CAPITAL MARKET DEVELOPMENTS IN INDIA

The capital market is one of the important constituents of the economy to groom and develop to attain the required growth rate through the attraction of corpus from not only in domestic market but also from international markets. In India, the capital market is more vibrant in the modern days due to many more developments routed through the structured mechanism of the market. The structured market facilitates to bring forth many developments in the capital market only in order to facilitate the companies to attract more investors to contribute financial resources to the requirement The participation of the investors is subject to the market environment conditions. To
attract more investors from the various corners of the market, the developments are inevitable. The development of the capital market in India are many fold and multi structured. The series of development could be studied one after the another.
CAPITAL MARKET REFORMS - IN GENERAL
Replacement of the office of CCI by the SEBI guidelines during the year 1992,
February
1 Exchange of powers of the SCRA/1956 57,2000 were transferred to office of
SEBI - notification issued
2 Inducement for investor claims through consume courts and redressal forum of
investor associations
3 Permission of the foreign equity participation
4 With the permission of RBI, NRIs were permitted to invest in the equity shares and
debentures
5 Norms relaxed for the Indian firms to raise financial resources
6 Sebi's autonomy reinforced through the Section of 30 - without any consultation of
the central govt
7 Introduction of OTCEI and NSE - electronic nationwide trading
REFORMS IN PRIMARY MARKET
Merchant banking and banking code installed
Due diligence certificate from the lead managers
Disclosure norms
Companies details - facts and risk factors associated with their projects
Stock exchanges required to ensure the formalities with the companies during the
issues
Restriction in the usage of Stock invest - institutional investors
Disclosure norms for the advertisement
Underwriting is optional and if it is not carried out due to bring down the issue
cost – 90% of the amount offered to the public - should be refunded
Bonus guidelines were relaxed
New system introduced for preferential issue - pertaining to pricing
Shri Y H Malegam – disclosure requirements and issue procedures
SEBI to vet the prospectus within 21 days from the date of issue and approval by
the registrar companies is given a time period of 14 days
Abridged prospectus - should be vetted by the SEBI
Reforms in the Primary Market: 1996-97
Norms were tightened - to enhance the quality of the paper
First time issuers - dividend payment record in three of the immediately preceding
five years
If this requirement is not applicable in the case of companies - appraisal should be
done through commercial banks or financial institutions -10% contribution from the
issuer out of the total size of the issue
For banks - no restriction but if the issues are premium priced - two years profitability
record
Prohibition on direct or indirect discounts during the moment of allotment
90% of the subscription waived due to minimum share holding
Housing finance companies allowed to function as registered issue facilitating
companies in along with the refinancing from the National housing bank
The promoters contribution should be in a phased manner if it crosses Rs.100 cr
Debt securities could be listed in the stock exchanges without any listing of equity
shares.

No comments:

Post a Comment