Nishka

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 nishka@mba.christuniversity.in

(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