Innovative finance topics along with their simple meanings

 

    

            

• Green Finance: Money used for projects that help protect the environment, like solar power or electric cars.
• Crowdfunding: Raising small amounts of money from many people through the internet for a business or idea.
• FinTech (Financial Technology): Using apps or software to make banking, investing, or payments easier and faster.
• Cryptocurrencies: Digital money like Bitcoin that works without a bank.
• Robo-Advisors: Computer programs that give investment advice automatically, with little human help.
• Peer-to-Peer (P2P) Lending: People lending money directly to other people using online platforms—no banks involved.
• ESG Investing (Environmental, Social, Governance): Investing in companies that care about the planet, people, and good business practices.
• Blockchain in Finance: A digital way to record transactions safely and transparently, often used in crypto.
• Buy Now, Pay Later (BNPL): A way to buy something today and pay for it in parts later popular in online shopping.
• Neo-banks: Banks that work only through apps and websites-no physical branches.

 

UGC Invites Public Feedback on 'Professor of Practice' Guidelines to Involve Industry Experts in Higher Education

 

FDI inflows to India by Country- 2024-25  

source: file:///C:/Users/admin/Desktop/FDI%20Inflows.webp

 

·     Behavioural Fintech: Your savings app gives you friendly reminders and small rewards to encourage you to save regularly, helping you build an emergency fund without feeling forced.

·   Central Bank Digital Currencies (CBDCs): Instead of carrying cash, you get a digital wallet issued by your country’s central bank. You use it to pay for groceries or send money to a friend instantly without a bank in between.

Pigovian tax & Discount house

Pigouvian tax:  It is a tax levied on any market activities that generates negative externalities. This tax objective is to correct an inefficient market outcome. Example: Impose more tax on gold imports  

Discount house: Money dealer that participate in the buying and discounting (Selling) of bills of exchange and other financial products such as money market instruments, government bonds. 

Book Building

IPOs are offered at prices as detailed by their underwriters. Book building is the process through which an underwriter comes up with the price for the IPO being publicly offered. The underwriter of the IPO is normally an investment bank and this party determines the price by inviting institutional investors like fund managers to submit their respective bids for the price they would be willing to pay for a certain number of shares.

Hence book building is the means by which an underwriter can determine the overall price at which a company’s IPO will be publicly offered. To discover this price, the book-building process involves generating and keeping a record of investor demand for these shares before the underwriter arrives at their issuance price 

Pecking Order Theory

 

The pecking order theory states that companies prioritize their sources of financing (from internal financing to equity) and consider equity financing as a last resort. Internal funds are used first, and when they are depleted, debt is issued.

Instruments used under Money market

 

§  Treasury bills: Treasury bills are instrument of short-term borrowing by the Government of India, issued as promissory notes under discount. The interest received on them is the discount, which is the difference between the price at which they are issued and their redemption value.

§  Money at call short notice: It includes funds borrow to discount houses, money brokers, the stock exchange, bullion brokers, corporate customers, and increasingly to other banks. 'At call ‘money is repayable on demand, whereas 'short notice' money implies that notice of repayment of up to 14 days will be given.

§  Commercial bill: A Commercial Bill arises out of a genuine trade transaction. A bill of exchange is an important commercial bill which is drawn by the seller on the buyer for the amount due to him. The maturity period of bill may vary from three to six months.

§  Commercial Paper: Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note. It was introduced in India in 1990 with a view to enabling highly rated corporate borrowers to diversify their sources of short-term borrowings and to provide an additional instrument to investors.

§  Certificate of Deposits: A Certificate of Deposit in India are issued by all scheduled commercial banks excluding (Regional Rural Banks and Local Area Banks) and all India Financial Institutions permitted by RBI. A commercial bank can issue Certificate of Deposit as per their requirements.

§  Interbank participation certificate: Participation certificates are also a new form of credit instrument whereby banks can raise funds from other banks and other central bank approved financial institutions to ease liquidity. In this case banks have the option to share their credit asset(s) with other banks by issuing participation certificates.

§  Repo Instruments: Repo is short for repurchase agreement. Those who deal in government securities use repos as a form of overnight borrowing. A dealer or other holder of government securities (usually T-bills) sells the securities to a lender and agrees to repurchase them at an agreed future date at an agreed price.

§  Gilt-Edged securities: The gilt -edged market refers to the market for Government and semi-government securities, backed by the Reserve Bank of India (RBI). Government securities are tradable debt instruments issued by the government authorities for meeting its financial requirements. The term gilt-edged means 'of the best quality'

§  Bills rediscounting: Rediscount is the act of discounting a short-term negotiable debt instrument for a second time. Banks may rediscount these short-term debt securities to assist the movement of a market that has a high demand for loans.

§  Money market mutual funds: A money market fund is a mutual fund open-ended scheme that invests solely in cash/cash equivalent securities with less than one year maturity, which are also often referred to as money market instruments. These investments are short-term very liquid investments with high credit rating.

§  Call money: Call money is minimum 5% short-term finance repayable on demand, with a maturity period of one to fourteen days or overnight to fortnight. It is used for inter-bank transactions. The money that is borrow for one day in this market is known as "call money" and, if it exceeds one day, is referred to as "notice money."

§  Inter Corporate Deposits:  An Inter-Corporate Deposit (ICD) is an unsecured borrowing by corporate and FIs from other corporate entities registered under the Companies Act 1956. The corporate having surplus funds would lend to another corporate in need of funds.

Contingent Liabilities

Liabilities that may be incurred by an entity depending on the outcome of a uncertain future events such as court case, income tax disputes, sales tax disputes etc.. These liabilities are not recorded in company accounts and shown in the balance sheet.   

Evolution of Management Education

Management Education in India formally began in 1953 at the Indian Institute of Social Welfare and Business Management (IISWBM). The first B.School established by Government of West Bengal and Kolkatta Unibersity. However, a few institutions like Tata Institute of Social Sciences (1936) and Xavier Labour Research Institute (1949) had already started training programmes for managers in personnel function well before launch of first MBA programme at IISWBM. 

Swadeshi Products List with different brands of each Product

                    

Swadeshi toothpaste brands	Neem, Babool, Vicco vajradanti, Emami, Dant Kanti, Dabur red, Baidyanath, Choice, Meswak, Eagle, Anchor, Promise, MDH, Babul, Ajay, Ajanta, Classic, Dant Manjan, Herbodent
Swadeshi Toothbrush brands	Promise, Ajay, Royal, Classic, Ajanta, Monet, Dr. Strock, Patanjali
Swadeshi Tea and Coffee brands	Tata, Society, Himdhi, Leo coffee, Indian cafe, Divya Peya (Patanjali ), Shangrila, Vita, Nutrine, Duncan, Brahmaputra, Tej, Assam, Champion, Tate cafe, AVT tea, Wagh bakri, Madhu, Vereka, Mahan, Narasus
Swadeshi ice cream brands	Milk food, Parle, Nutramul, Safal, Bakeman, Mother Dairy, Vadilal, Asian, homemade ice cream/kulfi, Nirula, Arun ice cream, Amul, Himalaya, Classic
Swadeshi shampoo brands	Himalaya, Nikhar, Godrej, Nirma, Hair and Care, Kesh Kanti, Velvet, Nycil, Wipro, Arnica, Park avenue, Dabur, Vatika, Swastik, Mayur herbal, Bajaj, Nile, Lavender, Kesh Nikhar
Swadeshi mobile connection brands	Idea, Reliance, Airtel, Tata, BSNL, MTNL
Swadeshi mobile and PC brands	Videocon, Amar PC, Wipro, Orpat, Chirag, HCL, Onida, T Series, Micromax, Spice
Swadeshi Motorbike brands	TVS, Enfield, Hero, Bajaj
Swadeshi Readymade Garment brands	Cambridge, Peter England, Lux, Kolkata, Park Avenue, Mafatlal, Amul, Ludhiana, Oxemberg, Trend, VIP, Bombay Dyeing, Double bull, Raymond, Newport, Altimo, Ruf and Tuf, Zodiac, Flying machine, Don, Trigger Jeans, Prolin, Dukes, TT, Prolin
Swadeshi Watch brands	Titan, Prestige, Ajanta, HMT, Maxima, Fast track, Chumbak, Roadster, Fressberry, Sonata
Swadeshi Biscuit brands	Parle, Cremica, Patanjali, Amla candy, Bel candy, Aarogya biscuit, Tiger, Amul, Indiana, Sunfeast, Ravalgaon, Britannia, Priya gold, Bakemens, Anmol, Shangrila, Unibic
Swadeshi Snacks brands	Bikano, Maakhan bhog, Haldiram, Bikanervala, Parle, Kaleva, Kipps, Anamika
Swadeshi Tonic brands	Nutramul, Chyavan Prash, Patanjali, Maltova, Badaam Pak, Amrit Rasayan
Swadeshi Washing Powder brands	Tata shudh, Wheel, Chamko, Nima, Sasa, Care, T series, Sahara, Dr. Det, Swastik, Ghadi, Henko, Genteel, Rin, Ujala, Vimal, Ranipal, Fena, Nirma, Fena, Octo, Sunlight, Dip
Swadeshi Pen and Pencil brands	Camel, Ambassador, Flair, Linc, Classmate, Montex, Kingson, Steek, Rotomac, Sangita, Sharp, Apsara, Cello, Camel, Natraj, Luxor, Wilson, Today
Swadeshi online shopping brands	Flipkart, Book my show, India Plaza, Myntra, YeBhi, Naaptol, Make my trip, Snapdeal, Yatra, Ibibo, Home shop 18, clear trip, Via.
Swadeshi Cold Drink brands	Rose drink (Sherbet), Yoghurt, Shakes, Godrej Jumpin, Kalimark Bovonto, Chaach, Real, Badam drink, Juice, Jaljeera, Lemonade, Thandai, Coconut water, Roohafza, Rasna, Frooti
Swadeshi soap brands	Himalaya, Wipro, Ayur herbal, Nyle, Kaya Kanti Aloe vera, Nirma, Park Avenue, Kesh Nikhar, Mysoor Sandal, Medimix, Fair glow, Jasmine, Cinthol, Neem, Kutir, Ganga, Sahara, Godrej, Hair and care, Santoor, Dabur Vatika, Himani glycerine, Bajaj, Kesh Kanti, Swastik
Swadeshi Blade brands	Topaz, Gallant, Supermax, Esquire, Laser, Premium, Silver prince.
Swadeshi Shaving cream brands	Park avenue, Emami, Premium,  V-John, Balsara, Nivea, Godrej
Swadeshi Talcum Powder brands	Santoor, Cinthol, Gokul, Boroplus, Cavin care products
Swadeshi Textile brands	Raymond, American swan, Reliance Retail, Siya ram, Gini and Jony, RmKV, Bombay Dyeing, Globus, S.Kumars, Madame, Globus, Mafatlal, Monte Carlo, Garden Vareli
Swadeshi Footwear and Polish brands	Paragon, Finix, Action, Lakhani, Wiring, Kiwi shoe polish, Flash, Billy Chavda, Carona, Khadims, Rexona, VKC pride, Lunar footwear, Relaxo Sparx, Red tape, Lotus, Liberty
Swadeshi Jeans and Tshirt  brands	Spykar, Arvind Denim, Mufti, Numero Uno, Flying Machine,  Killer, K-Lounge
Swadeshi child food brands	Amul, Sagar, Milk care, Tapan
Swadeshi Salt brands	Tata, Taaza, Ankur, Surya, Sindhav, Sundar, Taaza, Nirma, Catch, Saffola, Iron-45 Ankur, Tara
Swadeshi Ketchup and Jam brands	Priya, Everest, Priya, Cremica, Indiana, Smith and Jones, Rasna, Patanjali fruit jams, Tops
Swadeshi Water brands	Bisleri, Yes, Himalaya, Kingfisher, Catch, Ganga, Rail Neer
Swadeshi oil brands	Param, Postman, Sapan, Vanaspati, Shakti Bhog, Amul, Dhara, Parachute, Ramdev, Goverdhan, Rocket, Ashok, MDH, Ginni, Saffola, Everest, Sweekar, Kohinoor, Bedeker, Raj oil, Cornelia, Madhur, Rath, Sahkar, Mohan, Engine, Lijjat, Ankur oil, Umang, Gagan, Ganesh, Amrit, Maruti, Vijaya
Swadeshi Cosmetic brands	VLCC, Vicco, Cinthol, Elle 18, Boroplus, Glory, Shahnaz Hussain, Boroline, Velvet, Himalaya, Himani gold, Viviana, Nyle, Borosil, Hair and care, Lavender, Ayur, Heavens
Swadeshi Electronic brands	Videocon, Orpat, Usha, Voltas, Jayco, BPL, Oscar, Polar, Arise, IFB, Nelco, Anchor, Cool home, Wipro, Weston, Surya, Khetan, Onida, Upton, Orient, Everready, Salora, Keltron, Cinni, ET&T, Cosmic, Geep, Crompton, Nelco, Lloyds, Nirlep, Novino, Godrej, Bajaj, Blue star, Elite, Crown
Swadeshi Automobile brands	Tata, Maruti, Mahindra, Hindustan Motors, Ashok Leyland, Swaraj, Hero, Eicher

Short Selling/Shorting

 Short selling involves borrowing a security whose price you think is going to fall from your brokerage and selling it on the open market. Your plan is to then buy the same stock back later, hopefully for a lower price than you initially sold it for, and pocket the difference after repaying the initial loan.

Traders may use short selling as speculation (Profit) and investors or portfolio managers may use it as a hedge against the downside risk of a long position in the same security.

Example

Example of Short Selling for a Profit

Imagine a trader who believes that ABC stock- currently trading at Rs.100-will decline in price in the next three months. They borrow 100 shares and sell them to another investor. The trader is now “short” 100 shares since they sold something that they did not own but had borrowed. A week later, the company whose shares were shorted reports dismal financial results for the quarter, and the stock falls to Rs. 90. The trader decides to close the short position and buys 100 shares for Rs.90 on the open market to replace the borrowed shares. The trader’s profit on the short sale, excluding commissions and interest on the margin account, is Rs.10, 000 (100 - 90 = 10 × 100 shares = 1,000).

Example of Short Selling for a Loss

Using the scenario above, let’s now suppose the trader did not close out the short position at Rs.90 but decided to leave it open to capitalize on a further price decline. However, a competitor swoops in to acquire the company with a takeover offer of Rs.115 per share, and the stock soars.

If the trader decides to close the short position at Rs.115, the loss on the short sale would be Rs.1, 500 (100 - 115 = negative 15 × 100 shares = 1,500 loss). Here, the trader had to buy back the shares at a significantly higher price to cover their position.

Difference between Retained earnings and Reserves

 Retained earnings 

Retained earnings are part of company's net income which is left after paying out dividends to shareholders. It uses to reinvest in the main business. 

Formula = (Previous Retained earnings + Net income) - Net dividend paid to shareholders 

Reserves

Reserves refers to a fund which an enterprise creates for fulfil future contingencies and unexpected liability. It is a part of the profit it uses to meet future losses or liability. Usually company transfer certain percentage of profit to reserves every year before giving dividend. 

Russia-Ukraine Invasion effects on global economy

Russia-Ukraine war effects on global economy 

Trade and Commodities: Commodity Prices were already on the rise and the respective indices skyrocketed since the start of invasion. 

Supply Chain: Due to the accelerated demand which outstripped supply, the world saw heavily disrupted global supply chains. 

Inflation: The combination of Higher commodity prices and supply chain crunch ultimately led to spikes in both producer and consumer inflation in most developed markets. 

Finance and Investment: The sanctions will definitely affect the financial interactions between Russia and the rest of the world, as Russia's participation in the financial and payments network is technically suspended. 

Components of Intellectual Capital (IC)

Intellectual Capital is the learning capacity, ability, and knowledge of employees, which in turn, reinforces the organizations' competitive edge. Initially, the gap between a company's book value and market value treated as IC. IC is helpful in improving firms' financial and market performance. 

Components of Intellectual Capital

Human Capital: Human capital is the summation of a person's intellect and expertise used by a          company to attain its long-term gals. 

Structural Capital/ Organizational Capital: It consists of supporting structure that enable the          company to access. It consists of hierarchical structures, methods, schedules, frameworks,                      technologies, data bases and so on that stay within the company. 

Relational Capital/ Customer Capital: It is capital formed outside the organization and is mainly      linked to the market, boosting its capabilities. It shows relationship with the customers, industry,            suppliers, society, government, shareholders and relationship with other companies. 

Innovation Capital: Introduction of unique products, which give greater value to the customers. In    addition, it offers better options for consumers than competitors in terms of quality, price, and                rewards. Therefore, therefore, the company's expenditure on R&D is considered the innovation              capital. 

Process Capital: Process have evolved into a vital component of every company and a critical              instrument for defining how assets are managed. It describes how a firm prepares its activities to            achieve its goals. It is a part of Innovation Capital that encourages the development, accessibility, and    sharing knowledge. 

Methods of Raising share capital

 An existing company has three methods for expanding its share capital. 

1. First is through a fresh issue of shares to existing shareholders in proportion to shares held by them---        Right issue or Bonus issue

2. Second is by making an open offer, inviting the public in general to subscribe the shares---IPO

3. The third method is by making a bulk allotment to individuals, companies, venture capitalists or any          other person through a fresh issue----  Private placement 

Recourse Vs Non-Recourse loan

Recourse is the Lender's legal  right to collect the Borrower's pledge collateral if the borrower does not pay their debt obligation

Recourse Loan: It allows lender to pursue additional assets when a borrower defaults on a loan if the debt's balance surpasses the collateral's value. 

Non-Recourse loan: It permits the lender to seize only the collateral specified in the loan agreement, even if its value does not cover the entire debt. 

Tools of Financial Analysis

Trend Analysis: Trend analysis involves assessment of arithmetical relationship in which each item of several years  has to the same item of base years. 

Common size statements: It shown in analytical percentages of total assets, total liabilities and total sales. The total are taken as 100 and differences are expressed as a percentage. 

Independent Director

An independent director is an non-executive director of a company who helps the company in improving corporate credibility and governance standards. He or She does not have any kind of relationship with the company.