Stock Exchanges In IndiaStock Exchanges are an organized marketplace, either corporation or mutual organization, where members of the organization gather to trade company stocks and other securities. The members may act either as agents for their customers, or as principals for their own accounts.Stock exchanges also facilitate for the issue and redemption of securities andother financial instruments including the payment of income and dividends. The record keeping is central but trade is linked to such physical place because modern markets are computerized. The trade on an exchange is onlyby members and stock broker do have a seat on the exchange. List of Stock Exchanges In India ombay Stock Exchange !ational Stock Exchange "egional Stock Exchanges #hmedabad angalore hubaneshwar $alcutta $ochin $oimbatore %elhi &uwahati 'yderabad (aipur )udhiana *adhya +radesh *adras *agadh *angalore *eerut ,T$ Exchange ,f -ndia +une Saurashtra .utch /ttar+radesh 0adodaraIntroduction Stock markets refer to a market place where investors can buy and sell stocks. The price at which each buying and selling transaction takes is determined by the market forces 1i.e. demand and supply for a particular stock2.)et us take an example for a better understanding of how market forces determine stock prices. #$ $o. )td. en3oys high investor confidence and there is an anticipation of an upward movement in its stock price. *ore and more people would want to buy this stock 1i.e. high demand2 and very few people will want to sell this stock at current market price 1i.e. less supply2. Therefore, buyers will have to bid a higher price for this stock to match the ask price from the seller which will increase the stock price of #$ $o. )td.,n the contrary, if there are more sellers than buyers 1i.e. high supply and low demand2 for the stock of #$ $o. )td. in the market, its price will fall down. -n earlier times, buyers and sellers used to assemble at stock exchanges to make a transaction but now with the dawn of -T, most of the operations are done electronically and the stock markets have become almost paperless. !ow investors dont have to gather at the Exchanges, and can trade freely from their home or office over the phone or through -nternet. History of the Indian Stock Market - The Origin,ne of the oldest stock markets in #sia, the -ndian Stock *arkets have a 455 years old history. 18th CenturyEast -ndia $ompany was the dominant institution and by end of the century, busuness in its loan securities gained full momentum183!s usiness on corporate stocks and shares in ank and $otton presses started in ombay. Trading list by the end of 6789 got broader18"!s "ecognition from banks and merchants to about half a dozen brokers18#!s "apid development of commercial enterprise saw brokerage business attracting more people into the business18$!s The number of brokers increased to :518$-$1 The #merican $ivil ;ar broke out which caused a stoppage ofcotton supply from /nited States of #merica< marking the beginning of the =Share *ania= in -ndia18$%-$3 The number of brokers increased to about 455 to 4>518$# # disastrous slump began at the end of the #merican $ivil ;ar1as an example, ank of ombay Share which had touched "s. 47>5 could only be sold at "s. 7?2&re-Inde'endance Scenario - Esta()ish*ent of +ifferent Stock Exchanges18," ;ith the rapidly developing share trading business, brokers usedto gather at a street 1now well known as =%alal Street=2 for the purpose of transacting business.18,# =The !ative Share and Stock rokers@ #ssociation= 1also known as =The ombay Stock Exchange=2 was established in ombay188!s %evelopment of cotton mills industry and set up of many others18-" Establishment of =The #hmedabad Share and Stock rokers@ #ssociation=188 - -!sSharp increase in share prices of 3ute industries in 67?5@s was followed by a boom in tea stocks and coal1-8 =The $alcutta Stock Exchange #ssociation= was formed1-% *adras witnessed boom and business at =The *adras Stock Exchange= was transacted with 655 brokers.1-%3 ;hen recession followed, number of brokers came down to 8 and the Exchange was closed down1-3" Establishment of the )ahore Stock Exchange1-3$ *erger of the )ahoe Stock Exchange with the +un3ab Stock Exchange1-3, "eAorganisation and set up of the *adras Stock Exchange )imited 1+vt.2 )imited led by improvement in stock market activities in South -ndia with establishment of new textile mills and plantation companies1-" /ttar +radesh Stock Exchange )imited and !agpur Stock Exchange )imited was established1-"" Establishment of =The 'yderabad Stock Exchange )imited=1-", =%elhi Stock and Share rokers@ #ssociation )imited= and =The %elhi Stocks and Shares Exchange )imited= were established and later on merged into =The %elhi Stock Exchange #ssociation )imited=&ost Inde'endance ScenarioThe depression witnessed after the -ndependance led to closure of a lot of exchanges in the country. )ahore Estock Exchange was closed down after the partition of -ndia, and later on merged with the %elhi Stock Exchange. nagalore Stock Exchange )imited was registered in 69>? and got recognition only by 69:8. *ost of the other Exchanges were in a miserable state till 69>? when they applied for recognition under Securities $ontracts 1"egulations2 #ct, 69>:. The Exchanges that were recognized under the #ct wereB 6. ombay4. $alcutta8. *adrasC. #hmedabad>. %elhi:. 'yderabad?. angalore7. -ndore*any more stock exchanges were established during 6975@s, namelyB $ochin Stock Exchange 169752 /ttar +radesh Stock Exchange #ssociation )imited 1at .anpur, 69742 +une Stock Exchange )imited 169742 )udhiana Stock Exchange #ssociation )imited 169782 &auhati Stock Exchange )imited 1697C2 .anara Stock Exchange )imited 1at *angalore, 697>2 *agadh Stock Exchange #ssociation 1at +atna, 697:2 (aipur Stock Exchange )imited 169792 hubaneswar Stock Exchange #ssociation )imited 169792 Saurashtra .utch Stock Exchange )imited 1at "a3kot, 69792 0adodara Stock Exchange )imited 1at aroda, 69952 $oimbatore Stock Exchange *eerut Stock Exchange#t present, there are twenty one recognized stock exchanges in -ndia which does not include the ,ver The $ounter Exchange of -ndia )imited 1,T$E-2 and the !ational Stock Exchange of -ndia )imited 1!SE-)2. I.+I/. STOC0 E1CH/.2ESStock Exchanges are structured marketplace where affiliates of the union gather to sell firm@s shares and other securities. -ndia Stock Exchanges can either be a conglomerateD firm or mutual group. The affiliates act as intermediaries to their patrons or as key players for their own accounts.Stock Exchanges in -ndia also assist the issue and release of securities and other monetary tools incorporating the fortification of revenues and dividends. The book keeping of the trade is centralized but the buying and selling is associated to a particular place as advanced marketplaces are mechanized. The buying and selling on an exchange is only open to its affiliates and brokers. +fferent stock exchanges in India3a4 .ationa) Stock Exchange 3.SE4 of India-ntegrated in !ovember 6994, the !ational Stock Exchange of -ndia 1!SE2 was initially a tariff forfeiting association. -n 6998, the exchange was certified under Securities $ontracts 1"egulation2 #ct, 69>: and in (une 699Cit started its business functioning in the ;holesale %ebt *arket 1;%*2. The EEuities division of !SE began its operations in 699C while in 4555 the corporation incorporated its %erivatives division. -n order to lift the -ndian stock market trading system on par with the international standards. ,n the basis of the recommendations of high powered +herwani $ommittee, the !ational Stock Exchange was incorporated in 6994 by -ndustrial %evelopment ank of -ndia, -ndustrial $redit and -nvestment $orporation of -ndia, -ndustrial Finance $orporation of -ndia, all -nsurance $orporations, selected commercial banks and others. !SE provides exposure to investors in two types of markets, namelyB6. ;holesale debt market4. $apital market5ho)esa)e +e(t Market - Similar to money market operations, debt market operations involve institutional investors and corporate bodies entering into transactions of high value in financial instrumets like treasury bills, government securities, commercial papers etc.Trading at .SE Fully automated screenAbased trading mechanism Strictly follows the principle of an orderAdriven market Trading members are linked through a communication network This network allows them to execute trade from their offices The prices at which the buyer and seller are willing to transact will appear on the screen ;hen the prices match the transaction will be completed # confirmation slip will be printed at the office of the trading member/d6antages of trading at .SE -ntegrated network for trading in stock market of -ndia Fully automated screen based system that provides higher degreeof transparency -nvestors can transact from any part of the country at uniform prices &reater functional efficiency supported by totally computerized networkSo*e .SE 7igures and 7acts The eEuities division of !SE covers around 855 -ndian cities, whileits derivates section covers 85> cities. The number of securities accessible for buying and selling in !SE exchange in its eEuities and derivates section are 6,878 and 8,6C8 respectively. The total amount of Settlement warranty fund in !SE eEuities division and derivates section are "s 4,57>.4> crores and "s :,567.85 crores respectively. The daily turnover of !SE eEuities division is "s 65,88:.>4 crores, for derivates segment is "s 84,759.9: crores and for ;hole sale debt division is "s 68,966.>? crores. !SE uses satellite communication expertise to strengthen contribution from around C55 -ndian cities. The exchange administers around rs 6 million of buying and sellingon daily basis. -t is one of the biggest 0S#T incorporated stock exchange across the world. $urrently more than 7,>55 customers are doing online exchange business on !SE application.3(4 8o*(ay Stock Exchange 38SE4 of IndiaThe oldest stock market in #sia, SE stands for ombay Stock Exchange and was initially known as =The !ative Share G Stock rokers #ssociation.= -ncorporated in the 67?>, SE became the first exchange in -ndia to be certified by the administration. -t attained a permanent authorization from the -ndian government in 69>: under Securities $ontracts1"egulation2 #ct, 69>:.,ver the year, the exchange company has played an essential part in the expansion of -ndian investment market. #t present the association is functioning as corporatised body integrated under the stipulations of the $ompanies #ct, 69>:. So*e 8SE 7igures and 7acts SE exchange was the first in -ndia to launch EEuity %erivatives, Free Float -ndex, /S% adaptation of SE Sensex and Exchange facilitated -nternet buying and selling policy SE exchange was the first in -ndia to acEuire the -S, authorization for supervision, clearance G Settlement SE exchange was the first in -ndia to have launched private service for economic training -ts ,nA)ine Trading System has been felicitated by the internationally renowned standard of -nformation Security *anagement System.3c4 9egiona) Stock Exchanges 39SE4 of India The "egional Stock Exchanges in -ndia started spreading its business operation from 679C. The first "SE to start its functioning in -ndia was #hmedabad Stock Exchange 1#SE2 followed by $alcutta Stock Exchange 1$SE2 in 6957. The stock exchange in -ndia witnessed a flourishing phase in 6975s with the incorporation of many exchanges under it. -n early :5s, it has only few certifies "SEs under it namely 'yderabad Stock Exchange, -ndore Stock Exchange, *adras Stock Exchange, $alcutta Stock Exchange and %elhi Stock Exchange. The recent to 3oin the list was *eerut Stock Exchange and $oimbatore Stock Exchange.Cata)og of 9egiona) Stock Exchanges in India #hmedabad Stock Exchange angalore Stock Exchange hubaneshwar Stock Exchange $alcutta Stock Exchange $ochin Stock Exchange $oimbatore Stock Exchange %elhi Stock Exchange &uwahati Stock Exchange 'yderabad Stock Exchange (aipur Stock Exchange )udhiana Stock Exchange *adhya +radesh Stock Exchange *adras Stock Exchange *agadh Stock Exchange *angalore Stock Exchange *eerut Stock Exchange ,T$ Exchange ,f -ndia +une Stock Exchange Saurashtra .utch Stock Exchange /ttar +radesh Stock Exchange 0adodara Stock ExchangeO6er The Counter Exchange of India 3OTCEI4Traditionally, trading in Stock Exchanges in -ndia followed a conventional style where people used to gather at the Exchange and bids and offers were made by open outcry.This ageAold trading mechanism in the -ndian stock markets used to create many functional inefficiencies. )ack of liEuidity and transparency, long settlement periods and benami transactions are a few examples that adversely affected investors. -n order to overcome these inefficiencies, ,T$E- was incorporated in 6995 under the $ompanies #ct 69>:. ,T$E- is the first screen based nationwide stock exchange in -ndia created by /nit Trust of -ndia, -ndustrial $redit and -nvestment $orporation of -ndia, -ndustrial %evelopment ank of -ndia, S- $apital *arkets, -ndustrial Finance $orporation of -ndia, &eneral -nsurance $orporation and its subsidiaries and $anank Financial Services. /d6antages of OTCEI &reater liEuidity and lesser risk of intermediary charges due to widely spread trading mechanism across -ndia The screenAbased scripless trading ensures transparency and accuracy of prices Faster settlement and transfer process as compared to other exchange Shorter allotment procedure 1in case of a new issue2 than other exchangesTE9M LO/. /.+ &9O:ECT /&&9/IS/L;< Ex')ain 6arious ste's in6o)6ed for tern )oan sanctioning=/ns< +rocedure followed by #llA-ndia Financial -nstitutions and State )evel Financial -nstitutions.62 Idea 2eneration and 7inancia) &ro>ections< $onceiving the pro3ect and preparation of the pro3ections regarding the pro3ect.42 Su(*ission of Loan /'')ication< Submission of loan application along with pro3ect report giving comprehensive information about pro3ect.82 -nitia) &rocessing 37)ash 9e'ort4< -nitial processing of loan application and preparation of HFlash reportI.C2 +etai)ed /''raisa)< #ppraisal of the proposed pro3ect report covers marketing, technical, financial, managerial and economic aspects which is prepared after site inspection.>2 Issue of 3In ?&rinci'a)4 Letter of sanction< -ssue of letter of sanction i.e.< of financial letter of sanction.:2 /cce'tance of Ter*s and Conditions< #cceptance of the Terms and $onditions and compliance of the Terms of sanction by the borrowing unit at its board meeting and passing of resolution of and conveying its acceptance within a stipulated period.?2 Execution of Loan /gree*ent< Executions of loan agreement and payment of "egistration charges. The draft loan agreement sent for execution by authorized persons and to be properly stamped as per the -ndian Stamp #ct, 6799 and then the financial institution also signs it.72 +is(urse*ent of 7unds< disbursement of loans time to time as perthe progress of the pro3ects and the financial status of the pro3ect.92 Creation and 9egistration of Security< creation of security through the first mortgage of immovable properties and hypothecation of moveable properties. $reation of mortgage withinone year from the date of first disbursement failing which 6J additional interest to be paid. This time limit is given for acEuiring the assets which might be indigenously purchased or assembled or imported as the case maybe.652 Monitoring@&ost dis(urse*ent check< *onitoring done at the implementation stage as well as the operational stage. #lso monitoring recovery of dues on interest and principle of repayment.3;4 5hat are the contents of a &ro>ect 9e'ort=/ns< $ontents of +ro3ect "eportB# pro3ect report must contain the following thingsB314 Co*'any Infor*ation5 )acs. +rincipal amount to be repaid in 4C eEual Euarterly installments. )oan sanctioned against the security of plant and machinery, collateral securityof "- onds and +ersonal &uarantee of the directors. Oou are reEuired to list any eight items of flash reports.So)utions< .a*e of the Ter* Lending 7inancia) InstitutionB F-$,*. .a*e of the 8orroAer B $hemeexperts )td. Set u' at B !asik. .ature and Ty'e of 8usinessB *anufacturerof bulk drugs. Loan a*ountB "s.6, 455 lakhs.Tenure of )oan B : years.3I4 Market /''raisa)5 lakhs K "s.6, 455 lakhsQ as margin money towards the pro3ect. 3"4 Security for term loanB 1a2 +rimary security of +lant and *achinery.1b2$ollateral security of "- onds and1c2 +ersonal guarantee of the %irectors.3#4 +romoters are contributing 8>.6CJ 1approx.2 of the total pro3ect cost.3$4 The %ebtAEEuity "atio after the proposed term loan will be 6.7>B6.3,4 #mount of Term )oan "s.6, 455 lakhs.384 "ate of interest N 68J on "*.3-4+rincipal amount repayment in 4C eEual Euarterly installments3IE4 Econo*ic /''raisa) per )itre and a fixed cost 9excluding depreciation5 "s.85, 555 per year. #dvertising expenses are also expected to be "s.45, 555 per year. ROS can be sold at "s.65 per )itre. "aw *aterial 1-ndustrial ;aste2 is available at re.6 per )itre.The $apital $ost of $hemical /nit is "s.?, >5,555.The company has applied for a loan of "s.:, 55,555 for a term of 65 years that is over the life of the asset. The promoters of this company are young, dynamic and highly Eualified people but are doing the venture forthe first time.The +romoters are unable to provide any collateral security for the loan except +ersonal &uarantee of their parents.They have thought of this pro3ect after market research. The said researchhas stated in the risk factors about invasion of South .orea in $hemical *arket and drastic reduction in Selling +rice of similar products.The above unit is SS- unit and its average tax rate is 45J.-nterest "ate is 64J p.a.)oan is repayable eEually in 65 annual installments along with interest at the end of each year.Oou are reEuired toB 162&ive the $ash Flow generated by the above pro3ect for the first 8years only. 142$alculate the %ebt Service $overage "atio for the above 8 years. 182+repare Flash "eport presenting the above information to the Financial -nstitution.So)ution