Samacheer Kalvi 12th Commerce Notes Chapter 5 Capital Market
→ The term Capital Market refers to the facilities and institutional arrangements through which long term funds both debt and equity are raised and invested.
→ Capital Market can be defined as a “Market for borrowing and lending of long term capital funds required by business enterprises.” Capital market offers an ideal source of external finance.
→ The Capital Market is divided into two that is Primary Market and Secondary Market. Primary Market deals with those securities which are issued to the public for the first time. Primary Market facilitates capital formation.
→ Secondary Market may be defined as the market for old securities which are previously issued in the Primary Market are traded here. It covers both stock exchange and over-the-counter market.
→ The significance of Capital Market in economic development – savings and capital formation, permanent capital, Industrial growth, proper channelization of Funds and Provision of variety of services.
→ The period between 1947 and 1973 marked the development of infrastructure for Capital Market. The period between 1980 and 1992, Debenture emerged as a powerful instrument of resources mobilization in the Primary Market. There was a momentous growth in the Secondary Market.
→ SEBI emerged as an effective regulatory body for the Primary and Secondary Markets.
→ A High Powered study Group on Establishment of New Stock Exchange, A Committee on Trading in Public Sector Bonds and Units of Mutual Funds.
→ A number of institutions of finance have been established to cater to the credit, requirements of various segments of Industry and needs. (Mutual Funds, Factoring institutions, OTCEI, NSEI, NCDS, NSDL and SHCIL).