Spring / February 2012 Master of Business Administration- MBA Semester 4 MF0017 Merchant Banking and Financial Services - 4 Credits

s (Book ID: B1318) Assignment Set- 1 (60 Marks) Note: Each Question carries 10 marks. Answer all the questions.

Q1. Discuss the role of a custodian of shares. Custodial services refer to the safeguarding of securities of a client. The activities relating to custodial services involve collecting the rights benefiting the client in respect to securities, maintaining the securities account of the client, informing the clients about the actions taken or to be taken, and maintaining records of the services. Custodian of services is a person who proposes or carries on the business of providing custodial services. The custodian provides the services to a client. To receive custodial services, the client enters into an agreement with the custodian of securities. The custodian of securities must be registered with the SEBI. The person proposing to carry on business as custodian of securities after the commencement of the SEBI regulations has to send an application to the Board to grant a certificate. The applicant has to provide the necessary information to the Board to receive the certificate of registration. The application without complete information is rejected. However, before rejecting any application, the Board gives an opportunity to the applicant to remove the objection within a specified time. Custodial services is a new method of services provided to Foreign Institutional Investors (FIIs) and Mutual Funds (MFs) to protect their assets such as security certificates and documents of ownership. Every custodian should have adequate facilities, sufficient capital and financial strength to manage the custodial services. Roles and responsibilities of custodians The SEBI regulations prescribe the roles and responsibilities of the custodians. According to the SEBI the roles and responsibilities of the custodians are to: Administrate and protect the assets of the clients. Open a separate custody account and deposit account in the name of each client. Record assets. Conduct registration of securities.

 Segregate securities and cash belonging of each client from others including custodian himself.

Dear Students, Just email to piyushxcd@gmail.com or S M S your email to +91 9999624869 message Format - <E-MAIL ID> Space <Name> To +91 9999624869 , we will reach back you with in 24H Take adequate insurance of risks. Maintain records manually or in machine readable form. State clearly the method and system of receiving instructions from the client regarding collection, receipt, reporting and delivery of securities. Conduct verification of securities and to follow the stated control mechanism. Mention specifically the fees charged in the agreement. Conduct audit annually. The custodian should have an adequate internal control system to prevent the manipulation of records and documents, which includes audit for securities and entitlements arising from securities, and held on behalf of the clients. To ensure that securities are protected from theft and natural hazards, the custodian must have appropriate safekeeping measures. On behalf of the client, the custodians have to maintain records and documents such as details of securities, money received and released registration of securities, and all reports submitted to the SEBI. To monitor the compliance to the SEBI Act, every custodian of securities appoints a compliance officer. The SEBI can ask for any information with respect to any matter relating to the activities of the custodian. The SEBI is authorised to conduct inspection or investigation of accounts, documents or records of the custodians to ensure that the provisions of the SEBI Act and

regulations are followed. In case of default, the SEBI can suspend or cancel registration of a custodian. Every registered custodian must follow the code of conduct prescribed by SEBI. The following are the code of conduct prescribed by SEBI: Integrity The custodian of securities must maintain high standards of integrity and professionalism while discharging duties.
Prompt distribution The custodian of securities must be prompt in distributing interests and divide

Dear Students, Just email to piyushxcd@gmail.com or S M S your email to +91 9999624869 message Format - <E-MAIL ID> Space <Name> To +91 9999624869 , we will reach back you with in 24H nds collected by him, on behalf of his clients on the securities held in custody. Infrastructure The custodian of securities must establish and maintain suitable infrastructure to discharge custodial services to the satisfaction of the clients. The operating procedures and systems of the custodian of securities need to be well documented. Accountability The custodian of securities is responsible for the movement of securities. The movement of securities can be from custody account, deposit and withdrawal of cash from the clients account. Whenever demanded by SEBI or the client, the custodian of securities must provide the complete audit trail. Confidentiality The custodian of securities has to maintain confidentiality regarding the client. Precautions The custodian of securities must take necessary precautions to ensure that continuity in custodial records is not lost or destroyed. To maintain sufficient backup records, the

custodial records are kept electronically. Records The custodian of securities must create and maintain records of securities held in custody appropriately. This must be done to locate securities or obtain duplicate documents easily if the original records are lost due to any reason. Cooperation The custodian of securities must cooperate with other custodial entities and depositories which are necessary for the conduct of business, especially in the areas of inter custodial settlements and transfer of securities and funds. Diligence The custodian of securities must exercise diligence in administrating and safekeeping the clients assets which are in his custody.

Dear Students, Just email to piyushxcd@gmail.com or S M S your email to +91 9999624869 message Format - <E-MAIL ID> Space <Name> To +91 9999624869 , we will reach back you with in 24H Q2. What are the provisions for prevention of fraudulent and unfair trade practices by SEBI regulations?

Q3. Explain the different life insurance products.

Q4. Describe the deposit products and loan products. Deposit products

Q5. Discuss about the two important credit rating agencies in India.

Q6. Describe issue management in merchant banking.

Spring / February 2012 Master of Business Administration- MBA Semester 4 MF0017 Merchant Banking and Financial Services - 4 Credits (Book ID: B1318) Assignment Set- 2 (60 Marks) Note: Each Question carries 10 marks. Answer all the questions. Q1. Give examples of various venture capital funds that are present and examples of some business ventures that have been successful with venture capital financing. Indian Venture Capital Scenario In India, the emergence of venture capital companies is a relatively new phenomenon. Until 1985, individual investors and Development Finance Institutions (DFIs) have played the role of venture capitalists in the absence of an organised venture capital industry. During that time entrepreneurs have largely depended on private placements, public offerings and lending by financial institutions. The venture capital phenomenon has arrived at a take-off stage in India with the easy availability of risk capital in all forms. In the earlier stage, it was easy to raise only growth capital but financing of ideas or seed capital is now available after the introduction of venture capital phenomenon. The number of players offering growth capital and the number of investors is rising rapidly. In India, the concept of venture capital was initiated by the Industrial Finance Corporation of India (IFCI) when it established the Risk Capital Foundation (RCF) to provide seed capital to small and risky projects. However, the concept of venture capital financing first time got statutory recognition in the fiscal budget for the year 1986 to 1987.

The venture capital companies operating at present in India can be divided into four categories based on their mode of promotion. Let us read about each mode.

Dear Students, Just email to piyushxcd@gmail.com or S M S your email to +91 9999624869 message Format - <E-MAIL ID> Space <Name> To +91 9999624869 , we will reach back you with in 24H Promoted by All-India Development Financial Institution (IDFI) The ICICI provided the required impetus to venture capital activities in India. In 1986 it started providing venture capital finance. In 1998, it promoted with the Unit Trust of India (UTI) and Technology Development and Information Company of India (TDICI) as the first venture capital company registered under the Companies Act, 1956. The risk capital foundation established by the IFCI in 1975 was converted to Risk Capital and Technology Finance Company (RCTC). The RCTC was established as a subsidiary company of IFCI to provide assistance in form of conventional loans and to give financial support to high technology projects. Promoted by state level finance institution In India, the state level financial institutions in some states like Gujarat, Uttar Pradesh have done an excellent job by providing venture capital finance to small scale enterprises. Promoted by commercial banks Venture capital funds have been established by their corresponding commercial banks to undertake venture capital financing activity. Examples of these funds are Canbank venture capital fund, State

bank venture capital fund, and Grindlays bank. Private venture capital funds In India, several venture capital funds have been established to provide funding to various small scale enterprises. Examples of these funds established in India are 20th Century Venture Capital Corporation and Indus venture capital fund.

Dear Students, Just email to piyushxcd@gmail.com or S M S your email to +91 9999624869 message Format - <E-MAIL ID> Space <Name> To +91 9999624869 , we will reach back you with in 24H Q2. Mutual fund schemes can be identified by investment objective, List one scheme within each category. Q3. What are the advantages of leasing to a company ? Advantages of leasing Q4. What is the provision of green shoe option and how is it used by companies to stabilize prices?

Q5. What do you understand by insider trading? What are the SEBI rules and regulations to prevent insider trading?

Q6. A company wishes to take machinery on lease. Study the lease options available to the company.

Dear Students, Just email to piyushxcd@gmail.com or S M S your email to +91 9999624869 message Format - <E-MAIL ID> Space <Name> To +91 9999624869 , we will reach back you with in 24H