MA0041 – Merchant Banking and Financial Services

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Master of Business Administration- MBA Semester 4

MA0041 – Merchant Banking and Financial Services- 4 Credits

(Book ID: B 1318)

Assignment Set- 1 (60 Marks)

Note: Answer all questions (with 300 to 400 words each) must be written within 6-8 pages. Each Question carries 10 marks 6 X 10=60

Q1. Identify the role of merchant banking as financial intermediaries.

Answer : A well developed non-bank financial sector is viewed as an important component of a healthy and efficient financial system that can provide a sound base for growth and prosperity in the economy. This study observes that the non-bank financial sector has developed significantly in the SEACEN countries in the last two decades and it has helped widen and deepen the financial systems in these countries. The degree and scope of non-bank financial intermediation varies in the SEACEN region according to the extent of development of the financial systems.

Q2. Describe the issuance process of depository receipts.

Answer : GDRs are the best way of raising finance from USA and other European countries' investors.No Indian company has right to sell their shares in foreign capital market without GDRs. So, it is very necessary to know the procedure of issue GDRs. Only GDRs connects foreign investors with Indian Companies.

Following are the simple steps of issuing GDRs :

1st Step

To find the Depository bank

Depository bank has only right to issue the GDRs. So, it is necessary to find depository bank in USA and other European countries.

Q3. Explain the operational guidelines that need to be followed by a merchant banker.

Answer : Merchant Banks

Merchant banks are approved under the Monetary Authority of Singapore Actand their operations are governed by the Merchant Bank Directives. Their ACU operations are also subjected to the Banking Act.

Merchant Banks operate within the Guidelines for Operation of Merchant Banks. Their typical activities include corporate finance, underwriting of share and bond issues, mergers and acquisitions, portfolio investment management, management consultancy and other fee-based activities. Most merchant banks have, with MAS'

Q4. Explain the basic features of securities lending and borrowing scheme.

Answer : Features of SLBS

NSCCL as an Approved Intermediary launched the Securities Lending & Borrowing Scheme on April 21, 2008. Lending & Borrowing is facilitated on an automated screen based platform where the order matching is on price time priority. The participant needs to quote the lending fee per share on the order matching platform.

Features of Securities lending and borrowing scheme

Revised Securities Lending and  Borrowing (SLB) Scheme

In pursuance of SEBI Circular No MRD/Dope/SE/

Q5. Discuss the difference between asset and fee based financial services.

Answer: Asset-Based Lending or financial services

Asset-Based Lending (ABL) is a specialized loan product that provides fully collateralized credit facilities to borrowers with high financial leverage and marginal cash flows. These loans are based upon the assets pledged as collateral and are structured to provide a flexible source of working capital, by "monetizing" assets on your balance sheet.

Expertise

Financial Services is a committed business partner that combines deep industry expertise, derived from the entire Siemens experience in the healthcare, energy and industrial markets, with integrated financing solutions to

Q6. Describe accounting and reporting for operating lease in detail.

Answer : What is a lease?

A lease is simply an agreement between two parties for the hire of an asset. The lesser is the legal owner of the asset who rents out the asset to the lessee. At the end of the lease the asset is returned to the lesser. The lessee will pay a lease rental to the lesser in return for the use of the asset. The accounting treatment for the lease entirely depends on the nature of the lease. For accounting purposes all leases are classified into one of two categories, they are either deemed to be ‘finance leases’ or ‘operating leases’.

What are operating leases?

If you are studying the UK stream and have studied group accounts then you should be aware that FRS 6, Accounting for Acquisitions

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