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SHADOW BANKING
A Financial Newsletter
October 2014, Volume V, Issue 52
Introduction to Shadow Banking
Upasana Gurung, Sudeshna Bhattacharya, F1 and
Purnima Singh, F2
Economist Paul McCauley in a speech at the an-
nual financial symposium hosted by the Kansas City Fed-
eral Reserve Bank in Jackson Hole, Wyoming in 2007
coined the term “Shadow Banking”.
All Financial Intermediaries are involved in facil-
itating credit creation, but some are regulated and some
are not. Intermediaries that are not directly regulated and
their activities fall under the purview of Shadow Banking.
Shadows do not necessarily mean dark and sinis-
ter. It also drives home an important point in the financial
system. Shadow banking has low operation cost, custom-
er orientation and provision of services. It, therefore,
plays a crucial role in broadening access to financial ser-
vices and diversification of financial sector.
In the year 2001 during the property boom, par-
ticularly in the US, all intermediaries operated in different
parts of the securitization business, mortgage loans were
packaged as securities, moved off bank balance sheets
and were distributed (traded) through (by) various invest-
ment vehicles, to an array of investors.
A Shadow Bank performs bank like functions
outside the regular banking system. It undertakes credit
risk transfer by using direct or indirect financial leverage,
activities like securitization, securities lending and repo
transaction that act as an important source of funding for
Non-Banking Financial Institutions.
The risk emanating from shadow banking would
primarily be of four types: liquidity risk, leverage risk,
regulatory arbitrage and contagion risk. In liquidity risk,
the risk of asset liability mismatch leads to liquidity prob-
lem. India faced this situation during global crisis in 2008
when some NBFCs ran into severe liquidity problem as
they used short-term liabilities (money market commodi-
ties) such as Commercial Papers and Non-Convertible
Debentures (NCDs) to raise funds. As NBFCs do not
have a particular regulating authority, they don’t have
prudential limits on borrowings hence they can become
highly leveraged. Transfer of risk outside the purview of
banking supervision has the potential to build-up a possi-
ble global financial crisis. Since shadow bank entities
have no access to central bank funding or safety nets like
deposit insurance, they remain vulnerable to shocks. Giv-
en the huge size of shadow bank activities and their inter-
linkages with other entities of the financial sector, any
shock in the shadow banking segment can get amplified
through, transmission to the main stream financial sec-
tors, giving rise to systemic risk concern. RBI undertook
many measures, both conventional as well as unconven-
tional to enhance availability of liquidity to NBFCs, such
as allowing augmentation of capital funds of NBFC
through perpetual debt, which provides liquidity support
under Liquidity Adjustment Facility (LAF).
Challenges posed by Shadow banking to the econo-
mies
Aswathy Edison, F1
Shadow Banking is the conduct of banking
transactions outside the purview of formal banking net-
work with the support of credit intermediaries. The credit
intermediaries play a pivotal role in this network by ar-
ranging funds in the form of debentures, commercial
papers etc., for the working of shadow banks, due to
their inability to access funds in the form of deposits.
The major differentiating variable compared to our com-
mercial banks is the absence of regulatory framework
which enables it to flourish unscathed.
So what are the prominent challenges caused by
this inconspicuous system to the global economy?
Inadequate Regulation of Shadow Banking
There are no specific acts dedicated to regulating
this system which has led to an increase in the number of
illegal activities. In US, the Dodd Frank Act was passed
in 2010 after the financial crisis to regulate the stability
of financial system and mitigate the risks. An institution
established under the act was the Financial Stability
Oversight Council (FSOC) which has been criticized, for
its inability in developing adequate risk identification
tools and has been heavily dependent on suggestions
from its member staffs.
From the Indian perspective, discussions have
been going on to create a separate regulation and RBI
had set up a committee on Comprehensive Financial Ser-
vices for Small Businesses and Low Income Households
under the Chairmanship of Shri Nachiket Mor, member
of Central Board of Directors, in the month of September
2013.
The committee had made some recommendations on
Financial Inclusion which consists of the following:
Every Indian who is an adult (above 18 years)
should have a bank account by January 1, 2016. This
will be known as Universal Electronic Bank Account
(UEBA).
Every resident should be issued an account at the
time of receiving Aadhaar Card by the bank itself.
A customer grievance redressal system known as
Financial Redress Agency under the Finance Minis-
try should be set up.
The Government should abolish the system of loan
waiver and interest subsidies and suggested benefits
should be directly transferred to the farmers.
Statutory Liquidity Ratio has outlived its utility for
banks and needs to be scrapped.
Priority Sector Lending caps needs be hiked to 50%
from the current 40%.
A Payment Bank needs to be created to provide pay-
ment services including credit, insurance and risk
management.
A State Finance Regulatory Commission (SFRC)
needs to be set up and all existing regulators at the
state level needs to be merged into SFRC.
Each district should have a total term life insurance
sum assured to GDP ratio of at least 30%.
Permission to banks for pricing farm loans below the
base rate needs to be eliminated.
The major criticism against the Nachiket Mor Com-
mittee Recommendations was the short time frame for
implementation, which was 2016. The committee should
have opted for a reasonable date which could have given
the banks the sufficient time to implement the above
mentioned recommendations.
"Looking at the enormity of the task, more particu-
larly in low density rural areas, and the need of support-
ing physical as well as virtual infrastructure vis-à-vis
their present state, the timeline looks pressing," as quot-
ed by Shikha Sharma (Axis Bank, Chief Executive) and
S S Mundra (Bank of Baroda, Chairman) who had com-
mented in a note to Mor. They suggested January 2018
as a more "realistic and implementable" target date.
Also, the committee had proposed creation of
a payment bank (PB) to provide payment services and
deposit products to the target segment, the bankers felt
this would not help achieve the desired level of financial
inclusion.
A Payment Bank is allowed only to accept deposits
and offer payment services. They are restricted from
lending loans which doesn’t serve the purpose of finan-
cial inclusion and could lead to growth of shadow banks
in the rural areas of the country.
RBI has issued guidelines for a new category of
‘payment banks’ which can provide payment services to
migrant workers, low-income households and small busi-
nesses, among others. Payment Banks could be a mobile
operator, NBFC or a supermarket chain etc.
The above recommendations have been criticized for
being over ambitious.
Regulatory Arbitrage spread across geographical ju-
risdictions
The varying regulatory framework across differ-
ent geographies comes as a blessing for this system. Tax
havens are another form of shadow banking which ena-
bles the originator to park his/her black money safe from
taxability. A typical example is the Swiss Black Money
Case.
In this case, the unwillingness of the Swiss Government
to divulge the identity of the concerned entities as also
the quantum of funds involved, citing the confidentiality
clause of the information exchange, hence making it easy
for people with black money (source of income is illegal)
to transfer monies to Swiss Banks. This framework be-
tween India and Switzerland is an example of varying
regulatory framework across geographies. This affects
the financial stability of the country from where these
monies has been transferred and will benefit the recipient
country.
Impact on the Monetary Policy
As shadow banking business is outside the pur-
view of the regulatory framework, monetary policies do
not affect them resulting in policy initiatives being sub
optimal in bringing about desired policy effect.
Let’s understand this through an example
Suppose, RBI deciding to pursue a deflationary mone-
tary policy will lower interest rates and hugely benefiting
borrowers. From the depositors’ perspective, it will also
translate into lower rates on their savings and deposits
prompting them to move monies into instruments such as
commercial papers, debentures issued by the shadow
banks. In the absence of regulatory protection, depositors
could be exposed to huge risks of suddenly losing their
savings.
Financial Stability and Systematic Risk Concern
Shadow Banking activities have been mainly
criticized for their role in the 2008 financial crisis. It was
triggered by a run on short term bank debt, illiquidity in
the commercial paper market and a sudden lack of confi-
dence in the money market mutual fund industry as men-
tioned in a report by Forbes.
Due to their increasing share of shadow banking
activities and their linkages with various segments of the
financial sectors, any significant changes in this system
could translate into another major financial crisis.
How can we quell the continuance of shadow banking in
India?
Shadow Banking occurs rampantly in the rural
areas of the country. To quell the problem at lowest lev-
el, the most commonly suggested solution called
“Financial Inclusion” can be adopted. Through financial
inclusion of banks, the problem of unorganized lending
can be eliminated and more customers could be brought
into the spectrum of organized lending.
To end on a lighter note, let’s be supportive and
help our traditional banks in combating this system from
surviving by being obedient in terms of our lending and
borrowing activities.
References:
http://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=911-
Excerpts from (Address by Shri R. Gandhi, Deputy Gov-
ernor on August 21, 2014 at ICRIER’s International
Conference - Governance & Development: Views from
G20 Countries)
http://www.forbes.com/sites/robertlenzner/2014/06/30/
the-unregulated-shadow-banking-system-triggered-the-
2008-financial-crisis/
Case Analysis: Sahara Group
Challapalli Kalyana Karthik, F2 and Niharika
Shadra, F1
Shadow banking which was estimated to be
roughly US $70 trillion across the globe in the year 2012
is likely to be much higher now. Another hard fact is
that it is expected to grow at phenomenal rates in coun-
tries like India & China. The phrase shadow banking
encompasses pawnbrokers, individual to individual lend-
ing, loan shark operations and also covers the more so-
phisticated activities like securities lending, derivatives
and money market funds. The bigger question thus aris-
es: how susceptible is India to the growth of Shadow
Banking? A lot, is what the experts feel. RBI is working
with the government and has very recently formed a 15
member committee to monitor shadow banking develop-
ments.
There are a number of companies that are regis-
tered as finance companies but are not regulated by the
Reserve Bank of India. There are incorporated compa-
nies and unincorporated entities who are accepting de-
posits from the public, then there are Credit Corpora-
tions, Chit Funds. There is no regulatory body to keep
checks on them. The financial liberalization and deregu-
lation have seen shadow banking institutions in both,
countries becoming more interconnected and more sys-
temically important. It is due to this, that individuals and
businesses turn towards shadow banking.
Recently, Sahara group was ordered by India’s
Supreme Court, to refund 22 million investors, US $3
billion obtained through improper bond sales in the
country’s largest case involving a non-bank financial
firm. Following this order, founder and chairman of Sa-
hara Group Mr. Subrata Roy is now in jail.
What is the Sahara Case all about?
When an entity seeks to raise money from the
public by issuing securities, it essentially asks investors
for money, promising a return on the investment. The
securities market enables promoters of businesses to
raise capital from the public without directly involving
them in the business, when the capital needed is sliced
into securities of small denominations in which several
people invest. Investor protection in such cases rests on
the safeguards created by regulators.
A few safeguards created by regulators are as
follows:
First, the entity has to be profitable, have an adequate
net worth, and the funds being raised need to be limited
to a multiple of the net worth. This is to ensure that the
issuer prudently uses money invested by public and has
the financial strength to meet interest commitments and
return of capital at maturity.
One of the Sahara firms, Sahara India Real Estate
(SIREC) was making a loss and the net worth of the other
Sahara Housing Investment Corp (SHIC) was Rs. 11 lakh
only. Clearly, neither of the companies had the requisite finan-
cial standing to raise thousands of crores of rupees from the
public.
Second, the money should be raised through a de-
fined process. The information has to be shared with prospec-
tive investors in a prescribed format. The prospectus floated
for the amounts mobilized were scrutinized by SEBI and
found to be wanting in terms of adequacy and accuracy of
disclosures. Public issues require the appointment of regis-
tered merchant bankers, collecting bankers, registrars and
transfer agents. In this case, no such entities were involved
except a group entity that appointed millions of agents to mo-
bilize money.
Third, the instrument used for mobilizing
money is an Optionally Fully Convertible Deben-
ture (OFCD). This is a debt instrument, where inter-
est is paid until maturity or till the investor exercis-
es the option to convert it into equity shares. A de-
benture's interest is paid till maturity and its value
depends on the future cash flow. It is, therefore,
logical that debentures have an issue date, interest
payment dates and a maturity date. The OFCDs of the Sahara
companies are issued on tap. It is anybody’s guess whether
small retail investors who the Sahara Group targeted had the
necessary knowledge and skills to evaluate an option product.
Fourth, the issue of OFCDs by the Sahara companies
falls short in terms of every other safeguard for investors.
These are unsecured; there is no credit rating; there is no liquid-
ity as these are unlisted; there is no dematerialized holding of
the paper; and there are only accounts or pass books, no certifi-
cates. The fact 3 crore investors trusted this structure is incred-
ulous.
It’s clear that the strategy for mobilizing money by
Sahara was explicitly designed to circumvent regulations, take
advantage of loopholes in the wording of various laws, and
exploit the gaps in the stated jurisdictions of the RBI, SEBI and
the Department of Company Affairs.
Over the past 35 years, Mr. Roy had built the Sahara
valued at US $11 billion at the end of 2012. It owned various
properties and at least 120 companies, including television sta-
tions, a hospital, a dairy farm, retail shops selling everything
from detergents to diamonds and a 42.5 percent stake in In-
dia’s Formula One racing team. Sahara also owns 14,600 hec-
tares (36,000 acres) of land, an area the size of Liechtenstein.
All the while, Roy has portrayed himself as a crusader for what
he calls “financial inclusion” for the 65 percent of adults in
India who, according to the World Bank, do not have access to
a bank account. Roy, who began accepting daily deposits of as
little as 30 cents in 1978 and went on to build an $11billion
business empire, is fighting allegations that his group failed to
abide by a court order to repay US $3 billion to depositors.
Sahara, collects sums as small as 20 rupees a day from rick-
shaw pullers, laundry washers and tire repairmen. Agents
working for the company on commission promise to return an
agreed-upon amount after a specified period sometimes enough
accumulated savings to pay for a daughter’s wedding or a plot
of land. Roy says he performs a critical service, which he calls
“para-banking,” his term for shadow banking.
http://www.theigc.org/wp-content/uploads/2014/08/Sabri-
Oncu-Finance-GW2012.pdf
http://www.bloomberg.com/quicktake/shadow-banking/
http://www.bloomberg.com/news/2012-12-19/cash-for-gold-
loans-hide-shadow-banking-risks-in-india.html
Corporate Column
Sai Nanthini. R.K, F2
To gain insights on Shadow Banking in India, we inter-
viewed the Regional Head of a well-known organization in
the NBFC sector.
1. Are Indian NBFC’s shadow banks?
A: Indian NBFC’s are certainly not shadow banks because
they have been under the regulatory structure of the Reserve
Bank of India for more than 50 years now. NBFC’s come into
picture when the corporates or individuals need additional
funding apart from the funding done by banks in most of the
cases. NBFC’s bridge the funding gap of most of the corpo-
rates. It is the second or third financing option available. The
"NBFCs" of India include not just the finance companies, but
also a wider group of companies that are engaged in invest-
ment, insurance, chit fund, etc. as their principal business.
Totally, NBFCs play a supplementary role to banks.
2. What are the risks involved in shadow banking? Do
they pose systemic risks?
A: When we talk about the risk factors involved, it is the same
as in the case of banking. Now in NBFC’s, collateralized lend-
ing is emerging. Previously, NBFC’s used to charge a certain
rate on their clients. As we know that it is the second or third
financing option available, the risk here is that there is no first
charge for NBFC. Previously, the partnership firms and the
like used to approach NBFCs because of the collateral issue,
thus, the collateral risk also increases. But when it comes to
other risk factors, yes it possesses systemic risks. It also has
the risk of collapsing the financial system.
3. What are the challenges for supervisory and regulatory
authorities in India?
A: Globally, a need was felt to bring such unregulated entities
under the regulatory architecture. RBI is working towards
improving the regulatory framework so as to curb the shadow
banking activities, which pose a risk to financial stability.
First of all, we need to understand that shadow banks in India
are of a different genre. The shadow banks are under regula-
tion for more than 50 years. Unlike the banking sector, con-
sistent database on shadow banking is not available. Some of
their challenges could be relating to law as well. Improve-
ments have to be made in law to reduce gaps. But again en-
forcement of the law has to be more effective. RBI is also
working towards it.
4. Is repo a type of shadow banking?
A: Repo is not essentially a shadow banking instrument as it is
not used exclusively by so-called shadow banks. It is widely
employed by commercial banks and securities firms and in-
creasingly by regulated end-users such as pension funds and
insurance companies. It is also the principal tool used by RBI
in the implementation of monetary policy. The NBFC also
charge a certain rate but essentially it need not be the repo
rate.
Economic Rollers
Simmy Kumari , F2
Rates Rates as on 1st September,
2013
Rates as on 1st October, 2014
Repo Rate 7.25% 8%
Reverse Repo Rate 6.25% 7%
CRR 4% 4%
SLR 23% 22%
MSF 10.25% 9%
Base Rate 9.70/10.25% 10.00/10.25%
Call Money Rate (Weighted average) 10.10% 7.48%
91 days T-Bill (Primary) Yield 11.26% 8.60%
364-Day Treasury Bill (Primary) Yield 9.89% 8.66%
10 years Govt. Securities Yield 8.63% 8.54%
Bank Rate 10.25% 9%
Term Deposit Rate>1 Year 8.00/9.00 8.00/9.05
Savings Deposit Rate 4.00% 4.00%
Forward Premia of US$ 1-month 10.01% 8.44%
Sources: Finance Ministry, Office of Economic Advisory, HDFC Securities Report, Ministry Of Commerce, RBI,
http://www.tradingeconomics.com/india/
Crossword
Samyuktha Reddy, F2
Clues:
Across:
2. Which bank is the world’s largest lender by assets
5. Co-chief executive of Deutsche Bank recently in news for his comments on Shadow Banking
6. Which Bank Co. in Shandong province, China repaid 3.7 billion yuan ($600 million) of principal and 300 million yuan of
interest on Aug. 29 as guarantor for the borrowing
8. By whom was the term "shadow banking system" coined?
9. Shadow banking was referred to as what ------- intermediation in IMF’s 2014 Global Financial Sector Report
Down:
1. Which Hangzhou-based company went public in the US on 18th September 2014?
3. In May, the Chinese government ordered limits on ---------------- borrowing as part of checking growth in shadow banking
4. Which country was recently in the news for fastest growth in the Shadow Banking system
6. On 29 January 2014, the __________ Commission adopted a proposal for a regulation to stop the biggest banks from en-
gaging in proprietary trading
7. Shadow institutions typically do not have ----------------------- licenses
Market Roundup
B. Suma Sravya, F1 & K. Alekhya F2
Bandhan financial services, one of the two entities
that secured an in-principle approval from the Re-
serve Bank of India to set up a bank, has raised
Rs.160 Crores in debt from International Finance
Corporation (IFC). (15/09/2014) (ET).
The insurance regulator IRDA is poised to scrap the
decade-old standardized general insurance policy
format covering fire and accidents. This will leave
customers free to choose what kind of risk they need
protection against, marking a big step forward in the
evolution of an industry that could do with a boost.
(15/09/2014) (ET).
State Bank of India has reduced interest rates on long
-term deposits of one to three years by 25 basis points
to 8.75% with effect from September 18th due to poor
demand for and growth in loans. (17/09/2014) (ET).
Investments into Indian capital markets through Par-
ticipatory notes (P-Notes) surged to US $ 34 Billion
last month according to SEBI data. (17/09/2014)
(ET).
China’s Alibaba.com has been in talks with
Snapdeal.com as it looks to enter India’s booming
online retail industry, according to two people aware
of the development. Alibaba is considering invest-
ment in Snapdeal as one of its options in order to size
up the online consumer market in this country.
(18/09/2014) (BS).
Cognizant Technology Solutions will buy US-based
healthcare software specialist TriZetto for $2.7 bil-
lion in cash, marking the biggest acquisition to date
for the Indian IT industry. (16/09/2014) (BS).
Online grocer BigBasket has received funding of Rs.
200 crore in a round led by venture capital firms He-
lion and Zodius Fund II with Avendus taking its valu-
ation to US $ 100 (12/09/2014) (ET).
India inks free trade agreement with ASEAN. The
pact will allow India to leverage its competitive edge
in the areas of finance, education, health, IT, tele-
communications and transport. This will be helpful
for balancing India’s trade deficit with ASEAN coun-
tries. (09/09/2014) (ET).
The Reserve Bank of India eased norms to refinance Ex-
ternal Commercial Borrowings (ECB), and allowed
banks to approve even those cases where the Average
Maturity Period (AMP) of fresh borrowings exceeded the
residual maturity of existing loan. (28/09/2014) (BS).
Answers for Crossword:
1. Alibaba
2. ICBC (Industrial & Commercial Bank of China Ltd)
3. Interbank
4. China
5. Anshu Jain
6. Evergrowing (Across) / European (Down)
7. Banking
8. Paul McCulley
9. Nonbank
RBI Column
Pawanpreet Kaur, F2
Easy issuance of equity under the norms of FDI:
After the revival of FDI norms, RBI has allowed com-
panies to issue equity shares to a non-resident Indian
against any type of fund in contrast to earlier norms under
which an Indian company under the automatic route could
issue shares/convertible debentures to a person residing
outside India against lump sum technical know-how fee,
royalty external commercial borrowings and import paya-
bles of capital goods. RBI has reviewed the extant guide-
lines for issue of shares or convertible debentures, remit-
tance of which does not require prior permission of the
government or RBI.
RBI’s action against money laundering:
Cracking down on concealment of origin of illegally
obtained money, the RBI has closed down six UCBs
(Urban Co-operative Banks). These entities were used as
conduits for money laundering and the matter of money
laundering came out during the inspection which happens
annually or earlier or once in two years depending on their
ratings or classifications. The major points which came out
were as follows:
RBI has asked state governments to take strict ac-
tions against the erring UCBs.
Blocking the accounts of non-complying custom-
ers while keeping the credit accounts open.
This action was taken after RBI came to know
about deposits of over ₹2 lakh crore being
used for money laundering.
A Gujarat-based cooperative bank in which 9,166
forged SB accounts were opened in the name
of deceased persons to launder black money
saw Rs.161 Crores being deposited and with-
drawn simultaneously.
RBI has informed that the problem is being re-
solved through the mechanism of TAFCUB
(Task Force on Cooperative Urban Banks),
and the banking related aspects of the UCBs
being regulated by it.
Inflation dips but no rate cut:
Softening prices of food items, including vegetables
pulled down the WPI to a five year low of 3.74% in Au-
gust from 5.19% in July and 6.99% in August, 2013.
While the WPI inflation has come down prompting India
Inc. to clamor for a rate cut to boost industrial output, the
RBI governor Dr. Raghuram Rajan on the other hand clari-
fied it is not yet completely right for us to cut rates be-
cause the inflation rates are not on a comfortable level as
of yet.
RBI’s focus on Sahara:
RBI’s attention is on the issues of SIFCL (Sahara In-
dia Financial Corporation Limited). SIFCL is a residuary
non-banking company which is under RBI supervision. In
2011, RBI issued a notice warning depositors about Sahara
and cautioned the investors that there is no guarantee of
deposits collected by SIFCL.
Finance Buzz
Vyom Goel, F2
Relative-Value Funds - A hedge fund that seeks to exploit differences in the price or rate of the same or similar secu-
rities. The relative value fund trades on gaps, rather than the price of a specific stand-alone security.
Residential Mortgage-Backed Security (RMBS) - A type of mortgage-backed debt obligation whose cash flows
come from residential debt, such as mortgages, home-equity loans and subprime mortgages. A residential mortgage-
backed security is comprised of a pool of mortgage loans created by banks and other financial institutions. The cash
flows from each of the pooled mortgages is packaged by a special purpose entity into classes and tranches, which then
issues securities and these can be purchased by investors.
Volcker Rule - The Volcker Rule’s purpose is to prevent banks from making certain types of speculative investments
that contributed to the 2008 financial crisis. It prohibits banks from conducting certain investment activities with their
own accounts, and limits their ownership of and relationship with hedge funds and private equity funds, also called
covered funds.
Credit Default Swap – CDS - A swap designed to transfer the credit exposure of fixed income products be-
tween parties. A credit default swap is also referred to as a credit derivative contract, where the purchaser of the swap
makes payments up until there is a default. Payments are made to the seller of the swap. In return, the seller agrees to
pay off a third party debt if this party defaults on the loan.
ISDA Master Agreement - A standard agreement used in over -the-counter derivatives transactions. The ISDA
Master Agreement, published by the International Swaps and Derivatives Association (ISDA), is a document that out-
lines the terms applied to a derivatives transaction between two parties.
Uncollected Funds - The amount of a bank deposit that comes from cheques that have yet to be cleared by the
bank on which the cheques are drawn. Essentially, uncollected funds are sums of money that the bank needs to realize
prior to releasing the funds to the depositor.
Finance Quiz
Srinivas Rahul Chaganti, F2
1. ________________is set to become the new economic advisor of India.
2. _____________acquired 60 per cent stake in German bicycle company MIFA.
3. _________has replaced Tata group's IT giant TCS as the country's most admired company on Fortune magazine
list.
4. Which is the online ecommerce giant which raised US $ 22 billion dollars in an IPO in USA?
5. __________ buys Bangalore based tech startup Book pad for Rs. 50 crore.
6. An Indian born Chief Executive Officer (CEO) of a MNC, __________ has been named as 3rd most powerful
business women by fortune.
7. Which bank tops in mobile banking with 50 percent market share (1.15 million customers)?
8. ___________________eyes $230 million share sale in Bharti Infratel.
9. ____________is to buy Dresser-Rand (US oil equipment maker) for $7.6 Billion in Cash.
10. Which software company has recently acquired healthcare company TriZetto?
Stock Market Analysis
Sooraj Kumar C., F1
The BSE Index (Sensex) plummeted to 26631.29 points in the last week of September. The BSE averaged
6362.17 Index points since its inception, reaching an all-time high of 27319.85 points in mid-September this year.
Looking at specific segments in the market, the BSE Mid-cap index ended up 1% and small-cap index gained 1.5% this
month.
On the sectorial front, BSE Healthcare, IT and Consumer Durables were the top sectorial indices. However,
Auto, Bankex, Metal and FMCG indices ended down between 0.4-1.1 per cent. Sun Pharma gained 3.4 per cent while
Cipla ended 0.7% higher. TCS gained 3%. HDFC, HDFC Bank, ICICI Bank and Axis Bank ended down between 0.7-
1.4 percent each.
Asian markets remained volatile following political unrest in Hong Kong, the worst in 20 years. Shanghai
Composite gained 0.4% while shares in Hong Kong witnessed selling pressure and the Hang Seng ended 1.9% lower.
Meanwhile, Singapore's Straits Times ended flat with negative bias.
Stock of the Month (Sun Pharma)
Total Share Capital: Rs. 207.12 million
Book Value per Equity share: Rs. 75
Previous Close: Rs. 834.20/-
Answers for Quiz:
1. Arvind Subramanian
2. Hero cycles
3. ITC
4. Alibaba
5. Yahoo
6. Indra Nooyi
7. SBI
8. KKR (Kohlberg Kravis Roberts)
9. Siemens
10. Cognizant Technology Services
PhotoFind
Nilanjana Chatterjee, F2
Answers:
1. Jack Ma, Executive Chairman of Alibaba Group. He is the first mainland Chinese entrepreneur to appear on
the cover of Forbes.
2. Logo of World Bank, United Nations international financial institution that provides loans to developing coun-
tries for capital programs.
3. Larry Page, CEO and co-founder of Google.
4. Logo of Reuters, an international news agency headquartered in Canary Wharf, London and
a division of Thomson Reuters.
5. Yogesh Chander Deveshwar, Chairman of ITC Limited.
6. Logo of International Monetary Fund (IMF), an international financial organization.
Nishka is a monthly finance magazine brought by the students of the finance club of Chr ist
University Institute of Management, Kengeri Campus. The idea behind coining this issue of the
magazine is to establish a learning among the students, which helps them to gain an insight about the
world of finance.
NISHKA TEAM
Faculty Coordinator
Prof Shrikanth Rao
Student Coordinators
Niharika Shadra
Niken Jain
INSTITUTE OF MANAGEMENT, CHRIST UNIVERSITY, KENGERI CAMPUS
Please mail your valuable feedback/reviews to [email protected]
(For private circulation only)
Editor
George P Job
Neha Mishra
Introduction
Sudeshna Bhattacharya
Upasana Gurung
Purnima Singh
Article coordinators
Ashwathy Edison
Sudeshna Bhattacharya
Article writing
CK Karthik
Niharika Shadra
Aswathy Edison
RBI Column
Pawanpreet Kaur
Finance Buzz
Vyom Goel
Market updates
B.A Sravya
Katepalli Alekhya
Economic Rollers
Simmy Kumari
Stock Analysis
Sooraj Kumar
Crossword
Samyuktha Reddy
Quiz
Rahul Srinivas Chaganti
Photofind
Nilanjana Chatterjee
Corporate interview
Sai Nanthini RK
Designing
Krishnendu Kundu