May-July 2013 NISM Update

Volume 4 / Issue 23
May-July 2013
at Patalganga
Commencement of construction of
New

I take great pride to announce that the construction of NISM’s
new campus has kick-started and the event itself was
formally inaugurated by Hon’ble Prime Minister Dr.
Manmohan Singh. The campus is expected to become
operational from the year 2015 and provide a major boost to
theactivitiesofNISM.
NISM has decidedly expanding its operations across the
countrytoservealargeraudience.Inthisdirection,itrecently
opened an Office cum Test Centre at Chennai to meet the
needs of southern region. The test centre would conduct
mandatory certification examinations, non-mandatory
certification examinations and CPE programmes. NISM also
intends to provide niche short duration and part-time courses
that are currently not available for the professionals working
in the southern region. Additionally, NISM recently entered
into an MOU with Asia-Pacific Institute of Management
(AIM), New Delhi to offer one of NISM’s flagship
programmes, Certificate in Financial Engineering and Risk
Management(CFERM)attheAIM`sNewDelhicampus.
As part of its commitment to assist SEBI in augmenting its
quality of human resource, NISM conducted two Induction
programmes for the employees of SEBI. A total of 67 officers
from SEBI attended the program conducted in two batches.
The program covered technical inputs on securities markets
as well as behavioural sessions to enhance the soft skills of
the participants. NISM also entered into a strategic alliance
with SBI Mutual Fund for conducting mutual fund
distributors' (MFD) certification examinations. Under
the strategic alliance, SBI Mutual Fund has enabled
select Learning Centres of State Bank of India
(SBLCs), including four SBLCs of associate banks,
to conduct the MFD certification examination for
the benefit of State Bank Group (SBG)
employees,includingretiredemployees.
Foreword
Shri Sandip Ghose
Director, NISM
|01| NISM Update May-July 2013

Hon’ble Prime Minister of India Dr. Manmohan Singh unveiled the Commemorative Plaque symbolizing the
commencementofconstructionofnewNISMcampusatPatalgangaonFriday,May24,2013.
The Prime minister was attending the silver jubilee function of SEBI held in Mumbai. The event was graced with
the presence of Hon’ble Minister of Communications and Information Technology and Law and Justice Shri Kapil
Sibal, Hon’ble Finance Minister Shri P. Chidambaram, Hon`ble Chief Minister of Maharashtra Shri Prithviraj
Chavan&SEBIChairmanShriU.K.Sinhaamongotherdignitaries.
Dr. Singh said “I am happy that SEBI has over the years nurtured and supported under its auspices the National
Institute of Securities Markets (NISM) to promote securities market education and research. It is also heartening
to note that the Government of Maharashtra has allotted 70 acre of land for the new campus of NISM at
Pathalganga, Navi Mumbai. The NISM will have, a state-of the art residential campus catering to 1,000 students
at a time. The Institute is expected to play a pivotal role in implementing the National Strategy for Financial
Education(NSFE)”.
The new state-of-the-art campus of NISM will be situated on the Mumbai-Pune Expressway at Patalganga. The
newcampus,oncefunctional,willgiveamajorboosttotheactivitiesofNISM.
The event also saw the unveiling of the SEBI Coffee Table Book “Banyan tree to e-trading” to mark the silver
jubileeanniversaryoftheregulatorybody.
Commencement of construction of new NISM campus at Patalganga
NISM Update May-July 2013 |02|

Activities at NISM
SCHOOL FOR SECURITIES EDUCATION (SSE)
PGPSM & PGCSM programmes were launched with 37 and 21 students respectively. Mr Ranadeep Mookerjee,
Head-Markets Group of ICICI, was present at the inaugural on June 25, 2013. All inductees from NISM`s first
two batches have performed very well on the job at ICICI Treasury. For the Orientation programme, we had a
galaxy of speakers from industry, viz. Sundar Sankaran (formerly Kotak), Mr Sudipto Roy (Principal), Mr. Dhruva
Chatterjee (Morningstar), Mr. B. Renganathan (Edelweiss) and Mr Sameer Chinchanikar (KBC Bank Belgium,
Chief India Representative). Term I of PGPSM and PGCSM commenced on July 1, 2013. A number of teaching
innovationshavebeeninitiatedandcompleted:
01. WorkshoponIntroductiontoSecuritiesMarkets
02. WorkshoponBusinessCommunicationwithafinanceorientation
03. WorkshoponAnalysisofAnnualReports
04. MentoringandCareer-counseling
05. BookReviews:HowMarketsFail(JohnCassidy)andCurrencyWars(JamesRickards)
06. FilmReviews:TooBigtoFail(AndrewRossSorkin)andAscentofMoney(NiallFerguson)
07. News Analysis (with student groups representing Business Line, Business Standard, Economic Times,
FinancialExpressandMint)
08. CountryStudies,coveringMyanmarandSaudiArabia
09. Contemporary and live topics such as RBI's credit and monetary policies are being discussed in the Macro-
economicsclass
10. Users' training by CMIE on Prowess Software with incorporation into the Financial Accounting & Reporting
course
11. Studentsarebeingprovidedwithexperts/professionalanalysts'reportsonfinancialmarkets
12. One session on Business Engagement has been organized by ICICI (Mr Tadit Kundu, ICICI Treasury Group, on
EconomicOutlook)
NISM achieved another milestone by entering into an MOU with Asia-Pacific Institute of Management (AIM) to
offer the CFERM programme at AIM`s New Delhi campus. At NISM Bhavan, Navi Mumbai, classes for CFERM
commenced (Formats A and B). The Basic Module in Format B has been completed to the satisfaction of
students.
Efforts have kick-started to launch a formal alumni association for all the programmes of NISM. Over 140
students have completed the PGPSM, PGCSM, CFERM and CSL programmes and are playing a vital role in
raisingthesecuritiesmarkets.
ResearchPapers:
Mr. Akhlaque Ahmad’s paper ‘Affecting the Smile and Implied Volatility in the Context of Option Pricing Models’,
presentedinFebruary2013,isnowpublishedintheRoyalFlemishAcademy’sJournal forScienceandArts.
Dr. Rachappa’s paper ‘Rounding Up in Reported Income Numbers: Evidence from Indian Companies’, with
Sudershan Kuntluru, submitted with minor revisions to the publication Review of Accounting and Finance on
17.6.2013.
SCHOOL FOR SECURITIES INFORMATION & RESEARCH (SSIR)

Other Institution-Building Activities By SSE and SSIR
SCHOOL FOR REGULATORY STUDIES AND SUPERVISION (SRSS)
MOU signed between The Institute of Company Secretaries of India (ICSI) and
NationalInstituteofSecuritiesMarkets(NISM)
AMemorandumofUnderstandinghasbeensignedbetweenNationalInstituteOfSecuritiesMarkets(NISM)and
The Institute of Company Secretaries of India (ICSI) on June 16th 2013 at ICSI Centre for Corporate Governance
ResearchandTraining,NaviMumbai.
3.6.13 and
4.6.2013
Conducted a 2-day training programme on Investment Advice - A Holistic
Approach for Principal Retirement Solutions Pvt. Ltd. Prof Sunder Ram
Korivi and Ms. Kavitha R. designed, delivered and anchored the
programme.ThiswasbasedonaPGPSMsubject,BehaviouralFinance.
Designed course at the ICSI 2-day Workshop on Securities Law
Documentation at CCGRT Belapur. This was based on a CSL subject. A
copyofthecoursematerialisondisplayintheNISMlibrary.
Designed course at the ICSI 2-day Workshop on Compliance of Listing
Agreement at CCGRT Belapur. This was based on a CSL subject. A copy of
thecoursematerialisondisplayintheNISMlibrary.
MOU with ICSI which was signed on 16.6.2013
8.6.2013 and
9.6.2013
29.6.2013 and
30.6.2013
16.6.2013
Dr. Poonam Singh's paper, ‘Convergence in Emerging Markets: The Case of Abuse of Dominant Position in
Competition Policy’, accepted for publication in Journal of Interdisciplinary Economics. A paper ‘Can business
groups survive with institutional development? Theory and Evidence’, with Narahari Hansoge and Vijay
Marisetty,acceptedforpresentationinIndiaFinanceConference.
Kavitha Ranganathan’s paper ‘Global Shapes of Preference Scaling Functions’, accepted for publication in the
JournalofInterdisciplinaryEconomics.
Kiran Kumar’s paper 'Economic Shocks, Fund Flows and Market Returns’, with Viral Acharya (presenter), NYU
Stern School of Business; Ravi Anshuman, IIM-B; presented at the NYU-NSE Indian Capital Market Conference
on29.7.2013,atMumbai.

The objective of the MOU is to achieve a common goal in promoting Corporate Governance & Public Policy,
Financial Reporting & Disclosures, Inclusive Growth & Sustainable development, Business Environment,
CapacityBuilding,CorporateSocialResponsibility,Quality&AssuranceServices.
The Institutes would jointly organize seminars, conferences, workshops, certificate programs for corporate and
securities market professionals and executives, as well as students' exchange programmes. They would also
jointly endeavour to develop appreciation by the companies for corporate governance in securities market and
buildcapacityofthemembersofICSIforimplementationofcorporategovernanceinletterandspirit.
Both Institutes will undertake joint research projects, surveys and publish monographs, papers, reports, studies,
cases etc. on corporate governance, corporate finance, financial markets, corporate social responsibility,
sustainability & sustainability reporting and other areas as identified and would also jointly design and conduct
certification modules, conduct development programmes for Director's/top management in areas of Corporate
Governance, Corporate Laws, Accounting, Finance, Management etc. The Institutes would also collaborate in
Education,TrainingandResearchand wouldexchangeJournalsandotherpublications.
NISM has organised two induction training programs for the newly joined officers of Grade A and Grade B in
Securities & Exchange Board of India. The two weeks programmes were held in Navi Mumbai during the period
May 06-17, 2013 and June 03-14, 2013. A total of 67 officers from SEBI attended the program conducted in two
batches. The program covered technical inputs on securities markets as well as behavioural sessions to
enhance the soft skills of the participants. The technical inputs include Primary market and secondary market
operations, Equity Market and Pricing of instruments, Trading & Settlement Processes, Custodians and RTAs,
Role of Depositories, Portfolio Management Services, Legal and Regulatory Framework, Regulation and
Supervision of Market Intermediaries, Mutual Funds, Venture Capital and Private Equity Investments, FIIs and
Regulatory Framework, Risk Management, Investigations and Market Manipulations, History of Scams,
MergersandTakeovers,NationalStrategyforFinancialEducationetc.
SEBIInductionTrainingPrograms
Seen in the photograph : CS S. N. Ananthasubramanian (President, Council of the ICSI), Shri Gopal Chalam, Dean ICSI-CCGRT, Shri Sandip Ghose, Director
NISM (Signing the MOU on the behalf of The ICSI and NISM respectively), CS M.S. Sahoo (Secretary, ICSI), CS Keyoor Bakshi (Past President ICSI), CS
Sudhir Babu (Council Member,The ICSI),CS Umesh Ved (Council Member, The ICSI & Chairman ICSI-CCGRT Managing Committee), CS Vikas Y. Khare
(CouncilMember,TheICSI),CSN.L.Bhatia(FormerChairmanWIRC)and CSB.V.Dholakia(PCS).

SCHOOL FOR CERTIFICATION OF INTERMEDIARIES (SCI)
NISM’sstrategicalliancewithSBIMutualFund
On May 18, 2013 SBI Mutual Fund announced its strategic alliance with National Institute of Securities Markets
(NISM)forconductingmutualfunddistributors’(MFD)certificationexaminations.
As per SEBI Notification on NISM Series-V-A: Mutual Fund Distributors dated May 31, 2010, NISM Mutual Fund
Distributors Certification is mandatory for the following category of associated persons, i.e., distributors, agents
or any persons employed or engaged or to be employed or engaged in the sale and/or distribution of mutual fund
products. Under the strategic alliance, SBI Mutual Fund has enabled select Learning Centres of State Bank of
India (SBLCs), including four SBLCs of associate banks, to conduct the MFD certification examination for the
benefitofStateBankGroup(SBG)employees,includingretiredemployees.
On the occasion of this strategic alliance, SBI Funds Management Managing Director & CEO, Deepak Chatterjee
said, “Through this initiative, we aim to achieve the objective of increased acceptance of mutual fund schemes
amongstbank’scustomers”.
Considering the fact that SBI and Associate banks are the largest distributors of SBI Mutual Fund schemes, this
alliancewillhelpNISMtowidenitsreachtermsofcreatingcapabilitiesfordistributionofmutualfundproductsin
different geographies across the country. It will enhance the quality of sales, distribution and related support
servicesinthemutualfundindustry.
This alliance will also give impetus to the Securities and Exchange Board of India (SEBI) objective to encourage
the mutual fund industry to increase its reach beyond the large cities. As per the alliance till date NISM has
successfully conducted Mutual fund distributors' (MFD) certification examination at SBI Learning Centers
locatedinthecitiesmentionedbelow:
Participants of the Induction Training Program for Batch-II conducted during June 03-14, 2013
Sr. No LocationDate of Exam No. of Candidates Enrolled
01
02
03
04
05
06
07
March 09,2013 Ahmedabad
Panchkula
Indore
Ranchi
Kochi
Patna
Lucknow
64
57
61
50
66
54
50
May 18,2013
June 01,2013
June 08,2013
June 22,2013
July 06,2013
July 13,2013
08
09
10
Patiala
Panchkula
Guwahati
55
53
51
July 13,2013
July 20,2013
July 27,2013

Consolidated Status Report (Period: As on July 28, 2013)
NISM Certification Examination
Sr
No.
NISM EXAMINATION
Total
Candidates
Passed
Pass
Percentage
Total
Candidates
Enrolled
Total
Candidates
Appeared
Mutual Fund Distributors
(Launched on 01/06/2010)
RTA - Mutual Fund
Currency Derivatives
Currency Derivatives - Gujarati
Securities Intermediaries Compliance
(Non-Fund)
Interest Rate Derivatives
Mutual Fund Distributors - Gujarati
Mutual Fund Distributors - Hindi
Currency Derivatives - Hindi
RTA - Corporate
Mutual Fund Foundation
Depositories Operations
Securities Operations and Risk
Management
Equity Derivatives
Merchant Banking
Equity Sales Certification Examination
Securities Markets Foundation
Mutual Fund Distributors (Level 2)
Total
01
02
03
04
05
06
07
08
09
10
11
13
14
15
16
18
19
12
Investment Adviser (Level 1)
Certification Examination
17
145522
6041
57329
17
74
2298
172
692
747
1098
213
32820
17781
14315
40
32
76
279432
124
41
27
29
134004
5632
52856
16
71
2089
141
492
633
918
155
29087
16627
13418
61
256378
95
27
23
57093
3364
4
11
1480
113
90
109
143
137
15276
12687
22175
12
7262
22
120073
49
23
42%
25%
15%
71%
60%
80%
18%
43%
17%
16%
88%
53%
76%
20%
54%
81%
79%
52%
85%

NISM Continuing Professional Education
Sr
No.
NISM Continuing Professional Education
NISM Mutual Fund Distributors CPE (1 Day Programme)
(Launched on 01/06/2010 and upto 31/05/2012)
NISM Mutual Fund Distributors CPE (Day 1)
NISM Mutual Fund Distributors CPE (Day 2)
NISM RTA Corporate CPE (Day 1)
NISM RTA Corporate CPE (Day 2)
NISM Currency Derivatives CPE (Day 1)
NISM Currency Derivatives CPE (Day 2)
NISM RTA Mutual Fund CPE (Day 1)
NISM RTA Mutual Fund CPE (Day 2)
NISM Depository Operations Certification Examination CPE (Day 1)
NISM Depository Operations Certification Examination CPE (Day 2)
NISM Mutual Fund Foundation CPE (Day 1)
Total Candidates
Appeared through
NISM & CPE Providers
16039
14276
14268
4592
162
2623
2617
162
21
230
230
964
01
02
03
04
05
06
07
08
09
10
11
12
OTHER DEVELOPMENTS
InaugurationofNISM’snewofficecumTestCentreatOverseasTowers,Chennai
In a move to expand its operations across the country and cater to stakeholders in southern region, it has opened
anOfficeandTestCenteratChennai.
The Chennai Office cum Test Center situated at Overseas Towers, 756-L, 9th Floor, Mount Road, Anna Salai,
Chennai – 600 002, was inaugurated by Shri. Sandip Ghose, Director, NISM in the presence of representatives of
Capital Market Intermediaries, SEBI officials and dignitaries from Banking and Financial Services Industry. Shri.
G.P.Garg,Registrar,NISMwasalsopresentattheoccasion.

While addressing the gathering at inauguration of NISM Chennai Office and Test Center, Mr.Ghose mentioned
the importance of financial education across country and was of the strong view that this center would meet the
needs of southern region. At Chennai Office and Test Center, NISM has plans to conduct mandatory certification
examinations for functioning in the areas of Currency Derivatives, Basic & Advanced module for Mutual Fund
Distributors / Employees, Equity Derivatives & Interest Rate Derivative Segment, Securities Operations and Risk
Management, Depository Operations and many alike. Non-mandatory certification examination include module
on Certified Personnel Financial Advisor Examination. It will also conduct Continuing Professional Education
Programmes (CPE) besides certification examinations mandated by SEBI. This will provide skill enhancement to
existing professionals working in the Securities Markets and also provide an opportunity to the students seeking
a career in the Financial Services Industry in general and Securities Markets in particular. He further added that
the NISM, would also like to provide niche short duration and part-time courses that are currently not available
fortheprofessionalsworkinginthesouthernregion.
Articles
Prof. Sunder Ram Korivi, Dean - SSE and SSIR, NISM
NISM's vision is “to be a hub of knowledge initiatives for playing a strategic role in quality enhancement and
capacity building, for transforming the securities markets in India and the Asia-Pacific Region.” In line with the
vision statement, classroom discussions include analyses of countries that can be categorized as Frontier
Markets. Myanmar provides exciting investment opportunities for Indian companies in oil & gas as well as
banking.Itisapartofafour-countrygroupingcalledCambodia-Laos-Myanmar-Vietnam(CLMV).Inthisabridged
study, classroom discussions are presented in a tabular form. India's hundred-plus years of experience and
expertiseincapitalmarketsmaybeappropriateforcatalyzinganddevelopingcapitalmarketsinCLMVgroup.
Country Study: Myanmar

POLITICAL
▪ Centuries-old ties with
India, both cultural and
commercial
▪ Erstwhile British
colony
▪ Was under military
rule since almost 4
decades
▪ Was close to China
during military rule
▪ Recent transition into
Democracy. Formal
handover of power is
pending
▪ Wants to reduce
Chinese influence
ECONOMIC SOCIAL TECHNOLOGICAL
▪ Rich in minerals and
gemstones.
▪ Recent discoveries in
Oil and Gas
▪ Was the world's
largest rice exporter
▪ Is one of the world's
largest exporter of
pulses
▪ Member of ASEAN
and BIMSTEC (Bay of
Bengal Initiative for
Multi-Sectoral
Technical and
Economic Cooperation)
▪ USA, Australia and
Japan have granted aid
▪ Historically, a
pluralistic society
▪ Myanmar is
comprised of different
ethnic groups: Kachin,
Karen, Chin and Mon
▪ Recent tensions
surfacing between the
Buddhist majority and
the Muslim minority
▪ Also, tensions
between the receding
military-men and the
new democratic party
▪ Poverty is wide-
spread
Industrialization and
development effort may
further enrich the
entrenched military-
men-turned-
businessmen
▪
▪
▪
Technologically
backward
Telecom may lead
transformation
Oil and gas,
Transportation and
Logistics (including
pipe-lines) may lead
economic
transformation
‘PEST’ Aanlysis
PEST = Political, Economic, Social and Technological Factors]
STRENGTHS
Resource rich in
agriculture, teak-wood,
minerals, oil & natural
gas, abundant and
economical labour
supply, opening up to
the world, ending four
decades of economic
and political isolation.
Political and economic
reforms initiated.
WEAKNESSES OPPORTUNITIES THREATS
The political peace is
viewed by some as
fragile. Transition to
democracy will be
completed in 2014.
Ethnic tensions
simmer.
Four decades of political
and economic isolation
unleash a whole world
of opportunity.
Development of ports
and infrastructure and
also the financial sector
present opportunities
SWOT Analysis
[SWOT = Strengths, Weaknesses, Opportunities & Threats]
Myanmar has
attempted to wean
itself away from
Chinese influence and
broad-base its
engagement with the
rest of the world.

PRIMARY
▪
▪
▪
▪
Agriculture, aided by highly
fertile soil-one of the world's
biggest exporters of rice
Also exporter of pulses
Largest exporter of timber
(the world-famous Burma-teak).
This may reduce to fears of
depletion of forest cover.
Rich deposits of minerals,
including gemstones
Recently discovered huge
amounts of oil and natural gas,
attracting large Chinese and
Indian petrochemical giants
Sectors
SECONDARY TERTIARY
▪ Wood-based and paper
industries have good scope
Textiles and garments
manufactured by low-cost
labour
▪
▪
▪
▪
▪
▪
▪
▪
Export-oriented economy will
need travel, transportation and
hotels for business travelers.
Attraction for tourists since it
is a famed centre for Buddhist
learning
Two new ports are likely to be
expanded (Sittwe and Dawei)
Print media has been
liberalized after decades of
censorship
Due to the early stage of its
developments, large swathes of
population are likely to be un-
banked or under-banked
Commercial enterprises may
need banks for trade finance
and international trade
Myanmar has announced a
unified exchange rate for its
currency 'kyat' and plans to set
up a stock exchange, with
feasibility study by Japanese
Recently called for tenders for
offering telecom services.
Business tourists are likely to
also create demand for hotels
As regards capital market development, the Japanese are in the process of drafting a stock-market law. This will
need to be accompanied by a corporate law incorporating the issue and transferability of shares, a securities
market regulator, establishment of stock exchanges, clearing houses, depositories and settlement processes
and a payment system. On the soft side, this also calls for educational and training initiatives at the basic,
vocational and professional levels. Concurrent with this, the capital markets could catalyze investment in
governmentbondtradingandalsoentrepreneurshiptrainingforbuddingbusinesses.
SourceofInformation:
The Economist, dated: 31.3.2012, 21.4.2012, 28.4.2012, 2.6.2012, 7.7.2012, 16.6.2012, 25.8.2012, 30.3.2013,
27.4.2013
Financial inclusion has been the topic of discussion since the last one decade in India among the policy makers,
planners, practitioners and civil society and all round efforts have been taken to achieve financial inclusion so as
FinancialEducationforInclusiveFinance-NeedforCo-OrdinatedApproach
K.Sukumaran,Dean-SRSSandSIEFL,NISM

tocontribute effectively tothe socioeconomicdevelopment. Toachieve financialinclusion,the need forfinancial
educationisemphasisedatalllevels.
Financial inclusion or inclusive finance is the delivery of financial services at affordable costs to the vast sections
of society. Provision of financial services like savings, credit, insurance, pension services etc. from formal
financial institutions helps people to manage their personal finance prudently and achieve financial wellbeing.
Financialexclusionisasituationwherethoseservicesarenotavailableoraffordable.
Two important literature that give insights into the incidence of financial inclusion are the Global Financial
Inclusion Index Database (Global Findex), a study sponsored jointly by World Bank and Bill & Melinda Gates
Foundationandtheothernationalstudy-InclusixbyCrisil.
The Global Findex database provides such indicators, measuring how people in 148 economies around the world
save, borrow, make payments, and manage risk. According to the Global Findex data, 47 percent of women and
55 percent of men worldwide have an account at a formal financial institution-a bank, credit union, cooperative,
post office, or microfinance institution. In India 35 percent of adults have a formal account and 8 percent a formal
loan,accordingtodatafromtheGlobalFinancialInclusion(GlobalFindex)database.
CRISIL, India's leading credit rating and research company launched an index on 25th June 2013 to measure the
status of financial inclusion in India. CRISIL Inclusix is a one-of-its-kind tool to measure the extent of inclusion in
India. CRISIL Inclusix is a relative index on a scale of 0 to 100, and combines three critical parameters of basic
banking services branch penetration, deposit penetration and credit penetration into one metric. The study
reveals that all India financial inclusion score is 40.1 in 2011, improved from 35.4 in 2009. Regarding the
coverage of districts, 618 out of 632 districts reported an improvement in their scores during 2009-11. The top
three states/union territories in coverage of inclusion are Puducherry, Chandigarh and Kerala. The top three
districtsarePathanamthitta(Kerala),Karaikal(Puducherry)andThiruvananthapuram(Kerala).
Financial education is the process by which investors improve their understanding of financial markets,
products, concepts and risks. Through information and objective advice, they develop the skills and confidence
to become more aware of financial risks and opportunities and make informed choices to improve their financial
position.
Financial education fosters financial stability for individuals, families, and entire communities. The more people
know about credit and banking services, the more likely they are to increase savings, buy homes, and improve
their financial health and well-being. Financial literacy involves imparting knowledge about the risk and return of
financial products to the users and providers of these products. It is this knowledge that helps in containing risks
andmaintainingstabilityinthefinancialsystem.
Financial literacy is an essential pre-requisite for ensuring consumer protection. The low levels of transparency
and the consequent inability of consumers in identifying and understanding the fine-print from a large volume of
information leads to an information asymmetry between the financial intermediary and the consumer. In this
context, financial education can greatly help the consumers to narrow this information divide. Besides,
knowledge about the existence of an effective grievance redress mechanism is essential for gaining the
confidenceoftheunbankedpopulation.
The life span of an individual has increased over years and the lack of social security measures makes an
individual to think of retirement planning. The proliferation of numerous products and complexity of these
productsalsomakeaconsumerquiteconfusedaboutitsusefulness.Overtheyearstheincomeandsavingslevel
have increased, wherein the consumer requires right understanding to channelize the savings to the right
–

TrendsinthePerformanceoftheCorporateSector
Dr.RachappaShette,AssistantProfessor,NISM
Quarterly Corporate Results are one of the indicators of economic activity in the country. A study on Quarterly
Earnings of 100 companies (Nifty 50 companies and Nifty Junior 50 companies) is carried out with a view to
obtain broad trends in the performance of companies and various sectors for Quarter January-March 2013 as
comparedtoJanuary-March2012.AsonJune15,2013,allthe100companiesreportedearnings.
Across all 100 companies, PAT (Profit after Tax) has grown 9.06% over the corresponding Quarter in the previous
year. This is achieved with the help of 6.47% growth in Sales, 3.76% growth in Operating Profit and 16.53%
growth in Other Income. These 100 companies are classified into 13 sectors. Out of 13 sectors, 6 sectors have
reportedanincreaseinPAT,significantly,Energy(55%),Media(37%)andPSE(34%).7sectorshavereportedina
declineinPAT,significantly,Pharma(-51%),Realty(-44%),Metal(-22%)andPSUBanks(-20%).
Nifty P/E ratio decreased to 17.57 from 18.71 a year back (Table C). This could imply that Nifty companies have
become more attractive. As against the Nifty P/E of 17.57, the P/E of Media was the highest (38.65) and the P/E
ofPSUBankswasthelowest(6.72).
financial products balancing with risks and rewards. Today's generation relies on borrowings to accumulate the
consumer durables resulting in increased borrowings in the economy. Financial education on borrowings
empowers the individual to reduce the incidence of interest/cost of capital. Understanding about time value of
money and the need for an inflation adjusted return requires financial education to be imparted. The shift from
joint families to nuclear families requires more expenditure to settle for a household for which financial planning
helpsalot.
Understanding the significance of financial education, all the regulators, practitioners and civil society are
engaged in spreading financial education. SEBI through its Financial Education Resource Persons programme
reaches to the wide sections of society. The SEBI Financial Education is open to six target segments viz. School
Students,CollegeStudents,MiddleIncomeGroup,HomeMakers,ExecutivesandRetiredPeople.Duringthelast
three years of implementation, SEBI has reached more than five lakhs people on financial education through
11,000 workshops held in various districts. SEBI is engaged in empanelling Financial Education Resource
Persons in every district of the country so that these resource persons can act as ambassadors in spreading
financial education to benefit the public. Reserve Bank of India through its campaign “Project Financial Literacy”
disseminate information regarding the central and general banking concepts to various target groups including
school and college going children, women, rural and urban poor, defence and senior citizens. Insurance
Regulatory Development Authority (IRDA), and Pension Fund Regulatory Development Authority (PFRDA) are
engaged in popularising insurance education and pension literacy respectively. Besides, various commercial
banks are engaged in organising financial literacy campaigns through Financial Literacy Counselling Centres
(FLCCs).
Recognising the need for a co-ordinated approach in spreading financial education, Govt of India through the
Financial Sector Legislative Reforms Commission (FLRC) has suggested framing out a national strategy for
financial education and National Institute of Securities Markets (NISM) is coordinating with various agencies to
puttinginplaceanationalinitiativeinfinancialeducation.

UtilizationperiodforGovernmentDebtLimits
FII/QFIinvestmentsinSecurityReceipts
RevisedPositionLimitsforExchangetradedCurrencyDerivatives
EnhancementinForeignInvestmentlimitsingovernmentdebt
(CIR/IMD/FIIC/11/2013dated31-07-2013)
In partial modification to para 2 of CIR/IMD/FIIC/22/2012 dated November 07, 2012, it is proposed that FIIs/QFIs
may be permitted to utilize the debt limits allocated to them in each monthly auction till the 17th day of the
succeeding month. Any unutilized limit as on the 18th of each month would get auctioned on the 20th of each
month.
The consolidated FDI policy circular issued by the Department of Industrial Policy and Promotion, Ministry of
Commerce and Industry, effective from April 05, 2013, states that FII investments in Security Receipts issued by
AssetReconstructionCompaniesshouldbewithintheFIIlimitoncorporatebondsprescribedfromtimetotime.
Accordingly, the investments in Security receipts issued by Asset Reconstruction Companies by FII`s shall be
reckoned against the extant Corporate Debt Limits. The investment of FIIs in Security Receipts shall be subject to
termsandconditionsasspecifiesbytheReservebankofIndiafromtimetotime.
(CIR/MRD/DP/22/2013dated08-07-2013)
In consultation with RBI and in view of the recent turbulent phase of extreme volatility in USD-INR exchange rate,
it has been decided to curtail position limits and increase margin requirements for Currency Derivatives as
follows:
▪ Margins: Initial and extreme loss margins shall be increased by 100% of the present rates for USD-INR
contractsinCurrencyDerivatives.
▪ Clientlevelpositionlimits:thegrossopenpositionofaclientacrossallcontractsshallnotexceed6%ofthetotal
openinterestor10millionUSD,whicheverislower.
▪ Non-bank trading Member position limits: The gross open position of a Trading Member, who is not a bank,
acrossallcontractsshallnotexceed15%ofthetotalopeninterestor50millionUSDwhicheverislower.
The Government of India has enhanced the government Debt Limits by USD 5 Billion (equivalent to
approximatelyINR29,137croreconvertedattheRBIreferencerateof1USD=INR58.274asonJune12,2013)
It has been decided that the aforesaid enhanced limit of USD 5 Billion shall be available for investments only to
those FIIs which are registered with SEBI under the categories of Sovereign Wealth Funds (SWFs), Multilateral
Agencies,EndowmentFunds,InsuranceFunds,PensionFundsandForeignCentralBanks.
To begin with, the amount of USD 5 Billion together with the unutilized limit of INR 29,812 crore (equivalent to
approximately USD 6.2 Billion) as on May 31, 2013 (due for auction on June 20, 2013) will be made immediately
availableforinvestmentontapbytheseinvestorsmentionedinPara2above.
INITIATED BY SEBI
Regulatory Changes

INITIATED BY RBI
UnsolicitedCommercialCommunication-NationalDoNotCallRegistry
Risk Weights on deposits placed with NABARD/SIDBI/NHB in lieu of shortfall in
achievementofprioritysectorlendingtargets/sub-targets
(RBI/2013-14/163 DNBS(PD)CCNo.353/03.10.042/2013-14)
NBFCs were earlier advised to employ only those DMAs/DSAs/call centers who are registered as telemarketers
with DoT, Govt. of India, as per Telecom Regulatory Authority of India (TRAI) Regulations, 2007 for the purpose of
soliciting or promoting any commercial transaction. However, many financial institutions as also their
franchisees are engaging telemarketers who are not registered with TRAI, for marketing their services and these
unregistered telemarketers use their normal telephone connections for making commercial calls to customers
registeredintheNationalCustomerPreferenceRegister.Thisisresultinginalotofcustomergrievance.
It is, therefore, reiterated that NBFCs should engage only those telemarketers who are registered in terms of the
guidelines issued by TRAI, from time to time, for all their promotional/ telemarketing activities. These guidelines
shouldbestrictlycompliedwith.
(RBI/2012-13/536 DBOD.BP.BC.No.103/21.06.001/2012-13)
The amount not utilized as on June 18, 2013 (out of the presently unutilized limit of INR 29,812 crore) will be put
onauctiononJune20,2013.Similarexerciseshallcontinueeverymonth.
With regard to those FIIs which have exhausted their reinvestment limits, as a one time measure, as special
window of upto USD 250 million per FII shall be available till the date of the next auction i.e. June 20, 2013
subject to the aggregate investments in Government debt by all FIIs / QFIs being limited to USD 25 Billion (i.e. the
limit other than the limit of USD 5 Billion earmarked for investors in para 2 above) Such investments made by FIIs
using special window shall be subject to a lock-in of 90 days. Moreover, these investments will not be eligible for
re0investmentfacility.
(CIR/CFD/DIL/9/2013dated05-06-2013)
SEBI has mandated listed companies to submit either Form A (Unqualified / Matter of Emphasis Report) or Form
B (Qualifies / Subject To / Except For Audit Report) along with the Annual Report to the Stock Exchanges. It is also
envisaged that the qualifies audit reports will be scrutinized by Qualifies Audit Review Committee (QARC) and if
necessary the company will be required to restate its books of accounts to provide true and fair view of its
financialpositions.
SEBI is in receipt of various queries with regard to restatement of books of accounts of listed companies
envisaged in the captioned circular. The primary concern raised is whether the restatement of books of accounts
needstobecarriedoutinthesamefinancialyearorinthesubsequentfinancialyearasapriorperioditem.
In order to address the aforesaid concern, it is clarifies that the restatement of books of accounts indicated in
para 5 of the said circular shall mean that the company is required to disclose the effect of revised financial
accounts by way of revised pro-forma financial results immediately to the shareholders through Stock
Exchange(s). However the financial effects of the revision may be carries out in the annual accounts of the
subsequentfinancialyearasapriorperioditemsothatthetaximpacts,ifany,canbetakencareof.
Clarification on SEBI’s Circular dated August 13, 2012 providing for the “Manner of
DealingwithAuditReportsfiledbyListedCompanies”

It has been observed that there is a lack of uniformity among banks in application of risk weights on claims on
deposits placed with NABARD/SIDBI/NHB, in lieu of shortfall in achievement of priority sector lending
targets/sub-targets,forthepurposeofcapitaladequacy.
In terms of extant instructions [paras 5.4.1 and 5.8.1 of the Master Circular dated July 2, 2012 on Prudential
Guidelines on Capital Adequacy and Market Discipline-New Capital Adequacy Framework (NCAF)], claims on
public sector entities (including NABARD, SIDBI, NHB, etc.) are required to be risk weighted in a manner similar
to claims on corporates as per the ratings assigned by the rating agencies registered with the SEBI and
accredited by the Reserve Bank of India. Where the borrower has a specific assessment for an issued debt, but
the bank's claim is not an investment in this particular debt, the rating applicable to this specific debt can be
applied to the bank's unassessed claim provided the conditions indicated in para 6.8 of the Master Circular ibid
aresatisfied.
It is clarified that if the conditions indicated in para 6.8 are not satisfied, the rating applicable to the specific debt
cannot be used and the claims on NABARD/SIDBI/NHB on account of deposits placed in lieu of shortfall in
achievement of priority sector lending targets/sub-targets shall be risk weighted as applicable for unrated
claims,i.e.100%.
(RBI/2012-13/505 DBS.FrMC.BC.No.6/23.04.001/2012-13)
Please refer to Para 3.1.3 of circular DBS. FrMC. BC. No. 1/23.04.001/2012-13 dated July 02, 2012 i.e. the
Master Circular on ‘Frauds - Classification and Reporting’ which requires commercial banks to furnish in hard
copiestheFMR-1reportsinallcasesdetectedatbank'ssubsidiaries/affiliates/jointventures.
It has since been decided to partially amend Para 3.1.3 of Master Circular DBS. FrMC. BC. No.
1/23.04.001/2012-13 dated July 02, 2012 on ‘Frauds - Classification and Reporting' by providing that in case the
subsidiary of the bank is an entity which is regulated by Reserve Bank of India and is independently required to
report the cases of fraud to RBI in terms of guidelines applicable to that subsidiary/affiliate/joint venture, the
parent bank need not furnish the hard copy of the FMR-1 statement in respect of fraud cases detected at such
subsidiary/affiliate/jointventure.
Frauds-ClassificationandReporting
INITIATED BY IRDA
TransferofAgency/CorporateAgencyLicensefromoneinsurertoanother
(IRDA/CAGTS/CIR/142/07/2013dated25-07-2013)
Agents/Corporate Agents will not be allowed to seek transfer of License within One Year from the date of grant of
their License. Further, no agent/Corporate Agent shall seek transfer without achieving the Minimum Business
NormsmandatedbytherespectiveInsurers.
The Insurers shall grant No Objection Certificate within One week of receipt of the request subject to compliance
with provisions of Circular referred above. In case No Objection certificate cannot be granted within stipulated
time frame, the Insurer shall record the reasons for non-issuance of NOC in portal and shall ensure compliance by
the agent of the provisions of the above Circular within one month of request except in case of fraud or serious
compliant. In case no pertinent reason is recorded within one week and one month time period is elapsed from
the date of request, those requests will be deemed to have been granted NOC and transfer will be effected in
portal.

Submission of Insurance Data of IRDA to Insurance Information Bureau of India
(IIB)
IRDA (Non-Linked Insurance Products) Regulations, 2013 and IRDA (Linked
InsuranceProducts)Regulations,2013
(IRDA/ADM/CIR/118/06/2013dated20-06-2013)
TheInsuranceInformationBureauofIndia(IIB)hasbeenformedtocater totheneeds ofthevariousstakeholders
in the Insurance sector such as Insurance Companies, TPAs, policy holders etc. Under a mandate of the
Authority to the Insurers and TPAs, vide circular no. IRDA/DC/CIR/19/July09 dated 13/07/2009; Insurance
companies and TPAs are required to submit data to IIB for processing and dissemination of the data. Based on
this circular, IIB has been collecting transactional data from the market (Insurance Companies, TPAs etc.) for
different lines of business, analyzing the same and producing periodical and ad-hoc reports for the benefit of
stakeholdersintheInsuranceIndustry.
IIB which was formed as an Advisory body of the IRDA in the year 2009 is now transformed into a society as an
independent body. Accordingly, it is reiterated that the Insurance Companies and TPAs continue to submit data
toIIB,intheexistingdataformatsasisbeingcurrentlydone.
(IRDA/ACTL/REG/CIR/123/06/2013datedon28-06-2013)
In response to the representations received from the industry to extend the time period for the implementation
with respect to group products, and after detailed examination of such representations, the Regulation 47(e) of
IRDA (Non-Linked Insurance Products) Regulations, 2013 and 64(e) of IRDA (Linked Insurance Products)
Regulations,2013shallbemodifiedasbelow:
“All existing group products and all the existing individual products not in conformity with the provisions of this
regulation shall be withdrawn from 1st August, 2013 and 1st October, 2013 respectively. Once the product is
withdrawn, no new members shall be enrolled into the existing group policies after the immediate policy
st
anniversary falling due after 31 July, 2013. However, all group policies at the time of renewal of such policy shall
be given an option to switch over to the modified version of the group product, if any, once introduced. Those
grouppolicieswhichdonotswitchovertothemodifiedversion:
1.Maycontinuetoberenewedunderoldpolicy
2.Closedtonewmembersand
3.Specificwrittenconsentisobtainedbythegrouppolicyholdertocontinueintheoldpolicy.”
NPSTrustaccountnumbersandcontactdetailsofNewTrusteeBank
(PFRDA/2013/12/CRTB/2dated31-05-2013)
From 1st July, 2013 onwards, all NPS contributions are to be remitted to the designated accounts of Axis Banks.
The overall procedure for remittance of funds to the Trustee Bank, the matching & booking of Subscriber
Contribution Files (SCF) and the receipt of funds returned from Trustee Bank shall remain unchanged. While
remitting the funds electronically to Axis Bank, the accredited banks shall still be required to mention the 26
character string 'PAOFIN <7 Digit PAO registration number><13 digit transaction id>' in the 7002 field for
NEFT and 7495 field for RTGS as per the current process. The RTGS remittances should be through R-41 RTGS
formatonly.
INITIATED BY PFRDA

Pleasenotethechangesasmentionedbelow:
a.IndianFinancialSystemCode(IFSC)forNPSremittance:UTIB0NPS001
b.New Account Numbers: 7 digit unique registration number allotted by CRA (NSDL) would be the designated
accountnumberfortherespectiveremittingoffice.
The contact details of NPS Team at Axis bank are available in the circulars section of PFRDA website
(www.pfrda.org.in).
(PFRDA/2013/11/PDEX/7dated22-05-2013)
Pursuant to PFRDA’s earlier circular no PFRDA/2013/1/PDEX/25 dated 11-01-2013 with respect to revised list of
Know Your Customer (KYC) documents required for both entry and exit under National Pension System, it has
been decided to include below mentioned documents in addition to the acceptable KYC documentation, on the
basisoffeedbackreceivedfromvariousentitiesregisteredunderNPS.
KYCdocumentsrequirementforNPSandPANcardrequirementforTierIIAccount
Identification Proof
Identity card issued by Central/State government and its Departments,
Statuary/Regulatory Authorities, Public Sector Undertakings, Schedules
Commercial Banks, Public Financial Institutions, Colleges affiliated to
Universities and Professional Bodies such as ICAI, ICWAI, ICSI, Bar
Counciletc.
Theidentitycard/documentwithaddress,issuedbyanyofthefollowing:
Central/State Government and its Departments, Statuary/Regulatory
Authorities, Public Sector Undertakings, Scheduled Commercial Banks,
PublicFinancialinstitutionfortheiremployees.
Address Proof
It has also been decided to make submission of PAN Card a mandatory requirement for opening and operation of
aTierIIaccountforallsectorsunderNPSwithimmediateeffecttoensurecompliancewithAML/CFTguidelines.
In pursuance of this, all existing Tier II accounts under NPS need to be made PAN compliant. The subscribers
would be given a time period of 3 months from the date of issuance of this circular, after which the operation of
suchaccountwouldbesuspendedtilltherequirementiscompliedwith.

National Centre for Financial Education (NCFE) has been set up with the
support of RBI, SEBI, IRDA, PFRDA, FMC and NISM to further the cause of
financial literacy and inclusion in India in a collaborative manner. Our mission
is to undertake massive Financial Education campaign to help people manage
money more effectively to achieve financial well-being by accessing
appropriate financial products and services through regulated entities with
fair and transparent machinery for consumer protection and grievance
Redressal with the objective of achieving a financially aware & empowered
India.
Support NCFE by asking questions, discussing issues & sharing your
experiencesatfacebook.com/ncfeindiaorfollowusonTwitter@NCFE_India
Supported byNCFE
NISM Bhavan, Plot No. 82, Sector 17, Vashi, Navi Mumbai - 400 703
Phone: 022 66735100-05 | Fax: 022 66735110
www.nism.ac.in
National Institute of Securities Markets
(An Educational Initiative by SEBI)

May-July 2013 NISM Update

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