Resource Mobilization

Section-A: Finance
Q.1. Answer each of these questions in about fifteen words:
a)
What do you understand by finance?
b)
Give the significance of finance in an enterprise.
c)
Name the most important pre-requisite to start an enterprise.
d)
State the most important factors for the survival of any business enterprise.
e)
State how sources can broadly be classified into 2 major categories.
f)
What do you understand by internal sources of finance?
g)
How will you differentiate between financial market with other market? Give one difference.
h)
‘Production’, ‘Marketing’, and Financing’ – deemed as the most important factors for any business’s survival rates. Among these name the most critical element and why?
Q.1. a) What do you understand by finance?
Finance refers to the
funds
or monetary resources
needed by either
individuals
or business houses
or by the government.
and is needed by the businesses to
to start
and to allow businesses to exploit the opportunities to grow and expand.

Q.1. b) Give the significance of finance in an enterprise. Watch Video🎥
Finance is very important for the business as it helps the business to
a.
Acquire fixed assets
b.
Be prepared to meet the unplanned/unexpected expenses.
c.
Conduct Market investigations.
d.
Develop the product
e.
Encourage management to progress and create value
f.
Establish or promote the business
g.
Expand, diversify, improve and grow
h.
Keep men and machines at work
Q.1. c) Name the most important pre-requisite to start an enterprise.
Before starting an enterprise, the most important pre-requisite that the entrepreneur must consider is finance as it helps
a.
to start
b.
and to allow businesses to exploit the opportunities to grow and expand.
Q.1. d) State the most important factors for the survival of any business enterprise.
The most important factors for any business to sustain itself are
a.
Financing
b.
Production
c.
Marketing
Q.1. e) State how sources can broadly be classified into 2 major categories.
The finance sources are majorly classified into the following two categories.
1.
Internal Sources
2.
External Sources
Q.1. f) What do you understand by internal sources of finance?
Internal source of finance, also known as equity, refers to the owner’s money and is usually small. This is either from owner’s personal savings.
Q.1. g) How will you differentiate between financial market with other market? Give onedifference.
Financial markets would trade in financial assets such as financial securities, stocks etc. In other-words, financial markets trade the ownership or similar value proposition of an enterprise where as the other markets trade in products or real assets.
Q.1. h) ‘Production’, ‘Marketing’, and Financing’ – deemed as the most important factors forany business’s survival rates. Among these name the most critical element and why?
Among production, marketing and financing, financing is considered to be the most important factor because the other two i.e. production and marketing can not existing without financing/money.
Q.2. Answer each of these questions in about fifty words:
a)
Which sources provide the supply for long-term funds?
b)
Name the sources of demand for capital comes from.
c)
Entrepreneur can use the capital raised for a variety of purposes, what are they?
d)
How can an entrepreneur, raises funds by selling the issue mainly to the institutional investors?
e)
How stock options lead to enable employees to become shareholders and share the profits of the company?
Q.2. a) Which sources provide the supply for long-term funds? Watch Video🎥
The following sources provide the supply for long-term funds.
1. Capital Markets: A capital market is an organized means meant for effective and smooth mobilization of the money capital or financial resources from the investors to the entrepreneurs. In capital markets production capital is raised and it is made available to the entrepreneurs to be used in the establishment or operations of their enterprises.
2. Angel investors: Angel investor, also known as business angel or informal investors is a wealthy person who can provide the capital for starting an enterprise or for the initial stage operations of an enterprise. They usually have high-risk, high-return matrix. In return they expect convertible debt or ownership equity in the enterprise.
3. Venture capital: This source is a kind of private equity capital and supplies seed &funding while staring up the enterprise. Suitable for high potential, high risk, growth-up enterprises run by the entrepreneurs who are in need of necessary experience and finances to implement their ideas.
4. Specialized financial institutions: These specialized financial institutions provide the finance to
a.
Small and medium sized concerns
b.
New enterprises established by the new entrepreneurial groups
c.
Specific industries that are in need of finance to implement modernization
d.
Enterprises established to implement innovations and new technological developments
e.
Enterprises in need of huge funds to sustain long gestation period
f.
Enterprises established in backward regions
Q.2. c) Entrepreneur can use the capital raised for a variety of purposes, what are they? Watch Video🎥
The entrepreneurs can use the raised capital for a variety of purposes like
a.
Acquisition capital to buy a competitor or another business or supplier.
b.
Business debt that is existing can be repaid with the acquired capital and there by saving on the interest (if any)
c.
Corporate marketing and development to increase the sales and revenues
d.
Development and expansion/growth of the business more rapidly
d) How can an entrepreneur, raises funds by selling the issue mainly to the institutional investors? Watch Video🎥
Entrepreneurs use private placement to raise funds from the institutional investors. These institutional investors are very limited in number. Entrepreneurs belonging to both public and private limited sector utilize this option. They issue different varieties of financial instruments to capitalize using private placement. Private placement help the entrepreneurs to keep maintain business information confidentially and keep it from disclosing in the open market.
Different institutional investors are
a.
Unit Trust of India
b.
Life Insurance Corporation of India
c.
General Insurance Corporation
d.
Army Group Insurance
e.
State Level Financial Corporations
e) How stock options lead to enable employees to become shareholders and share the profits of the company? Watch Video🎥
Stock options or offering shares enable the employees to become share holders and share the profits of the company. When an employee opts for a stock option, the employee goes through an agreement to stay with the company for a specified period of time. If the employee leaves the company before the specified period or is fired, they’ll not be able to utilize their stock options. Availing the stock options requires the employees to stay with the company for a specified period of time after which they can purchase the stocks. They benefit from the stock options if the value of the share is increased during this period.
Q.3. Answer each of these questions in about two hundred and fifty words:
a)
Explain some important sources of raising finance in business. Watch Video🎥
The following are the important sources are available for an entrepreneur, to raise funds, to cater to their needs of long-term fund requirements.
1. Capital Markets: A capital market is an organized means meant for effective and smooth mobilization of the money capital or financial resources from the investors to the entrepreneurs. This is known as financial inter-mediation. In capital markets production capital is raised and it is made available to the entrepreneurs to be used in the establishment or operations of their enterprises.
2. Angel investors: Angel investor, also known as business angel or informal investors is a wealthy person who can provide the capital for starting an enterprise or for the initial stage operations of an enterprise. They usually have high-risk, high-return matrix. In return they expect convertible debt or ownership equity in the enterprise.
3. Venture capital: This source is a kind of private equity capital and supplies seed funding while staring up the enterprise. Suitable for high potential, high risk, growth-up enterprises run by the entrepreneurs who are in need of necessary experience and finances to implement their ideas.
4. Specialized financial institutions: These specialized financial institutions provide the finance to
a.
Small and medium sized concerns
b.
New enterprises established by the new entrepreneurial groups
c.
Specific industries that are in need of finance to implement modernization
d.
Enterprises established to implement innovations and new technological developments
e.
Enterprises in need of huge funds to sustain long gestation period
f.
Enterprises established in backward regions
Section-B: Financial Markets
Q.1. Answer each of these questions in about fifteen words:
a)
Define capital market.
b)
Name the two players in the capital market.
c)
Identify the reward IPO investors seek as an appreciation of their investment.
d)
Identify the method of raising additional finance from existing shareholders by offering securities to them on pro-rata basis.
e)
What do you understand by pro-rata allotment of securities?
f)
What is Right Issue?
g)
When the right issue are proposed to the existing shareholders and if they are not ready to subscribe what is the next step taken by an entrepreneur?
h)
Why right issue method of issuing securities is considered to be inexpensive?
i)
What do you understand by private placement?
j)
What is meant by Stock options or offering shares to the employees?
k)
Name the method which enables employees to become shareholders and share the profits of the company.
l)
What is a secondary market?
m)
What is the need of secondary market?
n)
In what forms company can raise capital through primary market?
Q.1. a) Define capital market. Watch Video🎥
A capital market is a well organized mechanism for
a.
effective
b.
and smooth
transfer of
a.
money capital
b.
or financial resources
from the
a.
investors
b.
to the entrepreneurs
Q.1. b) Name the two players in the capital market.
The major players in the capital market are
a.
Individual investors
b.
Stock Exchange
c.
Financial Institutions
d.
Securities and Exchange board of India (SEBI) etc

Q.1. c) Identify the reward IPO investors seek as an appreciation of their investment.
The IPO investors seek the following rewards in return of their investment.
a.
Appreciation of their investment
b.
Dividends
Q.1. d) Identify the method of raising additional finance from existing shareholders by offering securities to them on pro-rata basis. Watch Video🎥
When additional finance is required, entrepreneurs follow the strategy named Rights issue where in they offer securities to the existing shareholders on a pro-rata basis. In other-words they give right on certain number of shares in proportion to the number of shares held by them currently.
Q.1. e) What do you understand by pro-rata allotment of securities? Watch Video🎥
a.
A circular is issued to the existing shareholders proposing the Rights issue.
b.
If they like the offer, they can subscribe.
c.
Otherwise, they can refuse the offer and other persons gets the opportunity to acquired the rights issue.
Q.1. f) What is Right Issue? Watch Video🎥
Rights issue is the method used to raise additional finance from existing shareholders by offering them securities to them. The shares are offered on a pro-rata basis in which the shareholders get the rights to purchase a specific number of shares in proportion to the shares they are holding currently.
Q.1. g) When the right issue are proposed to the existing shareholders and if they are not ready to subscribe what is the next step taken by an entrepreneur? Watch Video🎥
When the existing shareholders are not ready to purchase the shares issued to them under the Rights issue, the shares are offered to other persons who are willing to purchase them.
Q.1. h) Why right issue method of issuing securities is considered to be inexpensive? Watch Video🎥
The method of issuing securities through Rights Issue is considered to be inexpensive as it does not involve any
a.
Agents
b.
Brokers
c.
Prospectus
d.
Underwriters
e.
Enlistment etc.
C.1. i) What do you understand by private placement? Watch Video🎥
Private placement is the method in which the companies directly sell their securities to a finite set of sophisticated investors.
C.1. j) What is meant by Stock options or offering shares to the employees? Watch Video🎥
This is the method in which the employees of a company are offered to own the shares and become the shareholders. This leads to much better growth of the company.
C.1. k) Name the method which enables employees to become shareholders and share the profits of the company.
Stock Options is the method in which the employees of a company are offered to own the shares and become the shareholders. This leads to much better growth of the company.
C.1. l) What is a secondary market?
Secondary market, also know as old securities market or stock exchange, is the market in which the old securities (i.e. the market securities issued earlier) are bought and sold.
C.1. m) What is the need of secondary market?
Secondary markets are required because
a.
they increase the marketability of the securities
b.
and this leads to liquidity of investments.
and
Q.1. n) In what forms company can raise capital through primary market? Watch Video🎥
The following are the forms in which the companies can raise their capital through the capital market.
1.
Public issue
2.
Rights issue
3.
Private Placement
4.
Offers to the employees
Q.2. Answer each of these questions in about fifty words:
a)
For what purpose is finance required right from the very beginning i.e. conceiving an idea?
b)
What is the need of finance?
c)
An entrepreneur is a person who bears the risks, unites various factors of production and carries out a creative innovation, and for doing all these, what is the basic requirement to be reached to this extent.
d)
State some mushrooming sources of raising finance in the business.
a) For what purpose is finance required right from the very beginning i.e. conceiving an idea? Watch Video🎥
Entrepreneurs will in in need of finance right from the point of conceiving an idea, for various requirements like
a.
Acquire fixed assets
b.
Be prepared to meet the unplanned/unexpected expenses.
c.
Conduct Market investigations.
d.
Develop the product
e.
Encourage management to progress and create value
f.
Establish or promote the business
g.
Expand, diversify, improve and grow
h.
Keep men and machines at work
Q.2. b) What is the need of finance? Watch Video🎥
Finance is needed by the entrepreneurs because it is the primarily required means for establishing the enterprise. Finance helps in the formation of the new enterprise and to exploit the opportunities to grow and expand the enterprise. It is required for various activities like
a.
Acquire fixed assets
b.
Be prepared to meet the unplanned/unexpected expenses.
c.
Conduct Market investigations.
d.
Develop the product
e.
Encourage management to progress and create value
f.
Establish or promote the business
g.
Expand, diversify, improve and grow
h.
Keep men and machines at work
Q.2. c) An entrepreneur is a person who bears the risks, unites various factors of production and carries out a creative innovation, and for doing all these, what is the basic requirement to be reached to this extent.
Finance is the essential requirement for the entrepreneurs to reach the extent of bearing the risk, bringing together different factors of production and implementing their creative ideas.
Q.2. d) State some mushrooming sources of raising finance in the business. Watch Video🎥
The following are some of the mushrooming sources of raising finance in the business
1. Capital Markets: A capital market is an organized means meant for effective and smooth mobilization of the money capital or financial resources from the investors to the entrepreneurs. In capital markets production capital is raised and it is made available to the entrepreneurs to be used in the establishment or operations of their enterprises.
2. Angel investors: Angel investor, also known as business angel or informal investors is a wealthy person who can provide the capital for starting an enterprise or for the initial stage operations of an enterprise. They usually have high-risk, high-return matrix. In return they expect convertible debt or ownership equity in the enterprise.
3. Venture capital: This source is a kind of private equity capital and supplies seed & funding while staring up the enterprise. Suitable for high potential, high risk, growth-up enterprises run by the entrepreneurs who are in need of necessary experience and finances to implement their ideas.
4. Specialized financial institutions: These specialized financial institutions provide the finance to
a.
Small and medium sized concerns
b.
New enterprises established by the new entrepreneurial groups
c.
Specific industries that are in need of finance to implement modernization
d.
Enterprises established to implement innovations and new technological developments
e.
Enterprises in need of huge funds to sustain long gestation period
f.
Enterprises established in backward regions
In addition to this, the entrepreneurs can also procure the finance from the following Specialized financial institutions (SFIs), as per their needs.
1. At national level/All India development banks
a.
Industrial Credit and Investment Corporation of India (ICICI)
b.
Industrial Development Bank of India (IDBI)
c.
Industrial Finance Corporation of India (IFCI)
d.
Industrial Investment Bank of India Ltd.(IIBI)
e.
National Bank for Agriculture and Rural Development (NABARD)
f.
Small Industries Development Bank of India (SIDBI)
2. At state level
a.
State Financial Corporation (SFCs)
b.
Tourism Finance Corporation of India (TFCI)
c.
State Industrial Development Corporations (SIDC)

Q.3. Answer each of these questions in about one hundred and fifty words:
a)
State the nature of money market. Who are the major participants in the money market?
b)
Explain how Capital markets are the most important source of raising finance for an entrepreneur.
c)
What do you understand by capital market? How can the capital market in India be broadly classified into different categories?
d)
Write down the sectors of organized and un–organized market?
e)
What is meant by primary market? Briefly explain the concept of ‗Right Issue for existing companies‘?
Q.3. a) State the nature of money market. Who are the major participants in the money market? Watch Video🎥
Money market is an element of the financial market which is involved in the lending and borroweing of short term loans. The loan term should be less than or equal to 365 days. Money market is the means though which the short term monetary transactions are dealt with in the economy.
The major participants in the money market are
a.
Banks
b.
Brokers
c.
Corporate Investors
d.
Government
e.
Mutual funds
f.
Non-Banking Finance Companies (NBFCs)
g.
Provident Funds
h.
Public sector undertakings (PSUs)
i.
Reserve Bank of India (RBI)
Q.3. b) Explain how Capital markets are the most important source of raising finance for an entrepreneur. Watch Video🎥
Capital markets act as the vital sources of procuring finance for the entrepreneurs in the following ways.
a.
They mobilize the financial sources throughout the nation.
b.
They secure the required foreign capital
c.
They know the process to accelerate the economic growth.
d.
They make sure that the financial resources are allocated most effectively. They achieve this by directing the financial resources either
to the projects that are capable of returning maximum returns
or to the underdeveloped priority areas that that are in need to promote balanced and diversified industrialization urgently.
Q.3. c) What do you understand by capital market? How can the capital market in India be broadly classified into different categories? Watch Video🎥 Watch Video🎥
A capital market is an organized means meant for effective and smooth mobilization of the money capital or financial resources from the investors to the entrepreneurs. In capital markets production capital is raised and it is made available to the entrepreneurs to be used in the establishment or operations of their enterprises.
The capital markets are broadly classified in India into the follow broad categories.
Organised Sector:
a.
Individual investors
b.
Corporate investors
c.
Institutional investors
d.
Government bodies
e.
Semi-Governmental agencies
f.
International financial agencies
Un-organized sector:
a.
Indigenous bankers
b.
Money lenders
c.
Finance Brokers
d.
Non-regulated banking finance institutions like chit funds or Nidhis etc
Q.3. d) Write down the sectors of organized and un–organized market? Watch Video🎥 Watch Video🎥
The various sectors of organized market are
a.
Individual investors
b.
Corporate investors
c.
Institutional investors
d.
Government bodies
e.
Semi-Governmental agencies
f.
International financial agencies
The various sectors of un-organized market are
a.
Indigenous bankers
b.
Money lenders
c.
Finance Brokers
d.
Non-regulated banking finance institutions like chit funds or Nidhis etc
Q.3. e) What is meant by primary market? Briefly explain the concept of ‘Right Issue for existing companies’? Watch Video🎥
Primary market is the market whose sole purpose is to enable the transfer of resources
a.
from the savers
b.
to the entrepreneurs who are are looking for the funds for the purpose of
i.
Setting up new enterprises
ii.
Expansion
iii.
Diversification
from the savers to the entrepreneurs who are in
Rights Issue that is implemented by the established companies:
1.
When additional finance is required, entrepreneurs follow the strategy named Rights issue where in they offer securities to the existing shareholders on a pro-rata basis. In other-words they give right on certain number of shares in proportion to the number of shares held by them currently.
2.
The availability of the shares is communicated to the existing shareholders through a circular.
3.
The existing share holders have the option to either acquire their shares or to not accept them.
4.
If the shares are not accepted by the existing shareholders they are transferred to the other persons.
5.
Rights issue is inexpensive as there is no involvement of
Agents
Brokers
Prospectus
Underwriters
Enlistment etc.
Q.4. Answer each of these questions in about two hundred and fifty words:
a)
An entrepreneur can raise the required capital in the primary market”. Explain the various methods of raising the funds in the primary market by an entrepreneur.
b)
When an entrepreneur decides to go public and become a public company, he/she tends to be in advantageous positions and get many benefit out of it . Explain the benefits
c)
While there are benefits to going public, at the same time additional obligations and reporting requirements on the companies and its directors means disadvantages too. what are they? Explain.
Q.4. a) “An entrepreneur can raise the required capital in the primary market”. Explain the various methods of raising the funds in the primary market by an entrepreneur. Watch Video🎥
The entrepreneurs have the option of raising the required funds through the following methods in the primary market.
1. Public Issue/Going Public: This is the method more popular. In this method a prospectus is prepared and issued to the public. The funds are collected from the public through this prospectus.
2. Rights Issue:
a.
When additional finance is required, entrepreneurs follow the strategy named Rights issue where in they offer securities to the existing shareholders on a pro-rata basis. In other-words they give right on certain number of shares in proportion to the number of shares held by them currently.
b.
The availability of the shares is communicated to the existing shareholders through a circular.
c.
The existing share holders have the option to either acquire their shares or to not accept them.
d.
If the shares are not accepted by the existing shareholders they are transferred to the other persons.
e.
Rights issue is inexpensive as there is no involvement of
Agents
Brokers
Prospectus
Underwriters
Enlistment etc.
3. Private Placement: Entrepreneurs use private placement to raise funds from the institutional investors. These institutional investors are very limited in number. Entrepreneurs belonging to both public and private limited sector utilize this option. They issue different varieties of financial instruments to capitalize using private placement. Private placement help the entrepreneurs to keep maintain business information confidentially and keep it from disclosing in the open market.
Different institutional investors are
a.
Unit Trust of India
b.
Life Insurance Corporation of India
c.
General Insurance Corporation
d.
Army Group Insurance
e.
State Level Financial Corporations
4. Offers to the employees: Stock options or offering shares enable the employees to become share holders and share the profits of the company. When an employee opts for a stock option, the employee goes through an agreement to stay with the company for a specified period of time. If the employee leaves the company before the specified period or is fired, they’ll not be able to utilize their stock options. Availing the stock options requires the employees to stay with the company for a specified period of time after which they can purchase the stocks. They benefit from the stock options if the value of the share is increased during this period.

Q.4. b) When an entrepreneur decides to go public and become a public company, he/she tends to be in advantageous positions and get many benefit out of it . Explain the benefits. Watch Video🎥
Entrepreneurs have the following advantages of raising the funds through the capital market.
a.
Acquisition capital to buy a competitor or another business or supplier.
b.
Business debt that is existing can be repaid with the acquired capital and there by saving on the interest (if any)
c.
Corporate marketing and development to increase the sales and revenues
d.
Development and expansion/growth of the business more rapidly
In addition to the above advantages they’ve the following additional advantages too.
a.
Acquisitions and Mergers: The entrepreneurs can use the public stock option to grow the enterprise through acquisitions and mergers.
b.
Benchmark trading price: The trading price of a public company’s stock act as a benchmark of the offer price of the other securities.
c.
Capital Formation: It becomes easier to raise the capital later due to the extra liquidity for the investors.
d.
Dilution: Dilution of ownership is less as compared to the IPO.
e.
Eased out/reduced business requirements: Going for an IPO requires significant earnings. But going public does not require significant earnings and hence it is easier.
f.
Higher Valuations: As compared to the private companies, public companies have higher valuation.
g.
Incentives: Stock options and stock incentives attract the employees a lot.
h.
Liquidity: Public companies provide liquidity for
Investors
Management
and Minority investors
i.
Increased prestige: Increased prestige in the eyes of the
customers
financial investors
suppliers
Q.4. c) While there are benefits to going public, at the same time additional obligations and reporting requirements on the companies and its directors means disadvantages too what are they? Explain. Watch Video🎥
The entrepreneur has to endure the following additional obligations and reporting requirements too when they go public
a.
Adhere strictly to the rules and regulations laid out by the governing bodies and need to closely observe them.
b.
Becomes more vulnerable to an unwelcome/hostile takeover
c.
Costs are increase as the company has to comply with higher levels of reporting requirements.
d.
Demand/Need to maintain more dividend and profits.
e.
Enhanced/increased accountability to public share holders.
f.
Following the public offer, the entrepreneur is likely to lose some control.
g.
Growth of media interest results in a loss of privacy.
Q.5. HOTS: (High Order Thinking Skills)
a)
Why primary market is also known as new issue market? Give one reason.
The entrepreneurs have high dependency on primary markets though the initial issues to generate funds. When the entrepreneurs decides to issue securities to the public so as to procure capital funds they do it in the primary market for the first time. As this is done for the first time such “issues of securities” are also known as “new money issues”. Consequently the primary market is also known as new issue market
Section-C: Stock Exchange
Q.1. Answer each of these questions in about fifteen words:
a)
What are the responsibilities of governing body?
b)
Name the stock exchanges were most of the stock trading in India is done.
c)
What is a secondary capital market?
Q.1. a) What are the responsibilities of governing body?
The responsibilities that the governing body possess are to look after
a.
policy formulation
b.
proper functioning of the exchange
c.
possess wide range of powers like
Admit and expel members
By-laws, rules and regulations etc interpretation
Conduct the affairs related to the exchange
Dispute adjudication
Electing the office bearers and set up committees
Finance and property (belonging to the exchange) management for the exchange
Q.1. b) Name the stock exchanges were most of the stock trading in India is done.
In India stock trading is done mostly in the following stock exchanges
a.
Bombay stock exchange(BSE)
b.
National Stock exchange (NSE)
Q.1. c) What is a secondary capital market?
Secondary market, also know as old securities market or stock exchange, is the market in which the old securities (i.e. the market securities issued earlier) are bought and sold.
Q.2. Answer each of these questions in about fifty words:
a)
What is the alternate name of stock used by different people?
a.
Equity
b.
Holdings
c.
Scrip
d.
Security
e.
Share
Q.3. Answer each of these questions in about one hundred and fifty words:
a)
Explain the importance of Stock Exchange from the viewpoint of companies.
b)
Explain the importance of Stock Exchange from the viewpoint of investors.
c)
Explain the importance of Stock Exchange from the viewpoint of society.
d)
Rahil (Finance) and Anushk (HR) are doing MBA (IIM Indore) While reading the newspaper Anushk saw the heading ‗Sensex goes up. But last week the heading was different that ‗Sensex goes down. , now some confusion was going on his mind, immediately he asked his Friend Rahil the same? Now according to you how Rahil will clear the confusion of Anushk? Explain and give some value points
Q.3. a) Explain the importance of Stock Exchange from the viewpoint of companies. Watch Video🎥
The following is the significance of the stock exchange from the view point of the companies.
1. Recognition: The market values of the companies’s shares are published in various media channels like newspapers, magazines and websites. This increases the reputation of good companies/entrepreneurs.
2. Wide market: The securities of some companies are listed in multiple stock exchanges, there by widening the market for the securities of that company. Due to this the companies will be able to reach more number of investors who are willing to invest in the company and this helps is procuring large capital funds.
3. Higher share value: Investors prefer to buy shares that have some premium value and hence there is demand for such shares. Due to increase in the demand, the price of the shares increase further.
Q.3. b) Explain the importance of Stock Exchange from the viewpoint of investors. Watch Video🎥
The following is the significance of the stock exchange from the view point of the investors.
1. Dissemination of useful information: Stock exchanges publish useful information related to securities like the price lists, quotations etc in various channels like newspapers, magazines, journals, websites etc. Investors heavily depend on this information published by the stock exchanges to buy and sell their securities
2. Ready market: Shareholders can sell their shares and convert them to cash through a member of the stock exchange.
3. Investors’ interests protected: Stock exchanges formulate the rules and regulations. This will avoid frauds and protect the investor interests.
4. Genuine guidance about the securities listed: The information published by the stock exchanges is trustworthy and the investors can safely depend upon this information.
5. Barriers of distance is removed: Stock exchanges provide an opportunity to the investors to participate in the shares of any company regardless of the location. Thus an investor has an opportunity to invest without any distance barriers.
6. Knowledge of profit or loss on investments: The price of the securities is live and up-to-date which helps the investors to get an instant estimate of whether their securities are running with profit or loss and decide whether to retain or sell the securities.
Q.3. c) Explain the importance of Stock Exchange from the viewpoint of society. Watch Video🎥
The following is the significance of the stock exchange from the view point of the society.
1. Rapid capital formation: When the companies are performing well in the stock market, they lure the investors to invest in their securities. Thus the investments in corporate and government sectors is increased. In addition to this, the income from these securities can be further invested. Thus there is a surplus flow of funds and this leads to rapid capital formation.
2. Economic development: As the funds are easily mobilized, the production is boosted and this brings additional capital. This in-turn lead to economic development.
3. National Projects: As stock exchanges promote capital formation, it becomes easier to start projects that bring National Prosperity.
Q.3. d) Rahil (Finance) and Anushk (HR) are doing MBA (IIM Indore) While reading the newspaper Anushk saw the heading ‗Sensex goes up. But last week the heading was different that ‗Sensex goes down. , now some confusion was going on his mind, immediately he asked his Friend Rahil the same? Now according to you how Rahil will clear the confusion of Anushk? Explain and give some value points Watch Video🎥
SENSEX is the short name for S&P BSE SENSEX(S&P Bombay Stock Exchange Sensitive Index) also called as BSE 30 is an index of how the well-established 30 companies listed on the Bombay Stock exchange are performing. These 30 companies are from various industry sectors. This index represents health of the India’s economy. When most of these stocks are performing well their prices increases and the SENSEX goes up and vice versa. Last week there was a dip in the prices and hence the SENSEX has gone down and this week their prices are increased and hence the SENSEX has gone up.
The value points from this case study are:
a.
Awareness of surroundings
b.
Enthusiasm
c.
Knowledge Sharing
d.
Communication
e.
Cooperation
f.
Willingness to help
Q.4. Answer each of these questions in about two hundred and fifty words:
a)
Write down the features of stock exchanges.
b)
Explain the functions of stock exchange.
Q.4. a) Write down the features of stock exchanges. Watch Video🎥
The following are the features of the stock exchange
a. Association of persons: A stock exchange is an association of persons or body of individuals which may be registered or unregistered.
b. Barometer of finances: Stock exchanges are the financial barometers and indicate the development of the national economy. The index of stock exchange reflects the stability and industrial growth.
c. Central Government Recognition: As stock exchange is an organized market, it requires recognition from the Central Government.
d. Deals in second hand securities: Stock exchanges deal with the bonds, debentures, shares and other such securities which are already issued by the companies. In other-words, they deal with the existing or second hand securities and hence they are called as secondary market.
e. Effect of transactions only through members: All the transactions in securities at the stock exchanges are effected only through its authorized brokers and members. They will not allow the outsiders or direct investors to enter the trading circles. It is only through the authorized brokers that the investors have to buy and sell the securities.
f. Facilitate dealings only in listed securities: A stock exchange has its own official list of securities. Investors can buy and sell only these securities through this stock exchange. Securities which are not part of this official list are called as unlisted securities. The unlisted securities can not be traded in the stock exchange.
g. Governs/works as per the rules: The investors can carry out the buying or selling transactions at the stock exchange subject to the rules and regulations of the stock exchange and the SEBI guidelines. There is no relaxation of these rules and regulations under any circumstances.
h. Handles/regulates trade in securities: Stock exchanges neither buy nor sell any securities themselves. They just provide the required infrastructure and the facilities to the brokers and its members to perform the trading of securities. Thus stock exchanges handle or regulate the trading activities and ensure that the trade is free and fair.
i. It is market for securities: Stock exchange is market where in securities of
corporate bodies
Government bodies
Non-government bodies
are bought and sold.
j. Specific Location: It is the place where authorized brokers come together on working days. They meet on the floor of market called trading circles and do trading. The prices of various securities being traded are displayed on the electronic boards. The market is closed after the working hours. The working of stock exchange is conducted and controled through computers and electronic system.

Q.4. b) Explain the functions of stock exchange. Watch Video🎥
The following are the various functions of stock exchange.
a. Acts/Serves as economic barometer: Stock exchanges act as an index indicating the health of the companies and national economy. In other-words it acts as a barometer indicating the economic conditions/situation and serves as the pulse of economy or economic mirror.
b. Bank Lending facilitation: Banks get the information related to the prices of the quoted securities from the stock exchanges. So, they offer loans to customers against the corporate securities as they know the value or price of these securities. This is a very big convenience to the owners of securities.
c. Continuous and ready market securities: Stock exchange act as a central market for buying and selling securities. It provides ready and continuous platform for buying and selling securities. Buyers and sellers strongly believe that they would be able to perform the transactions at any time (during the stock exchange working hours)
d. Deals/regulates company management: Stock exchanges mandate that the companies should comply with the rule and regulations laid out. The companies will be under the vigilance of stock exchange authorities.
e. Examines or checks on brokers: Stock exchanges control the activities of brokers and there by prevent any fraud activities or malpractices by the brokers. If any of the brokers are found to be overcharging or not providing accurate information, their licence may be cancelled.
f. Facilitates public borrowing: Stock exchanges also provide the platform for buying and selling of government securities. This makes it easy for the government to raise public debts quickly.
g. Gathering/raising new capital by the entrepreneurs: The companies will be able to easily gather or raise new capital through stock exchanges for the purpose of development expansion.
h. Healthy Speculation: Stock exchanges keep a check on the speculation and regulates it at healthy levels. This provides more business to the exchange. The speculation is also under control and there by preventing any danger to the investor and growth of corporate sector.
i. Intensifying capital formation: Stock exchanges promote the habit of saving, investing and risk taking among the investors and there by converting their savings into profitable and safe investments. This accelerates the capital formation as the investors will be more willing to invest their money in companies.
j. Justice through Safety and security in dealings: The stock exchanges work under the control of the provisions of the Securities Control (Regulation) Act. Due to this the investor confidence is grown. Also, the fraudulent practices are under check and there by ensuring safety, security and justice in dealings.
k. Facilitates evaluation of securities: Stock exchanges help in the evaluation of industrial securities. They thoroughly analyze the demand and supply position and publish the share prices. The investors will thus be able to know the true worth of their holdings at any time.
Q.5. HOTS: (High Order Thinking Skills)
a)
Stock exchange performs a number of functions in respect of marketability of different types of securities for investors and borrowing companies. Explain the important functions of stock exchanges. Watch Video🎥
The following are the various functions of stock exchange.
a. Acts/Serves as economic barometer: Stock exchanges act as an index indicating the health of the companies and national economy. In other-words it acts as a barometer indicating the economic conditions/situation and serves as the pulse of economy or economic mirror.
b. Bank Lending facilitation: Hanks get the information related to the prices of the quoted securities from the stock exchanges. So, they offer loans to customers against the corporate securities as they know the value or price of these securities. This is a very big convenience to the owners of securities.
c. Continuous and ready market securities: Stock exchange act as a central market for buying and selling securities. It provides ready and continuous platform for buying and selling securities. Buyers and sellers strongly believe that they would be able to perform the transactions at any time (during the stock exchange working hours)
d. Deals/regulates company management: Stock exchanges mandate that the companies should comply with the rule and regulations laid out. The companies will be under the vigilance of stock exchange authorities.
e. Examines or checks on brokers: Stock exchanges control the activities of brokers and there by prevent any fraud activities or malpractices by the brokers. If any of the brokers are found to be overcharging or not providing accurate information, their licence may be cancelled.
f. Facilitates public borrowing: Stock exchanges also provide the platform for buying and selling of government securities. This makes it easy for the government to raise public debts quickly.
g. Gathering/raising new capital by the entrepreneurs: The companies will be able to easily gather or raise new capital through stock exchanges for the purpose of development expansion.
h. Healthy Speculation: Stock exchanges keep a check on the speculation and regulates it at healthy levels. This provides more business to the exchange. The speculation is also under control and there by preventing any danger to the investor and growth of corporate sector.
i. Intensifying capital formation: Stock exchanges promote the habit of saving, investing and risk taking among the investors and there by converting their savings into profitable and safe investments. This accelerates the capital formation as the investors will be more willing to invest their money in companies.
j. Justice through Safety and security in dealings: The stock exchanges work under the control of the provisions of the Securities Control (Regulation) Act. Due to this the investor confidence is grown. Also, the fraudulent practices are under check and there by ensuring safety, security and justice in dealings.
k. Facilitates evaluation of securities: Stock exchanges help in the evaluation of industrial securities. They thoroughly analyze the demand and supply position and publish the share prices. The investors will thus be able to know the true worth of their holdings at any time.
Section-D: SEBI & Others
Q.1. Answer each of these questions in about fifteen words:
a)
What do you mean by stock exchange?
b)
What is SEBI?
c)
State three functions of SEBI rolled into one body.
d)
“Humorously, they were once given the acronym FFF for Angel Investors”. What is FFF stands for.
e)
What do you understand by angel investors?
Q.1. a) What do you mean by stock exchange?
A stock exchange is a body of individuals, either incorporated or not incorporated, constituted for the purpose of
a.
Assisting
b.
Controlling
c.
or Regulating
the business of
a.
buying
b.
and selling
c.
or dealing in
securities.
Q.1. b) What is SEBI? Watch Video🎥
SEBI is acronym for Securities and Exchange Board of India. It is the regulator of the securities market in India. It was established on 12th April, 1992 through the SEBI Act, 1992. This act ws passed by the Indian Parliament.
Q.1. c) State three functions of SEBI rolled into one body. Watch Video🎥
SEBI has three functions rolled into one body.
a.
quasi-legislative: It can draft regulations in its legistlative capacity.
b.
quasi-judicial: It passes rulings and orders in its judicial capacity.
c.
quasi-executive: It conducts investigation and enforcement action in its executive function.
Q.1. d) “Humorously, they were once given the acronym FFF for Angel Investors”. What is FFF stands for.
The acronym FFF used while referring to the angel investors stands for Friends, Family and Fools
Q.1. e) What do you understand by angel investors?
Angel investors are affluent individuals who can arrange capital for a start-up company or those companies which are still in the incubation stage and have high-risk, high-return matrix. The arrangement of the capital is usually in exchange of convertible debt or ownership equity. Angel investors are also called as Business angel or informal investor.
Q.2. Answer each of these questions in about fifty words:
a)
What is SEBI and what is its role?
b)
Who manages SEBI?
c)
Explain briefly the three functions of SEBI rolled into one body.
d)
What do you understand by venture capital?
e)
Enlist several categories of financing possibilities in which smaller ventures sometimes rely on.
f)
Why are Venture capitalists typically very selective in deciding while doing the investment?
Q.2. a) What is SEBI and what is its role? Watch Video🎥
SEBI: SEBI is acronym for Securities and Exchange Board of India. It is the regulator of the securities market in India. It was established on 12th April, 1992 through the SEBI Act, 1992. This act was passed by the Indian Parliament.
Roles of SEBI:
a.
It supervises and regulates the securities market to eliminate any malpractices and to promote the securities market in India.
b.
quasi-legislative: It can draft regulations in its legislative capacity.
quasi-judicial: It passes rulings and orders in its judicial capacity.
quasi-executive: It conducts investigation and enforcement action in its executive function.
Q.2. b) Who manages SEBI? Watch Video🎥
SEBI is managed by its member as follows:
a.
Chairman nominated by Union Government of India
b.
Two members who are officers from Union Finance Ministry
c.
One member from The Reserve Bank of India
d.
Five members nominated by Union Government of India. Among these five, at-least three should be whole-time members.
Q.2. c) Explain briefly the three functions of SEBI rolled into one body.
SEBI has three functions rolled into one body.
a.
quasi-legislative: It can draft regulations in its legislative capacity.
b.
quasi-judicial: It passes rulings and orders in its judicial capacity.
c.
quasi-executive: It conducts investigation and enforcement action in its executive function.
Q.2. d) What do you understand by venture capital? Watch Video🎥
a.
Venture capital is a type of private equity capital. It is provided in the form of seed funding to the companies which are early-stage, high potential, high risk, growth-up stages. These are also provided to entrepreneurs have very less experience and are in need of funds to implement their ideas.
b.
Venture capital is provided to such companies which are new or going to implement very new technologies by entrepreneurs who are professionally or technically qualified. Such companies fail to attract investments from public. Without venture capital they will never be able to take shape.
c.
It is equity based investment in small to medium companies that have growth-potential.
d.
It is through venture capital that the investors support the entrepreneurs who have talent. In return the investors will be able exploit market opportunities and reap long-term capital gains.
e.
It is a tool for economic development in many of developing regions. In many of these regions finance is made available to many small and medium enterprises (SMEs) which have difficulties in getting a loan from the banks.
Q.2. e) Enlist several categories of financing possibilities in which smaller ventures sometimes rely on.
The following financing options are available for the small ventures.
a.
Venture capital
b.
Seed capital finance
c.
Pre-startup and startup finance
d.
Second-round financing
e.
Specialized financial institutions at both national and state levels.
Q.2. f) Why are Venture capitalists typically very selective in deciding while doing the investment? Watch Video🎥
Venture capitalists will prefer to invest in only selected ventures due to the following reasons.
a.
The ventures into which they’re going to invest are early-stage, high risk, growth-up companies started by the entrepreneurs who might have been lacking the necessary experience.
b.
The ventures are usually employing new or relatively new technologies which have not yet proven their potential to be successful.
c.
The ventures in which they’re going to invest are in still developing regions.
As they’re investing their money they will be very cautious and they won’t proceed if there is more probability of failure.
Q.3. Answer each of these questions in about one hundred and fifty words:
a)
Explain the powers SEBI has been vested wit for discharging of its functions efficiently.
b)
What are the features of venture capital finance?
c)
When can an entrepreneur seek venture capital financing?
Q.3. a) Explain the powers SEBI has been vested wit for discharging of its functions efficiently. Watch Video🎥
To carry out its functions efficiently, the following powers are provided to SEBI
a.
Approve the by-laws of stock exchanges, SEBI.
b.
Books of accounts inspection. Inspection of periodical returns from recognized stock exchanges.
c.
Compel specific companies to make their shares available in one or more stock exchanges.
d.
Delegate powers that can be executed.
e.
Enquire the stock exchanges so taht they amend their by-laws, as required.
f.
Financial intermediaries’s books of accounts inspection
g.
Grant licenses to any persons so that they can deal with the securities at specific places.
h.
Have the fee and other charges imposed on the intermediaries for executing their functions.
i.
Impose monetary penalties
j.
Judge after prosecuting the violation of specific provisions of the companies Act., directly.

Q.3. b) What are the features of venture capital finance? Watch Video🎥
The following are the features of the venture capital.
a.
Equity finance in relatively new start-up companies.
b.
Long-term investment in small or medium firms which have growth possibilities.
c.
Venture capitalists mentor business skills to the companies in which they are investing.
d.
Lies in the high risk-return spectrum
e.
Subset of private equity
f.
Continuously involve in the affairs of the business after investing in them.
g.
Dis-invest the holdings either to the promoters or in the markets.
Q.3. c) When can an entrepreneur seek venture capital financing? Watch Video🎥
Entrepreneurs will go for raising venture capital funds under the following conditions.
a.
When the venture under consideration is in the start-up stage, high risk oriented.
b.
When the venture involves the use of new or upcoming technologies which is not yet successfully implemented by others.
c.
When the business is such that it fails to attract funds from the invetors
d.
When the entrepreneurs are looking for partners/mentos who have good business skills and also can provide capital for their start-ups.
e.
Seed capital requirements to develop a prototype.
f.
When the entrepreneurs are in need of start-up finance.
Q.4. Answer each of these questions in about two hundred and fifty words:
a)
Explain the characteristics of angle investors. Watch Video🎥
The following are the features of the angel investors.
a.
They are currently working or retired executives, business owners or high net worth individuals. They possess the knowledge, expertise and funds that are needed for a firm to start and grow.
b.
They bear very high risk and go for dilution from future investment stages. They seek high return for their investments.
c.
They also assist the entrepreneurs with advice, provide guidance, help them network with the people in the industry and also mentor the entrepreneurs.
d.
They aim at creating great companies through value creation. In addition they help the investor get a high return on their investment.
e.
They keep a close watch on the current development in a specific industry/sector, mentor the entrepreneurs to become next generation leaders.
Q.5. HOTS: (High Order Thinking Skills)
a)
Why it is said that “A venture capitalists investments are illiquid”. Give reason. Watch Video🎥
Venture capitalists invest in high-risk, high-growth, yet to mature companies having high returns in the future. Their funding goes when the company is about to be started. It takes a huge amount of time before the value of the investment reaches the desired levels. In addition the entrepreneurs are usually not yet experienced. Due to these reasons it takes lot of time for the investment to reach the desired growth levels. In addition there is risk of the enterprise not becoming successful and subsequently losing their investment. Due to these reasons, the venture capitalist’s investments are illiquid in other words their investments can not easily/quickly converted into cash.
Section-E: Specialized Financial Institutions
Q.1. Answer each of these questions in about fifteen words:
a)
What is the role of Specialized Financial Institutions in India?
b)
Enumerate the types of Specialised Financial Institutions from were entrepreneur can access capital according to their need and requirements.
c)
When was SIDBI established?
Q.1. a) What is the role of Specialized Financial Institutions in India?
The specialized financial institutions play the role of
a.
a promotional “mentor” and technical adviser
b.
Also, they act as an important source of medium and long term financing .
to various types of upcoming and existing entrepreneurs.
Q.1. b) Enumerate the types of Specialised Financial Institutions from were entrepreneur can access capital according to their need and requirements. Watch Video🎥
The following are the various specialized Financial institutions from where entrepreneurs can borrow capital to meet their needs and requirements.
1. At national level/All India development banks
a.
Industrial Credit and Investment Corporation of India (ICICI)
b.
Industrial Development Bank of India (IDBI)
c.
Industrial Finance Corporation of India (IFCI)
d.
Industrial Investment Bank of India Ltd.(IIBI)
e.
National Bank for Agriculture and Rural Development (NABARD)
f.
Small Industries Development Bank of India (SIDBI)
2. At state level
a.
State Financial Corporation (SFCs)
b.
Tourism Finance Corporation of India (TFCI)
c.
State Industrial Development Corporations (SIDC)
Q.1. c) When was SIDBI established?
SIDBI was established as wholly owned subsidiary of IDBI, in April, 1990 under the Small Industries Development Bank of India Act, 1990.
Q.2. Answer each of these questions in about fifty words:
a)
Explain the need and importance of Specialized Financial Institutions in India?
b)
Explain the objectives and functions of SIDC.
c)
Write the full form of & when it was established.
i)
SIDC
ii)
TFCI
iii)
SFC’s
iv)
NABARD
v)
IFCI
vi)
IDBI
vii)
ICICI
Q.2. a) Explain the need and importance of Specialized Financial Institutions in India? Watch Video🎥
Specialized Financial Institutions (SFIs) provide developmental finance. Thus SFIs are the sources for the entrepreneurs to procure finance required to invest in fixed assets. Due to this reason, the SFIs are also called as Development Banks or Development Financial Institutions. Thus the SFIs play an important role and are very much need due to the following reasons.
a.
Accommodate enough long-tern funds in the required sectors as per the planned priorities as the industrial units and entrepreneurs.
b.
Bring new and small entrepreneurs into the industry by providing the required finance to them.
c.
Coordinate the underwriting of and direct subscription to the issue of shares and debentures in the capital market of the upcoming ventures.
c.
Development of
Small scale industry
Projects in the backward areas
d.
Establishing the enterprises that are in need of extremely huge finance and those that have lengthy gestation periods.
3.
Facilitate the technical and managerial support to the entrepreneurs there by facilitating the
identification
evaluation
and execution
of new enterprises that require finance.
Q.2. b) Explain the objectives and functions of SIDC. Watch Video🎥
Objective: To promote industrial development in the states where they are setup.
Functions:
a.
Allocate term finance to all the small, medium and large industrial enterprises established in the state.
b.
Be a catalyst for the activities like underwriting and directly subscribing to the shares and debentures of industrial enterprises that are established in the state.
c.
Collaborating with private entrepreneurs to establish industrial enterprises in fields of joint and assisted sectors.
d.
Direct the operations like
Preparation of feasibility study
Conducting market surveys
Motivating the private entrepreneurs to start their ventures in the state
e.
Ensure that the the IDBI’s scheme of seed capital is implemented in the state.
Q.2. b) Write the full form of & when it was established.
i)
SIDC
ii)
TFCI
iii)
SFC’s
iv)
NABARD
v)
IFCI
vi)
IDBI
vii)
ICICI
Financial
Institution
Expansion
Year of
Establishment
SIDC
State Industrial Development Corporation
1956
TFCI
Tourism Finance Corporation of India
1989
SFC’s
State Finance Corporation
1951
NABARD
National Bank for Agriculture and Rural Development
1982
IFCI
Industrial Finance Corporation of India
1948
IDBI
Industrial Development Bank of India
1964
ICICI
Industrial Credit and Investment Corporation of India
1955

Q.3. Answer each of these questions in about one hundred and fifty words:
a)
Apoorva wants to start a new business near to her locality, for which she requires capital.
State different types of national level and state level financial institutions from where Apoorva can access capital according to her needs and requirements.
b)
Write down the objectives of IDBI.
c)
Write an explanatory note on the financing schemes of state level financial institutions and their importance in promotion of an entrepreneur in India.
d)
Write a short note on IIBI.
e)
Describe the form of assistance provided by SIDBI to the industrial concern.
Q.3. a)
Apoorva wants to start a new business near to her locality, for which she requires capital.
State different types of national level and state level financial institutions from where Apoorva can access capital according to her needs and requirements. Watch Video🎥
The following state/national level financial institutions can provide the required capital to Apoorva.
At national level/All India development banks
a.
Industrial Credit and Investment Corporation of India (ICICI)
b.
Industrial Development Bank of India (IDBI)
c.
Industrial Finance Corporation of India (IFCI)
d.
Industrial Investment Bank of India Ltd.(IIBI)
e.
National Bank for Agriculture and Rural Development (NABARD)
f.
Small Industries Development Bank of India (SIDBI)
At state level
a.
State Financial Corporation (SFCs)
b.
Tourism Finance Corporation of India (TFCI)
c.
State Industrial Development Corporations (SIDC)
Q.3. b) Write down the objectives of IDBI. Watch Video🎥
The following are the objectives of IDBI.
a.
Assist in widening the scope of assistance provided by other financial institutions. To achieve this, IDBI supplement the resources of other financial institutions.
b.
Broadening or diversifications of industrial growth and
planning
promotion
and development
of key industries.
b.
Coordination
Regulation
and supervision
of the working of other financial institutions like IFCI, ICICI, UTI, LIC, Commercial Banks and SFCs.
c.
Devising a system of industrial growth that conforms to national priorities and then enforce it.
Q.3. c) Write an explanatory note on the financing schemes of state level financial institutions and their importance in promotion of an entrepreneur in India. Watch Video🎥
State Financial Corporations (SFCs) were established to meet the financial needs of small and medium enterprises through the State Financial corporations Act in 1951. The act empowers state governments to establish a bank that cater to the development in their respective states. As of now there are 18 SFCs.
Objectives:
a.
Arrange financial assistance to small and medium industrial companies. The companies that can benefit might be from the following wide range of sectors/types
Corporate sector
Co-operative sectors
Partnership
Individual
Joint Hindu family business
Manufacture
Preservation
Processing of goods
Mining
Hospitality
Transportation
Generation or distribution of electricity
Repairs and maintenance of machinery
Setting up or development of an industrial area or industrial estate
b.
Bring financial assistance in reach of those industrial concerns whose paid up share capital and free services is a maximum of ₹ 3 crores.
c.
Contribute financial assistance to any single industry that fall into the corporate or co-operative sector at an average maximum value of ₹ 60 lakhs. For all other type of companies the maximum value is ₹ 30 lakhs.
d.
Deal with providing long and medium-term loan repayment. The re-payment period in most cases is below 20 years.
e.
Ensure that special emphasis is laid on the development of small scale industries and backward localities.
Functions:
a.
Act as an agent of
central government
state government
IDBI
IFCI
or any other financial institution
in matters related to the grant of loan or business of IDBI, IFCI or other financial instituion
b.
Bear the responsibility of underwriting of
stock
bonds
or debentures
by the industrial concern.
c.
Coordinate the grant of advances and loans or subscribe to the debentures of indistrial concerns.
The maximum repayment period is 20 years.
There is provision to convert into shares or stocks of the company.
d.
Development and promotion of industries through planning and assisting
e.
Equip technical and administrative assistance to any industrial entity or individuals for
promotion
management
or expansion
of any industry.
f.
Facilitate the guarantee for the loans raised by industries. The maximum loan repayment should be 20 years.
g.
Guaranteeing deferred payments pending from an industrial entity for buying capital goods in India.
h.
Handle/own the subscription or purchasing of
Stock
Shares
Bonds
or debentures
of an industrial concern within the limit of
30 percent of the subscribed capital
or 30 percent of paid up share capital and free reserve
whichever is less
Q.3. d) Write a short note on IIBI. Watch Video🎥
Industrial Reconstruction Bank of India (IRBI) was transformed and renamed as Industrial Investment Bank of India Ltd or IIBI under the Companies Act, 1956 in March, 1997. It was initially setup by IDBI through Government of India in April 1971. Its sole purpose was to rehabilitate poorly performing industrial companies.
Functions: It provides a wide range of products and services as specified below.
a.
Assistance in term-loan for project finance.
b.
Backing the financing of working capital or other short term loan to companies. This is usually for purchasing short duration non-project assets.
c.
Capital market and money market instruments investments.
d.
Dealing with equity subscription asset credit.
e.
Equipment finance.
Q.3. e) Describe the form of assistance provided by SIDBI to the industrial concern. Watch Video🎥
a.
Allocate finances for the promotion, financing and development of small-scale industries in India. This is channelized through the following routes.
Direct assistance
Indirect assistance
b.
Bring about the initiation of the technological up-gradation and/or modernization of existing units.
c.
Create channels for marketing of SSI sector products in India and abroad and opens up new markets.
In addition it has taken over the responsibility of allocating the following two funds.
a.
Small Industries development fund
b.
Small Industries development Assistance Fund
i.
Financial assistance to SSS
ii.
Refinance loans and advances
iii.
Discount and re-discount bills arising from sale of machinery to or its manufacture by industrial units
iv
Refinance assistance for
setup new venture
expansion
modernization
diversification of existing units for all the activities.
v
Seed capital/loan assistance through specified lending agencies.
vi
Grant direct assistance and refinance loans.
vii
Provide venture capital assistance
viii
Leasing and factoring to small-scale units

Q.4. Answer each of these questions in about two hundred and fifty words:
a)
Explain the main objectives and functions of ICICI.
b)
Explain in detail objectives and three important Primary functions of NABARD.
Q.4. a) Explain the main objectives and functions of ICICI. Watch Video🎥
Main Objectives of ICICI:
a.
Assist in the
formation
expansion
and modernization
of industrial entities in the private segment.
b.
Bring private capital (both Indian and foreign) into these industries by stimulating and promoting
c.
Coordinate the provision of technical and managerial help in order to increase production and there by increasing employment opportunities.
Functions of ICICI:
a.
Allocate medium and long-term loans in Indian and foreign currency to import capital equipment and technical services. The aim is to allocate these loans for the purchase of fixed assets like
Land
Building
and Machinery
b.
Become the guarantor for the loans raised from private sources. This is applicable for deferred payments too.
c.
Consultancy services
technical assistance
managerial assistance
is provided to industrial entities to start new projects.
d.
Direct subscription to the new issues of shares. Most of the times taking up the underwriting.
e.
Equipment and other asset lease to industrial entities. In this cases the assets will be under the ownership of ICICI and will be leased to the industrial concerns for rent.
f.
Facilitate merchant banking services
g.
Gives/sanctions a minimum loan of ₹ 5 lakhs and a maximum loan of ₹ 1 crore to a business entity.
Q.4. b) Explain in detail objectives and three important Primary functions of NABARD. Watch Video🎥
The following are the objectives and functions of NABARD.
Objectives of NABARD:
a.
Allocate direct lending to any institution as approved by the central government.
b.
Bank will play the role of financing institution
for industrial credit like long-term, short-term
for the promotion of activities in rural regions.
Functions of NABARD:
1. Credit functions:
a.
Short-term credit to
State Cooperative Banks
Regional Rural Banks
Other financial institutions
approved by RBI for the following purposes
Financing seasonal agricultural operations
Marketing of crops
Pisciculture activities
Production
Procurement
and Marketing
of cooperative weavers and rural artisans societies and individuals.
Production and marketing activities of industrial cooperatives.
b.
Medium-term credit to
State Cooperative Banks
State Land Development Banks
Regional Rural banks
and Other approved financial institutions approved by RBI
to convert the short term loans to medium term loans for approved agricultural requirements.
c.
Long-term credit to
State Land Development Banks
State Cooperative banks
Regional Rural Banks
and Other approved financial institutions
d.
Refinance to
cottage
village
small-scale industries
located in rural areas.
2. Developmental Functions
a.
Acts as an agent to the Government and RBI in the transaction of business in relevant areas and provide facilities for training, research and dissemination of information in rural banking and development
b.
Be the coordinator for the operations of rural credit institutions
c.
Contribute to the share capital of eligible institutions.
d.
Develop the expertise to deal with agricultural and rural problem so taht it can help in rural development efforts
e.
Equip the provision of direct loans to centrally approved cases.
3. Regulatory Functions:
a.
Authorized to undertake the inspection of RRBs and Cooperative banks, excluding the Primary Cooperative Banks
b.
Branch opening requires a recommendation of NABARD. This is imperative by RRBs or Cooperative Banks to take permission from RBI.
c.
Collect the file returns and documents from
RRBs
Cooperative Banks
including RBI
Q.5. HOTS: (High Order Thinking Skills)
a)
“TFCI is playing vital role in the development of entrepreneurship in modern economy”. Comment.
b)
Hari is an entrepreneur who wants to start an amusement park in Indore. He knows that she needs a huge amount of initial capital. According to you which of the financial institution will be more suitable to him? Suggest and Explain why?
c)
Assuming that you wish to start a small scale industry for manufacturing and selling detergent powder, discuss how would you seek support of financial institutions.
d)
Discuss the advantages and disadvantages of financial institutions for an entrepreneur.
e)
Distinguish between ICICI and SIDBI.
f)
How NABARD is different from TFCI.
g)
Company A goes for public issue of 10,000 shares @` 10 each. Application were received for only 5,000 shares. Can the company proceed with the process of issuing shares.
Q.5. a) “TFCI is playing vital role in the development of entrepreneurship in modern economy”. Comment. Watch Video🎥
Yes. TFCI was born with this sole objective in mind. It is a specialized all-India development financial institution to serve the needs to the needs of the tourism industry.
The following are its functions through which it helps in the development of entrepreneurship in today’s economy.
a.
Advisory and merchant banking services provision in this field.
b.
Billions of rupees (5.2 billion)were sanctioned as assistance to more than 2000 projects in the recent 5 years. Due to these more than 12,000 hotel rooms came into existence and around 23,000 people got jobs.
c.
Capital cost to be eligible under this scheme should be more than 1 crore. However, they consider small projects also.
d.
Deals with providing financial assistance to enterprises for setting up or the development of tourism related projects, facilities and services such as
Amusement parks
Air Services
Convention halls
Cultural centers
Education and Sports
Entertainment centers
Hotels
Holiday resorts
Restaurants
Rope ways
Sports facilities
Travel
Tourism emporium
Tourism operating agencies
Thus there is wide range of new ventures financed by TFCI and as the tourism sector has multitude of opportunities and is growing industry in the modern times, TFCI plays a critical role in the development of modern economy.
b) Hari is an entrepreneur who wants to start an amusement park in Indore. He knows that she needs a huge amount of initial capital. According to you which of the financial institution will be more suitable to him? Suggest and Explain why? Watch Video🎥
Tourism Finance Corporation of India (TFCI) provides financial assistance to enterprises for setting up the development of tourism related projects like amusement park etc. So, Hari should approach TFCI for procuring the funds for starting this amusement park. In addition to this TFCI assists with a capital cost of ₹ 1 crore which best suits for ventures like an amusement park etc. There were more than 2000 projects that were benefited from the finance aid provided by TFCI. Due to these reasons Linden should approach TFCI for getting the required capital.
c) Assuming that you wish to start a small scale industry for manufacturing and selling detergent powder, discuss how would you seek support of financial institutions. Watch Video🎥
Due to the less complicated process of manufacturing, the manufacture of detergent power falls under small-scale industries. The following are the various options available for procuring the finance for small scale industries.
a.
Angel Investors: Angel investors will be willing to invest in this manufacturing concern, as the market is huge and once established the returns would be high. So, this option can be used by the entrepreneurs. The angel investors not only provide funds but they also provide expertise and mentor the entrepreneurs.
b.
Venture Capitalist: As the manufacturing concern is going to be started (as it is a startup), the entrepreneurs can approach the venture capitalist. In addition venture capitalist help the new entrepreneurs to realize their dreams.
c.
State financing corporations: State financing corporations provide financing help to the small and medium enterprises engaged in the manufacture etc. So, the entrepreneurs can approach these financial institutions.

d) Discuss the advantages and disadvantages of financial institutions for an entrepreneur. Watch Video🎥
Advantages of financial institutions for an entrepreneur:
1.
It is easy to procure loans from the financial institutions.
2.
Less time consuming.
3.
Option of subscribing to the shares and debentures either directly or through underwriting.
4.
The financial institutions also play the role of mentor and technical advisor to a wide range of upcoming and existing entrepreneurs.
5.
The are very important sources of long term financing
6.
Availability of very long term loans.
7.
Possibility of getting finance for both new and small industrial units
8.
Certain financial institutions focus on the development of specific sectors. If the enterprise being established matches this sector, then getting finance is very easy.
9.
They promote the systems that are in alignment with the national priorities.
10.
They assist in the formation, expansion and modernization for the industrial units.
11.
Certain financial institutions target specifically rural sectors for the development of the rural areas.
Disadvantages of financial institutions for an entrepreneur:
1.
Procuring finance for terms beyond 20 years is very difficult.
2.
Sometimes it is difficult to get loans for business concerns that fall into specific sectors.
3.
Interest rates are high and sometimes it is possible to lose collateral.
4.
Sometimes the loans are made available in 2 or more terms. The entrepreneurs have to seek other sources for the rest of the amount till it is sanctioned from the bank.
5.
Sometimes it is possible to lose some control on the enterprise as the financial institutions get involved and take the position of important stakeholders.
Q.5. e) Distinguish between ICICI and SIDBI. Watch Video🎥
The following are the differences between ICICI and SIDBI.
ICICI
SIDBI
1. ICICI was established in 1995 as a joint stock company in the private sector. All its share capital came from
a.
banks
b.
insurance companies
c.
foreign institutions including world bank

At present it has the following major share holders
a.
General Insurance corporation of India and its subsidiaries
b.
Life insurance corporation of India
c.
Unit Trust of India

Their total share capital in ICICI is approximately 50%, all put together.

1. SIDBI was established in April 1990 as a wholly owned subsidiary of IDBI under the Small Industries Development Bank India Act, 1990
2. Its objective is to help the industrial units in the private sector in the
formation
expansion
and modernization

2. To assist in the technology upgrade during the starting stage and/or modernization of existing business entities.
3. It stimulates and promotes the investment of private capital in the industrial units both from India and abroad.
3. It broadens the channels for marketing of SSI sector products both in India and abroad.
4. To facilitate
technical assistance
managerial assistance
consultancy services
and to increase production and to create more employment opportunities.

4. To promote employment oriented industries
5. It owns certain assets and lease them to industrial entities.
5. It provides leasing and factoring to small-scale business units
6. It gives medium and long-term loans in Indian and foreign currency for importing capital equipment and technical services.
6. Provides direct assistance and refinance loans. These loans are extended by primary Lending Institutions for financing the export of products manufactured by industrial concerns in small scale sector.
Q.5. f) How NABARD is different from TFCI. Watch Video🎥
The following are the differences between NABARD and TFCI.
NABARD
TFCI
1. Started for promoting agriculture and other rural small scale industries sector.
1. Started for promoting the tourism industry.
2. Provides short, medium and long term and refinance facilities.
2. Provides medium term loans.
3. Coordinates the operations of the rural credit institutions.
3. Provides the advisory services
4. Contributes to the share capital.
4. No share capital participation.
5. Authorized to perform regulatory functions.
5. Works independently.
g) Company A goes for public issue of 10,000 shares @ ₹ 10 each. Application were received for only 5,000 shares. Can the company proceed with the process of issuing shares. Watch Video🎥
SEBI has issued a guideline where if a company receives less than 90% of the issued amount from the public subscription and development from underwriters, in less than 120 days from the initial issue date, the applicants should be refunded with the subscribed amount. Even if the development is under dispute, the applicants should be refunded with the subscribed amount if this criteria is not met.
If there is any development to be received from the underwriters and if it is not received within 120 days of the issue of prospectus, the applicants should be refunded with the subscribed amount. However, in this case no interest is required to be paid. But if this amount is not returned in the next 10 days (after completion of 120 days), the directors of the company will be jointly liable to repay that money including interest after completion of 130 days
In this case, after closing the subscription list, if refunds are not paid within 8 days, the company should refund all the amount and interest within 10 weeks
In the given scenario only 50% of the issued shares are subscribed. Hence the company should not proceed with the issuing of shares and should return the share amount to the subscribers as specified above.



Value Based Question
Q1.
Harish is working as the chief accountant in ABC infrastructure Ltd. He came to know that the company is planning to announce an interim dividend. He purchased 2000 shares of the Co. at the market price of ₹ 215 with the expectation of an appreciation in the market price. When the price increased to ₹ 537 he sold his holdings & made a handsome profit. Name the related concept which social values have been affected here?
Q2.
By offering shares to its employers what values are promoted by a company
Q3.
Mr. B the financial Manager of ABC Company purchases 100 shares of the Company just before the rights issue was announced. Is the behaviour of the manager ethical? What would you do as a legal advisor of the company.
Q1. Harish is working as the chief accountant in ABC infrastructure Ltd. He came to know that the company is planning to announce an interim dividend. He purchased 2000 shares of the Co. at the market price of ₹ 215 with the expectation of an appreciation in the market price. When the price increased to ₹ 537 he sold his holdings & made a handsome profit. Name the related concept which social values have been affected here? Watch Video🎥
The underlying concept is known as insider trading. Interim dividend is decided in the annual general meeting (AGM) held by the directors. This information is confidential and it is illegal to use such information for personal gains as it results in conflict of interest. Chief accountants have access to this information and it is illegal for them to use this for personal advantage and they are not supposed to disclose it even to their close associates.
The following social values are negatively impacted by the behaviour of the chief accountant.
Integrity
Ethical behaviour
Shareholder Trust
Social
Reputation of the company
Q2. By offering shares to its employers what values are promoted by a company Watch Video🎥
The following values are exhibited by the companies by offering the shares to their employees.
a.
Encourage employees to stay with the company for longer periods of time.
b.
Gain Reputation as employee friendly
c.
Gain employee trust.
d.
Induce a sense of ownership among the employees.
e.
Employees will be more enthusiastic to work and there by productivity and profits will increase.
f.
Promote savings among employees.
g.
Socially responsible to increase the standards of their employees.
Q3. Mr. B the financial Manager of ABC Company purchases 100 shares of the Company just before the rights issue was announced. Is the behaviour of the manager ethical? What would you do as a legal advisor of the company. Watch Video🎥
The company announcing the rights issue is confidential information and should not be mis-used by the employees.
It is unethical practice to use such information for personal gain.
Companies go for rights issue to gather additional capital/finance from the existing stakeholders. A company going for rights issue means that it is in the path of growth and preference will be given to the existing shareholders to purchase shares on a pro-rata basis.
It is responsibility of the employees from the finance department to keep such information confidential and it should not be used for their personal gains. As the legal adviser of the company, I discourage such practices and advise for a legal action against the manager for breaching the integrity.


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