Q1.

1) Securities financing is the lending of securities (stocks, bonds, asset-

backed securities) by one party to another against cash. There are different
types of securities financing transactions, including securities loans, repurchase
agreements and sell-buybacks, but the economics of the transaction are similar:
this is a form of short-term lending using securities as collateral. In January
2014, the European Commission proposed a Regulation to make SFTs more
transparent by giving supervisors a better understanding of the systemic risks of
this practise. The Regulation requires all SFTs to be reported to trade
repositories, to help supervisors to identify stability risks. It requires investment
funds that use SFTs to inform their investors and potential investors about their
SFT practices, which should improve market discipline as investors could better
assess the risks and rewards being taken with their assets.

2) Loan Financing means financing made or to be made available by the Bank to the

Borrower in its capacity as the Borrower under the Loan Agreement and on-lent to the
Recipient pursuant to the terms of the Subsidiary Loan Agreement. Loan financing is
offered by many equipment manufacturers, vendors, and contractors as well as third-party
banks and lenders. Loan terms and availability may be affected by the creditworthiness of
the customer, limitations on debt that can be taken on the balance sheet, or current debts
held by the customer.

A LOAN MAY BE A GOOD FIT IF YOUR ORGANIZATION...

 Wants a simple, quick, accessible financing option with minimal contract

complexity
 Is considering working with a manufacturer or contractor that offers loan
financing
 Is relatively credit-worthy and willing to take on equipment performance
risk
 Qualifies for one or more of the various below-market and philanthropic
loan options below

3) Project financing refers to the funding of long-term projects, such as public infrastructure or

services, industrial projects, and others through a specific financial structure. Finances can consist
of a mix of debt and equity. The cash flows from the project enable servicing of the debt and
repayment of debt and equity. The structure of project financing relies on future cash flows for
repayment of the project finances. The assets or rights held under the project act as collateral for
the finance. Governments or companies prefer project finance for long gestation projects or for
joint venture arrangements or collaboration arrangements. In project financing, the lenders have
limited recourse. This means that in the case of a default, the lenders have recourse to the assets
under the project, securing completion and using performance guarantees under the project.

Q2 Loan syndication is the process of involving a group of lenders in funding various

portions of a loan for a single borrower. Loan syndication most often occurs when a
borrower requires an amount too large for a single lender to provide or when the loan is
outside the scope of a lender's risk-exposure levels. Syndicated loans arise when a project
requires too large a loan for a single lender or when a project needs a specialized lender
with expertise in a specific asset class. Syndicating the loan allows lenders to spread risk
and take part in financial opportunities that may be too large for their individual capital base.
Interest rates on this type of loan can be fixed or floating, based on a benchmark rate such
as the London Interbank Offered Rate (LIBOR). LIBOR is an average of the interest rates
that major global banks borrow from each other.

Q3) 1 – Regulation of Monetary Supply- Financial like the central bank help in regulating the
money supply in the economy. They do it to maintain stability and control inflation. The
central bank applies various measures like increasing or decreasing repo rate, cash reserve
ratio, open market operations, i.e., buying and selling government securities to regulate
liquidity in the economy.

2-Banking Services- Financial institutions, like commercial banks, help their customers by

providing savings and deposit services. They provide credit facilities like overdraft facilities
to the customers for catering to the need for short-term funds. Commercial banks also
extend several kinds of loans like personal loans, education loans, mortgage or home loans
to their customers.

3-Insurance Services- Financial institutions, like insurance companies, help to mobilize savings
and investment in productive activities. In return, they provide assurance to investors against
their life or some particular asset at the time of need. In other words, they transfer their
customer’s risk of loss to themselves.

4-Capital Formation- Financial institutions help in capital formation, i.e., increase in capital
stock like the plant, machinery, tools and equipment, buildings, means of transport and
communication, etc. They do so by mobilizing the idle savings from individuals in the
economy to the investor through various monetary services.

5 – Investment Advice- There are a number of investment options available at the disposal of
individuals as well as businesses. But in the current swift changing environment, it is very
difficult to choose the best option. Almost all financial institutions (banking or non-banking)
have an investment advisory desk that helps customers, investors, businesses to choose the
best investment option available in the market according to their risk appetite and other
factors.

6 – Brokerage services- These institutions provide their investors access to a number of

investment options available in the market that ranges from stock, bonds (common
investment alternative) to hedge funds, and private equity investment (lesser-known
alternative).
7 – Pension Fund Services- Financial institutions, through their various kinds of investment
plans, help the individual in planning their retirement. One such investment options is
a pension fund, where the individual contributes to the pool of investment set up by
employers, banks, or other organizations and get the lump sum or monthly income after
retirement.

8 – Trust Fund Services- Some financial organization provides trust fund services to their
clients. They manage the client’s assets, invest them in the best option available in the
market, and take care of its safekeeping as well.

9 – Financing the Small and Medium Scale Enterprises- Financial institutions help small and
medium scale enterprises set up themselves in their initial days of business. They provide
long-term as well as short-term funds to these companies. The long-term fund helps them in
the formation of capital, and short-term funds fulfil their day to day needs of working capital.

10 – Act as A Government Agent for Economic Growth- Financial institutions are regulated by
the government on a national level. They act as a government agent and help in the growth
of the nation’s economy as a whole. For example, to help out an ailing sector, financial
institutions, as per the guidelines from the government, issue selective credit line with lower
interest rates to help the sector overcome the issues it is facing.

Q4) A global depositary receipt (GDR) is a bank certificate issued in more than one country
for shares in a foreign company. GDRs list shares in two or more markets, most frequently
the U.S. market and the Euromarkets, with one fungible security. DRs are most commonly
used when the issuer is raising capital in the local market as well as in the international and
US markets, either through private placement or public stock offerings. A global depositary
receipt (GDR) is very similar to an American depositary receipt (ADR), except an ADR only
lists shares of a foreign country in the U.S. markets. Companies issue GDRs to attract
interest from foreign investors. GDRs provide a lower-cost mechanism in which these
investors can participate. These shares trade as though they are domestic shares, but
investors can purchase the shares in an international marketplace. A custodian bank often
takes possession of the shares while the transaction processes, ensuring both parties a
level of protection while facilitating participation.

Q5) Types Of Money Market Instruments

Treasury Bills (T-Bills)
Issued by the Central Government, Treasury Bills are known to be one of the safest money
market instruments available. However, treasury bills carry zero risk. I.e. are zero risk
instruments. Therefore, the returns one gets on them are not attractive. Treasury bills come
with different maturity periods like 3-month, 6-month and 1 year and are circulated by
primary and secondary markets.
Certificate of Deposits (CDs)
A Certificate of Deposit or CD, functions as a deposit receipt for money which is deposited
with a financial organization or bank. However, a Certificate of Deposit is different from a
Fixed Deposit Receipt in two aspects. The first aspect of difference is that a CD is only issued
for a larger sum of money. Secondly, a Certificate of Deposit is freely negotiable.
Commercial Papers (CPs)
Commercial Papers are can be compared to an unsecured short-term promissory note which
is issued by highly rated companies with the purpose of raising capital to meet requirements
directly from the market. CPs usually feature a fixed maturity period which can range
anywhere from 1 day up to 270 days. 
Repurchase Agreements (Repo)
Repurchase Agreements, also known as Reverse Repo or simply as Repo, loans of a short
duration which are agreed upon by buyers and sellers for the purpose of selling and
repurchasing. These transactions can only be carried out between RBI approved parties Repo
/ Reverse Repo transactions can be done only between the parties approved by RBI. 

Q6) 1) Factoring is a financial transaction and a type of debtor finance in which a

business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at
a discount. A business will sometimes factor its receivable assets to meet its present and
immediate cash needs. Forfaiting is a factoring arrangement used in international trade
finance by exporters who wish to sell their receivables to a forfeiter.[6] Factoring is commonly
referred to as accounts receivable factoring, invoice factoring, and sometimes accounts
receivable financing. Accounts receivable financing is a term more accurately used to describe a
form of asset-based lending against accounts receivable.
2) Venture capital (VC) is a form of private equity and a type of financing that investors
provide to start-up companies and small businesses that are believed to have long-term
growth potential. Venture capital generally comes from well-off investors, investment banks,
and any other financial institutions. However, it does not always take a monetary form; it
can also be provided in the form of technical or managerial expertise. Venture capital is
typically allocated to small companies with exceptional growth potential, or to companies
that have grown quickly and appear poised to continue to expand.
3) The term credit rating refers to a quantified assessment of a
borrower's creditworthiness in general terms or with respect to a particular debt or financial
obligation. A credit rating can be assigned to any entity that seeks to borrow money—an
individual, a corporation, a state or provincial authority, or a sovereign government.
Individual credit is scored by credit bureaus such as Experian, Equifax, and TransUnion  on
a three-digit numerical scale using a form of Fair Isaac Corporation (FICO) credit scoring.
Credit assessment and evaluation for companies and governments is generally performed
by a credit rating agency such as S&P Global, Moody’s, or Fitch Ratings. These rating
agencies are paid by the entity seeking a credit rating for itself or one of its debt issues.