FINANCIAL
INSTITUTIONS
AND CREDIT
RATING
AGENCIES
Financial Institutions
?
They are the participants in the financial market. They are business
org’s dealing in financial resources. They collect resources by
accepting deposits from individuals and institutions and lend them to
trade, industry& others. They buy & sell financial instruments and
deals in financial assets. They accept deposits, grant loans and invest
securities.
?
On the basis of nature of activities financial institutions may be
classified as:
?
Regulatory and promotional institutions: Financial institutions,
financial markets, financial services are all regulated by regulators
like R!", The #ompany $a% &oard, ministry of finance etc. The
t%o ma'or regulatory institutes in ndia are R& & ()& they
administer legislate supervise monitor & control the entire financial
system.
?
&anking nstitutions: They mobili*e the savings of people. They
provide mechanism for smooth e+change of goods & services. There
are , basic
categories of banking institutions namely commercial banks, co-operative
banks and development banks.
?
.on-&anking nstitutions: They also mobili*es financial resources
directly or indirectly from the people. They lend funds but do not create
credit. #ompanies like $#, /#, 0T, 1rovident funds falls in this
category.
FUNCTIONS OF FINANCIAL INSTITUTIONS
2. To facilitate creation & allocation of credit & li3uidity.
4. To help in process of balanced economic gro%th.
,. To provide financial convenience.
5. To serve as intermediaries for mobili*ation of savings
6. To provide information and facilitate transactions at lo%er cost.
MERCHANT BANKS
SERVIES OFFERED BY MERCHANT
BANKERS:
•
7anagement of debt and e3uity offerings .
•
1lacement and distribution.
•
"dvisory services.
•
1ro'ect advisory services.
•
$oan syndication .
Unit trust of
Inia !UTI"
#if$ insuranc$
cor%oration of
Inia !#IC"
&$n$ral
insuranc$
cor%oration of
Inia !&IC"
INVESTMENT
COMPANIES
O'($cti)$s of unit trust of Inia !UTI"
•
To encourage and pool the savings of the
middle and lo% income groups.
•
To enable them to share the benefits and
prosperity of the industrial development
in the country.
•
To pay dividend to the unit holders.
•
To sell units among as many investor as
possible.
O'($cti)$s of lif$ insuranc$
cor%oration of Inia !#IC"
•
7a+imi*ation of mobili*ation of people’s savings foe
nation building activities.
•
1rovide complete security and promote efficient service to
the policy holders at economic premium rates.
•
"ct as trustees of the insured public in their individual and
collective capacities.
•
7eet the various life insurance needs of the community
that %ould arise in the changing social and economic
environment.
&$n$ral insuranc$ cor%oration of
Inia !&IC"
•
/eneral insurance industry in ndia %as nationali*ed and a
government company kno%n as general insurance corporation
of ndia %as formed by the central government in .ovember
2894.
•
/eneral insurance companies have %illingly catered to these
increasing demands and have offered a plethora of insurance
covers that almost cover anything under the sun.
MANA&EMENT INVESTMENT
COM*ANIES:
• " management investment company is one of the three fundamental
types of investment companies.
• t allo%s investors to pool their capital %ith that of other investors in
order to purchase professionally-managed groups of diversified
securities.
• " management investment company is headed by a #)O, a team of
officers and a board of directors.
• These company leaders choose the types of investment products the
company %ill offer.
• 7anagement investment companies are sub'ect to rules set forth in the
nvestment #ompany "ct of 285:.
MANA&EMENT INVESTMENT
COM*ANIES:
.O.-&".;./ F.#".#" #O71".)( <.&F#’(=
•
.on-banking financial companies, or .&F#s, are financial
institutions that provide banking services, but do not hold a banking
license.
•
They attract deposits of huge amounts by attractive rates of interest.
•
They run chit funds, provide hire purchase, lease financing etc.
•
"lso rene% short period loans from time to time.
•
(ome of the other services offered by .&F#’( include
loans %ithout securities, retirement planning, money markets,
under%riting, and merger activities.
D$)$lo%+$nt Ban,s in Inia
•
n the field of industrial finance, the concept of development bank is
of recent origin. n a country like ndia, the emergence of
development banking is a post -independence phenomenon.
•
n ndia, the first development bank called the ndustrial Finance
#orporation of ndia %as established in 285>.
•
!evelopment bank is essentially a multi-purpose financial institution
%ith a broad development outlook. " development bank may, thus,
be defined as a financial institution concerned %ith providing all
types of financial assistance <medium as %ell as long term= to
business units, in the form of loans, under%riting, investment and
guarantee operations, and promotional activities ? economic
development in general, and industrial development, in particular.
F$atur$s
•
(pecialised financial institution.
• 1rovides medium and long term finance to business units.
• 0nlike commercial banks, it does not accept deposits from the public.
• .ot 'ust a term-lending institution. t is a multi-purpose financial institution.
• t encourages ne% and small entrepreneurs and seeks balanced regional
gro%th.
• 1rovides financial assistance not only to the private sector but also to the
public sector undertakings.
• "ims at promoting the saving and investment habit in the community.
• ts ma'or role is of a gap-filler, i. e., to fill up the deficiencies of the e+isting
financial facilities.
• 7otive is to serve public interest rather than to make profits. t %orks in the
general interest of the nation.
MUTUA# FUNDS
•
" mutual fund is a type of professionally managed investment
fund that pools money from many investors to purchase
securities.
CONCE*T
FACTS
• 7utual Funds are there in ndia since 28@5.
• 7utual Funds market has evolved in 0("
& is there for the last @: years
• 7utual funds are the best solution for people %ho %ants to
manage risks and get good returns.
• (ome of the top ranked mutual funds are
&irla sun life,sbi blue chip fund,tata e3uity.
TY*ES
• O1). ).!)! F0.! - Fund manager
continuously allo%s investors to 'oin or leave the
fund.
• #$O() ).!)! F0.!- (imilar to a listed
company %ith respect to its share capital. These
shares are not redeemable and are traded in the
stock e+change like any other listed securities.
Cr$it Ratin- A-$nci$s. Inia
• Crisil Limited
Corporate office A 7umbai, 7aharashtra B Establishment A 28>9
• Credit Information Bureau India Limited -CIBIL!
Corporate office A 7umbai, 7aharashtra B Establishment A 4:::
• Fitch "atin#s India $ri%ate Ltd&
Corporate office A .e% Cork, 0(" B Establishment A 282,
• E'uifa(
Corporate office A "tlanta, 0nited (tates B Establishment A 2>88
• Credit Anal)sis * "esearch Ltd& CA"E!
Corporate office A 7umbai, 7aharashtra B Establishment A 288,
• IC"A Limited
Corporate office A /urgaon, Daryana B Establishment A 2882
/0at is a cr$it ratin- a-$nc12
?
" credit ratin# a#enc) <C"A, also called a ratin#s ser%ice= is
a company that assigns credit ratings, %hich rate a debtorEs
ability to pay back debt by making timely interest payments and
the likelihood of default.
/0at is cr$it ratin-2
A credit rating is an $)aluation of t0$ cr$it
4ort0in$ss of a $'tor. $s%$ciall1
a 'usin$ss !co+%an1" or a -o)$rn+$nt. 'ut
not ini)iual consu+$rs5
•
&ondsFdebentures
•
#ommercial paper
•
&ank loans
•
Fi+ed deposits and bank certificate of deposits
•
7utual fund debt schemes
•
nitial public offers
Cr$it ratin- s$r)ic$s
Rol$ of cr$it ratin- a-$nci$s
•
1rovide superior information
•
$o% cot information
•
&asis for a proper risk and return
•
Dealthy discipline on corporate borro%ings
•
/reater credence to financial and other representation
•
Formation of public policy
doc_821255783.pptx
INSTITUTIONS
AND CREDIT
RATING
AGENCIES
Financial Institutions
?
They are the participants in the financial market. They are business
org’s dealing in financial resources. They collect resources by
accepting deposits from individuals and institutions and lend them to
trade, industry& others. They buy & sell financial instruments and
deals in financial assets. They accept deposits, grant loans and invest
securities.
?
On the basis of nature of activities financial institutions may be
classified as:
?
Regulatory and promotional institutions: Financial institutions,
financial markets, financial services are all regulated by regulators
like R!", The #ompany $a% &oard, ministry of finance etc. The
t%o ma'or regulatory institutes in ndia are R& & ()& they
administer legislate supervise monitor & control the entire financial
system.
?
&anking nstitutions: They mobili*e the savings of people. They
provide mechanism for smooth e+change of goods & services. There
are , basic
categories of banking institutions namely commercial banks, co-operative
banks and development banks.
?
.on-&anking nstitutions: They also mobili*es financial resources
directly or indirectly from the people. They lend funds but do not create
credit. #ompanies like $#, /#, 0T, 1rovident funds falls in this
category.
FUNCTIONS OF FINANCIAL INSTITUTIONS
2. To facilitate creation & allocation of credit & li3uidity.
4. To help in process of balanced economic gro%th.
,. To provide financial convenience.
5. To serve as intermediaries for mobili*ation of savings
6. To provide information and facilitate transactions at lo%er cost.
MERCHANT BANKS
SERVIES OFFERED BY MERCHANT
BANKERS:
•
7anagement of debt and e3uity offerings .
•
1lacement and distribution.
•
"dvisory services.
•
1ro'ect advisory services.
•
$oan syndication .
Unit trust of
Inia !UTI"
#if$ insuranc$
cor%oration of
Inia !#IC"
&$n$ral
insuranc$
cor%oration of
Inia !&IC"
INVESTMENT
COMPANIES
O'($cti)$s of unit trust of Inia !UTI"
•
To encourage and pool the savings of the
middle and lo% income groups.
•
To enable them to share the benefits and
prosperity of the industrial development
in the country.
•
To pay dividend to the unit holders.
•
To sell units among as many investor as
possible.
O'($cti)$s of lif$ insuranc$
cor%oration of Inia !#IC"
•
7a+imi*ation of mobili*ation of people’s savings foe
nation building activities.
•
1rovide complete security and promote efficient service to
the policy holders at economic premium rates.
•
"ct as trustees of the insured public in their individual and
collective capacities.
•
7eet the various life insurance needs of the community
that %ould arise in the changing social and economic
environment.
&$n$ral insuranc$ cor%oration of
Inia !&IC"
•
/eneral insurance industry in ndia %as nationali*ed and a
government company kno%n as general insurance corporation
of ndia %as formed by the central government in .ovember
2894.
•
/eneral insurance companies have %illingly catered to these
increasing demands and have offered a plethora of insurance
covers that almost cover anything under the sun.
MANA&EMENT INVESTMENT
COM*ANIES:
• " management investment company is one of the three fundamental
types of investment companies.
• t allo%s investors to pool their capital %ith that of other investors in
order to purchase professionally-managed groups of diversified
securities.
• " management investment company is headed by a #)O, a team of
officers and a board of directors.
• These company leaders choose the types of investment products the
company %ill offer.
• 7anagement investment companies are sub'ect to rules set forth in the
nvestment #ompany "ct of 285:.
MANA&EMENT INVESTMENT
COM*ANIES:
.O.-&".;./ F.#".#" #O71".)( <.&F#’(=
•
.on-banking financial companies, or .&F#s, are financial
institutions that provide banking services, but do not hold a banking
license.
•
They attract deposits of huge amounts by attractive rates of interest.
•
They run chit funds, provide hire purchase, lease financing etc.
•
"lso rene% short period loans from time to time.
•
(ome of the other services offered by .&F#’( include
loans %ithout securities, retirement planning, money markets,
under%riting, and merger activities.
D$)$lo%+$nt Ban,s in Inia
•
n the field of industrial finance, the concept of development bank is
of recent origin. n a country like ndia, the emergence of
development banking is a post -independence phenomenon.
•
n ndia, the first development bank called the ndustrial Finance
#orporation of ndia %as established in 285>.
•
!evelopment bank is essentially a multi-purpose financial institution
%ith a broad development outlook. " development bank may, thus,
be defined as a financial institution concerned %ith providing all
types of financial assistance <medium as %ell as long term= to
business units, in the form of loans, under%riting, investment and
guarantee operations, and promotional activities ? economic
development in general, and industrial development, in particular.
F$atur$s
•
(pecialised financial institution.
• 1rovides medium and long term finance to business units.
• 0nlike commercial banks, it does not accept deposits from the public.
• .ot 'ust a term-lending institution. t is a multi-purpose financial institution.
• t encourages ne% and small entrepreneurs and seeks balanced regional
gro%th.
• 1rovides financial assistance not only to the private sector but also to the
public sector undertakings.
• "ims at promoting the saving and investment habit in the community.
• ts ma'or role is of a gap-filler, i. e., to fill up the deficiencies of the e+isting
financial facilities.
• 7otive is to serve public interest rather than to make profits. t %orks in the
general interest of the nation.
MUTUA# FUNDS
•
" mutual fund is a type of professionally managed investment
fund that pools money from many investors to purchase
securities.
CONCE*T
FACTS
• 7utual Funds are there in ndia since 28@5.
• 7utual Funds market has evolved in 0("
& is there for the last @: years
• 7utual funds are the best solution for people %ho %ants to
manage risks and get good returns.
• (ome of the top ranked mutual funds are
&irla sun life,sbi blue chip fund,tata e3uity.
TY*ES
• O1). ).!)! F0.! - Fund manager
continuously allo%s investors to 'oin or leave the
fund.
• #$O() ).!)! F0.!- (imilar to a listed
company %ith respect to its share capital. These
shares are not redeemable and are traded in the
stock e+change like any other listed securities.
Cr$it Ratin- A-$nci$s. Inia
• Crisil Limited
Corporate office A 7umbai, 7aharashtra B Establishment A 28>9
• Credit Information Bureau India Limited -CIBIL!
Corporate office A 7umbai, 7aharashtra B Establishment A 4:::
• Fitch "atin#s India $ri%ate Ltd&
Corporate office A .e% Cork, 0(" B Establishment A 282,
• E'uifa(
Corporate office A "tlanta, 0nited (tates B Establishment A 2>88
• Credit Anal)sis * "esearch Ltd& CA"E!
Corporate office A 7umbai, 7aharashtra B Establishment A 288,
• IC"A Limited
Corporate office A /urgaon, Daryana B Establishment A 2882
/0at is a cr$it ratin- a-$nc12
?
" credit ratin# a#enc) <C"A, also called a ratin#s ser%ice= is
a company that assigns credit ratings, %hich rate a debtorEs
ability to pay back debt by making timely interest payments and
the likelihood of default.
/0at is cr$it ratin-2
A credit rating is an $)aluation of t0$ cr$it
4ort0in$ss of a $'tor. $s%$ciall1
a 'usin$ss !co+%an1" or a -o)$rn+$nt. 'ut
not ini)iual consu+$rs5
•
&ondsFdebentures
•
#ommercial paper
•
&ank loans
•
Fi+ed deposits and bank certificate of deposits
•
7utual fund debt schemes
•
nitial public offers
Cr$it ratin- s$r)ic$s
Rol$ of cr$it ratin- a-$nci$s
•
1rovide superior information
•
$o% cot information
•
&asis for a proper risk and return
•
Dealthy discipline on corporate borro%ings
•
/reater credence to financial and other representation
•
Formation of public policy
doc_821255783.pptx