive

manner.


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Research Methodology

Research is a process through which we attempt to achieve systematically and with the

support of data the answer to a question, the resolution of a problem, or a greater

understanding of a phenomenon. This process, which is frequently called research

methodology, has eight distinct characteristics:

1. Research originates with a question or problem.2. Research requires a clear articulation of a goal.3. Research follows a specific plan of procedure.4. Research usually divides the principal problem into more manageable sub

problems.

5. Research is guided by the specific research problem, question, or hypothesis.6. Research accepts certain critical assumptions.7. Research requires the collection and interpretation of data in attempting to resolve

the problem that initiated the research.

8. Research is, by its nature, cyclical; or more exactly, helical.

Objectives:

Objectives of a project tell us why project has been taken under study. It helps us to know

more about the topic that is being undertaken and helps us to explore future prospects of

that topic. Basically it tells what all have been studied while making the project.

To learn about the Reforms in the Indian Capital Market. To analyze the respondents view about the Capital Market and related concepts. To analyze the recent initiatives in Capital Market To analyze the history of Standard chartered bank and its business & strategy.


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Duration of Study:

22nd May 200915th July 2009

Place of Study:

Standard Chartered Bank

New Friends Colony

New Delhi

Research Design:

Descriptive research is used in this project report in order to know about the responses to

various views related to Indian Capital Market. This is the most popular type of research

technique, generally used in survey research design and most useful in describing the

characteristics of respondents.

The methods used were following:

Questionnaire methodDirect Interaction with the respondents.

Mode Of Data Collection:

Primary Data: - The sources of Primary data were questionnaires and personalinterviews.

Secondary data: - the sources of secondary data were internet, books andnewspaper articles.

Sample size: 50


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Introduction of the bank

Standard Chartered Bank has deep roots and a long heritage in international banking. It

has an extensive history in some of the world's most dynamic and fast-growing markets,

such as Asia and the Middle East. No one has a better understanding of the wealth

management needs of clients across these markets. Standard Chartereda financial

services gianthas top credit ratings and a 150-year history in banking, with a long-term

commitment and financial investment in the Private Bank. The Standard Chartered

Private Bank offers a full range of customized wealth management products and services.

It uses a broad architecture approach to investment management to bring to customers

some of the worlds leading money managers and financial products.

It is a London based bank, currently operational within over 70 nations with more than

1,700 branches and 73,000 strong workforce as of April 2009. Although the bank is

located in Britain, still a huge chunk of its revenues originate from the continents of Asia,

Africa and Middle East.

Standard Chartered Bank was formed as the merger of two banks viz. The Chartered

Bank of India, Australia & China and The Standard Bank of British South Africa. The

merger took place in the year 1969.

Despite its British base, it has few customers in the United Kingdom and 90% of its

profits come from Asia, Africa, and the Middle East. Because the bank's history is

entwined with the development of the British Empire its operations lie predominantly in

former British colonies, though over the past two decades it has expanded into countries
http://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Asiahttp://en.wikipedia.org/wiki/Africahttp://en.wikipedia.org/wiki/Middle_Easthttp://en.wikipedia.org/wiki/Middle_Easthttp://en.wikipedia.org/wiki/Africahttp://en.wikipedia.org/wiki/Asiahttp://en.wikipedia.org/wiki/United_Kingdom


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that have historically had little British influence. It aims to provide a safe regulatory

bridge between these developing economies.

It now focuses on consumer, corporate, and institutional banking, and on the provision of

treasury servicesareas in which the Group had particular strength and expertise.

Standard Chartered is listed on the London Stock Exchange and the Hong Kong Stock

Exchange and is a constituent of the FTSE 100 Index. Its largest shareholder is Temasek

Hodings.

History of the bank:

The name Standard Chartered comes from the two original banks from which it was

founded and which merged in 1969The Chartered Bank of India, Australia and China,

and The Standard Bank of British South America

The Chartered Bank was founded by Scotsman James Wilson following the grant of a

Royal Charter by Queen Victoria in 1853, while The Standard Bank was founded in the

Cape Province of South Africa in 1862 by another Scotsman John Paterson. Both

companies were keen to capitalize on the huge expansion of trade and to earn the

handsome profits to be made from financing the movement of goods from Europe to the

East and to Africa.

In those early years, both banks prospered. Chartered opened its first branches in

Bombay, Calcutta and Shanghai in 1858, followed by Hong Kong and Singapore in 1859.
http://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/James_Wilson_%28UK_politician%29http://en.wikipedia.org/wiki/James_Wilson_%28UK_politician%29http://en.wikipedia.org/wiki/London_Stock_Exchange


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With the opening of the Suez Canal in 1869 and the extension of the telegraph to China

in 1871, Chartered was well placed to expand and develop its business.

In South Africa, Standard, having established a considerable number of branches, was

prominent in financing the development of the diamond fields of Kimberley from 1867

and later extended its network further north to the new town of Johannesburg when gold

was discovered there in 1885. Half the output of the second largest gold field in the world

passed through The Standard Bank on its way to London.

Both banksat that time still quite separate companiessurvived the First World War

and the Depression, but were directly affected by the wider conflict of the Second World

War in terms of loss of business and closure of branches. There were also longer term

effects for both banks as countries in Asia and Africa gained their independence in the

50s and 60s.

Each had acquired other small banks along the way and spread their networks further. In

1969, the banks decided to merge, and to counterbalance their existing network by

expanding in Europe and the United States, while continuing their expansion in their

traditional markets in Asia and Africa. All appeared to be going well, when in 1986

Lloyds Bankof the United Kingdom made a hostile takeover bid for the Group.

After having defeated the bid, Standard Chartered entered a period of change. It made
http://en.wikipedia.org/wiki/Lloyds_Bankhttp://en.wikipedia.org/wiki/Lloyds_Bank


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provisions against Third World debt exposure and loans to corporations and

entrepreneurs who could not meet their commitments. It also began a series of

divestments notably in the United States and South Africa, and entered into a number of

asset sales.

Business & Strategy

Listed on both the London Stock Exchange and the Hong Kong Stock Exchange,Standard

Chartered PLC is consistently ranked in the top 25 FTSE 100 companies by market

capitalization. By combining its global capabilities with deep local knowledge, the bank

develops innovative products and services to meet the diverse and ever-changing needs of

individual, corporate and institutional customers in some of the world's most exciting and

dynamic markets.

Personal Banking

With global network of over 1,750 branches and outlets, it offers personal financialsolutions to meet the needs of more than 14 million customers across Asia, Africa and the

Middle East.

SME Banking

SME Banking division offers a wide range of products and services to help small and

medium-sized enterprises manage the demands of a growing business.

Wholesale Banking

Headquartered in Singapore and London, with on-the-ground expertise that spans the

global network, banks Wholesale Banking division provides corporate and institutional


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clients with innovative solutions in trade finance, cash management, securities services,

foreign exchange and risk management, capital raising, and corporate finance.

Islamic Banking

Standard Chartered Saadiq's dedicated Islamic Banking team provides comprehensive

international banking services and a wide range of Shariah compliant financial products

that are based on Islamic values.

Private Banking

Standard Chartered banks Private Bank advisors and investment specialists provide

customised solutions to meet the unique needs and aspirations of high net worth clients.

Principles & Values:

At Standard Chartered success is built on teamwork, partnership and the diversity of its

people.At the heart of their values lie diversity and inclusion. They are a fundamental part

of banks culture, and constitute a long-term priority in its aim to become the world's best

international bank.

Today it gives employments to 75,000 people, representing 115 nationalities, and one

can find 60 nationalities among its 500 most senior leaders. Bank believes that this

diversity helps to fuel creativity and innovation, supporting the development of exciting

new products and services for our customers worldwide.

Standard chartered Bank stands for:

Strategic intent

The world's best international bank Leading the way in Asia, Africa and the Middle East

Brand promise

Leading by Example to be The Right PartnerValues

Responsive


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Trustworthy International Creative Courageous

Approach

ParticipationFocusing on attractive, growing markets where bank can leverage its relationships

and expertise

Competitive positioningCombining global capability, deep local knowledge and creativity to outperform

its competitors

Management DisciplineContinuously improving the way it works, balancing the pursuit of growth with

firm control of costs and risks Commitment to stakeholders

CustomersPassionate about its customers' success, delighting them with the quality of our

service

PeopleHelping its people to grow, enabling individuals to make a difference and teams

to win

CommunitiesTrusted and caring, dedicated to making a difference


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InvestorsA distinctive investment delivering outstanding performance and superior returns

RegulatorsExemplary governance and ethics wherever bank is standing.

Personal Banking

Arrange of features are included for the customers ranging from accounts to insurances

and investments needs. Following are the personal services provided by the Standard

Chartered Bank:

Accountso Term Depositso Savings Accountso AxcessPlus Accounto Super Value Accounto Parivaar Accounto No Frills Accounto Aasaan Accounto 2-in-1 Accounto Depository Serviceso Corporate Salary Accounto Current Accountso Business Plus Accounto Enhanced Business Plus Account

Credit Cardso Choose your Credit Cardo Emirates Platinum Cardo Platinum Card
http://www.standardchartered.co.in/personal/accounts/en/accounts-landing.htmlhttp://www.standardchartered.co.in/personal/accounts/en/accounts-landing.htmlhttp://www.standardchartered.co.in/personal/accounts/en/accounts-landing.htmlhttp://www.standardchartered.co.in/personal/accounts/en/term-deposit.htmlhttp://www.standardchartered.co.in/personal/accounts/en/axcessplus-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/super-value-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/parivaar-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/no-frills-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/aasaan-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/two-one-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/depository-services.htmlhttp://www.standardchartered.co.in/personal/accounts/en/corporate-salary-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/business-pl-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/enhanced-business-pl-acc.htmlhttp://www.standardchartered.co.in/personal/credit-cards/en/cc-landing.htmlhttp://www.standardchartered.co.in/personal/credit-cards/en/cc-landing.htmlhttp://www.standardchartered.co.in/personal/credit-cards/en/cc-landing.htmlhttp://www.standardchartered.co.in/personal/credit-cards/en/cc-landing.htmlhttp://www.standardchartered.co.in/personal/accounts/en/enhanced-business-pl-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/business-pl-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/corporate-salary-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/depository-services.htmlhttp://www.standardchartered.co.in/personal/accounts/en/two-one-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/aasaan-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/no-frills-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/parivaar-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/super-value-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/axcessplus-acc.htmlhttp://www.standardchartered.co.in/personal/accounts/en/term-deposit.htmlhttp://www.standardchartered.co.in/personal/accounts/en/accounts-landing.html


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o Emirates Titanium Cardo Super Value Titanium Cardo Gold Cardo EMI Cardo Executive Cardo Classic Cardo Your Rewards Plus Programo Special offerso Fraud Protection

Debit & Prepaid Cardso Debit Cardso Shop Smart Cardo Gold Debit Cardo Prepaid Cardso Smart Travel

Loans & Mortgageso

Personal Loanso Home Loanso Loan Against Securitieso Home Savero Loan Against Term Depositso Home Saver Pluso Smart Credit Overdrafto Loan Against Propertyo Calculators

NRI Bankingo Which account is right for me?o NRE Accounto NRO Savings Account
http://www.standardchartered.co.in/personal/debit-prepaid/en/debit-landing.htmlhttp://www.standardchartered.co.in/personal/debit-prepaid/en/debit-landing.htmlhttp://www.standardchartered.co.in/personal/debit-prepaid/en/debit-landing.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/loans-landing.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/loans-landing.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/loans-landing.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/personal-loan.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/home-loan.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/loan-against-security.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/homesaver.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/loan-against-term-deposit.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/home-saver-plus.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/smart-credit.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/loan-against-property.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/calculators.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/nri-banking-landing.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/nri-banking-landing.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/nri-banking-landing.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/nri-banking-landing.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/nre-account.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/nro-account.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/nro-account.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/nre-account.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/nri-banking-landing.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/nri-banking-landing.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/calculators.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/loan-against-property.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/smart-credit.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/home-saver-plus.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/loan-against-term-deposit.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/homesaver.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/loan-against-security.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/home-loan.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/personal-loan.htmlhttp://www.standardchartered.co.in/personal/loans-mortgages/en/loans-landing.htmlhttp://www.standardchartered.co.in/personal/debit-prepaid/en/debit-landing.html


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o FCNR Accounto Accounts for Returning Indianso NRI Service Centers

Exclusive Bankingo Excel Bankingo Priority Bankingo Private Banking

Insurance & Investmentso General Insuranceo Life Insuranceo Investment Services

Private Banking

Standard Chartered Bank has been building partnerships with generations of clients since

it opened its first branches in Shanghai and Calcutta in 1853. It is one of the few financial

leaders that combine an extensive global reach with the in-depth, specialized knowledgethat comes from a history of being in local markets close to its clients. Today, as one of

the worlds leading international banks, it is dedicated to providing unsurpassed client

service and is uniquely situated to provide customized solutions to meet all wealth

management needs.

Standard Chartered Bank has deep roots and a long heritage in international banking. It

has an extensive history in some of the world's most dynamic and fast-growing markets,

such as Asia and the Middle East. No one has a better understanding of the wealth

management needs of clients across these markets.

Standard Chartereda financial services gianthas top credit ratings and a 150-year

history in banking, with a long-term commitment and financial investment in the Private

Bank. The Standard Chartered Private Bank offers a full range of customized wealth

management products and services, including those offered by its award-winning
http://www.standardchartered.co.in/personal/nri-banking/en/nro-account.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/nro-account.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/nro-account.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/nro-account.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/nro-account.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/nro-account.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/fcnr-account.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/accounts-for-returning-indians.htmlhttp://www.standardchartered.co.in/_documents/nri-banking/nri_centers.xlshttp://www.standardchartered.co.in/personal/exclusive-banking/en/exclusive-banking-landing.htmlhttp://www.standardchartered.co.in/personal/exclusive-banking/en/exclusive-banking-landing.htmlhttp://www.standardchartered.co.in/personal/exclusive-banking/en/exclusive-banking-landing.htmlhttp://www.standardchartered.co.in/personal/exclusive-banking/en/excel-banking.htmlhttp://www.standardchartered.com/in/cb/pb/index.htmlhttp://www.privatebank.standardchartered.com/http://www.standardchartered.co.in/personal/insurance-investments/en/insurance-investment-landing.htmlhttp://www.standardchartered.co.in/personal/insurance-investments/en/insurance-investment-landing.htmlhttp://www.standardchartered.co.in/personal/insurance-investments/en/insurance-investment-landing.htmlhttp://www.standardchartered.co.in/personal/insurance-investments/en/general-insurance.htmlhttp://www.standardchartered.co.in/personal/insurance-investments/en/life-insurance.htmlhttp://www.standardchartered.co.in/personal/insurance-investments/en/investment-services.htmlhttp://www.standardchartered.co.in/personal/insurance-investments/en/investment-services.htmlhttp://www.standardchartered.co.in/personal/insurance-investments/en/life-insurance.htmlhttp://www.standardchartered.co.in/personal/insurance-investments/en/general-insurance.htmlhttp://www.standardchartered.co.in/personal/insurance-investments/en/insurance-investment-landing.htmlhttp://www.privatebank.standardchartered.com/http://www.standardchartered.com/in/cb/pb/index.htmlhttp://www.standardchartered.co.in/personal/exclusive-banking/en/excel-banking.htmlhttp://www.standardchartered.co.in/personal/exclusive-banking/en/exclusive-banking-landing.htmlhttp://www.standardchartered.co.in/_documents/nri-banking/nri_centers.xlshttp://www.standardchartered.co.in/personal/nri-banking/en/accounts-for-returning-indians.htmlhttp://www.standardchartered.co.in/personal/nri-banking/en/fcnr-account.html


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commercial bank. It uses a broad architecture approach to investment management to

bring some of the worlds leading money managers and financial products.

Some key facts about Standard Chartered Bank:

Over 150 years in banking Total assets of US$329 billion (as of March 2008) Ranked 56th in size among top 1000 world banks (The Banker, July 2007) 70,000+ employees A+/A3/A+ credit rating (S&P/Moodys/Fitch respectively, as of March 2008) Listed on both London & Hong Kong exchanges Ranks among the top 25 companies in the FTSE-100 Regulated by the UK FSA

SME Banking

With years of banking experience, Standard Chartered Bank is undoubtedly in a strong

position to help growing businesses sail through the complexities they may face. As an

international bank with offices in more than 50 countries, It provides the global reach and

international recognition that the company deserves.SME Banking offers one of the widest range of banking products and services in the

market today. Managing a growing business demands most of existing time and energy.

Its relationship managers understand customers business requirement and help them

manage their business better.

Business Current Accountso International Trade Accounto International Trade Account - TEC

Loanso Business Installment Loano Loan/Overdraft Against Propertyo Term Loan
http://www.standardchartered.co.in/sme/business-current-account/en/business-landing.htmlhttp://www.standardchartered.co.in/sme/business-current-account/en/business-landing.htmlhttp://www.standardchartered.co.in/sme/business-current-account/en/business-landing.htmlhttp://www.standardchartered.co.in/sme/business-current-account/en/international-trade-account.htmlhttp://www.standardchartered.co.in/sme/business-current-account/en/international-trade-account-tec.htmlhttp://www.standardchartered.co.in/sme/loans/en/loans-landing.htmlhttp://www.standardchartered.co.in/sme/loans/en/loans-landing.htmlhttp://www.standardchartered.co.in/sme/loans/en/loans-landing.htmlhttp://www.standardchartered.co.in/sme/loans/en/business-installment-loan.htmlhttp://www.standardchartered.co.in/sme/loans/en/overdraft-against-property.htmlhttp://www.standardchartered.co.in/sme/loans/en/term-loan.htmlhttp://www.standardchartered.co.in/sme/loans/en/term-loan.htmlhttp://www.standardchartered.co.in/sme/loans/en/overdraft-against-property.htmlhttp://www.standardchartered.co.in/sme/loans/en/business-installment-loan.htmlhttp://www.standardchartered.co.in/sme/loans/en/loans-landing.htmlhttp://www.standardchartered.co.in/sme/business-current-account/en/international-trade-account-tec.htmlhttp://www.standardchartered.co.in/sme/business-current-account/en/international-trade-account.htmlhttp://www.standardchartered.co.in/sme/business-current-account/en/business-landing.html


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Trade & Working Capital Productso Trade & Working Capitalo Express Trade

Forex Serviceso Forex Services

Otherso Online tax paymento Service charges & feeso Schedule an appointmento Raise a complaint

Commercial Banking

Standard Chartered has maintained a long local presence, since 1858, with particular

emphasis on relationship banking. Significant networks have been established with

vendors and financial-related organizations to enable it to offer its customers acomprehensive range of flexible financial services, with special focus on transactional

banking products. Supported by state-of-the-art operations, Standard Chartered is pro-

active in improving every part of our services. Electronic Delivery system has been put in

place to ensure that transactions are handled speedily. It has its Cash Product Specialists

and dedicated Customer Service Centres to provide its customers with effective

solutions. Standard Chartered fully understands the importance of time, convenience and

efficiency to the success of your business. With over 140 years of experience in

trade finance and an extensive international branch network, Standard Chartered is

committed to help customers succeed in every competitive environment.
http://www.standardchartered.co.in/sme/trade-and-working-capital-products/en/trade-landing.htmlhttp://www.standardchartered.co.in/sme/trade-and-working-capital-products/en/trade-landing.htmlhttp://www.standardchartered.co.in/sme/trade-and-working-capital-products/en/trade-landing.htmlhttp://www.standardchartered.co.in/sme/trade-and-working-capital-products/en/trade-services-working-capital.htmlhttp://www.standardchartered.co.in/sme/trade-and-working-capital-products/en/express-trade.htmlhttp://www.standardchartered.co.in/sme/forex-services/en/forex.htmlhttp://www.standardchartered.co.in/sme/forex-services/en/forex.htmlhttp://www.standardchartered.co.in/sme/forex-services/en/forex.htmlhttp://www.standardchartered.co.in/sme/forex-services/en/forex.htmlhttp://www.standardchartered.co.in/sme/home/en/index.htmlhttp://www.standardchartered.co.in/sme/home/en/index.htmlhttp://www.standardchartered.co.in/sme/home/en/index.htmlhttp://www.standardchartered.co.in/sme/others/en/online-tax-payment.htmlhttp://www.standardchartered.co.in/sme/tools-and-utilities/en/service-charges.htmlhttps://play.standardchartered.com/smail/in/IN22/index.htmlhttp://www.standardchartered.co.in/personal/tools-utilities/en/complaints.htmlhttp://www.standardchartered.co.in/personal/tools-utilities/en/complaints.htmlhttps://play.standardchartered.com/smail/in/IN22/index.htmlhttp://www.standardchartered.co.in/sme/tools-and-utilities/en/service-charges.htmlhttp://www.standardchartered.co.in/sme/others/en/online-tax-payment.htmlhttp://www.standardchartered.co.in/sme/home/en/index.htmlhttp://www.standardchartered.co.in/sme/forex-services/en/forex.htmlhttp://www.standardchartered.co.in/sme/forex-services/en/forex.htmlhttp://www.standardchartered.co.in/sme/trade-and-working-capital-products/en/express-trade.htmlhttp://www.standardchartered.co.in/sme/trade-and-working-capital-products/en/trade-services-working-capital.htmlhttp://www.standardchartered.co.in/sme/trade-and-working-capital-products/en/trade-landing.html


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Wholesale banking in detail

Whole sale banking includes:

Transaction banking Principle finance Financial markets Corporate finance

Transaction banking offers a full scope of innovative, customized solutions in cash

management, trade finance and securities services.

With an extensive branch network and award-winning suite of electronic client access

channels it offers a full range of transaction banking solutions to help manage the

working capital more efficiently.

It provides a wide range of cash management services to corporate and institutional

clients worldwide. It helps customers with payments and collections, information

management, account services and liquidity management solutions. Standard Chartered

has been meeting securities industry participants' needs in the Greater Asia region for

over 150 years, serving a discerning client base that comprises leading North American,

European and Asian institutions. We count among our clients the world's largest global

custodians, broker-dealers, fund managers and institutional investors.

Standard CharterersPrincipal Finance business has a strong track record of creating

value through its investments. The group provides direct investment for growing

companies, invests in distressed and high yield assets and also provides advisory services


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to companies in financial distress. The bank has dedicated a team focusing on making

investments in real estate across Asia.

Leading the way in Financial markets, Standard Chartered delivers award-winning and

innovative solutions to meet clients risk management, financing and investment needs

Banks presence in Asia, Africa and the Middle East and active support for the

development of its equity infrastructures makes it well placed to help you tap into the

significant growth opportunities offered by these emerging markets.It provides a

comprehensive range of online solutions tailored to meet the electronic trading needs of

its clients.

Standard CharterersCorporate Finance group provides innovative and pioneering

solutions for clients, capitalizing on the Banks comprehensive on-the-ground knowledge

and strong international perspective to provide customized solutions to meet its clients

corporate finance needs, especially in cross-border trade and investment flows.

With teams specializing in Mergers & Acquisitions and Leveraged Finance, Standard

Chartereds Corporate Advisory group has the expertise, experience and local knowledge

to deliver high quality advice and execution on strategic cross-border advisory and

leveraged financing transactions.


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Islamic banking is a rapidly growing phenomenon in the global financial markets.

Muslims have always shielded away from conventional banking, as it does not conform

to their religious tenets.

There has always been a demand among Muslims for financial products and services that

conform to the Shariah (Islamic law). Based on this demand, a number of banks all over

the world have started offering products and services that are in compliance with Shariah.

With an estimated size of over USD 250 billion and a growth rate of 15%, Islamic

banking has now established itself as a serious business segment in the eyes of financial

institutions, businesses, consumers and regulators.

Standard Chartered, with an aim to meet the unique needs of its customer, has setup an

Islamic Banking Division. The bank is now offering tailor-made Shariah compliant

products to its customers.

Standard Chartered employs 38,000 people in 950 locations in more than 50 countries in

the Asia Pacific Region, South Asia, the Middle East, Africa, the United Kingdom and

the Americas. Standard Chartered is one of the worlds most international banks, its

employees representing 80 nationalities. Standard Chartered is the largest international

bank operating in Pakistan. With a presence of over 150 years in this industry, the bank is


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able to fully leverage its capabilities and product expertise to provide tailor-made

solutions for its customers.

Standard Chartered realizes that a segment of their customers wanted products that were

shariah compliant, and by introducing these Islamic financing options, they are fulfilling

their promise of being responsive to their customer needs. These products have been

developed under the guidance of an independent Shariah Supervisory Committee.

Product Details Of The Bank: Saving Accounts

A savings bank account is the most common operating account for individuals and others

for non-commercial transactions. A savings account helps people to put through day-to-

day banking transactions besides earning some return on the savings made. Banks usually

have ceilings on the total number of transactions permitted in a specific time period.

Banks also stipulate certain minimum balance to be maintained in savings accounts. The

Savings account is a transaction account.

Interest on the account is determined in accordance with directives of the Reserve Bank

of India. The current rate is 3.5% per annum. Interest is calculated on the Minimum

Credit Balance between the close of the business on the 10th and the last day of each

calendar month. Interest may be credited to the account on a quarterly or half yearly

basis.


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Savings account can be opened by the following persons or bodies:

A person in his / her name Two or more persons in their joint names payable to :

o both or all of them or the survivor or survivors of them; oro either or any more of them or the survivor or the survivors of them; oro former / latter or survivor of a particular person during his lifetime or

survivors jointly or survivor

Certain non-profit welfare organizations are also permitted to open Savings bank accounts with banks

Savings / Current accounts can become inactive if you do not make any debit

transactions for a continuous period. The duration of this period varies from bank to

bank.

What a bank asks for while opening an account

Banks are required to know the true identity of the person wanting to open anAccount.

Banks require photograph of the person to be kept on record for futureidentification purpose

Banks have to obtain PAN numbers (issued by Income Tax Dept.) of the account

holder at the time of opening of the account

In the absence of PAN number, the customer should give a declaration in the


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prescribed format (Form no.60 or 61) as the case may be.

Standared Chartered Bank has a range of accounts with unique features to offer you quick

and convenient banking facility. The range of accounts include- aXcess Plus account ,

Parivaar account, Super value account, 2-in-1 account, Corporate Salary account, No

Frills account and Aasaan account.

Under aXcess Plus account, bank offers variety of channels to access your money such as

Free Unlimited Visa ATM transactions, International Debit Card, etc. Under Parivaar

account you can tap your familys financial strength while maintaining your individual

identity.

The unique feature of this account is that you can maintain individual savings accounts

with the benefit of clubbing balances in grouped accounts. Super value account gives to a

host of free value added services such as Free Bill Pay, Free Inter Bank Funds Transfer,

etc. You can link your fixed deposits with a savings or current account under 2-in-1

account. Corporate Salary account is an account for corporates to help them streamline

salary payments. No Frills account is an account to offer basic banking facilities. Aasaan

account is a no-maintenance, hassle free savings account with basic requirements.

Features of some of the banksSaving Accouunts:

Axcess plus:

FREE Unlimited Visa ATM transactions (Cash withdrawal and balance enquiry) FREE Standard Chartered Bank branch access across the country


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FREE Doorstep Banking FREE Demand Drafts/Pay Orders (drawn at SCB locations) FREE Payable at Par Chequebook International Debit Card Extended Banking Hours

Super Value:

Free globally valid Debit-cum-ATM card.

Free Access to 6500 ATMs in India.

Free Doorstep Banking.

Free Payable at Par cheque book/ account statements / DDs Free Bill Pay.

Free Inter Bank Funds Transfer.

Free Foreign Inward Remittance Certificates.

Other benefits of the SuperValue account:o Globally valid debit card: Make purchases at over 12 million merchant outlets and

withdraw cash at over 810,000 ATMs worldwide using funds from your account

o Multicity Banking: Access your account even when you are out of towno Enjoy extended Banking hours at all our branches, and Speed Cheque Clearing


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and Metro Clearing facilities.

o 24-hour branches, 365 day branches available at select locationso Phone banking: Available to you 365 days a year on a 24-hour basis in the metros

and everyday of the week at other centers

o Internet banking: Access and transact on your accounts through the Internet fromany part of the world

o Free Investment Advisory Services to assist you in investing in a range of mutualfunds

o Full suite of complimentary banking services including credit cards, loan productsand capital market services.

Parivaar:

Family can maintain individual savings accounts with the benefit of clubbingbalances in grouped accounts.

Anytime, anywhere access to accounts through ATMs, Phone Banking andInternet banking. Option of Systematic Investment Plan (SIP): A well known long

term wealth building tool that allows customers to invest a fixed amount of

money every month in specific mutual funds. This comes with a direct debit

facility and avoids the need to remember dates and write cheques every month.

Globally valid ATM-cum-debit card can be used at 55,000 merchant outlets inIndia and 12 million outlets worldwide.


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Aasaan:

No Minimum Balance requirement. Free unlimited access to any SCB branch across the country for Customer-in-

person.

Unlimited Free access to Standard Chartered Bank ATM's. Up to 4 free cash withdrawal transactions per month at other domestic VISA

ATMs.

Nominal quarterly fee of Rs. 100 (reversed if the Average Balance in the quarteris Rs 10,000 or more).

Recent Alliances and Developments

In 2000, Standard Chartered acquired Grindlays Bankfrom ANZ Bank, increasing its

presence in private banking and further expanding its operations in India and Pakistan.

Standard Chartered retained Grindlays' private banking operations in London and

Luxembourg and the subsidiary in Jersey, all of which it integrated into its own private

bank. This now serves high net worth customers in Hong Kong, Dubai, and Johannesburg

under the name Standard Chartered Grindlays Offshore Financial Services. In India,

Standard Chartered integrated most of Grindlays' operations, making Standard Chartered

the largest foreign bank in the country, despite Standard Chartered having cut some

branches and having reduced the staff from 5500 to 3500 people.

On 15 April 2005, the bank acquired Korea First Bank, beating HSBC in the bid. Since

then the bank has rebranded the branches as SC First Bank.
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Standard Chartered completed the integration of its Bangkokbranch and Standard

Chartered Nakornthon Bank in October, renaming the new entity Standard Chartered

Bank(Thaiand). Standard Chartered also formed strategic alliances with Fleming Family

& Partners to expand private wealth management in Asia and the Middle East, and

acquired stakes in ACB Vietnam, Travelex, American Express Bankin Bangladesh and

Bohai Bankin China.

On 9 August 2006 Standard Chartered announced that it had acquired an 81% and

shareholding in the Union BankofPakistan in a deal ultimately worth $511 million.

This deal represented the first acquisition by a foreign firm of a Pakistani bank and

the merged bank, Standard Chartered Bank (Pakistan), is now Pakistan's sixth largest

bank.

On 22 October, 2006 Standard Chartered announced that it has received tenders for more

than 51 per cent of the issued share capital of Hsinchu International Bank (Hsinchu),

established in 1948 in Hsinchu province in Taiwan. Standard Chartered, which had first

entered Taiwan in 1985, acquired majority ownership of the bank, Taiwans seventh

largest private sector bank by loans and deposits as at 30 June, 2006. Standard Chartered

merged its existing three branches with Hsinchu's 83, and then delisted Hsinchu

International Bank, changing the bank's name to Standard Chartered Bank (Taiwan)

Limited). Prior to the merger, Hsinchu had suffered extensive losses on defaulted credit

card debt.

In 2007, Standard Chartered opened its Private Banking global headquarters in

Singapore.
http://en.wikipedia.org/wiki/Bangkokhttp://en.wikipedia.org/wiki/Asia_Commercial_Bankhttp://en.wikipedia.org/wiki/Travelexhttp://en.wikipedia.org/wiki/American_Express_Bankhttp://en.wikipedia.org/wiki/Bangladeshhttp://en.wikipedia.org/wiki/Bohai_Bankhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Standard_Chartered_Bank_Limitedhttp://en.wikipedia.org/wiki/Union_Bankhttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/Standard_Charteredhttp://en.wikipedia.org/wiki/Hsinchuhttp://en.wikipedia.org/wiki/Standard_Charteredhttp://en.wikipedia.org/wiki/Taiwanhttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Taiwanhttp://en.wikipedia.org/wiki/Standard_Charteredhttp://en.wikipedia.org/wiki/Hsinchuhttp://en.wikipedia.org/wiki/Standard_Charteredhttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/Union_Bankhttp://en.wikipedia.org/wiki/Standard_Chartered_Bank_Limitedhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Bohai_Bankhttp://en.wikipedia.org/wiki/Bangladeshhttp://en.wikipedia.org/wiki/American_Express_Bankhttp://en.wikipedia.org/wiki/Travelexhttp://en.wikipedia.org/wiki/Asia_Commercial_Bankhttp://en.wikipedia.org/wiki/Bangkok


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On 23 August, 2007 Standard Chartered entered into an agreement to buy a 49 percent of

an Indian brokerage firm (UTI Securities) for $36 million in cash from Securities Trading

Corporation of India Ltd., with the option to raise its stake to 75 percent in 2008 and, if

both partners agree, to 100 percent by 2010. UTI Securities offers broking, wealth

management and investment banking services across 60 Indian cities.

On 29 February 2008, Standard Chartered PLC announced it has received all the required

approvals leading to the completion of its acquisition of American Express Bank Ltd

(AEB) from the American Express Company (AXP). The total cash consideration for the

acquisition is US$ 823 million.

Insurance details of the bank: Mutual Funds

Standard Chartered mutual fund is promoted by banking giant Standard Chartered and

exclusively focuses on debt schemes. The fund started as ANZ Grindlays Mutual Fund

and was later renamed as Standard Chartered Mutual Fund after the takeover of

Grindlays Bank by Standard Chartered.

Standard Chartered Bank is a truly global bank with employees representing 80

nationalities. The bank has a strong brand presence in India and is well entrenched in

developing markets of Asia Pacific region.

The sponsor of the fund is Standard Chartered Bank. The AMC of the fund is Standard

Chartered Asset Management Company Private Limited. The sponsor holds a 75 per cent

stake in the company and the balance is held by Atul Choksey of Apcotex. As of Aug


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2006, the fund has assets of over Rs.15,551 crore under management.

Mutual Funds basics:

A Mutual Fund is a pool of money that gives small investors access to a well-diversified

portfolio of equities, bonds, and other securities. Each shareholder participates in the gain

or loss of the fund. Shares are issued and can be redeemed as needed (in the case of an

open-ended fund). The fund's net asset value (NAV) is determined each day. Each mutual

fund portfolio is invested to match the objective stated in its investment agenda.

An equity fund is one that is invested mainly in company equity through the stock

exchange and is exposed to the risk of volatility associated with the equity market.

Although this fund is the riskiest within the genre of mutual funds, it is also known to

yield the maximum yields and dividends.

A Fixed Income Fund is one that invests in avenues which offer fixed returns over a set

tenor. These funds are inherently linked to the general interest rate and are, therefore,

unlike the stock market, safe from drastic fluctuation. The capital value is more easily

sustainable while the returns are generally modest. However, active fund management

can yield returns which are higher than most fixed income avenues in the market and

therefore, it is an attractive investment avenue for investors with moderate risk appetites.

A Money Market Fund is one that invests in liquid, short-term avenues which offer


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fixed returns over short periods. These funds are inherently linked to the general interest

rate and are, therefore, unlike the stock market, safe from drastic fluctuation. Underlying

investment may include securities issued by corporate bodies, spread transactions,

reverse-repo transactions, selective exposure in the CFS market, Term Finance

Certificates (TFCs) and commercial paper.

Balance funds maintain a mix within equity and fixed income markets. The inclination

of this mix will be dictated by the funds strategic intent and mission statement. This fund

offers more maneuvering room to its fund managers as they have the option to switch

between market types i.e. fixed income avenues and capital markets. Effectively, the risk

associated to this category lies somewhere between that of equity funds and fixed income

funds and the returns also vacillate correspondingly between the ranges of the

two.

Mutual Funds Offered:

JS Investments Limited:

JS ABAMCO was incorporated on February 22, 1995 and registered as an investment

adviser and an asset management company with the SECP (formerly the Corporate Law

Authority) on February 27, 1995 and August 29, 1995 respectively. Last year its legal

title changed to JS Investments Limited.

SCB offers the following mutual funds from this fund house:

Unit Trust of Pakistan (UTP)is the first open-end mutual fundin Pakistan's


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private sector. UTP follows a balanced investment strategy which means that it

switches its investments from fixed-income to equity & vice versa depending

upon the investment outlook. When the stock market appears volatile, the funds

normally switch portfolios to fixed-income & debt based instruments and reverts

back to equity when the situation becomes stable.

Investment Strategy: UTP focuses on preserving the initial capital while providing

maximum diversification, along with liquidity, growth & consistent returns. In order to

achieve these, the fund invests in three types of high quality assets. These include:

Shares of companies which are either consistently dividend paying having growthprospects actively traded

Debt instruments with good credit rating Short-term money market instruments

JS - Income Fund (JS - IF) is the second open-end mutual fund launched byJS Investments Limited. JS-IF is a diversified investment program in fixed

income securities through a single investment. The fund aims at achieving a high

rate of current income consistent with reasonable concern for safety of capital and

provides the investors with the convenience to join or leave the fund at their

discretion.

Investment Strategy: JS-IF will generally invest in assets that pay a fixed rupee amount,

e.g. investment grade debt securities, treasury bills, term finance certificates, bank

deposits and Government bonds. They are generally not affected by the volatility at the


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Stock Exchanges. The element of risk is low and so is the return.

UTP- Islamic Fund (UTP- ISF) is an open-end Shariah compliant mutualfund managed by JS Investments Limited. The fund was launched in December

2002 with the Central Depository Company as the Trustee and has been given a 5-

star rating by PACRA. The fund is intended for long term investors who seek

high returns with the peace of mind that their money is being managed according

to Islamic rules of investing.

Investment Strategy: UTP-ISF aims to grow investors capital in the long term in

adherence with principles of Shariah compliance as advised by the Shariah Advisory

Board (SAB) of this fund while ensuring liquidity. The fund investments are limited to

asset classes approved by the Shariah Advisory Board and all companies under

investment consideration are regularly screened for Shariah compliance.

UTP- Capital Protected Fund (UTP-CPF) was the first open-end capitalprotected fund in Pakistan, established under a Trust Deed dated November 27,

2006 between JS Investments Limited as the Management Company and Standard

Chartered Bank (Pakistan) Limited as the exclusive distributor. Following the

tremendous success of this unique fund, 3 more Capital Protected Funds were

launched jointly by JS Investments and SCBPL.

Investment Strategy: A Capital Protected Fund aims at protecting investor capital

through the investment structure by placing a significant percentage of the Fund as bank


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deposit(s) or in other return-based fixed income instruments, and uses the remaining

funds to gain exposure into equity markets or any other investment instruments

permissible by SECP that the Management Company feels would be appropriate to

maximize return. The fund has a fixed tenor (e.g. 1 year or 3 years) which is the

minimum period of holding for capital protection to be in force.


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Project Title-Capital Market Reforms

Introduction:

Capital market reform enables the capital markets to embrace new ideas and techniques

affecting the capital market. Capital market liberalization is one such capital market

reform that is adopted by various countries to strengthen their economy.

A capital market is a place that handles the buying and selling of the securities. This is

the ideal place where both the governments and companies can raise their funds. The

capital markets of all the countries have undergone a number of reforms in the history.

Economic theories are made and implemented to reform the functionalities of the capital

market. The prime objective behind all the policies and reforms was obviously to

strengthen the capital market of a particular country as much as possible.

It has been always a big question to the economists whether to allow or not to allow the

foreign investments in the country. Packaged with both advantages and disadvantages,

the liberalization of the capital markets has always been controversial. In the 1980s and

1990s when the US Treasury and International Monetary Fund (IMF) tried to push world-

wide capital-market liberalization, there had been enormous opposition. Economists were

not in the support of free and unfettered markets.

Now, when the capitalist countries, developing capitalist countries, underdeveloped

countries and a large number of socialist countries have nodded their support to the


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capital market reform and capital market globalization, the global capital market has

evolved in a new identity. The concept of capital market is not restricted to the share and

bond trading in the developed capitalist countries only but is equally influenced by the

capital markets of developing and underdeveloped countries as well.

Now the economic or financial change in one country can affect the capital market of

other country in real time. Almost all the countries are now exposed to the inter-country

trades and inter-country investments. The use of internet and electronic media has added

some more feasibility to the practice. Exchange of information is fast and accurate with

internet. Another advantage of this system is that it brings the entire world in a single

place. The capital market is one of the industries that enjoy the maximum facility of the

internet service.

MARKET STRUCTURE AND DIMENSIONS

The public-sector debt instruments mainly comprise central and state government

securities, which account for about 65 percent of the countrys debt market, and public-

sector bonds issued by companies in the public sector. Other debt instruments in the

market are certificates of deposit and commercial paper in the short-dated sector, and

corporate bonds in the medium- to long-dated sector.The debt market is an important

source of funding for the corporate sector as well as the government. The borrowing rate

of the government determines the risk-free rate in the market and is the benchmark

against which all other paper is priced. The size of the Indian debt market is estimated at


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about Rs 4,172 billion, as of 31 March 1998 The development of the debt markets in

India has been constrained by the limited number and variety of instruments, lack of

liquidity, and dearth of investors. New debt instruments would add depth and volume to a

market that today comprises mostly government securities.The main instruments in the

Indian debt market are discussed briefly below.

Government of India Securities

Government of India securities (GOI securities), also called dated securities,are medium-

to long-term obligations of the government that are issued on its behalf by the central

bank, the Reserve Bank of India (RBI),and are registered in the holders name at the

Public Debt Office of the RBI. The RBI also acts as the depository and maintains

subsidiary general ledger accounts for banks and other select investors such as primary

dealers, financial institutions, mutual funds, insurance companies, and provident funds.

FIIs have recently been permitted to invest in GOI securities and to repatriate the profits

from the investments. Banks, nonbank finance companies (NBFCs),1 and housing

finance institutions (HFIs) are required to invest in government securities to satisfy their

statutory liquidity reserve (SLR) requirements.

Dated securities usually have a maturity period of two to ten years,and the issue size

varies from Rs 20 billion to Rs 50 billion. The outstanding GOI securities as of 31 March

1998, excluding securities issued by public-sector units which carried a central or state

government guarantee, amounted to about Rs 2,254 billion. In 19971998, primary


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auctions of GOI securities had yields ranging from 11.15 percent to 13.05 percent for

securities with a maturity of three to ten years. To boost the retail sector and give greater

liquidity to retail investors, the RBI in October 1997 allowed banks to buy GOI securities

and thensell them at prevailing market prices immediately after. Previously, there had to

be an interval of at least 30 days between the purchase and resale of the securities.

Treasury Bills

Treasury bills (T-bills) are short-term rupee-denominated obligations issued by the RBI

on behalf of the GOI. They are issued for maturityperiods of 14 days, 91 days, and 364

days. In addition, the RBI plans to introduce a 28-day T-bill. The typical auction size is

Rs 5 billion for the 91-day T-bill, and Rs 200 million to Rs 20 billion for the 364-day T-

bill. Outstanding T-bills amounted to about Rs 181 billion as of March 1998,compared

with Rs 165 billion in March 1997.Investors in T-bills include banks, primary dealers,

financial institutions, mutual funds, corporations, NBFCs, HFIs, state governments, and

insurance companies. The new monetary and credit policy for the first half of 19981999

allows FIIs to invest in T-bills. Nonresident Indians (NRIs) and overseas corporate bodies

(OCBs) may similarly invest in Tbills,but cannot repatriate the profits. In the second half

of 19971998, the RBI announced plans to introduce a uniform price auction for 91-day

T-bills, to deal with the problem of winners curse3 and to broaden market

participation.


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Sovereign Bonds

India has not yet issued sovereign bonds in the international market. The countrys

sovereign rating is based on the ratings assigned to bond and debenture issues of public-

sector Indian companies in the international market. Despite the countrys low

investment or high noninvestment grade ratings, Indian corporations have generally

been able to obtain funds abroad on better terms than what the sovereign ratings might

signify.

Some of the advantages of issuing sovereign bonds are:

The government would have less need to borrow in the domestic market.

Corporations could use the bonds as a benchmark against which they could price their

issues.

The bonds would broaden the investor base in the international market sand help

mobilize long-term finance for infrastructure projects.

The cost of borrowings would be reduced relative to the domestic market.

Thedrawbacks could, however, outweigh the advantages. For the sovereign bonds to

gain credibility in the international market, the government will need to have a sizeable

presence in the market and not merely undertake a token borrowing. Its external debt

would therefore increase.

Moreover, sovereign bonds are classified as external commercial borrowings (ECBs), on


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which India has set a ceiling. A foreign-currency bond may carry a lower nominal

interest rate than a rupee-denominated government security with the same maturity, but

the foreign-currency bond also entails an exchange-rate risk. Depending on the exchange

rate, the sovereign bond could turn out to be much more expensive for the government

than local borrowings.

Public-Sector Undertaking Bonds (PSU Bonds)

These are medium- to long-term obligations issued by public-sector corporations. The

total value of outstanding PSU bonds as of March 1998 was Rs 654 billion, including Rs

203 billion in government-guaranteed bonds. Public-sector corporations issue three types

of bonds: taxable bonds, tax-free bonds, and government-guaranteed bonds. To allow

public-sector units in priority sectors to raise money in the markets at low rates, the

government has either guaranteed their bond offerings or made the interest on the bonds

tax-free to investors. The PSU can thus raise money from the capital markets at

concessional rates. PSU bonds have a maturity period of three to seven years and an issue

size of Rs 100 million to Rs 15 billion. The main investors in PSU bonds are banks, cash-

rich corporations, financial institutions, insurance companies, trusts, FIIs, provident

funds, mutual funds, NBFCs, HFIs, and a few individuals. Most PSU bonds are issued

through private placement, although public issues are gradually gaining in popularity.

Seven public-sector units raised Rs 29 billion through privately placed bonds in 1997

1998; the year before, ten public-sector units raised Rs 33 billion through private

placement. In the second half of 19971998, the RBI announced that it would allow


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repurchase agreement (repo) transactions in PSU bonds, held in dematerialized form in a

depository, to take place on the recognized exchanges.

Certificates of Deposit

Certificates of deposit (CDs) are short-term, rupee-denominated instruments issued by

banks and development finance institutions (DFIs). DFIs issue CDs with a maturity of

one to three years. In March 1998, outstanding CDs amounted to Rs 143 billion. To

attract more investors in the money market, the RBI, in October 1997, halved the

minimum amount that a single investor can invest in CDs, from Rs 1 million to Rs

500,000. The main investors in CDs are DFIs, cash-rich corporations, insurance

companies, mutual funds, NBFCs, HFIs, provident funds, and some individuals.FIIs are

not permitted to invest in CDs. NRIs may invest in CDs, but the investments are

nontransferable and nonrepatriable. Earlier, CDs had a mandatory initial holding period

of 30 days during which the instrument was rendered illiquid. This lock-in period was

shortened to 15 days in April 1998.

Commercial Paper

Indian corporations finance part of their working capital requirements by issuing these

short-term negotiable promissory notes, which are denominated in rupees and are

unsecured. Issuers must satisfy RBI guidelines relating to creditworthiness to issue

commercial paper (CP), and must have the CP rated by at least one rating agency. The

maturity period of CP varies from 91 days to a year. The required minimum issue size is


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Rs 2.5 million, but the actual size can vary substantially and averages between Rs 20

million and Rs 100 million. The outstanding amount of CP reached a historic high of Rs52 billion in January 1998, but then dropped sharply to Rs 15 billion in March

1998. FIIs are not permitted to invest in CP.

Corporate Bonds and Debentures

These are medium- to long-term obligations issued by private-sector companies, either

through a public issue or more often through private placement, for their medium-term

working capital requirements or for project financing. The debentures are usually secured

with a first charge on assets of the issuing corporation. On the average, the maturity

period of debentures ranges from three to seven years. Bonds and debentures with a

maturity beyond 18 months must be rated. Outstanding bonds and debentures in March

1998 totaled an estimated Rs 432 billion. Banks, DFIs, insurance companies, FIIs, mutual

funds,NBFCs, and individuals are the main investors. FIIs can purchase only debentures

that are listed or that the issuer plans to list. A listing in the stock market can sometimes

provide liquidity to bonds and debentures, although these tend to be illiquid in actual

practice and even those that are listed are hardly traded in the secondary market. Bonds

and debentures that are issued through private placement are often unlisted. Besides the

traditional nonconvertible debentures, corporations also issue equity-linked debentures,

which are very popular with all classes of investors, especially individuals. A partly

convertible equity-linked debenture, as the name implies, is convertible only in part into

equity shares, while a fully convertible equity-linked debenture is convertible in its

entirety into equity shares. The conversion price and period are usually specified in the


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indenture. Conversion into equity is usually automatic, and call and put options are

normally not provided. The coupon rate paid on the debentures depends on their

convertibility. Fully convertible debentures carry the lowest coupon rate and

nonconvertible debentures the highest coupon rate.

Recently, a variety of instruments such as step-up and step-down bonds, deep-discount

bonds, floating-rate bonds, staggered redemption bonds, bullet redemption bonds, and

other innovative instruments have been introduced to suit various investor profiles. Deep-

discount bonds, which are long-dated (20- to 25-year) bonds issued by DFIs and some

large corporations, have proved to be very popular among individual investors who can

expect to earn a considerable amount of money from an affordable investment of only

about Rs 5,000. The bonds usually come with call and put options exercisable every five

years. Interest is compounded and paid with the principal at maturity.

All corporations that issue bonds or debentures through public issue must set up a

debenture redemption reserve (DRR), according to Securities and Exchange Board of

India (SEBI) guidelines, and transfer a certain amount to the reserve each year out of

retained earnings. The reserve must be funded in equal amounts over the life of the

debenture so that when it matures at least 50 percent of its redemption value should be

covered by the balance in the DRR. The transfer to the DRR is only a book entry.

Although dividend-paying capacity is reduced (the reason for the unpopularity of the

measure), the corporation is not restricted in how it chooses to invest the DRR. The

transfers therefore continue to be invested in thebusiness of the corporation.


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ISSUANCE OF DEBT SECURITIES

GOI securities have generally been issued through auction in recent years, but have also

been issued at preset interest rates from time to time. Government securities do not

follow a fixed schedule of issuance; the governments large borrowing program,

however, compels it to enter the market frequently. Auction details are announced a few

days before the issue date. Investors in the securities must quote the yield per year, and

bids up to the RBI cut-off yield are accepted. Every Friday, 91-day T-bills are auctioned

for an amount announced in advance by the RBI. Primary dealers and the RBI underwrite

the issue and take up whatever is left unsubscribed at the cut-off price decided at the

auction. The RBI has announced its intention to move over to uniform price auctions for

91-day T-bills. An auction in 364-day T-bills is held every other Wednesday. Unlike 91-

day T-bills and government securities, the amounts, until recently, were not announced in

advance for 364-day as well as 14-day T-bills.

In April 1998, however, the RBI decided to announce the amounts for competitive bids in

all Treasury bill auctions and to keep noncompetitive bids outside the purview of those

amounts. T-bill auctions are done in competitive French-style: those who bid at less than

or equal to the cut-off yield get allotments at their bid; higher bidders get pro rata

allocations. Successful bidders receive their allotments at their bid price and not at the

cut-off price. Corporate debentures are issued mostly through private placement and

therefore do not have to be rated. The mandates are given to merchant bankers, who are

in touch with potential investors. The terms and price of the bonds are fixed by agreement


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among the issuer, the merchant banker, and the potential investors. The rating the issuer

receives for its debt issuance affects the pricing of the issue.

Private Placement

Large quantities of PSU and corporate bonds have been issued through private

placement, which is an invitation to qualified investors to invest. The maximum number

of investors in a private placement used to be unlimited but has recently been set at one

hundred. Private placements have emerged in recent years as an important means by

which public- and private-sector companies can raise funds. In 19971998, when the

market in new issues was generally subdued, banks, financial institutions, and public- and

private-sector companies raised Rs 270 billion, or 85.3 percent of total funds raised,

through private placement. The comparative figure for the previous year was Rs 150

billion, or 49.3 percent of the total funds raised. Privately placed bonds have emerged as

the corporate sectors fundraising instrument of choice. The popularity of private

placements can be attributed largely to the lower issuance costs as well as the shorter

time required to make an issue, compared with a public issue. Also, private placements

can be tailored to the specific needs of large investors. From the issuers point of view,

the most important advantage of private placements is that, unlike public issues, they are

not strictly regulated. For example, an issuer of a privately placed bond does not have to

set up a DRR.

On the other hand, movements in the volatile short-term money market can affect


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investor sentiment and pricing in the bond market, particularly private placements, which

take at least 15 to 20 days to complete. The book-building or price discovery mechanism

has begun to be adopted to get around this problem. The increasing popularity of private

placements has made it necessary to deal with the matter of investor protection.

Particularly for retail private placement issues, it would be advisable to augment the

disclosure requirements in the memorandum of information and ensure greater

transparency in the issue documents. In developed markets, the regulatory authorities set

the parameters for private placements, including the maximum number of investors who

can participate and the criteria for identifying the investors who are qualified to receive

the private placement offer. With proper regulations and greater transparency, the private

placement market can become an integral and important part of the primary market.

RATING OF DEBT INSTRUMENTS

The Securities and Exchange Board of India (SEBI), the watchdog of the Indian capital

markets, has recently announced that credit rating will eventually be mandatory for all

debt instruments. As of now, only publicly issued debt instruments with a maturity period

of at least 18 months must be rated.

The three main rating agencies in India are the Credit Rating Information Services of

India Limited (CRISIL), Investment Information and Credit Rating (ICRA), and

Credit Analysis and Research Limited (CARE). These rating agencies are backed by the

three DFIs in India:


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CRISIL by the Industrial Credit and Information Services of India Limited (ICICI),

ICRA by the Industrial Finance Corporation of India (IFCI), and CARE by the

Industrial Development Bank of India (IDBI). Therefore, DFI issues must be rated by

two agencies, under SEBI regulations, for the sake of impartiality. The SEBI, however,

has not yet decided how conflicts in agency ratings should be resolved.

SEBI guidelines issued in March 1998 allow corporations with a net capitalization of

over Rs 1 billion for the last five years to set up a credit rating agency. International

credit-rating agencies that propose to rate Indian debt instruments, including those that

have entered into joint ventures with Indian credit-rating companies or hold an equity

stake in such companies, must register with the SEBI.Credit-rating agencies are regulated

more strictly to ensure that they function effectively, especially in view of the failure of

some of them to warn investors of the impending financial crisis.

INVESTORS IN DEBT INSTRUMENTS

Besides the lack of variety in debt instruments, the dearth of investors has also deterred

the growth of the debt market. The main investors are commercial banks, insurance

companies, provident funds, specialized debt funds, NBFCs, HFIs, and some cash-rich

corporations. Commercial banks,NBFCs, and HFIs invest in government securities and

other debt instruments to comply with their SLR requirements. The lack of liquidity in

the market prevents individuals from participating actively.


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SLR Requirements

Banks, NBFCs, and HFIs are required to invest in government securities and other

approved debt instruments and securities to comply with the SLR requirements of the

RBI. The SLR, which is the minimum level of investment in approved securities,

computed daily, is a percentage of the outstanding net demand and time liabilities

(NDTL) of banks. For NBFCs and HFIs, SLR is a percentage of their outstanding public

deposits.SLR ratios are announced by the RBI together with the monetary and credit

policy. Typically, this is done twice a year, in April and October, although recently the

guidelines have been revised more frequently.

The SLR for commercial banks peaked at 38.5 percent of their outstanding NDTL in

19921993 but was gradually reduced until October 1997, when the RBI fixed it at 25

percent. Still, most commercial banks hold SLR securities far in excess of their

requirementabout 12 percent more than the current SLR of 25 percentto comply with

the required capital adequacy and prudential ratios.

Investments in government securities have no risk weight unlike some other fixed-

income securities which carry a risk weight of 100 percent. Commercial banks in India

are required to maintain an 8 percent capital adequacy ratio.

In the case of NBFCs and HFIs, the SLR applies only to public deposits and not to other

term liabilities (as is the case with commercial banks). The SLR for NBFCs was set at


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12.5 percent on 1 April 1998, and will be raised to 15 percent on 1 April 1999. HFIs, on

the other hand, must maintain their SLR at 10 percent, divided equally between

government securities and bank deposits, versus the previous allocation of 25 percent for

government securities and 75 percent for bank deposits.

MARKING TO THE MARKET

Mark-to-the-market requirements are laid down by the RBI for commercial banks and

NBFCs, and by the National Housing Bank (NHB) for HFIs. In 19971998, commercial

banks were permitted to invest up to 40 percent of their investible funds in a permanent

portfolio of government securities, for which no provision for depreciation was required.

The remaining 60 percent of their investments were classified as current portfolio which

the banks had to value at market prices (mark to the market).

The RBI has, however, increased its mark-to-the-market requirements over the years. In

19981999, commercial banks have to mark to the market at least 70 percent of their

investment in government securities as against the previous 60 percent. For

nongovernment paper, there are no explicit mark-to-the-market requirements. NBFCs and

HFIs must take a different mark-to-the-market approach than the commercial banks.

They must classify their investments, both equity and debt, into a permanent portfolio

and a current portfolio, but the specific percentages are not prescribed. The classification

is made at the time of investment and approved by the board of directors of the company

or its authorized representative, taking into account the investment horizon planned by


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the NBFC or HFI. If the institution intends to sell within the year, it should classify the

investment as current portfolio, but if it intends to hold on to the investment for a longer

period, it can classify the investment as permanent portfolio. All current investments

must be marked to the market; investments in the permanent portfolio, on the other hand,

can be carried on the balance sheet at their original cost.

A substantial portion of the government securities portfolio of many commercial banks is

made up of lowcoupon rate securities acquired before yields on government securities

were freed to market determination. Securities reclassified from permanent to current

portfolio must have provision for depreciation, since the acquisition cost of older

securities significantly exceeds current market prices. Most of the older commercial

banks have adopted the RBIs mark-to the- market requirements, retaining a permanent

portfolio of government securities to reduce their provision for depreciation and show

higher profits. But some newer private-sector banks have adopted the more transparent

practice of marking to the market their entire portfolio of government securities.

TAX PROVISIONS

Except for tax-free bonds, which some public-sector units have been permitted to issue,

and unlike the dividend paid on equity and preference shares, which is tax-exempt to

investors,9 interest on debt instruments is taxable.

The Income Tax Act requires the corporation that pays interest on bonds or debentures to

deduct the tax at source. The rate of the tax varies from 10 percent to 20 percent

Documents

Project on Capital Market Reforms