Lecture-9 : Classification of Banks & Non Banking Financial institutions(NBFI)

Difference between cooperative & commercial Banks

2- No Profit no loss motive

2- Profit Motive

Commercial Banks in 2024

1- Public sector banks : 12

2- Private sector banks : 21

3- Foreign banks : 46

RRB : Regional rural banks

Eg of RRB
Problems with RRB

During elections

Merging of RRBs

RRB Amendment Bill 2014

Cooperative Banks No other registration needed for cooperative banks

Features Of Cooperative bank

Classification of cooperative banks

Long term loan

Non Banking Financial Institutions

1- AIFI (All India financial institutions)
a) EXIM Bank b) NABARD Bank

in lending loans
c) NHB (National Housing Bank) d) SIBDI

this measures the housing sector

inflation.

2- PD (Primary Dealers)

Financial markets:
---- Provide means to trade financial instruments including bonds, equities.
---- facilitate interaction b/w those who need capital & those who have to invest.

Selling brand new materials, eg: car showroom, the current stock etc

3- NBFC
Difference between Bank & NBFC

eg

If they take time deposits

PSL No PSL
 How does NBFI get funds ?

Gen Microfinance companies

Classification of NBFC

1-
2-

eg

eg: Tata Capital, Birla Capital

3-

Classification of NBFI not regulated by RBI

1-
2-

3-
Working of Microfinance Institution
Lecture-10 : L2/P1: Debt securities: Credit Rating, Bond-Yield, Muni.Bonds,
SEBI norms ------ (Financial Market)

Equity : Its value of an investor's stake in a company.

Equity & debt are kind of securities.

Debt:

Debt Instruments

1- Credit Rating

a) b)

c)
 Why does Government bother about credit rating, whats effect of bond yield? (18 :00)

1- Lets understand change in yield with an example

2- Importance of bond yield for govt.

Yield to maturity (YTM) : its the yield(return) a person gets when

he holds the bond till the maturity time.

To remember: Difference between bond & debenture

Municipality Bonds (22:00)

2- SEBI Guidelines for issuing municipal Bonds
1-

As per the smart cities scheme of Modi govt.

funding can be from:
1- relaxing FDI( foreign direct investment )
2- setting up devices- computer etc - corporate
social responsibility ( building public-private
relationship )
3- Municipality have to also contribute towards
this for which sebi had introduced some guildlines
for issuing municipality bond.

OFCD ( optionally fully-convertible debentures) (25:27)

Whats the difference in relation between company &
Debentures: Means the party will pay interest each year & investor, when debenture gets converted to shares?
will provide principal money after maturity.

OFCD : Its the scheme in which party give option to its investors
to convert some of their debentures to shares of company.
Lecture 11: L2/P2: Inflation Indexed Bonds (IIB), Nominal vs Real Interest rates

Inflation Indexed Bonds

-- Its designed to protect investors from the rising inflation.
Interest Rates

Why gold consumption is bad ? Import - export

which will create a vicious cycle

How to stop this gold consumption vicious cycle ?

Ex : Inflation index bond

More About inflation indexed Bonds

 How is inflation Indexed Bond connected to inflation ?

1-
Here Wholesale Price Index (WPI)

Acc. to RBI Guidelines

2- Impact of above adjustments

How does above adjustments work?

compounded 1/2 yearly

Same here, but all cal-

culations done on CPI

No Such facility of
trading here.

These Inflation indexed bonds will be profitable when inflation is much,

for less inflation rate, it won't give much profit.
 Lecture 12: L2/P3: T-Bill, G-Sec, Zero Coupon Bonds, Bearer Bonds &
Money Market

T-Bill => Treasury Bill

- Issued by Government
- Has shortest maturity (few days to 1 year )

G-sec => Government security bonds

Difference between T-Bill & G-sec How does T-Bill provide profit ?

Coupon Bonds
Zero Coupon Bonds Bearer Bonds
No names, No records
 Money Market : To get short term investments.

Some miscelleneous terms in Money market

1- Ways & Means advances

2- Debt Instruments

same as T-Bill

same things means the T-Bill

3- Call Money

Trade Bill

Lecture 12: L2/P4: Equities: IPO, E-IPO, ADR-GDR-IDR, Bonus shares,

preferential shares & Underwriters
Equity Finances
Difference between debt & Equity

1- About Equity

VCF means Venture capital funds

IPO means initial public offering

2- Shares Values
 How is IPO Issued ?

1- Red Herring Prospectus (RHP) : Document prepared for

getting SEBI approvals for listing stock publicly. It contains
all related info apart from price & date of listing.

a)

RHP

b)
Biding offered by publlic

After cloasing date

This cutoff is deceided

c) Electronic- IPO Benefits of EIPO

3- Retained Earning What to do with retained earning?

4- Bonus Shares 5- Rights issue

Representation of different teems

FPO : Follow on public offer

Preferential Shares
Share Splitting
DR : Depository Receipt

Issue The bank

Dividend generates
in $ American DR
in American
Exchange market

In the same way Bharat DR started

Lecture 13: L2/P5: P-Notes, ETF, Hedge Funds, Mutual funds, Alternative
Investment Funds

1- Mutual Funds

NAV => Net Asset Value

AMC => Asset management company

Types Of Mutual Funds

Exchange Traded Fund

New Fund offer

Can sell their units

to stock exchange
-Secondary Market

Private Mutual
Fund for high
Hedge Funds netwrok
Difference between ETF & Mutual Fund individuals

In ETF

Hedge Fund manager invests

in risky securities to get high
returns.
 P-Notes: Participatory Notes
-Its a financial instrument used by hedge funds
to invest in india.
- No SEBI Registration req.
- Do not pay capital tax to govt.

Since SEBI regulations are strict

How money laundering can happen due to

P-Notes ?

Acc. to SEBI regarding P-Notess

effects stock market due to large invest

-ment

- Terrorist money ( resulting in finance terrorism

Steps taken by SEBI to prevent negative impact of P-Notes

Lecture 14: L2/P6: Derivatives, Call Option, Put Option, Credit Default Swaps