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