Escrow account is an account placed in trust with a third party usually a bank to hold money which belongs to others. The release of money parked in escrow account will be dependent on conditions agreed to by the transacting parties. The Escrow services are offered to meet diverse requirements of clients that include Sale…
The Bank for International Settlements (BIS) was set up in 1930 with its head office in Basel, Switzerland and two representative offices in Hong Kong SAR and in Mexico City. The above organisation is owned by 60 central banks, representing several countries around the world that account for about 95% of world GDP. The aim…
The Negotiated Dealing System (NDS) is a facilitator platform for the purchase and sale of Government securities. The members who maintain their Subsidiary General Ledger (SGL) and or Current Account with RBI can participate in the auctions using this platform. Participants are primary dealers, commercial banks, and a few Financial Institutions who are permitted to…
Universal banking is generally compared to a super market where all types of financial products available within one roof. A universal bank undertakes financial services like commercial banking, investment banking, forex operations, remittances & payment systems, development banking and other financial services including functions of merchant banking, mutual funds, factoring, project finance, housing finance, credit…
Commercial Paper (CP) is an unsecured, money market instrument issued under section 45 W of the RBI Act. The corporates including Non-Banking Financial Companies and All India Financial Institutions (AIFIs) are eligible to issue Commercial Papers. Besides, other entities like co-operative societies/unions, government entities, trusts, limited liability partnerships, and other body corporates having a presence…
We are aware that the Reserve Bank of India issues Government securities on behalf of the Government. Primary Dealers are the licensed dealers who deal in buying and selling these Government securities. There are two types of primary dealers, viz. Standalone Primary Dealers and Bank Primary Dealers. Standalone Primary Dealers: Most of these PDs are…
The ordinance passed by Government of India on Wednesday (June 06, 2018) to Insolvency and Bankruptcy Code (IBC) treats home buyers in ailing real estate companies on par with banks in the resolution process. The new IBC ordinance tags the buyers of home buyers with financial creditors which empowers even a single home buyer to…
Convertible Bonds: Convertible bonds are exceptional securities that have features of both bonds and equity options. The holders of convertible bonds have the opportunity to convert bonds held by them into specified number of company’s equity shares during validity period for options mentioned in the bonds. The bond holder also receives the coupon payment till…
A Zero-Coupon Bond does not make periodic interest payments or “coupons” to the investors. Since the coupon rate of such bonds are ‘zero’ they are called as zero-coupon bond. In case of Zero-Coupon Bonds the issuer sells the bonds at a price less than the face value of the bonds and pays to the bond…
(This post explicates the difference between coupon rate and yield to maturity) Bonds: A bond is a debt instrument issued by a company or the Government to raise capital by way of borrowing from the investors. The investors in the bonds are debt holders (lenders/creditors). The issuer of bonds is obliged to pay bondholders the…