MA0041- MERCHANT BANKING AND FINANCIAL SERVICES

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ASSIGNMENT

 

 

 

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

 

 

Q.1 You want to apply for merchant banker. Find out the list of regulations that a merchant

banker needs to follow in India. 

 

Ans : Merchant banking role :

 

The role of merchant banker is dynamic in the wake of diverse nature of merchant banking services. Merchant banker‘s dynamism lies in promptly attending to the corporate problems and suggests ways and means to solve it. The nature of merchant banking services is development oriented and promotional to help the industry and trade to grow and survive. Merchant banker is, therefore, dedicated to achieve this objective through his dynamism. He is always awake to renew his skills, develop expertise in new areas so as to equip himself with the knowledge and techniques to deal with emerging new problems of corporate business world. He has to keep pace with the changing environment where Government rules, regulations

 

 

 

Q.2 Is book building an efficient IPO pricing mechanism? Substantiate your reasons. 

 

Ans : IPO process :

 

An initial public offering (IPO) or stock market launch is a type of public offering where shares of stock in a company are sold to the general public, on a securities exchange, for the first time. Through this process, a private company transforms into a public company. Initial public offerings are used by companies to raise expansion capital, to possibly monetize the investments of early private investors, and to become publicly traded enterprises. A company selling shares is never required to repay the capital to its public

 

 

 

Q.3 The banks are in a bind over the implementation of the new bancassurance proposal as

announced in Budget 2013-14.  Banks assuming the role of insurance brokers  may also lead

to conflict of interests where the bank is also the promoter of an insurance company. Discuss

the opportunities and threats  for the new proposal.

 

Ans : Bancassurance process :

 

The banks are in a bind over the implementation of the new bancassurance proposal as announced in Budget 2013-14. While the Insurance Regulatory and Development Authority (Irda), which is expected to announce its bancassurance norms next week, provides for much-relaxed guidelines, the Reserve Bank of India (RBI) has put

 

 

 

Q.4 Global Finance magazine  has named the “ SBI as the Best Trade Finance Bank-2013.  SBI

has a caption  of “Expertise delivered around the Globe! ” Do you agree with this statement.

 

Ans : Trade finance :

 

Trade Finance is basically related to ‘Domestic as well as International Trade Transaction’.

The term “Trade Finance” means, finance for Trade. For a trade transaction there should be a Seller to sell the goods or services and a Buyer who will buy the goods or use the services. Various intermediaries such as (banks), (Financial Institutions) can facilitate this trade transaction by financing the trade. While a seller (the exporter) can require the purchaser (an importer) to prepay for goods shipped, the purchaser (

 

 

 

Q.5 SKS Microfinance Limited, India’s only listed micro-lender has concluded a securitisation

transaction for Rs 321 crore with a major public sector bank. Describe the process of securitization.

 

Ans : Concept of securitisation :

 

Securitization is the financial practice of pooling various types of contractual debt, such as residential mortgages, commercial mortgages, auto loans, or credit card debt obligations, and selling the pooled debt as securities to investors. Cash collected from the underlying debt, including interest and proceeds from the repayment of the debt, is paid to the investors in the securities. Securities backed by mortgage receivables are called mortgage-backed securities (MBS), while those backed by other types of receivables are called asset-

 

 

Q.6 Compare and contrast the various instruments of money and capital market that are available

in India.

 

Ans : Instruments in money market :

 

1.Treasury Bills:

 

Treasury bills (T-bills) are short-term notes issued by the U.S. government. They come in three different lengths to maturity: 90, 180, and 360 days. The two shorter types are auctioned on a weekly basis, while the annual types are auctioned monthly.

 

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