UNIVERSITY OF MUMBAI

PROJECT REPORT

ON
INVESTMENT BANKING
T.Y.B.B&I (SEMESTER V)
ACADEMIC YEAR: 2011-2012

SUBMITTED BY
SATISH .A. KASARE
ROLL NO 13

PROJECT GUIDE
PROF. RASHNA .Z. GIARA

PEOPLES EDUCATION SOCEITYS
DR. AMBEDKAR COLLEGE OF
COMMERCE AND ECONOMICS
WADALA, MUMBAI 400 031.

(ACADEMIC YEAR 2011-2012)


PROJECT REPORT
ON
INVESTMENT BANKING
SUBMITTED
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD
OF DEGREEOF
B.COM BANKING & INSURANCE

BY
SATISH .A. KASARE
ROLL NO. 13
T.Y.B.B&I (SEMESTER V)


PEOPLES EDUCATION SOCEITYS
DR. AMBEDKAR COLLEGE OF
COMMERCE AND ECONOMICS
WADALA, MUMBAI 400 031.

CERTIFICATE
PEOPLES EDUCATION SOCIETYS
DR. AMBEDKAR COLLEGE OF
COMMERCE AND ECONOMICS
WADALA , MUMBAI- 4000 31.

NAAC ACCREDITED
This is to certify that , Mr. / Miss _SATISH .A. KASARE (13)
Of B.Com Banking and Insurance Semester v (2011-2012) has successfully
completes project on INVESTMENT BANKING Under the guidance of Prof.
RASHNA Z. GIARA.

(Signature of project guide.) (Signature of principal.)




(Signature of co-ordinator) (Signature of External Examiner)

ACKNOWLEDGEMENT

It is my great privilege to thanks Dr. Ambedkar College of Commerce
and Economics particularly to Prof. KHAN (Co-ordinator of BBI) and Dr. S.R
Kamble (Principle) for giving this opportunity to complete this project and support
us.
I also sincerely thank to my guide Prof. RASHNA Z GIARA without
whose suport and guidance it wouldnt be possible to complete the project.

I also thanks to my parents, relatives and colleagues for their
encouragement and support.

Place
Date

(Signature)





DECLARATION

I MR.Satish kasare the student of DR.AMBEDKAR College of Commerce &
Economics, studying in T.Y.B.Com Banking & Insurance (Semester V), hereby
declare that I have completed the project report on INVESTMENT BANKING
in the academic year 2011 2012.
The information submitted is genuine and practical to the best of my
knowledge.



Date:
SATISH .A. KASARE
(Roll No. 13)
Place:








EXECUTIVE SUMMARY
























CONTENT


PAGE
NO.

1

Introduction of Investment banking.


2

Role of investment banking in IPO process.


3.


Major services provided by Investment banking.


4.





5.




6.





7.




8.



CONCLUSION.


9.

LITERATURE REVIEW



10.

BIBLOGRAPHY

















11.


APPENDIX.










CHAPTER.1. INTRODUCTION TO INVESTMENT BANKING
1.1. INVESTMENT BANKING
It is concerned with the primary function of assisting the advisory
capital market in its function of capital intermediation, i.e., the movement of
financial resources from those who have them (the Investors), to those who need to
make use of them for generating GDP (the Issuers). Banking and financial
institution on the one hand and the capital market on the other are the two broad
platforms of institutional that investment for capital flows in economy. Therefore,
it could be inferred that investment banks are those institutions that are
counterparts of banks in the capital markets in the function of intermediation in the
resource allocation. Nevertheless, it would be unfair to conclude so, as that would
confine investment banking to very narrow sphere of its activities in the modem
world of high finance. Over the decades, backed by evolution and also fuelled by
recent technologies developments, an investment banking has transformed
repeatedly to suit the needs of the finance community and thus become one of the
most vibrant and exciting segment of financial services. Investment bankers have
always enjoyed celebrity status, but at times, they have paid the price for the price
for excessive flamboyance as well.
Investment banks help companies, governments, and their agencies to raise
money by issuing and selling securities in the primary market. They assist public
and private corporations in raising funds in the capital markets (both equity and
debt), as well as in providing strategic advisory services for mergers acquisitions
and other types of financial transactions.

1.2.WHAT IS INVESTMENT BANKING?
It Provides strategic, financial and valuation services
Use industry knowledge, expertise and contacts to advise senior executives
and boards of directors
Identify and assess strategic opportunities
Interpret market information and enhance shareholder value
Provide general valuation services (e.g., segment analysis, break-up
valuations, fairness opinions)

Raise capital through the issuance of securities
Act as intermediary between issuers and investors
Provide access to equity and fixed income capital (e.g., investment grade,
bank, high yield, preferred stock)
Create specialized securities and derivatives (e.g., convertibles, trust
preferred securities, warrants)
Advise companies in merger &acquisition and restructuring transactions
Sell-side assignments (represent client in the sale of its company or some of
its assets)
Buy-side assignments (represent potential acquirers and negotiate
transactions)
Hostile take-over defense/advisory
Offer specialized products and services that satisfy the needs of corporate and
government clients
Private equity (e.g. Merchant banking, Real Estate, Venture Capital, other)
Privatization
Monetization
1.3.HISTORY OF INVESTMENT BANKING.
Without a sound and effective banking system in India it cannot have a healthy
economy. The banking system of India should not only be hassle free but it should
be able to meet new challenges posed by the technology and any other external and
internal factors.

For the past three decades India's banking system has several outstanding
achievements to its credit. The most striking is its extensive reach. It is no longer
confined to only metropolitans or cosmopolitans in India. In fact, Indian banking
system has reached even to the remote corners of the country. This is one of the
main reason of India's growth process.

The government's regular policy for Indian bank since 1969 has paid rich
dividends with the nationalization of 14 major private banks of India.


Not long ago, an account holder had to wait for hours at the bank counters for
getting a draft or for withdrawing his own money. Today, he has a choice. Gone
are days when the most efficient bank transferred money from one branch to other
in two days. Now it is simple as instant messaging or dial a pizza. Money have
become the order of the day.

The first bank in India, though conservative, was established in 1786. From 1786
till today, the journey of Indian Banking System can be segregated into three
distinct phases. They are as mentioned below:
Early phase from 1786 to 1969 of Indian Banks
Nationalization of Indian Banks and up to 1991 prior to Indian banking
sector Reforms.
New phase of Indian Banking System with the advent of Indian Financial &
Banking Sector Reforms after 1991.
To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II
and Phase III.
1.3.1.Phase -I

The General Bank of India was set up in the year 1786. Next came Bank of
Hindustan and Bengal Bank. The East India Company established Bank of Bengal
(1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units
and called it Presidency Banks. These three banks were amalgamated in 1920 and
Imperial Bank of India was established which started as private shareholders
banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians,
Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore.
Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda,
Canara Bank, Indian Bank, and Bank of Mysore were set up. Reserve Bank of
India came in 1935.

During the first phase the growth was very slow and banks also experienced
periodic failures between 1913 and 1948. There were approximately 1100 banks,
mostly small. To streamline the functioning and activities of commercial banks, the
Government of India came up with The Banking Companies Act, 1949 which was
later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act
No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the
supervision of banking in India as the Central Banking Authority.

During those days public had lesser confidence in the banks. As an aftermath
deposit mobilisation was slow. Abreast of it the savings bank facility provided by
the Postal department was comparatively safer. Moreover, funds were largely
given to traders.

1.3.2.Phase II
Government took major steps in this Indian Banking Sector Reform after
independence. In 1955, it nationalised Imperial Bank of India with extensive
banking facilities on a large scale specially in rural and semi-urban areas. It formed
State Bank of India to act as the principal agent of RBI and to handle banking
transactions of the Union and State Governments all over the country.
Seven banks forming subsidiary of State Bank of India was nationalised in 1960 on
19th July, 1969, major process of nationalisation was carried out. It was the effort
of the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial
banks in the country was nationalised.

Second phase of nationalisation Indian Banking Sector Reform was carried out in
1980 with seven more banks. This step brought 80% of the banking segment in
India under Government ownership.

The following are the steps taken by the Government of India to Regulate Banking
Institutions in the Country:
1949: Enactment of Banking Regulation Act.
1955: Nationalisation of State Bank of India.
1959: Nationalisation of SBI subsidiaries.
1961: Insurance cover extended to deposits.
1969: Nationalisation of 14 major banks.
1971: Creation of credit guarantee corporation.
1975: Creation of regional rural banks.
1980: Nationalisation of seven banks with deposits over 200 crore.
After the nationalisation of banks, the branches of the public sector bank
India rose to approximately 800% in deposits and advances took a huge
jump by 11,000%.

Banking in the sunshine of Government ownership gave the public implicit
faith and immense confidence about the sustainability of these institutions.

1.3.3.Phase III

This phase has introduced many more products and facilities in the banking sector
in its reforms measure. In 1991, under the chairmanship of M Narasimham, a
committee was set up by his name which worked for the liberalisation of banking
practices.
The country is flooded with foreign banks and their ATM stations. Efforts are
being put to give a satisfactory service to customers. Phone banking and net
banking is introduced. The entire system became more convenient and swift. Time
is given more importance than money.

The financial system of India has shown a great deal of resilience. It is sheltered
from any crisis triggered by any external macroeconomics shock as other East
Asian Countries suffered. This is all due to a flexible exchange rate regime, the
foreign reserves are high, the capital account is not yet fully convertible, and banks
and their customers have limited foreign exchange exposure.

1.4. ROLE OF INVESTMENT BANKING
The major work of investment banks includes a lot of consulting. For instance,
they offer advices on mergers and acquisitions to companies. The other arena
where they give advice are tracking the market and determining when should a
company come out with a public offering and what is the best possible way to
manage the public assets of businesses. The role that an investment bank plays
sometimes gets overlapped with that of a private brokerage house. The usual
advice of buying and selling is also given by investment banks. There is no
demarcating line between the investment banking and other forms of banking in
India. This has been observed majorly of late. All banks nowadays want to provide
their customers the best of services and create a niche for themselves and that is
why apart from investment banks, all other banks too are aiming at making it big.
At the macro level, investment banking is related with the primary function of
assisting the capital market in its function of capital intermediation, i.e., the
movement of financial resources from those who have them (the investors), to
those who need to make use of them for producing GDP (the issuers). Over the
decades, investment banks have always suited the needs of the finance community
and thus become one of the most vibrant and exciting segment of financial
services. Globally investment banks handle significant fund-based business of their
own in the capital market along with their non-fund service portfolio which is
offered to the clients. All these activities are broadly segmented across three
platforms - equity market activity, debt market activity and merger and
acquisitions (M&A) activity. In addition, given the structure of the market, there is
also a segmentation based on whether a particular investment bank belongs to a
banking parent or is a stand-alone pure investment bank.

CHAPTER.2. ROLE OF INVESTMENT BANKER IN THE IPO
PROCESS.
2.1.1INTRODUCTION TO IPO
It is clear from the above discussion that, the activities or roles of the investment
banker in the IPO process cannot be discounted. The success of the IPO will to a
large extent depend on the capabilities of the investment banker selected (Ellis,
1989). However, in the absence of a model to guide issuers of securities in
selecting investment banks, how does a company come up with the right
investment banker to manage its IPO? Despite the numerous efforts made by
academics to investigate into issues concerning the market for IPOs, not much has
been done on the capabilities of investment banks. However by examining
critically the roles and responsibilities of investment banks in the IPO process, we
can glean some qualities or capabilities an investment banker must possess in order
to survive in its market. Weston and Copeland (1989) identified three main
functions or roles investment banks play in the IPO process and these include:
2.1.2Underwriting. This is the insurance function of bearing the risk of adverse
price fluctuations during the period in which a new issue of securities is being
distributed. There are two fundamental ways of doing this, and they are the firm
commitment and best efforts underwriting agreements. The firm commitment
agreement obligates the investment banker to assume all the risks inherent in the
issue. On the other hand, the best efforts agreement absolves the investment banker
from any risks in the issue. Under this underwriting agreement, the investment
banker undertakes to help sell at least minimum amount of the issue with any
unsold amounts returned to the issuing firm. Where the investment banker is not
able to sell the minimum quantity agreed upon, the whole issue is cancelled and
reissued when the market is ready to accommodate the issue.
2.1.3Distribution: Another related function to the one described above is the ability
of the issuing firm to reach as many investors as possible with its security.
According to Weston and Copeland (1989), investment banks play a very crucial
role here, because of their expertise in doing this relative to the issuing firm
assuming this responsibility when issuing securities. Advice and Counsel: This
involves the investment banker making valuable inputs into decisions concerning
its client ability to succeed in the capital market with an IPO. Its ability to make
valuable inputs in this direction may largely depend on its experience in
origination and selling of securities.
In addition, Ellis (1989), identified two categories of factors critical to evaluating
and choosing an investment bank. In his assessment, the most important factors
include.
1. Understand our company
2. Earn credibility with our senior management
3. Make useful recommendations to our company
The least important are:
1. Expertise in Eurobond market
2. Expertise in equity underwriting
Ellis (1989), again identified six (6) reasons why investment banks gain
importance with their corporate clients. These are:
1. Credibility with the client corporations senior management-earned over several
years.
2. Understanding the client companys needs for service and its financial goals and
policies.
3. Making useful recommendations to the company over a period of time.
4. Innovating with new financing techniques.
5. Having special expertise in a specific service.
6. Recommending a specific transaction.
Credibility with Senior Management His postulation on the role of an investment
banker goes beyond the IPO process to include other activities or capabilities of the
investment banker, which tends to impaction choice of an investment banker by
senior management who are interested in strategic issues of the organizations they
are responsible for. Thus if an investment bankers capabilities fit well with
financial strategies of the organization, it is made an integral part
2.1.4Understand Client Company
Another reason he finds important to corporate executives is the investment
bankers knowledge of their companies and their operations. More conservative
corporate executives rated this as a critical success factor in dealing with
investment banks, especially when the investment banking industry in US has over
the years survived, by maintaining a relationship with their clients. In his study, 3
of the 4 different industries he studied ranked this variable as the most important of
all in dealing with an investment banker.
2.1.5Making Useful Recommendations
A more IPO related factor is the ability of the investment banker to make valuable
recommendations to the issuing firm over time. This is because it reinforces the
reliability and consistency of the investment banks capabilities to its corporate
clients. In this light an investment banker that is able to consistently make valuable
inputs into the financial decisions of a client strengthens the relationship between
itself and its client.


2.1.6Expertise in Equity Underwriting
Another important IPO related capability is the ability of the investment banker to
under write securities. In the absence of any model to determine the overall
capabilities of an investment banker, this has been one of the criteria for ranking
the performance of investment banks.
2.1.7Having Expertise in a Specific Service
The competitive wave sweeping the US investment banking industry has caused
most investment banks to concentrate on their capabilities where they can gain a
competitive advantage. The era where one investment banker was at the centre of a
corporate entitys financial strategy is over. Corporate entities are shopping for
specific capital market capabilities of investment banks. This has eventually
changed the structure of the investment banking industry where size used to be a
competitive factor.
2.1.8Supplementing Capabilities
Other capabilities such as Euro market capabilities, recommending specific
transactions and innovating with new financing techniques are all additives to the
more generic functions described above. These capabilities, though not really taken
to be very important then are now making very important inputs into the choice of
firms by corporate clients. Grinblatt and Titman (2002), point out that investment
banks have been motivated in various ways to develop capabilities in these areas to
expand their client-base beyond their domestic financial markets.



2.2IPO Decisions:
2.2.1 Phase-I

At Phase-I, IPO decisions usually start with the company making decisions in the
following areas:
1. Amount to be raised: The decision variable here is the amount of new capital
needed by the firm.
2. Type of Securities to use: This stage of the process will consider the best
security to use; the firm would have to choose from basic forms such as shares,
bonds or other innovative types, which may include various combinations of
securities usually called exotic securities. The choice of security and the method
of selling will normally fall within the regulatory framework of the securities
industry.
3. Competitive bids versus a Negotiated deal: Should the company offer a blockof
securities for sale to the highest bidder? Or should it negotiate a deal with an
Investment banker? Competitive bids normally are used by large well-known
firms whiles negotiated deals are used by small firms not known to the investment
banking community.
4. Selection of an Investment Banker: the firm must decide on the investment
banker to use in raising the needed capital. This stage is very important to the firm,
as attends to have other implications on the success of the IPO process. The
intensity of the problem faced by the issuing firm may stem from the fact that there
is no model to rely on in selecting an investment banker to make the IPO
successful (Minister and Carter, 1990). Reputable investment banks target more
established firms whiles other investment banks are good at speculative issues or
new firms going public.
2.2.2Phase-II
At Phase-II, decisions include the input of the firms selected investment banker.
Components of Phase-II decisions generally include the following:
1. Re-evaluating the initial decisions: at this stage, the firm and its investment
banker will have to re-evaluate regarding issues such as size of the issue and type
of securities to use etc. These decision processes are organized under pre-
underwriting conferences as espoused by Weston and Copeland (1989).
The main aim of the re-evaluation processes is to fine-tune the internal decisions of
the company under Phase-I. This is to ensure the success of the issue.
2. Filing of Registration: The investment banker, after taking an inventory of all
the relevant information, it has to file an application with the Securities and
Exchange Commission (SEC) and the stock exchange if it wants the shares to be
publicly traded. In Ghana, the securities industry laws (SIL) however allow
applications tube filed with the GSE before it is filed with the SEC. Without the
examination and approval by these regulatory bodies, public sale of the security
can never begin.
3. Pricing of the Security: Another important decision at this phase is the pricing of
the security. This depends on a plethora of issues, usually resolved through the
research or experience of the investment banker. The important issues considered
here include, the risk profile of the issuer, the capacity of the market accommodate
the issue, the reputation of the investment banker etc. The pricing of the issue has
been identified as one of the sources of controversy between the issuer and the
investment banker (Weston and Copeland, 1989; Brigham et al,1999; Grinblatt and
Titman, 2002).
4. Forming the Underwriting Syndicate: In underwriting of security issues, the
managing/selected investment banker may or may not be in the position to
underwrite the whole issue. Where it is unable to underwrite the issue, it may have
to form an underwriting syndicate. This will ensure the diversification of
underwriting risk to the managing investment banker and permits economy of
selling effort and expense and encourages nationwide distribution.
5. Forming of the Selling Group: The selling group is formed to facilitate the
distribution of the issue for a commission. The managing investment bank through
the selling group agreement, which usually covers the description of the issue,
concession, handling of purchased securities and duration of the selling group, is
able to control the selling group.
6. Offering and Sale: The last important step in this process is the formal sale of
the securities after the approval by the regulatory authorities. This is usually
preceded by a series of publicity campaigns. The date on which the selling of the
issue will begin is made public before or during the publicity campaign in order to
avoid unfavorable events or circumstances.


2.3 Investment Banking falls under two broad headings:
2.3.1 The provision of financial advice capital
Principal clients are companies, particularly publicly listed companies, and
governments. For companies, these services are primarily directed towards raising
shareholder value (that is, ensuring that the share price fully reflects the value of
the business); and the actions prescribed are corporate actions (taking over another
company, selling a division, returning cash to shareholders by paying them a
special dividend, etc). For governments, these services are usually directed at
executing government policy, for example by selling off, or privatizing,
government-held businesses or industries.


Provision of financial advice As noted above, investment banking advice relates to
corporate actions rather than product or organizational matters, such as product
improvement, market analysis or management of organization. Nonetheless, an
investment banker needs to have an understanding of all these things because they,
too, will have an impact on shareholder value.
2.3.2 Mergers and Acquisitions (or "M&A")
The majority of financial advice relates to M&A. The client company seeks to
expand by acquiring another business. There are many possible commercial
reasons for this, such as:
Increasing the range of products increasing the business' geographical footprint
complementing existing products integrating vertically (i.e. acquire suppliers,
further up the chain, or customers, Further down the chain)protecting a position
(for example by preventing a competitor from acquiring the business in question).
In practice therefore, Investment Banking divisions tend to be divided into industry
sector teams, who can then familiarize themselves with the principal players,
economics and dynamics of the sector.
There are also many possible financial reasons for making an acquisition,
such as
:raising profitability, and therefore the share price increasing in size followed and
more widely invested in; again, likely to have a positive effect On the share price
financing growth. Improving quality of profits - the market likes predictable profit
streams, and will value these more highly shifting the business towards sectors
more favorably viewed by the market.
The Investment Bankers' roles in these transactions involve: using their knowledge
of the industry sector, to help with the identification of potential targets which
meet commercial criteria such as those referred to above using their knowledge of
the investment market, to advise on valuation, form of consideration (should the
sellers be paid in cash - which is likely to involve the buyer borrowing the money -
or in the buyer's shares - so that the seller ends up with a stake in the buyer, or a
blend of the two?), timing, tactics and structure coordinating the work of the other
advisers involved in the transaction - lawyers, who prepare the documentation for
the acquisition and help with the "due diligence" to be performed on the business
being acquired; accountants, who advise on the financial reporting aspects of the
transaction, and tax consequences; brokers, who advise on shareholder aspects
(how are the buyer's shareholders likely to view the acquisition?) and how the
market as a whole is likely to receive the transaction; and public relations
consultants, who ensure that the transaction has a favorable press.

2.4. General financial advice

Investment Banking also involves providing general financial advice on a range of
issues, such as funding structure (perhaps the company is too indebted, and should
issue shares to raise more money; or does it have too much cash on its balance
sheet, just sitting there not earning interest, so that it should consider paying a large
dividend to its shareholders or buying back some of its own shares?).


2.4.1 Capital raising
If a company is to grow, it has to invest and, often, that capital comes from
external sources. This can be in the form of either "equity", when the company
issues more shares to investors, who buy them for cash; or debt, either from banks
or - more usually nowadays - directly from investors. Investors may be either
institutional (pension funds and the like) or retail (individuals).Investment Banks
advise on the raising of capital - in what form, how much, from whom, timing -
and may also charge a fee for arranging the financing or for
"underwriting"(guaranteeing to take up any securities that are unsold in the market,
so that the issuer knows for sure how much cash it is going to raise and can plan
accordingly).

2.4.2 Ways of Raising Capital
There are several ways of raising equity capital: These are discussed below: Rights
Offerings Most company regulations or charters allow shareholders to have a pre-
emptive righting additional stock issues. Thus, anytime the company wants to raise
additional equity capital, it must make a formal offer to existing shareholders
before it can seek the interest of potential outside investors. Where it sells
additional stock issues to existing shareholders, it is called a rights offering. This
offer may be renounceable or non-renounceable. A renounceable rights offering
gives the shareholder the option to exercise his right to purchase the new shares at
the issue price. A non-renounceable rights offering obligates the shareholder to
exercise his rights at the issue price.


2.4.3 Public Offerings
Where the corporate charter or regulations are silent on pre-emptive rights of
existing shareholders, it may decide to sell new shares or stock through a rights
offering or a public offering.
Private Placements:
This method of selling securities is generally used by companies who are interested
in reducing their floatation costs and are interested in a specific group of investors.
Under private placements, new stocks are sold to one or a few investors, generally
institutional investors who invest in large blocks of shares. Employees Purchase
Plans and Employee Share/Stock Ownership Plain most organizations, the
regulations or charter allows employees to purchase the shares of the company
usually at predetermined prices based on the financial performance of the entity.
This usually affects managerial staff in order to reduce the prevalence of the
2.4.4 Principal-agency problem.
The Initial Public Offering and the Regulatory Framework At this stage we will
focus on the Initial Public Offering (IPO) process, the regulatory framework within
which the activity is organized and the role of the investment banker.






CHAPTER.3 MAJOR SERVICES PROVIDED BY INVESTMENT
BANKIING.

3.1Merchant Banking:

The merchant banker are those financial intermediary involved with the activity of
transferring capital funds to those borrowers who are interested in borrowing.

The activities of the merchant banking in India is very vast in nature of which
includes the following

a) The management of the customers securities
b) The management of the portfolio,
c) The management of projects and counseling as well as appraisal
d) The management of underwriting of shares and debentures
e) The circumvention of the syndication of loans
f) Management of the interest and dividend etc

3.1.1Factors responsible for the Changes:

Globalization of Indian Economy has made the whole economy open, which has
more multinational player in the era of the financial services? This has resulted in
to the emergence of the global investment in financial sector. Government has now
open up the doors of investments especially in the area of banks and insurance,
which leads to competitive environment for the present players. Now they have to
bring something new which is efficient and best services to live in the competitive
environment.

Competition arising out of Private Company Participation is due to the
liberalization of the economy. Now along with the public/government players,
private players are also offering financial services and instruments, which are more
innovative and different than the earlier offering. All around, there is a fresh
thinking on the financial products, structure of banking and insurance instruments
with value creation. Financial markets are being redefined, reinvented and
reconfigured on a persistent basis.


3.1.2 The emerging areas in banking services are;

1. Two in one Accounts
2.Overdrafts (OD)
3.ATMs
4.Net Banking
5.Credit Card


Two in one accounts: Are available at many of the foreign and private
banks. It amalgamates the features of a savings or a current account and a fixed
deposit account. As soon as one opens 2 in 1 accounts with the bank, deposit
starts earning a rate of interest higher than that of a plain savings account. The
rate of interest can be equivalent to prevailing rates for Fixed Deposit.
Customers can choose the sweep option Term Deposit or Mutual Fund, based
on their requirements.

Overdraft [OD]

Overdraft is the agreed amount by which a bank account can be overdrawn.
When the amount of money withdrawn from the bank account is greater than
the amount actually available in the account the excess is known as the
overdraft and the account is said to be overdrawn. If agreed by the bank in
advance this is essentially a form of loan facility and there is a particular
interest rate attached with the overdrawn amount.

ATMs

Automated Teller Machines has revolutionary's entire banking sector. Currently
there are more than 16000 ATMs in India fulfilling the daily requirement of
money to a common man. The story of the humble cash-dispensing machine
started around three decades back. Since then they have become common site in
metros and semi metro cities. ATM allows a customer to do number of banking
functions like withdrawing cash, making balance inquiries, transferring money
from one account to another account, request for a Cheque book and statements,
Utility Bill Payment like electricity bills, Credit Card payments etc by using a
plastic, magnetic strip card and personal identification number issued by
financial institution.

Net Banking

Internet technology has invaded the portal of our banking institutions. No doubt
innovation like ATM have considerably put customer at ease in the recent past,
but with net banking the customer will be able to transact with the help of the
mouse. The services offered enable one to check credit card transactions,
paying bills, transferring fund between accounts in two different banks, and
scheduling future payments and transfers. A gradual increase in net banking is
logical as the need to minimize costs catches attention. A North American
Internet Banking survey done by management consultancy Booz Allen &
Hamilton in 2000 revealed that the cheapest way of banking is internet
banking.

Credit Cards
It is estimated in the year 2004; the total credit card market in the country was
at 17 million cards. The credit card industry is growing at 30 35 % per annum
at present. The size of Indian credit card market is estimated to be around $4bn
by end of 2010.

Four banks have now crossed the 2 million card base, with ICICI bank leading
the pack at 4 million cards followed by Citi bank at 2.8 million, HDFC bank at
2.2 million and SBI card just over 2 million. Industry average for spends on
credit a card two years ago was just around Rs 16,000 per card that has now
increased to around 20,000 per card. Rapid Advancement in Technology, Easier
access to knowledge and globalization have changed entire banking sector.
Because of these factors today customer is sophisticated and well aware about
the financial needs.

3.1.3 Leasing Services

The Indian company investors must be acknowledged that lease is that
agreement under which the company or Indian firm acquire the exact right and
make use of certain capital asset on the consideration of payment of rental
charges. The Indian corporate company must equally known that it cannot
equally know that it cannot acquire any kind of ownership to such an asset apart
from making use of it. The user comparatively pays all the expected operating
costs and also the maintenance expenses.

The main corporate companies must equally take into the consideration that
developed countries like America, United Kingdom the companies of such a
countries are commonly depending on the leasing factor. In India since the era
of liberalization, many of the Indian companies have equally been involved in
the leasing transactions. On the other side, many financial institutions and even
the commercial banks in the Indian financial sector have comparatively been
accepted over the same transactions.

3.1.4Mutual Funds Services

The Indian corporate companies must equally be informed that the mutual funds
comprises of the exact funds gained by pooling all the public savings. The
mutual funds are comparatively invested in those portfolios, which are
commonly diversified in nature with the main objectives of sharing the risk.
The Indian small-scale investors cannot be able to get their funds from the
comparative big corporate companies can equally gain there working funds
from the mutual funds.

However, the modern concept of the mutual funds was developed in1968 in
London by the foreign and colonial government trust of London. By which it
gained its invention in India in early 1980, even if it was exactly started in 1964
by the unit trust of India.

In addition to the above, the mutual funds can be grouped into [a] Close ended
funds & [b] Open ended funds. The Indian corporate companies can only
benefits from the mutual funds on gaining savings for investment, better yield
low cost on investment, tax benefits, flexible on investment, promoting
industrial development reducing the cost of new issue and many more other
advantages.

On the other side, Indian corporate companies must be informed on the kind of
risks involved with the mutual funds like market risks, scheme risks, business
risk, investment risks and even the political nature of risks. While the investors
are selecting the funds must take into account the objectives of the fund,
consistency of performance of the funds. Historical background of the funds,
cost of operation, capacity for innovation, the investors servicing, market
trends, and even the transparence of the fund management. For the Indian
mutual funds to have good future there must be full support of SEBI better
control of capital issue, better interest rate, good PE ratio, investors must have
good choice, tax concessions, and many more.

3.1.5Hire Purchase Services

In the hire purchase kind of transaction is that method of selling by which
goods are left out on hiring by the Indian corporate company to the purchaser
by which the hirer is comparatively required to the payment on an agreed sum
of amount in the system of periodical installments. In the hire purchase the
Indian corporate companies must know that the ownership of such kind of the
property exactly remain under the control of the creditor who normally passes
the right to hirer on the condition of payment of the last agreed sum of money
in installment.

The Indian corporate company must know that legally, payment is made in
installment over the agreed specified period, possession of the same right is
delivered to the purchaser during the time of agreement, the property passes to
the exact purchaser on the agreed last installment, and the hirer has a right to
return the property without further installment. In addition to the above, the
Indian corporate company must know that the agreement must comparatively
contain the nature of the goods as described in manner so that to identify them
easily, the nature of the hire purchase price, the date of commencement and
finally the extend or number of installments.

3.1.6. Venture Capital Services

The venture capital is that investment in the new Indian enterprises without
stability in growth. It's that environment of capital, shareholding and even the
setting up of small firms, which are comparatively specializing, in same new
technological ideas in the commercial sectors.

The venture capital is equity participation, it's of high risk in nature, it's also
available only for commercialization of new technologies and it's the exact
promoter of the projects, and it's continuous in nature and input of the firm. The
Indian corporate companies must equally know that venture capital involves the
development of project idea, implementation, fledging or additional financing,
and establishment stage.

The main importance of venture capital to Indian, corporate companies are the
reduction of risk, easy to analyze the business prospects and to assume the
investors on affairs of the business. The Indian methods of venture financing
are equity participation, income notes, the conventional loans and even the
conditional loans. In order to promote the venture capital growth in India, there
must be tax concessions for capital gains, high level development of capital
market, giving of fiscal incentives to Indian corporate companies, high level
participation of the private sectors the improving and reviewing of the existing
laws and limited partnership and many more.


3.1.7. Discounting, factoring and forfeiting services

Due to the exact trade transaction the trade bill comparatively arises, the Indian
corporate companies must take into consideration that the supplier of the exact
goods draws bill which is based on the purchase for the invoice price of goods
sold on credit method of which is drawn on the short period of time. The buyer
pays the amount on the exact date by which the supplier of goods has to await
until the expiry of the exact bill. However, the banks provides the cash
discounting based on the exact trade bills by which they deduct certain charges
as discount based on the amount of the bill and credit balance of the customers
account.
Factoring

Factoring is to get thing being done. The ward factor means to mark or to do
according to R.W. Johnson factoring is a service involving the purchase by
financial organization, called a factor of receivables owned by
manufacturers and distributors by the customers with the factor assuming
full credit and collection responsibilities.

The main conditions of factoring that the Indian corporate companies must
know are these must be assignment of debt that has to be in favour of the
factor. The selling limits for the client, the factor must have recourse to the
client in the case of non-payment by the customer; the factor will equally
have recourse in case of non-payment, details on payment for the services,
interest and limit of any overdraft facility charged. The Indian corporate
companies must be well informed about the types of factoring as full service,
recourse factoring, maturity, bulk, invoice, agency and also international
factoring. At the same time the exact cost of factoring like the pricing, fee,
discount, accounting system must be taken into consideration.


Forfeiting

Forfeiting is the French term means "to give something" or "give one's
right". Generally the term forfeit is non-recourse purchase by the
commercial bank or any other financial intermediaries or institutions
receivables that equally arises from the export of the goods.


Securitization of Debt Services

The securitization is that process by which the liquidating of the liquid and
the long term assets of the Indian corporate companies like the loans and
receivables by the issuing marketable securities against the same. However,
the Indian corporate companies must know that securitization is that
technique by which the exact long term, non-negotiable instruments are
equally converted into securities of such kind of small value in nature which
can be easily transacted in the commercial capital market.

In India, apart from the above, there is low and unpopularity of
securitization due to introduction of it as it's a new idea or concept to India,
heavy stamp duty and comparative registration fees imposed by the Indian
government, complicated and also legal transfer procedure the difficulty in
the assignment of debts. Also there is poor standard of loan documentation,
problem of inadequate credit rating system, poor accounting procedure and
lack of comprehensive guidance.

3.1.8 Derivatives

The derivatives are those instruments, which are commonly used to derive
therein-exact value of underlying asset of the financial institutional corporate
companies. The derivatives comparatively may involve the payment or
receipt of the value or income created by the underlying assets. The main
factors that are responsible for the slow growth of derivatives in India and
high level of misconception of the derivatives, the derivatives lends
themselves to leveraging, the nature of the off balance sheet, items, poor
accounting system, speculative mechanism and finally poor infrastructure
system.

3.1.9 Credit Rating Services

According to Moody's Rating are designed exclusively for the purpose of
grading bonds according to their investments qualities". Also according to
the Australian Ratings "A corporate credit rating provides lenders with a
simple system of gradation by which the relative capacity of companies to
make timely repayment of interest and principal on a particular type of debt
can be noted".

The main credit ratings in India are credit rating information service
ltd(CRISIL), investment information and credit rating agency of
India(ICRA), Credit Analysis and Research (CARE), and Duff Phelps Credit
Rating
Financial services refer to services provided by the finance industry. The finance
industry encompasses a broad range of organizations that deal with the
management of money. Among these organizations are credit unions banks, credit
card companies insurance companies, consumer finance companies, stock
brokerage, investment funds and some government sponsored enterprises As of
2004, the financial services industry represented 20% of the marker capitalization
of the S&Pin the united states.



3.1.10. Banking services
The primary operations of banks include:
Keeping money safe while also allowing withdrawals when needed
Issuance of checkbooks so that bills can be paid and other kinds of payments
can be delivered by post
Provide personal loans commercial loans, and mortgage loans(typically
loans to purchase a home, property or business)
Issuance of credit cards and processing of credit card transactions and billing
Issuance of debit cards for use as a substitute for checks
Allow financial transactions at branches or by using Automatic teller
machine. (ATMs)
Provide wire transfers of funds and Electronic transfer funds between banks
Facilitation of standing orders and direct debits, so payments for bills can be
made automatically
Provide overdraft agreements for the temporary advancement of the Bank's
own money to meet monthly spending commitments of a customer in their
current account.
Provide internet banking system to facilitate the customers to view and
operate their respective accounts through internet.
Provide Charge card advances of the Bank's own money for customers
wishing to settle credit advances monthly.
Provide a check guaranteed by the Bank itself and prepaid by the customer,
such as a cashiers checks or certified checks .
Notary service for financial and other documents
3.1.11. Other types of bank services
Private banking- Private banks provide banking services exclusively to high
net worth individuals. Many financial services firms require a person or
family to have a certain minimum net worth to qualify for private banking
services. Private banks often provide more personal services, such as
wealth management and tax planning, than normal retail banks.
Capital market bank - bank that underwrite debt and equity, assist company
deals (advisory services, underwriting and advisory fees), and restructure
debt into structured finance products.
Bank cards - include both credit cards and debit cards. Bank of America is
the largest issuer of bank cards.
Credit card machine services and networks - Companies which provide
credit card machine and payment networks call themselves "merchant card
providers".
3.1.13. Foreign exchange services
Foreign exchange services are provided by many banks around the world.
Foreign exchange services include:
Currency exchange- where clients can purchase and sell foreign currency
banknotes.
Foreign currency banking- banking transactions are done in foreign
currency.
Wire transfer- where clients can send funds to international banks abroad.
3.1.14. Investment services
Asset management - the term usually given to describe companies which run
collective investment funds. Also refers to services provided by others,
generally registered with the Securities and Exchange Commission as
Registered Investment Advisors.
Hedge fund management - Hedge funds often employ the services of "prime
brokerage" divisions at major investment banks to execute their trades.
Custody services - the safe-keeping and processing of the world's securities
trades and servicing the associated portfolios. Assets under custody in the
world are approximately $100 trillion.

3.1.15. Other financial services
Intermediation or advisory services - These services involve stock brokers
(private client services) and discount brokers. Stock brokers assist investors
in buying or selling shares. Primarily internet-based companies are often
referred to as discount brokerages, although many now have branch offices
to assist clients. These brokerages primarily target individual investors. Full
service and private client firms primarily assist and execute trades for
clients with large amounts of capital to invest, such as large companies,
wealthy individuals, and investment management funds.
Private equity - Private equity funds are typically closed-end funds, which
usually take controlling equity stakes in businesses that are either private,
or taken private once acquired. Private equity funds often use leveraged
buyouts (LBOs) to acquire the firms in which they invest. The most
successful private equity funds can generate returns significantly higher
than provided by the equity markets
Venture capital is a type of private equity capital typically provided by
professional, outside investors to new, high-potential-growth companies in
the interest of taking the company to an IPO or trade sale of the business.
Angel investment - An angel investor or angel (known as a business angel or
informal investor in Europe), is an affluent individual who provides capital
for a business start-up, usually in exchange for convertible debt or
ownership equity. A small but increasing number of angel investors
organize themselves into angel groups or angel networks to share research
and pool their investment capital.
Conglomerates - A financial services conglomerate is a financial services
firm that is active in more than one sector of the financial services market
e.g. life insurance, general insurance, health insurance, asset management,
retail banking, wholesale banking, investment banking, etc. A key rationale
for the existence of such businesses is the existence of diversification
benefits that are present when different types of businesses are aggregated
i.e. bad things don't always happen at the same time. As a consequence,
economic capital for a conglomerate is usually substantially less than
economic capital is for the sum of its parts.
Debt resolution is a consumer service that assists individuals that have too
much debt to pay off as requested, but do not want to file bankruptcy and
wish to payoff their debts owed. This debt can be accrued in various ways
including but not limited to personal loans, credit cards or in some cases
merchant accounts. There are many services/companies that can assist with
this. These can include debt consolidation, debt settlement and refinancing.














CHAPTER.4. RBI AND SEBI GUIDELINES REGARDING
INVESTMENT BANKING

4.1 Various functions provided by investment banking.

4.1.1. ADVISING FUCTION
The advising function starts with the investment banker assessing the fund
requirements of its client, whether an individual or a corporate.

4.1.2. ADMINISTRATIVE FUNCTIONS

After deciding on the funding strategy, the second function is the administrative
function, under which the investment banker has to prepare the documentation and
a myriad of details associated with the regulatory framework of the country in
which the funds are being raised.

4.1.3. UNDERWRITING FUNCTIONS

Underwriting means guaranteeing a fixed price to the security issuer in exchange
for its securities.

4.1.4 DISTRIBUTION FUNCTIONS

Distribution function involves the placement of newly issued securities in the
hands of investors.

4.1.5. INVESTMENT MANAGEMENT FUNCTIONS

Given the fact that investment managers are involved with the issues from the
beginning, they have the strength to analyze the securities and firms that issue
them.

4.1.6. MERGERS AND AQUISITIONS

Mergers and acquisitions is another area where investment bankers have been
active for a quite long time. The mergers and acquisitions departments of
investment banks provide consulting services to companies in the process of
merging or acquiring other companies or organizations. Organizations wishing to
acquire, dispose of, or invest in real estate will deal with the real estate division of
an investment bank.

4.1.7. OTHER ACTIVITIES

In addition to the above mentioned activities, investment bankers have been
interested in designation of insurance products, pension plans, hedging risk and
risk management, foreign currency activities, real estate dealing, etc.

4.2.Gudelines on issues and valuation of shares in existing
companies.

A. The price of shares issued to persons resident outside India under the FDI
Scheme shall not be less than :
i. the price worked out in accordance with the SEBI guidelines, as applicable,
where the shares of the company is listed on any recognised stock exchange
in India;
ii. the fair valuation of shares done by a SEBI registered Category - I Merchant
Banker or a Chartered Accountant as per the discounted free cash flow
method, where the shares of the company is not listed on any recognised
stock exchange in India; and
iii. the price as applicable to transfer of shares from resident to non-resident as
per the pricing guidelines laid down by the Reserve Bank from time to time,
where the issue of shares is on preferential allotment.
B. The price of shares transferred from resident to a non-resident and vice versa
should be determined as under:
i) Transfer of shares from a resident to a non-resident:
a) In case of listed shares, at a price which is not less than the price at which a
preferential allotment of shares would be made under SEBI guidelines.
b) In case of unlisted shares at a price which is not less than the fair value as per
the Discount Free Cash Flow (DCF) Method to be determined by a SEBI registered
Category-I- Merchant Banker/Chartered Accountant.
ii) Transfer of shares from a non-resident to a resident - The price should not be
more than the minimum price at which the transfer of shares would have been
made from a resident to a non-resident.
In any case, the price per share arrived at as per the above method should be
certified by a SEBI registered Category-I-Merchant Banker / Chartered Accountant

4.3.Foreign Portfolio Investment.
Regulations regarding PI by SEBI registered Foreign Institutional
Investors (FIIs)?

Investment by SEBI registered FIIs is regulated under SEBI (FII)
Regulations, 1995 and Regulation 5(2) of FEMA Notification No.20 dated
May 3, 2000, as amended from time to time. FIIs include Asset Management
Companies, Pension Funds, Mutual Funds, Investment Trusts as Nominee
Companies, Incorporated / Institutional Portfolio Managers or their Power of
Attorney holders, University Funds, Endowment Foundations, Charitable
Trusts and Charitable Societies.
SEBI acts as the nodal point in the registration of FIIs. The Reserve Bank of
India has granted general permission to SEBI Registered FIIs to invest in
India under the Portfolio Investment Scheme (PIS).
Investment by SEBI registered FIIs and its sub accounts cannot exceed
10per cent of the paid up capital of the Indian company. However, in case of
foreign corporates or High Networth Individuals (HNIs) registered as sub
accounts of an FII, their investment shall be restricted to 5 per cent of the
paid up capital of the Indian company. All FIIs and their sub-accounts taken
together cannot acquire more than 24 per cent of the paid up capital of an
Indian Company. An Indian company can raise the 24 per cent ceiling to the
sectoral cap / statutory ceiling, as applicable, by passing a resolution by its
Board of Directors followed by passing a Special Resolution to that effect by
their General Body. The Indian company has to intimate the raising of the
FII limit to the Reserve Bank to enable the Bank to notify the same on its
website for larger public dissemination.

4.4 Regulations regarding Portfolio Investments by
NRIs/PIOs?
Non- Resident Indian (NRIs) and Persons of Indian Origin (PIOs) can
purchase or sell shares/ fully and mandatorily convertible debentures of
Indian companies on the Stock Exchanges under the Portfolio Investment
Scheme. For this purpose, the NRI/ PIO has to apply to a designated branch
of a bank, which deals in Portfolio Investment. All sale/ purchase
transactions are to be routed through the designated branch.
An NRI or a PIO can purchase shares up to 5 per cent of the paid up capital
of an Indian company. All NRIs/PIOs taken together cannot purchase more
than 10 per cent of the paid up value of the company. This limit can be
increased by the Indian company to 24 per cent by passing a General Body
resolution. The Indian company has to intimate the raising of the FII limit to
the Reserve Bank to enable the Bank to notify the same on its website for
larger public dissemination.
The sale proceeds of the repatriable investments can be credited to the NRE/
NRO, etc. accounts of the NRI/ PIO, whereas the sale proceeds of non-
repatriable investment can be credited only to NRO accounts.
The sale of shares will be subject to payment of applicable taxes.

4.5. Investment in other securities .

Can a Non-resident Indian(NRI) and SEBI registered Foreign Institutional Investor
(FII) invest in Government Securities/ Treasury bills and Corporate debt?
Under the FEMA Regulations, only NRIs andSEBI registered FIIs are permitted to
purchase Government Securities/Treasury bills and Corporate debt. The details are
as under :
A. A Non-resident Indian can purchase without limit,
(1) on repatriation basis
i) Dated Government securities (other than bearer securities) or treasury bills or
units of domestic mutual funds;
ii) Bonds issued by a public sector undertaking (PSU) in India; and
iii) Shares in Public Sector Enterprises being disinvested by the Government of
India.
(2) on non-repatriation basis
i. Dated Government securities (other than bearer securities) or treasury bills
or units of domestic mutual funds;
ii. Units of Money Market Mutual Funds in India; and
iii. National Plan/Savings Certificates.
B. A SEBI registered FII may purchase, on repatriation basis, dated Government
securities/ treasury bills, listed non-convertible debentures/ bonds issued by an
Indian company and units of domestic mutual funds either directly from the issuer
of such securities or through a registered stock broker on a recognised stock
exchange in India.
The FII investment in Government securities and Corporate debt is subject to a
ceiling decided in consultation with the Government of India. Investment limit for
the FIIs as a group in Government securities currently is USD 10 billion and in
Corporate debt is USD 20 billion.

4.6. Foreign Venture Capital Investment.

A SEBI registered Foreign Venture Capital Investor has general permission
from the Reserve Bank of India to invest in a Venture Capital Fund (VCF)
or an Indian Venture Capital Undertaking (IVCU), in the manner and subject
to the terms and conditions specified in Schedule 6 of RBI Notification No.
FEMA 20/2000-RB dated May 3, 2000, as amended from time to time.
These investments by SEBI registered FVCI, would be subject to the SEBI
regulation and sector specific caps of FDI.
FVCIs can purchase equity / equity linked instruments / debt / debt
instruments, debentures of an IVCU or of a VCF through initial public offer
or private placement in units of schemes / funds set up by a VCF. At the
time of granting approval, the Reserve Bank permits the FVCI to open a
Foreign Currency Account and/ or a Rupee Account with a designated
branch of an AD Category I bank.
The purchase / sale of shares, debentures and units can be at a price that is
mutually acceptable to the buyer and the seller.
AD Category I banks can offer forward cover to FVCIs to the extent of
total inward remittance. In case the FVCI has made any remittance by
liquidating some investments, original cost of the investments has to be
deducted from the eligible cover to arrive at the actual cover that can be
offered.

4.7. Foreign Direct Investment (FDI)
A foreign company planning to set up business operations in India may:
Incorporate a company under the Companies Act, 1956, as a Joint Venture
or a Wholly Owned Subsidiary.
Set up a Liaison Office / Representative Office or a Project Office or a
Branch Office of the foreign company which can undertake activities
permitted under the Foreign Exchange Management (Establishment in India
of Branch Office or Other Place of Business) Regulations, 2000.
An Indian company may receive Foreign Direct Investment under the two routes as
given under :
4.7.1. Automatic Route
FDI up to 100 per cent is allowed under the automatic route in all activities/sectors
except where the provisions of the consolidated FDI Policy, paragraph on 'Entry
Routes for Investment' issued by the Government of India from time to time, are
attracted.
FDI in sectors /activities to the extent permitted under the automatic route does not
require any prior approval either of the Government or the Reserve Bank of India.
4.7.2 Government Route
FDI in activities not covered under the automatic route requires prior approval of
the Government which are considered by the Foreign Investment Promotion Board
(FIPB), Department of Economic Affairs, Ministry of Finance. Application can be
made in Form FC-IL, which can be downloaded from http://www.dipp.gov.in.
Plain paper applications carrying all relevant details are also accepted. No fee is
payable.
Indian companies having foreign investment approval through FIPB route do not
require any further clearance from the Reserve Bank of India for receiving inward
remittance and for the issue of shares to the non-resident investors.
The Indian company having received FDI either under the Automatic route or the
Government route is required to report in the Advance Reporting Form, the
details of the receipt of the amount of consideration for issue of equity instrument
viz. shares / fully and mandatorily convertible debentures / fully and mandatorily
convertible preference shares through an AD Category I Bank, together with
copy/ ies of the FIRC evidencing the receipt of inward remittances along with the
Know Your Customer (KYC) report on the non-resident investors from the
overseas bank remitting the amount, to the Regional Office concerned of the
Reserve Bank of India within 30 days from the date of receipt of inward
remittances.
Further, the Indian company is required to issue the equity instrument within 180
days, from the date of receipt of inward remittance or debit to NRE/FCNR (B)
account in case of NRI/ PIO.
After issue of shares / fully and mandatorily convertible debentures / fully and
mandatorily convertible preference shares, the Indian company has to file the
required documents along with Form FC-GPR with the Regional Office concerned
of the Reserve Bank of India within 30 days of issue of shares to the non-resident
investors




Chapter 5 : Conclusion.
Investment banking is the process of raising capital for businesses through public
floating and private placement of securities. Investment banking is thus critical to
the existence of businesses intending to grow by employing external capital.
Investment banks therefore play crucial role in the IPOs and capital raising
process.
IPOs generally involve the issue of equity securities by business for the first time
and generally involve the use of investment banks in achieving this goal. In the
absence of any model to guide businesses in choosing the capable investment
banker (Manaster and Carter, 1990), it might fail in achieving this objective.
Capabilities of investment banks, which are critical to the IPO process, have been
found to lead to the development of competitive advantages for the investment
banks. These capabilities include, competitive pricing of services, knowledgebase
developed by the investment banker, provision of ancillary services, experience of
the investment banker in its area of business and the integrity of its stakeholders.











Chapter 6. Appendix




About:




Chapter 7. Bibliography.

1.Arditti, Fred Another look at mutual fund performance. Journal of financial
and quantitative analysis. VI, No3 (June 1991),PP. 909-12.
2.Elton, Edwin j., and Gruber, Martin J. optimal investment strategies with
investor liabilities, Journal of banking and finance. 10No. 2 (march..1991)pp 210-
230
3. Keim, Donald B., and stambangh, Robert F. Prediction returns in the stock and
bond market Journal of financial economics, 104, No.1(feb 1989)P.I
4. Brenman, M.J., and Schwartz, E. Conditional predictions of prices and returns
Journal of finance,35(1980)PP.405-417.
5. Niederhoffer. V ., and Regan, P. Earnings, changes, Analysts. Forecast, and
Stock Prices. Financial analyst journal, 28.no.3 (may-June 1972), PP 65-71
6. Cornell, Brad ford, and Green, Kevin. The investment performance of low-
grade bond funds. The journal of finance.49, No1 (Mar.1991), PP.29-48.





Chapter.8 Literature Review.

This book, as the title suggest is concerned with the characteristics and analysis of
individual securities: as well as with the theory and practice of optimal combining
securities into portfolio.

You will find answers to these questions and more in the new sixth edition of
modern portfolio theory and investment analysis. In this new Edition, Edwin Elton
and Marting Gruber, together with new co- authors Stephen Brown and will
Geozman , offer an accessible up to date presentation of advanced theories and
techniques of investment analysis and portfolio management.

Following a concise introduction to the basic concepts of securities and markets,
book guides you step through the nuts and bolts of modern portfolio theory,
including its strength and weakness, and recent breakthroughs. Along the way, you
will learn how to evaluate individual securities , combines securities into huge
performance portfolios , and apply modern tools, such as equilibrium theory to
manage portfolios more effectively.