MS 46 IGNOU MBA Solved Assignment -What are maritime perils? What is the difference Marine Cargo Policies and Marine hull policies?

What are maritime perils? What is the difference Marine Cargo Policies and Marine hull policies?

Ans :

         Maritime perils’ means the perils consequent on, or incidental to, the navigation of

the sea, that is to say, perils of the sea, fire, war perils, pirates, rovers, thieves, captures, seizures, restraints and detainments of princes and peoples, jettisons, barratry, and any other perils, either of the like kind, or which may be designated by the policy.”

         The term “perils of the sea” refers only to fortuitous accidents or casualties of the sea.

It does not include the ordinary action of the wind and waves. “Fortuitous” means

“accidental” not inevitable.

 marine insurance policies protect the assured against maritime perils. "Maritime Perils"

mean perils consequent on, or incidental to, the navigation of the sea, that is to say, perils of

the sea, fire, war perils, pirates and rovers, thieves, captures, seizures, restraints and

detainment of princes and peoples, jettisons, barratry and any other perils which are either

of the like kind or may be specified by the policy.

War Perils cover loss sustained owing to hostile acts of an enemy.
Pirates and Rovers means sea robbers and rioters who attack the ship from the shore.

          Jettison refers to throwing a part of the goods overboard with a view to lighten the ship and residue of the cargoes in an emergency.

         Barratry means wrongful act wilfully committed by the captain or crew in contravention of their duties, thereby causing prejudice to the owners, for example, intentionally setting fire to ship or running aground the ship.

         Perils of the sea refer only to fortuitous accidents or casualties of the seas. It does not include the ordinary wear and tear eg, bursting or breakage of shaft because inevitable action of the winds and waves. By the implied warranty of sea-worthiness, it is understood that a ship will be in such a condition as to withstand the ordinary waves and winds and therefore if the ship is sunk because of unseaworthines (eg defective boiler and machinery) at the commencement of voyage, the peril is not a sea peril and the insurer is not liable for any loss. On the other hand, the ship owner shall be liable to compensate the insurer, for any moneys payable to cargo owners, whose cargoes might have been danaged. Perils of the seas usually relate to casualties which might occur, and not to those which must occur.

War Perils cover loss sustained owing to hostile acts of an enemy.
Pirates and Rovers means sea robbers and rioters who attack the ship from the shore.
          Jettison refers to throwing a part of the goods overboard with a view to lighten the ship and residue of the cargoes in an emergency.

         Barratry means wrongful act wilfully committed by the captain or crew in contravention of their duties, thereby causing prejudice to the owners, for example, intentionally setting fire to ship or running aground the ship.

         Perils of the sea refer only to fortuitous accidents or casualties of the seas. It does not include the ordinary wear and tear eg, bursting or breakage of shaft because inevitable action of the winds and waves. By the implied warranty of sea-worthiness, it is understood that a ship will be in such a condition as to withstand the ordinary waves and winds and therefore if the ship is sunk because of unseaworthines (eg defective boiler and machinery) at the commencement of voyage, the peril is not a sea peril and the insurer is not liable for any loss. On the other hand, the ship owner shall be liable to compensate the insurer, for any moneys payable to cargo owners, whose cargoes might have been danaged. Perils of the seas usually relate to casualties which might occur, and not to those which must occur.

          Jettison refers to throwing a part of the goods overboard with a view to lighten the ship and residue of the cargoes in an emergency.
         Barratry means wrongful act wilfully committed by the captain or crew in contravention of their duties, thereby causing prejudice to the owners, for example, intentionally setting fire to ship or running aground the ship.

         Perils of the sea refer only to fortuitous accidents or casualties of the seas. It does not include the ordinary wear and tear eg, bursting or breakage of shaft because inevitable action of the winds and waves. By the implied warranty of sea-worthiness, it is understood that a ship will be in such a condition as to withstand the ordinary waves and winds and therefore if the ship is sunk because of unseaworthines (eg defective boiler and machinery) at the commencement of voyage, the peril is not a sea peril and the insurer is not liable for any loss. On the other hand, the ship owner shall be liable to compensate the insurer, for any moneys payable to cargo owners, whose cargoes might have been danaged. Perils of the seas usually relate to casualties which might occur, and not to those which must occur.

         Barratry means wrongful act wilfully committed by the captain or crew in contravention of their duties, thereby causing prejudice to the owners, for example, intentionally setting fire to ship or running aground the ship.
         Perils of the sea refer only to fortuitous accidents or casualties of the seas. It does not include the ordinary wear and tear eg, bursting or breakage of shaft because inevitable action of the winds and waves. By the implied warranty of sea-worthiness, it is understood that a ship will be in such a condition as to withstand the ordinary waves and winds and therefore if the ship is sunk because of unseaworthines (eg defective boiler and machinery) at the commencement of voyage, the peril is not a sea peril and the insurer is not liable for any loss. On the other hand, the ship owner shall be liable to compensate the insurer, for any moneys payable to cargo owners, whose cargoes might have been danaged. Perils of the seas usually relate to casualties which might occur, and not to those which must occur.

         Perils of the sea refer only to fortuitous accidents or casualties of the seas. It does not include the ordinary wear and tear eg, bursting or breakage of shaft because inevitable action of the winds and waves. By the implied warranty of sea-worthiness, it is understood that a ship will be in such a condition as to withstand the ordinary waves and winds and therefore if the ship is sunk because of unseaworthines (eg defective boiler and machinery) at the commencement of voyage, the peril is not a sea peril and the insurer is not liable for any loss. On the other hand, the ship owner shall be liable to compensate the insurer, for any moneys payable to cargo owners, whose cargoes might have been danaged. Perils of the seas usually relate to casualties which might occur, and not to those which must occur.

• Marine Cargo: Any loss or damage to goods in transit by rail, sea, road, air or post.

• Marine Hull: Any loss or damage to ships tankers bulk carriers smaller vessels fishing boats and sailing vessels.

• Fire or explosion; stranding sinking etc.

• Overturning derailment (of land conveyance)

• Collision

• Discharge of cargo at port of distress

• Jettison

• General average sacrifice salvage charges

• Earthquake lightning

• Washing overboard

• Sea lake river water

• Total loss of package lost overboard or dropped in loading or unloading.

• War and SRCC is specifically covered

• Fire or explosion; stranding sinking etc.

• Overturning derailment (of land conveyance).

• Collision.

• General average sacrifices salvage charges.

• Deliberate damage/destruction of the vessel by wrongful act of any person

• Use of any weapon of war employing atomic / nuclear fission and or fusion

• Insolvency or financial default of the vessel owner / operators / chatterers.

• War / civil war � Strike Riot or Civil Commotion.

• Any terrorist or person/s acting with political motive.

• Ocean Going Vessels

• Coastal Vessels

• Inland Vessels

• Port Crafts

• Ship Building

• Sailing Vessels

           Perils of the seas cover losses caused by seawater, stranding, cyclone, storm, lightning, fog, rough weather, collision with other ship, striking upon a sunken rock or icebergs.

Marine Cargo

The policy covers loss/damage to the property insured due to:

Marine Hull

The policy covers loss/damage to the property insured due to:

The policy does not pay any loss/damage caused by attributable to due to:

Types of Marine Cargo Insurance Policies

Open Cover

Open Policy

Specific Voyage Policy

Types of Marine Hull Insurance Policies

Charter’s Liability Fishing Trawlers, etc

MS 46 IGNOU MBA Solved Assignment - Explain the concepts of leasing and hire purchase and point out the difference between the two.

Explain the concepts of leasing and hire purchase and point out the difference between the two.

Ans :

Hire Purchase

                Hire Purchase, also known as Lease Purchase,  is ideal for Business or Private Users who wish to purchase a vehicle, but would like to spread the cost with manageable monthly installments. With Hire Purchase, there is normally a minimum deposit to pay, and then you can either spread the remaining cost equally over the chosen term, or opt to have a lump sum final payment, often referred to as a "Balloon". This type of agreement is designed for people requiring ownership, and there is no option of returning the vehicle at the end of the term.  Additional features such as maintenance may be available on a standalone basis, but not as part of this agreement.

How Does It Work?

          The process for buying a vehicle on Hire Purchase is simple.  First decide on the make/model of vehicle(s) required.  Then decide on the term of agreement (usually 2 to 5 years).  We'll then provide a quotation allowing you to spread the total cost, either with or without a final lump sum payment.

 Leasing

         A lease may be defined as a contractual arrangement or transaction in which a party (lessor) owing an asset or equipment provides the asset for use to another or transfer the right to use the equipment to the user (lessee) over a certain or for an indefinite period of time for consideration in the form of periodic payments (rentals). At the end of the period of contract (lease period), the asset or equipment reverts back to the lessor unless there is a provision for the renewal of the contract. The above definition reveals that leasing essentially involves the divorce of ownership from the economic use of an asset or equipment. It is a device of financing the cost of an asset. Lease financing is thus a device of financing or money lending. Lease financing is available for land, buildings, industrial equipments etc.

                As we have already discussed that in leasing, the user company does not own the machinery or the equipment leased; yet for all practical purposes the user has virtually all rights over the machinery. The main difference between leasing and term loan are: a finance company called the leasing company arranges to buy a piece of machinery or equipment (usually in consultation with and prior approval of the lessee) and the leases the machinery on long term to the lessee.
The basic features of a lease are-

• There are essentially two parties associated in the leasing; the lessor (owner of the asset) and the lessee (user of the asset).However, in some cases a third party called lender or financer is involved when the lessor thinks it to be necessary.

• The asset- a vehicle, an aircraft, a machine, a computer, a building, etc can be a subject of leasing.

• The lease contract separates the ownership from the user of the asset. After the tenure is over the asset reverted to the owner.

• Lease contract is done for a specified period; may be for long-term(called finance lease) or for short-term(called operating lease)

• Lessee has to pay a consideration to the lessor for using the asset. This is called rentals.

Point of Difference	Leasing	Hire-Purchase
Ownership Tax Deductibility Depreciation and other allowances Salvage Value	Ownership is not transferred to the lessee Entire lease rentals are tax-deductible expenses Cannot be claimed by the lessee Lessee cannot realize salvage value of the asset on the expiry of the lease  life of the asset.	Ownership is transferred to the hirer on payment of last installment. Only the interest component and not the entire installment is deductible Can be claimed by the hirer. Hirer can realize salvage value of the asset after payment of last installment and expiry of the life of the asset.

The lessee pays the lease rental whereas in a term loan the borrower is expected to pay the interest as well as the repayment of the loan amount. The lessee does not own the equipment and hence cannot claim the depreciation and investment allowances on the relative machines. However, the lease rental would normally include repayments towards principal and interest and the entire rental may be written off as eligible expenditure from profits for income tax purpose.

At the end of the lease period, the contract may be renewed or the asset may be sold to the lessee or the asset may be reverted to the owner

DIFFERENCES  BETWEEN LEASING AND HIRE-PURCHASE

Many a times people confuses between the leasing and hire purchase contract. Both leasing and hire-purchase provide a source of financing of fixed assets. However, the two are not similar on many accounts. Let us discuss the following points of distinction between leasing and hire purchase 

MS 46 IGNOU MBA Solved Assignment -Describe in detail the important aspects of the pre issue activities.

Describe in detail the important aspects of the pre issue activities.

Why do pre-listening tasks?

         In real life it is unusual for people to listen to something without having some idea of what they are going to hear. When listening to a radio phone-in show, they will probably know which topic is being discussed. When listening to an interview with a famous person, they probably know something about that person already. A waiter knows the menu from which the diner is choosing their food.
This is perhaps the most important thing to do - even most exams give an idea about who is speaking, where and why. In normal life we normally have some idea of the context of something we are listening to.
Motivating our students is a key task for us. If they are to do a listening about sports, looking at some dramatic pictures of sports players or events will raise their interest or remind them of why they (hopefully) like sports. Personalisation activities are very important here. A pair-work discussion about the sports they play or watch, and why, will bring them into the topic, and make them more willing to listen. 'You are going to listen to an ecological campaigner talk about the destruction of the rainforest'. This sets the context, but if you go straight in to the listening, the students have had no time to transfer or activate their knowledge (which may have been learnt in their first language) in the second language. What do they know about rainforests? - Where are they? What are they? What problems do they face? Why are they important? What might an ecological campaigner do? What organisations campaign for ecological issues? Students may have limited general knowledge about a topic. Providing knowledge input will build their confidence for dealing with a listening. This could be done by giving a related text to read, or, a little more fun, a quiz. Just as activating topic knowledge is important, so is activating the language that may be used in the listening. Knowledge-based activities can serve this purpose, but there are other things that can be done. If students are going to listen to a dialogue between a parent and a teenager who wants to stay overnight at a friend's, why not get your students to role play the situation before listening. They can brainstorm language before hand, and then perform the scene. By having the time to think about the language needs of a situation, they will be excellently prepared to cope with the listening. Once we know the context for something, we are able to predict possible content. Try giving students a choice of things that they may or may not expect to hear, and ask them to choose those they think will be mentioned. When we listen in our first language we can usually concentrate on the overall meaning because we know the meaning of the vocabulary. For students, large numbers of unknown words will often hinder listening, and certainly lower confidence. Select some vocabulary for the students to study before listening, perhaps matching words to definitions, followed by a simple practice activity such as filling the gaps in sentences. By giving your students plenty of time to read and understand the main listening comprehension tasks, you allow them to get some idea of the content of the listening. They may even try to predict answers before listening. When planning your lesson you should take the following factors into account when preparing the pre-listening tasks.

         In our first language we rarely have trouble understanding listening. But, in a second language, it is one of the harder skills to develop - dealing at speed with unfamiliar sounds, words and structures. This is even more difficult if we do not know the topic under discussion, or who is speaking to whom.

So, simply asking the students to listen to something and answer some questions is a little unfair, and makes developing listening skills much harder.

Many students are fearful of listening, and can be disheartened when they listen to something but feel they understand very little. It is also harder to concentrate on listening if you have little interest in a topic or situation.

Pre-listening tasks aim to deal with all of these issues: to generate interest, build confidence and to facilitate comprehension.

Aims and types of pre-listening tasks

Setting the context

Generating interest

Activating current knowledge - what do you know about…?

Acquiring knowledge

Activating vocabulary / language

Predicting content

Pre-learning vocabulary

Checking / understanding the listening tasks

Selection criteria

The time available

The material available

The ability of the class

The interests of the class

The nature and content of the listening text

         The choice of pre-listening task also gives you a chance to grade the listening lesson for different abilities. If you have a class who are generally struggling with listening work, then the more extensive that the pre-listening work is the better. If, however, you wish to make the work very demanding, you could simply do work on the context of the listening. Thus, the same listening text can provide work for different abilities.

Personally, I feel it is important to devote a fair proportion of a lesson to the pre-listening task, should the listening warrant it. For example, the listening about an ecological campaigner lends itself well to extended knowledge and vocabulary activation. However, a listening involving airport announcements may only need a shorter lead-in, as the topic is somewhat narrower.

Overall, training your students to bring their own knowledge and their skills of prediction to their listening work can only help them when listening to the language outside the classroom. These skills are as much a part of listening as understanding pronunciation or listening for details.

MS 46 IGNOU MBA Solved Assignment - What is a depository system? Discuss the process of dematerialization and the process of creating pledge of securities held in depository.

What is a depository system? Discuss the process of dematerialization and the process of creating pledge of securities held in depository.

Ans :

           A "Depository" is a facility for holding securities, which enables securities transactions to be processed by book entry. To achieve this purpose, the depository may immobilize the securities or dematerialise them (so that they exist only as electronic records).India has chosen the dematerialisation route. In India, a depository is an organisation, which holds the beneficial owner's securities in electronic form, through a registered Depository Participant (DP). A depository functions somewhat similar to a commercial bank. To avail of the services offered by a depository, the investor has to open an account with a registered DP

Concept of depositary system essentially aims at eliminating the voluminous and cumbersome paper work involved in the scrip-based system and offers scope for ‘paperless’ trading through state-of-the-art technology. It enables conversion of physical securities in electronic form through a process of ‘dematerialization’ (also known as ‘demat’) of share certificates and facilitates share transactions and transfers electronically without involving any share certificate or transfer deed. It thus alleviates the hardship currently faced by the investors and it offers options for converting the shares from electronic to physical or paper from through a process of ‘rematerialization’ (also known as ‘remat’). Depositary System is, indeed, time-tested and long prevalent in many advanced countries and has been playing a significant role in stock markets around the world.

In India, the first depositary has been set-up by National Securities Depositary Limited (NSDL), which is jointly promoted by IDBI, UTI and the NSE (National Stock Exchange) in accordance with the Rules and Regulations framed by SEBI.

Constituents

·         Depository (NSDL)

·         Depository Participants (DPs)

·         Companies Registrars

·         Investors 

We would like to describe the concept step-by-step:  

           Few years’ back, it was a concept of scrip-based system it was indeed a quite complex and time consuming and was riddled with a variety of problems like bad deliveries for several reasons, e.g.: 

·         Litigations and disputes in respect of shares purchased,

·         Tearing and mutilation of certificates,

·         Fake certificates

·         Loss of certificate in transit,

·         Delay in postal transit,

·         Time taken in processing

·         Mistakes in completing the details in transfer deeds,

·         Stamp Duty/ postal charges, etc.

DEMATERIALISATION

            It is a process of conversion of physical share – certificate into electronic – form . So, when a shareholder uses the dematerialization facility, company take back the shares, through depository – system and equal number of shares are credited in his account in e-form. 

             DEMAT is a process by which your share certificates are taken back by HLL through your DP, verified and if found in order, demat is confirmed by HLL and then an equivalent number of shares are credited by the DP to your account as electronic holding. The entire process of dematerialization has to be completed within a period of 15 days.

The depository system is very much like our banking system as,

·         NSDL holds securities in accounts

·         Safe keepings of securities

·         Transfers without handling securities

·         Transfers securities between accounts

Rematerialization

          It is a process of conversion of electronic shares into physical shares. When a beneficial – owner opt out of a depository, he will inform about it, to the company, through depository. The company will issue fresh share – certificate to the beneficial – owner, within 30 days from the date of request. 

In this, e- records are converted into physical – shares certificate.

Firstly shares are dematerialize then it is rematerialize, so it is secondary and supporting function of depository.

In this process it requires “Rematerialisation Request form” (RRF)

          Rematerialization is a process of converting your electronic holdings back into share

certificates in paper form. The process of rematerialization is also carried out through your DP and the process has to be completed within a period of 30 days.    

Switching over depository system from scrip-based system 

 The switching procedure is described here systematically:

STEP 1: -

·         Approach a DP of your choice and open an account just like we open an account with a bank.

·         With the opening of account, you get identification number called ‘Client ID’ that serve as a reference point for all your transactions with the DP. 

·         Fill up a form called Dematerialization Request Form (DRF) to be provided by the DP and hand over your share certificates duly called by writing “ surrendered for dematerialization” to them for demat. The DP will accept certificates registered only in your name. A specimen of DRF as prescribed by NSDL is given in annexure ‘C’.  

STEP 2: -

·         Upon receipt of DRF along with the original share certificates, the DP sends an electronic request to HLL through NSDL for confirmation of demat and simultaneously surrenders your DRF and share certificates accompanied by a standard letter to HLL for demat confirmation.

STEP 3: -

·         HLL is already equipped with the requisite hardware/software facility and is linked to NSDL network through a V-SAT connection. Your DP’s request for demat is thus electronically received by HLL through NSDL without any delay.

STEP 4: -

·         As soon as HLL receives the DRF and your share certificates, necessary verification is done and demat is confirmed to NSDL. 

STEP 5: -

·         NSDL further confirms demat to your DP.

STEP 6: -

·         DP credits your account with the number of shares so dematerialized and thereafter you hold the securities in electronic form.

·         Your DP also gives you a statement of holdings and updates your account after each transaction just like your bank account.  

FREEZING OF YOPUR ACCUONT WITH THE DP

If at any time, as a security measure, you wish that no transaction should be affected in your account, you may accordingly advise your DP who shall then ensure that your account is totally frozen until further instructions from you.

CORPORATE BENEFITS

When HLL announces dividend, NSDL will provide the details of all persons having electronic holding of HLL shares with reference to the record date/book closure and HLL will disburse the dividend to such holders by sending dividend warrants directly to them as per the practice presently followed in scrip-based system. In case of rights/bonus issues, the distribution of share entitlement will be done in electronic from by NSDL based on the information provided by HLL.

For any discrepancy with regard to corporate benefits, you can always approach your HLL/DP for any assistance of clarification.

BENEFITS OF THE DEPOSITORY SYSTEM:

·         As would be evident from the above, electronic transaction of securities eliminates the problems and delays arising out of scrip-based system.

·         Bad deliveries are almost eliminated.

·         There is no hassle, filling in transfer deeds and lodging/dispatching the transfer documents with the company, thus avoiding a lot of paper work.

·         You no longer have to wait for the shares to be transferred in your name and suffer delays because of processing time.

·         It thoroughly eliminates risks associated with loss/fraudulent interception of share certificates in postal transit.

·         There is no scope for any risk of loss, theft of fraud with regard to share certificates.

·         When you buy shares in depository mode, you become the owner of those shares in electronic from within a day of the completion of settlement. Similarly, when you sell shares in electronic from, you receive the payment much faster.

·         Investment is highly liquid at all times, as there is shorter waiting period.

·         The marketable lot for transaction in depository mode has been fixed as one share. Therefore, the problem of odd lots is eliminated.

·         Once you open an account with the DP for HLL shares, you can utilize the same for transacting securities of other companies, which are part of the depositary system.

·         You save on stamp duty @ 0.5% of the market value of shares and although you incur some cost towards DP’s service charges, it could still lead to some savings. This however needs to be evaluated by the individual investor.

·         The Syndicate, thus, request you to evaluate seriously this option of investment. We would be please to provide our assistance.

Rights and Obligations of Depositories and its constituents  :

1.            Every depository has to enter into an agreement  with the issuer  in respect of securities  to become eligible to held the securities in demat form.

2.            2.      Every depository is to maintain the following records and documents :

(a)    Records of securities dematerialised and rematerialised

(b)   Names of the transferor, transferee, and the dates of transfer of securities

(c)    A register and an index of beneficial owners

(d)   Details of holding of the securities of the beneficial owners as at the end of every day.

(e)    Records of instruction received from and sent to participants, issuers’ agents and beneficial owners,

3.            Details and the maintenance of records and documents should be intimated to Board.

All the records and documents should be preserved for minimum 5 years.

MS 46 IGNOU MBA Solved Assignment -What do you mean by ‘Financial System’? Explain the various components of financial systems detailing their purpose and functions.

What do you mean by ‘Financial System’? Explain the various components of

financial systems detailing their purpose and functions.

Ans :

            A financial system can be defined at the global, regional or firm specific level. The

firm's financial system is the set of implemented procedures that track the financial activities

of the company. On a regional scale, the financial system is the system that enables lenders

and borrowers to exchange funds. The global financial system is basically a broader regional

system that encompasses all financial institutions, borrowers and lenders within the global

economy.

            The processes and procedures used by an organization's management to exercise financial control and accountability. These measures include recording, verification, and timely reporting of transactions that affect revenues, expenditures, assets, and liabilities.

There are majorly 2 components of financial system one is formal financial system and another one is informal financial system. under the formal financial system there are 4 components

This is also called organized financial System
2)Financial Markets
3)Regulators
4)financial instruments
in informal financial system
in informal financial system
1. Money
2. Financial Instruments
3. Financial Market
4. Financial Institutions
5. Central Bank
1. Money
2. Financial Instruments
3. Financial Market
4. Financial Institutions
5. Central Bank

Financial Institutions

Financial institutions facilitate smooth working of the financial system by making investors and borrowers meet. They mobilize the savings of investors either directly or indirectly via financial markets, by making use of different financial instruments as well as in the process using the services of numerous financial services providers. They could be categorized into Regulatory, Intermediaries, Non-intermediaries and Others. They offer services to organizations looking for advises on different problems including restructuring to diversification strategies. They offer complete array of services to the organizations who want to raise funds from the markets and take care of financial assets for example deposits, securities, loans, etc.

Financial Markets

Financial Markets: - Financial Markets can be classified as primary and secondary markets. A Primary Market deals with new issues and secondary markets is meant for trading in existing securities.

Financial Instruments

Financial Instruments: - A financial instrument is a claim against an institution or a person for payment at a future date of a sum of money in the form of dividend.

Financial Services

Financial services consist of services provided by Asset Management and Liability Management Companies. They help to get the necessary funds and also make sure that they are efficiently deployed. They assist to determine the financing combination and extend their professional services upto the stage of servicing of lenders. They help with borrowing, selling and purchasing securities, lending and investing, making and allowing payments and settlements and taking care of risk exposures in financial markets. These range from the leasing companies, mutual fund houses, merchant bankers, portfolio managers, bill discounting and acceptance houses. The financial services sector offers a number of professional services like credit rating, venture capital financing, mutual funds, merchant banking, depository services, book building, etc. Financial institutions and financial markets help in the working of the financial system by means of financial instruments. To be able to carry out the jobs given, they need several services of financial nature. Therefore, Financial services are considered as the 4th major component of the financial system

Functions performed by financial system are:

•Saving function: Public saving find their way into the hands of those in production through the financial system. Financial claims are issued in the money and capital markets which promise future income flows. The funds with the producers result in production of goods and services thereby increasing society living standards.

•Liquidity function: The financial markets provide the investor with the opportunity to liquidate investments like stocks bonds debentures whenever they need the fund.

•Payment function: The financial system offers a very convenient mode for payment of goods and services. Cheque system, credit card system etc are the easiest methods of payments. The cost and time of transactions are drastically reduced.

•Risk function: The financial markets provide protection against life, health and income risks. These are accomplished through the sale of life and health insurance and property insurance policies. The financial markets provide immense opportunities for the investor to hedge himself against or reduce the possible risks involved in various investments