Page 30 - DCOM304_INDIAN_FINANCIAL_SYSTEM

Unit 2: Financial Market Reforms

During 2008-09, over 90 percent of the resources was garnered through private placement and Notes
the balance (7%) was mobilized through Initial Public Offerings (IPOs). However, the domestic
private placement, which has emerged as a major alternative source of funding for the Indian
corporate sector in the recent years, witnessed a slowdown during the period due to adverse
capital market conditions. Mobilization of resources through private placement was lower
during 2008-09 than in 2007-08.
Despite tremendous progress made in Indian primary market during the post-liberalization
period, size of the market remains much smaller than many advanced economies such as Hong
Kong, Australia, the UK, the US and Singapore, as also emerging market economies such as
Thailand, Malaysia, Brazil and the Philippines (Figure 2.1).

Figure 2.1

25
21.6
20

15
Percent

10

4.7 4.7
5
2.3 2.1 1.5 1.4 1.4 1.0 0.8 0.6

0 UK US 0.1
Hong Kong Australia Singapore Thailand Malaysia Brazil Philippines India Argentina Mexico

Task How far have the various policy measures taken by the government impacted the
working of the new issue market in India?

Self Assessment

Fill in the blanks:
5. During 1994-95 when the primary market was in its initial phase, equity shares accounted
for ............................... of the total resources mobilized.
6. Debt instruments have a redemption period of ............................... years.
7. In 1999-2000, the average size of IPOs was ` 100 and in 2006-06, it was `...............................
8. In financial inter mediariaes group, ............................... mobilized predominant shares of
resources.
2.6 Summary

 The new issue market in India until the pre-liberalization period remained undeveloped
and lopsided in terms of quantum and kinds of new issues, participation of agencies in
new issue activity and investors' apathy towards new security issues. However, the

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