Merchant bankers are called by different names across the world. In the USA they are called Investment bankers and in the UK they are called ‘accepting and issuing houses’. In India, National Grindlays Bank initiated merchant banking services in 1969. Then Citibank joined the financial service in 1970. The State Bank of India was the…
Updated till December 1, 2023. The Securities and Exchange Board of India (SEBI) was established as the regulator for the Stock and Security market in India under the Securities and Exchange Board of India Act 1992. The main object of SEBI is to protect the interests of investors in securities and promote the development of…
Equity shares are also known as Ordinary Shares. The money invested in the equity shares of a company is a part of the capital of the company. When an investor buys a company’s share or equity, he gains partial ownership rights of that company. The amount so invested on the equity shares of a company…
The Reserve Bank of India vide. Circular No. DOR.RRB.No.21/31.01.001/2019-20 dated November 1, 2019, permitted RRBs (Regional Rural Banks) to issue Perpetual Debt Instruments (PDI) eligible for inclusion as Tier 1 capital so as to maintain prescribed CRAR. The Perpetual Debt Instruments (PDI) is issued by way of bonds or debentures in Indian Rupees only. The…
In the financial market many investors prefer for investments in bond portfolio which can provide them the decent yields with a lower level of volatility than equities. Further, the bonds issued by corporates offer with a higher income than the money market funds or bank instruments. However, the volatility in interest rate in the financial…
Option is an agreement between two parties offering to buy or sell a security (a stock, bond, commodity or other instruments) from or to the other party at a specified price within a specific time period. In option contracts, there is no obligation on the part of buyer or seller to buy or sell the…
We are aware that Reserve Bank of India issues Government securities on behalf of the Government. Primary Dealers are the licensed dealers who deal in buying and selling these Government securities. There are two types of primary dealers, viz. Standalone Primary Dealers and Bank Primary Dealers. Standalone Primary Dealers: Most of these PDs are subsidiaries…
Convertible Bonds: Convertible bonds are exceptional securities that have features of both bonds and equity options. The holders of convertible bonds have the opportunity to convert bonds held by them into specified number of company’s equity shares during validity period for options mentioned in the bonds. The bond holder also receives the coupon payment till…
A Zero-Coupon Bond does not make periodic interest payments or “coupons” to the investors. Since the coupon rate of such bonds are ‘zero’ they are called as zero-coupon bond. In case of Zero-Coupon Bonds the issuer sells the bonds at a price less than the face value of the bonds and pays to the bond…
(This post explicates the difference between coupon rate and yield to maturity) Bonds: A bond is a debt instrument issued by a company or the Government to raise capital by way of borrowing from the investors. The investors in the bonds are debt holders (lenders/creditors). The issuer of bonds is obliged to pay bondholders the…