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Questions

  • Public Lt v/s Private Lt

A company is a voluntary assosiation of a group of ppl as per the companies act with a seperate legal entity, distinct name, common seal, common capital divided into a common denomination called shares which are transferable formed for the purpose of doing business. Eg: tcs, Infosys.

Feature PVT LTD Public ltd.
No. of shareholders Min: 2, max: 200 Min: 7, max: $\infty$
Directors min: 2, max: — Min: 3, max: 15
Transfer of shares Only among 200 Anyone
Name clause Pvt Ltd is mandatory only Ltd is needed
Fin. stmts X mandatory
General body meetings X mandatory
Director's salary No limit There is a limit as per regulation
Prospectus, MOA, AOA Only prospectus required All 3 mandatory
Regulatory bodies Only company act. Companies act, SEBI, Registrar of companies, FEMA: Foreign ex. management act.
- [x] Treasury bill yield

FV-DP/DP * 364/D * 100

  • Money Market v/s Capital Market
Feature Money Market Capital Market
Duration Short term fund / duration Long duration / long term
Location No fixed place Fixed place (Stock Exchange)
Participants Not much notification Public participation
Volume High volume short duration Regular produce / volume
Risk/Return High liquidity; Not fixed produces High risk; Returns unpredictable
Regulator RBI Registered SEBI Registered
  • 5 A/s

1. Anticipation: Planning for the Future

The first step in financial management is anticipation, which involves forecasting future financial needs. This includes estimating revenues, expenses, capital requirements, and cash flow. Financial planning, budgeting, and forecasting are core activities in this phase.

Key Activities:

  • Developing annual budgets
  • Conducting financial forecasting
  • Scenario and risk analysis

Objective: To prepare the organization for both expected and unforeseen financial demands, ensuring long-term sustainability.

2. Acquisition: Securing Financial Resources

Once needs are identified, the next step is acquisition—obtaining the funds necessary to meet those needs. This can involve sourcing capital through equity, debt financing, internal profits, or external grants.

Key Activities:

  • Fundraising
  • Securing loans or investments
  • Managing working capital

Objective: To ensure funds are available at the right time and at the most favorable terms.

3. Allocation: Distributing Financial Resources

With funds secured, the next function is allocation. This step focuses on how best to distribute financial resources across various departments, projects, or investments to maximize efficiency and returns.

Key Activities:

  • Capital budgeting
  • Resource prioritization
  • Investment planning

Objective: To align financial resources with strategic priorities for maximum impact and growth.

4. Appropriation: Controlling and Authorizing Spending

Appropriation refers to the authorized use of financial resources. This function ensures that spending stays within budgetary constraints and complies with internal policies and external regulations.

Key Activities:

  • Expense monitoring
  • Internal controls and approvals
  • Budget enforcement

Objective: To promote accountability and avoid overspending or financial mismanagement.

5. Assessment: Evaluating Financial Performance

Finally, assessment involves evaluating the effectiveness of financial activities. This includes reviewing performance, identifying areas of improvement, and ensuring compliance through audits and analysis.

Key Activities:

  • Financial statement analysis
  • Internal and external audits
  • Performance reviews and KPIs

Objective: To drive continuous improvement, ensure transparency, and support informed decision-making.

  • Certificate of Deposit v/s Fixed deposit
Certificate of Deposit Fixed Deposit
Issued by commercial banks Created at bank
Denomination fixed Denomination not fixed
Duration fixed Duration not fixed
Interest not specified Interest specified
Transferrable Non-transferrable

  • Equity Capitalisation

  • Money Market Products

Money Market Products - [x] Monetory Policies of RBI

Monetary Policy Instruments - [x] Treasury bill v/s Commercial paper

Treasury Bill Commercial Paper
Issued by Government of India Issued by Big Industrial Houses
91, 182, 364 7 - 365 days
Denomination starts from 25,000 Denomination starts from 5,00,000
Risk-free Backed by issuing company, may be risky
To manage the governments fiscal deficit Used for working capital needs
Not requirement for ratings Companies require ratings from ICRA, CRISLL, CARE
  • Organization of RBI

RBI is the India central bank, overseeing country’s monetary policies, managing banks and issuing currencies. It is the apex bank of the country. It serves as the banker of banks and general public. RBI controls the money market of India

Leadership and Central Board

There are 21 members who must hold minimum 4 board meetings. - Governor - Nominated by govt for 3 years - 4 Deputy Governors - 4 Regional Directors - 10 Directors - 2 Secretaries - One from Ministry of Finance and another from Ministry of Commerce.

Monetary Policy Committee

  • Governor
  • Deputy Governor
  • 3 nominees from Govt of India

Internal Departments

  • Banking department and Banking operations
  • Banking development
  • Foreign Exchange and Export Credit
  • Legal and Inspection department
  • Agricultural and Industrial Finance

Institutions and Subsidiaries

The RBI manages several educational and training organizations, such as the RBI Academy, RBI Staff College, College of Agriculture Banking, NIBM (Pune), IGIDR (Mumbai), and IDRBT (Hyd)

Additionally, it has fully owned subsidiaries and specialized units

• BRBNMPL (Bharatiya Reserve Bank Note Mudran Private Limited): Operates printing presses in Mysore and Salboni

• SPMCIL: Manages currency note printing in Nashik and Dewas, along with four mints

• DICGC: Deposit Insurance and Credit Guarantee Corporation of India

• REBIT: Reserve Bank Information IT Private Limited

• IFTAS: Indian Financial Technology and Allied Services

  • REPO, SLR, Reverse REPO

Monetary Policy Instruments

  • 3 word expansion (NABARD, etc.)

NABARD - National Bank for Agricultural and Rural Development IFCI - Indian Financial Corporation of India IRBI - Indian Reconstruction Bank of India ICICI - Industrial Credit and Investment Corporation of India SPMCIL - Securities printing and minting corporation of India limited IFTAS - Indian Financial Technology and Allied Services REBIT - Reserve Bank IT BRBNMPL - Bharatiya National Bank Note Mudran Private Limited SEBI - Securities and Exchange Board of India IDBI - Indian Development Bank of India

  • Various commercial activities (with examples)

  • Trade

  • Warehousing
  • Transport
  • Banking
  • Insurance
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