1. INDIAN ECONOMY: TYBAF REVISED SYLLABUS

2. M- 1 INTRODUCTION : FIVE CHAPTERS M – 2 AGRICULTURAL SECTOR : SIX CHAPTERS M – 3 INDUSTRIAL SECTOR : FOUR CHAPTERS M – 4 SERVICE SECTOR : THREE CHAPTERS M – 5 EXTERNAL SECTOR : FOUR CHAPTERS M – 6 MONEY AND BANKING : FIVE CHAPTERS

3. REVISED PAPER PATTERN NUMBER OF QUESTIONS = 06 NUMBER OF QUESTIONS TO BE ANSWERED = 4 Q.1 – COMPULSORY Q.2 – COMPULSORY; OBJECTIVE TYPE Q.3 – OR Q.4 Q.5 – OR Q.6 – SHORT NOTES

5. MONEY MARKET FUNCTIONS STRUCTURE FEATURES/LIMITATIONS REFORMS MARKET FOR SHORT TERM FUNDS

7. MONEY MARKET DEALS IN FUNDS AND INSTRUMENTS HAVING A MATURITY OF ONE DAY TO ONE YEAR MARKET PLAYERS RBI- REGULATOR, MERCHANT BANKER GOVERNMENT – BIGGEST BORROWER BANKS AND FINANCIAL INSTITUTIONS – LENDING & BORROWING CORPORATES – BORROWERS INSTITUTIONAL PLAYERS – ( M.F., FII ) AS PER RBI GUIDELINES DISCOUNT HOUSES & PRIMARY DEALERS – INTERMEDIARIES, discounting & rediscounting T-BILLS, COMMERCIAL BILLS PRIMARY DEALERS (1995) – to develop active government securities market

9. STRUCTURE OF MONEY MARKET ORGANISED UNORGANISED All INDIA DEBT & INVESTMENT SURVEY 1991 36% OF LOANS IN RURAL AREA.

10. CALL / NOTICE MONEY MARKET: 1 to 14 days; at call money rate fixed by market forces . Participants : commercial banks, co-op banks , primary dealers (FI authorised by RBI) & DFHI,LIC,GIC,UTI etc. only as lenders Location: MUMBAI, KOLKATA, CHENNAI etc. RBI function: provide additional funding to DFHI, increasing liquidity through REPO, mopping liquidity through REVERSE REPO, stabilizing call rates. TREASURY BILL MARKET (TB ) : issued by RBI on behalf of central Govt., Main instrument of short term borrowing of Govt. Issued on auction, interest determined by market forces Eligible security to meet SLR, highly liquid, absence of risk of default Ordinary bills to bankers, but Ad-hoc for deficit financing(discontinued in 1997) Initially 182 days, recently 91,364 days bills are issued. Sold on discount are available for a minimum 25,000 Rupees & multiples of 25,000. Participants : commercial banks, primary dealers, MFs, corporates, FIs, pension funds etc.

11. COMMERCIAL BILL MARKET (CB): Drawn by one merchant firm on another & get liquidity from commercial banks Interest charged is at discount. Maturity upto 90 days Undeveloped – a)cash credit b)no uniformity in drafting bills c) tedious procedure d) heavy stamp duty Share of bill market has fallen fm 11% in 1993-94 to 6.5% in 2002-03 CERTIFICATE OF DEPOSIT (CDs) Introduced in 1989; issued by commercial banks & Development Financial Institutions Are marketable receipts of funds deposited in a bank for a fixed period at a specified Rate of interest. Initially – in multiples of 25 lakh, min size 1 cr.,3 months maturity, 45 days lock in After reforms - min amount 1 lakh, multiples of 1 lakh, at discount rt of market, lock in 15 days, subject to CRR & SLR, scheduled banks other than RRBs fm 15 days to 1 year, financial institutions 1 year to 3 years maturity

12. COMMERCIAL PAPER (CPs) MARKET Introduced in 1990, raising funds by corporates Issuing company tangible net worth not less than 4 cr. & working capital no less than 4 cr. Min rating P2, 07 days to 1 year maturity period, min denomination 5 lakh & its multiples From 2001 in DEMAT form Dealing done by DFHI REPO MARKET Introduced in 1992. two parties transaction agreement of selling & buying back REPO – INJECTION REVERSE REPO – MOPPING LIQUIDITY (current repo- 7.50 R.Repo 6.50) Inter bank repo & RBI repo, rates are changed by RBI Repo of state & central govt. securities, PSU bonds, corporate bonds in DEMAT FORM can be used for SLR, and liquidity control MONEY MARKET MUTUAL FUNDS (MMMFs) April 1992, can be set up by scheduled commercial banks, public financial institutions, Lock in 15 days, regulated by SEBI. Enable small investors to participate in money market. DISCOUNT AND FINANCE HOUSE OF INDIA (DFHI) Set up by RBI in 1988 – owned by RBI, public sector banks, all India financial institutions That have contributed in paid up capital. Developmental & stabilizing role; acts as a intermediary body

15. RBIs MONETARY MANAGEMENT Refers to controlled changes in the stock of money to achieve well defined social objectives INSTRUMENTS OF CREDIT CONTROL CRITICAL EVALUATION OF MONETARY MANAGEMENT RECENT CHANGES IN MONETARY MANAGEMENT

16. UNIVERSITY QUESTIONS: EXPLAIN THE MONETARY POLICY OF RBI SINCE 1991 (APR. 06) CRITICALLY EVALUATE THE MONETARY POLICY OF RBI IN POST REFORM PERIOD ( NOV.07) LIKELY QUESTIONS: DISCUSS THE VARIOUS INSTRUMENTS OF CREDIT CONTROL OF RBI WRITE A NOTE ON QUANTITATIVE CREDIT CONTROL

19. Bank rate : 6 INR/USD: 45.1000, INR/EURO : 63/ 7500 Repo rate: 7.50 LENDING /DEPOSIT (BASE RATE) : 9.25/ 10 DEPOSIT RT: 8.25 – 9.10 Reverse repo: 6.50 Crr: 6 Slr: 24

27. 7) To set up asset reconstruction fund/ tribunal for bad % doubtful debts..NPA 2% by 2002 8) Banking structure – 2-3 banks of international recognition, 8-10 national level, & local banks 9) Guidelines for asset classification, transparency 10) Prudential norms – asset classification, arrangement of bad debt 11) Profit & loss account formats were revised 12) Greater autonomy 13) Interest deregulation 14) Banking ombudsman scheme to address consumer grievances 15) Public sector banks can raise capital from capital market 16) Rating models – CAMELS – capital adequacy, asset quality, management earnings, liquidity & systems CACS capital adequacy, asset quality, compliance & systems

28. CAPITAL MARKET STRUCTURE ROLE GROWTH FACTORS RESPONSIBLE FOR GROWTH PROBLEMS REFORMS SEBI MARKET FOR MEDIUM & LONG TERM LOANS

32. Primary dealers 1995, satellite dealers in 1996 Foreign investors allowed Foreign Investments through the issue of Global Depository Receipts (GDRs) & Foreign Currency Convertible Bonds (FCCBs) Indian companies got access to international market through Euro issue (Indian companies on NASDAQ) Tax exemption on income from govt. securities Negotiated Dealing System 2001 CCIL 5)Credit Rating Agencies CRISIL- 1988, ICRA- 1991, Credit Analysis & research Ltd. CARE, 1993 6)Merchant Banking 7) Rolling settlement 8) depositories NSDL –demat of securities, National Securities Depository Ltd. In 1996 9) screen based trading 10) 1997, L.C. Gupta Committee recommended introduction of derivative trading 11) Insurance Regulatory and Development Authority Act (IRDA) 1999, IRDA set up 2000 12) PAN made compulsory for operating demat. account India INFY Infosys Limited 3/11/1999 India REDF Rediff.com India Limited 6/14/2000 India SIFY Sify Technologies Limited 10/19/1999

33. SEBI FUNCTION /ROLE OF SEBI – 1) protect investors interest – a) frame rules & regulations b) ensures that rules are followed c) handles complaints of investors 2) Regulation of stock brokers activities – registered 3) Formulates guidelines on first capital issue 4) Regulate working of Mutual funds 5)Regulation of Merchant banking- rules, regulation, code of conduct 6) Regulation of Portfolio Management Services 7) Restriction on insider trading 8)Regulation of takeovers & mergers 9) Education & guidelines to investors 10) stricter norms on share transfer( NRI, preferential allotment under SEBI code) Criticism : false claim on success of dealing complaints, large no. of rules, less protection to Investors, corporate friendly, insufficient power