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Unit 2: Financial Market Reforms

credit available to market makers would help ensure more active participation in the Notes
secondary market. They must be allowed to lend against shares.

2.7 Keywords

Financial institutions: Provide a variety of financial products and services to fulfil the varied
needs of the commercial sector.
Money market: Is a market for short-term funds and covers money and financial assets that are
close substitutes for money.
Primary market of a country renders three major services: investigating and processing of
proposals for new issues, underwriting of new security issues and distribution of new securities
to ultimate investors.
Secondary market is a market where the sale of previously issued securities takes place.

2.8 Review Questions

1. What were the primary reasons for undeveloped new issue market in India during the
pre-liberalization period?
2. Discuss, in brief, various measures undertaken by the government and the RBI to develop
new market in India.
3. Critically assess the performance of new issue market in India during the post-liberalization
period.
4. What were the main reasons for the reforms in the Indian financial market?
5. Discuss the mode of distribution of new issues.
6. "Overpricing of issues is another pernicious weakness of the new issue market in India
responsible for its stymied development." Comment.
7. What role has the public sector played in new issue market in India?
8. What measures would you suggest to further strengthen the new issue market in India?
9. Discuss the objectives of Financial Market Reforms.

10. What are the various measures taken towards the growth of new issue market?

Answere to Self Assessment

1. Partially Convertilde Debenture
2. Global Depository Receipt
3. Foreign Currency convertible Bonds

4. Non-Convertible Debentures
5. 73%
6. 7
7. ` 700

8. Banks

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