NMIMS Global Access

School for Continuing Education (NGA-SCE)

Course: Financial Institutions and Markets

Internal Assignment Applicable for June 2023 Examination

1.Ans:

As a financial advisor, I can suggest the following techniques that Ambey Ltd. can use to raise capital
from the debt market:

Corporate Bonds: Ambey Ltd. can issue corporate bonds to raise capital from the debt market.
Corporate bonds are debt securities issued by companies to investors in exchange for capital. The
company can choose the terms of the bond such as the coupon rate, maturity date, and principal
amount.

Debentures: Debentures are similar to corporate bonds, but they are not secured by any collateral.
The company can issue debentures to raise capital from the debt market. Debenture holders are
considered as creditors of the company and have the right to receive regular interest payments.

Bank loans: Ambey Ltd. can take a loan from a bank to raise capital. The loan can be secured or
unsecured, and the interest rate and repayment terms will be determined by the bank.

Line of credit: Ambey Ltd. can obtain a line of credit from a bank or financial institution to raise
capital. A line of credit is a pre-approved amount of money that the company can borrow when
needed. Interest is charged only on the amount borrowed and not on the entire credit limit.

Asset-based lending: Asset-based lending is a type of financing where a company uses its assets as
collateral to secure a loan. Ambey Ltd. can use its inventory, equipment, or real estate as collateral
to raise capital from the debt market.

Convertible debt: Convertible debt is a type of debt that can be converted into equity at a future
date. Ambey Ltd. can issue convertible debt to raise capital from the debt market. Convertible debt
is attractive to investors because it gives them the option to convert their investment into equity if
the company performs well.

These are some of the techniques that Ambey Ltd. can use to raise capital from the debt market. The
company should carefully evaluate each option and choose the one that is most suitable for its
needs and goals.

2.Ans

Sure, I can provide you with an overview of the role of NBFCs and the different types of NBFCs in
India.

Non-Banking Financial Companies (NBFCs) are financial institutions that offer financial services and
products similar to banks, but they are not licensed to accept deposits from the public. NBFCs can
provide a wide range of financial services, including loans and credit facilities, investment advice,
wealth management services, and infrastructure financing.

The Reserve Bank of India (RBI) classifies NBFCs into different categories based on their business
activities, and some of the major types of NBFCs in India are:
Asset Finance Company (AFC): An AFC primarily provides finance for the acquisition of physical
assets such as machinery, vehicles, and equipment.

Investment Company (IC): An IC primarily deals with investments in securities, and it does not carry
out any other financial activity.

Loan Company (LC): An LC primarily provides loans and advances, and it does not carry out any other
financial activity.

Infrastructure Finance Company (IFC): An IFC provides long-term finance to infrastructure projects
such as power, telecom, and transportation.

Microfinance Company (MF): An MF provides financial services such as credit, savings, and insurance
to low-income individuals and small businesses.

Non-Banking Financial Company - Factors (NBFC-Factors): An NBFC-Factor provides factoring

Non-Banking Financial Company - Microfinance Institutions (NBFC-MFIs): NBFC-MFIs primarily

Non-Banking Financial Company - Non-Operative Financial Holding Company (NBFC-NOFHC): An

Some examples of NBFCs in India are Bajaj Finance, Mahindra & Mahindra Financial Services Limited,
Tata Capital, and L&T Finance. These companies play a crucial role in providing financial services to
various sectors of the Indian economy and have contributed significantly to the growth of the
financial services sector in India.

3Ans

Sure, I can provide you with an overview of the various participants in the foreign exchange market.

The foreign exchange market, also known as the forex market or FX market, is a global decentralized
market for the trading of currencies. The participants in the foreign exchange market can be broadly
classified into the following categories:

Commercial and Investment Banks: Banks are the largest players in the forex market, and they trade
currencies for their own accounts as well as for their clients. They facilitate transactions for their
clients and make profits through the bid-ask spread.

Central Banks: Central banks, such as the Federal Reserve in the United States and the European
Central Bank, play a significant role in the forex market by setting monetary policy and managing the
exchange rate of their respective currencies.

Hedge Funds and Investment Managers: Hedge funds and investment managers trade currencies for
their clients and themselves. They use various trading strategies to generate profits, including trend
following, carry trades, and macroeconomic analysis.

Retail Forex Brokers: Retail forex brokers provide trading platforms to individual traders who want to
trade currencies. They make profits by charging spreads and commissions on trades.
Corporations: Multinational corporations that operate across borders need to exchange currencies
to conduct business. They use the forex market to hedge currency risks and manage their foreign
exchange exposure.

Governments and Sovereign Wealth Funds: Governments and sovereign wealth funds trade
currencies to manage their foreign exchange reserves and hedge their currency risks.

Individual Traders: Individual traders, also known as retail traders, trade currencies for their own
accounts. They use online platforms provided by retail forex brokers to buy and sell currencies.

Understanding the participants in the forex market is crucial for preparing reports on currency
exchange trends. By analysing the behaviour of the different players in the market, Uday can identify
the underlying factors that influence currency exchange quotes and provide insights on the trends in
the major currency exchange quotes over the past year.

3b Ans:

Sure, I can explain the important regulatory authorities in India and their functions.

India has a well-established regulatory framework to ensure the efficient and effective functioning of
financial markets. The regulatory authorities in India include:

Reserve Bank of India (RBI): The RBI is the central bank of India, responsible for the formulation and
implementation of monetary policy. It regulates and supervises banks, non-banking financial
companies (NBFCs), and other financial institutions. The RBI also manages the foreign exchange
market and controls the flow of foreign funds into and out of India.

Securities and Exchange Board of India (SEBI): SEBI is the primary regulatory authority for the
securities market in India. It regulates and supervises all entities that are registered under the
Securities and Exchange Board of India Act, 1992. SEBI's functions include regulating stock
exchanges, regulating and supervising market intermediaries such as brokers, investment advisors,
and mutual funds, and protecting the interests of investors.

Insurance Regulatory and Development Authority of India (IRDAI): The IRDAI is the regulatory
authority for the insurance sector in India. It regulates and supervises insurance companies, protects
the interests of policyholders, and promotes the development of the insurance sector.

Pension Fund Regulatory and Development Authority (PFRDA): The PFRDA is the regulatory authority
for the pension sector in India. It regulates and supervises pension funds and promotes the
development of the pension sector.

Ministry of Finance: The Ministry of Finance is responsible for formulating and implementing fiscal
policies in India. It is also responsible for the administration of taxation laws and the management of
public finances.

Registrar of Companies: The Registrar of Companies (ROC) is responsible for the registration of
companies in India. It ensures compliance with the provisions of the Companies Act, 2013, and
maintains a database of registered companies.

These regulatory authorities play a crucial role in ensuring the stability and efficiency of India's
financial markets. They implement various rules and regulations to ensure that financial institutions
operate in a fair and transparent manner and that investors are protected. By maintaining a balance
between the inflow and outflow of funds, these regulatory mechanisms ensure the efficient and
effective functioning of India's financial markets.