ASSIGNMENT ON ROLE OF BANKS IN THE DEVELOPMENT OF ECONOMY

SUBMITTED TO: ABED ALI REXONA YESMIN COURSE CO-ORDINATORS BANGLADESH INSTITUTE OF BANK MANAGEMENT DHAKA

SUBMITTED BY: MD. MAHMUDUL ISLAM TALUDKER MD. ZABED HOSSEN MD. ABDULLAH KHAN MD. MOHIUDDIN SUMON KANTHI BAROI ACHYUTANANDA DEY A.Q.M. SAFIUL ALAM

Preface
In the new era of globalization, the banking sector has witnessed drastic changes at structural and organizational levels. In the financial sector, banks act as an intermediary to transfer the resources from those who spend more than their earnings to those who spend less. Banking play a key role in deciding the best business practices in developing new markets and clients, and creates new products for e-commerce & Net-based technologies. Faster technological developments have transformed human life into a virtual mode, a reality that allows people to make purchase payments online, without risking themselves to errors and frauds. In the economy whether it is developed, developing or under developed, we see a variety of banks operating to meet some specific objectives. All kinds of banks play significant contribution for the development of the economy as a member of financial markets.

Before describing the contribution made by the banks to the economy, we must see their classification, key functions and traditional role thereafter.

Classification of Banks
1) Central Bank. 2) Commercial Bank 3) Specialized Bank 4) Investment Bank 5) Merchant Bank

Overview of Banks
Banks can be described as financial institutions whose current operations consist of accepting deposits from the public and issuing loans. The receiving of deposits and provision of loans distinguishes banks from other financial institutions.

The term banks includes commercial banks, merchant banks, finance houses, building societies, savings banks and credit unions

Key Function: Financial Intermediation

Banks act as intermediaries when they mobilize savings from surplus units (savers) to shortage units (borrowers) in order to finance productive activities. Other financial institutions can also be intermediaries e.g. between buyers and sellers of shares The taking of deposits and granting of loans singles out banks.

Traditional Theory of the Role of Banks

There have eight significant elements information advantages, imperfect information, delegated monitoring, control, insurance role of banks, commitment theories, regulatory subsidies and the special role of banks in the payment systems. Banks solve problems associated with asymmetric information between lenders: ex ante (adverse selection) and ex post (moral hazard) behavior of borrowers. With large investments in information technology and expertise, banks are able to evaluate a borrowers credit worthiness and verify the borrowers dealings at a lower cost than would individual savers.

The role of central banks in fostering economic development

We will here describe both the traditional & Neo-liberal role of a central bank operated as an agent of the govt. as well as the financial market controller of every economy. Indeed, historians of central banking will agree that financing governments and managing exchange rates were key of central banks for decades, if not centuries. But there will be more resistance to the idea that a common feature of central banking has also included the support of economic sectors.

1). Price stability

Let us first consider price stability. Low and stable inflation rates allow the private sector to plan for the future, lead to a lower need for costly price adjustments, prevent tax distortions and thus create a stable business environment. On the other side, high and unstable inflation creates random wealth transfers between creditors and debtors. One of the main objective of a central bank is to maintain the price stability in the country, attempting to minimize the inflation rate and upgrading the currency rate.

2). Payment systems

Next lets look at the payment system. The development of the payment system determines how easy it is for firms and consumers to access and transfer money. Can businesses pay their suppliers by writing a cheque or making an electronic transfer? Or do they have to undergo the cumbersome and insecure process of sending cash physically? Can workers in urban areas transfer money to their rural families by simply sending an SMS, or do they have to carry it with them on a dangerous bus ride? Particularly in Bangladesh, Central bank is playing a great role in the payment systems with the help of commercial banks. Introduced online clearing house, mobile banking & online banking as well many non-cash mode payment instruments which enables the easy transaction and increases high standard of living.

3. Financial sector development

An efficient and deep financial sector provides enterprises with debt and equity to finance their growth, thus spurring economic activity. At the same time a deep financial sector can provide households with savings and credit products to smooth their consumption patterns, again increasing their return from economic activity, and reducing poverty.

Traditional Functions:
The central banks in the developing countries perform both traditional and non-traditional functions. The traditional functions of the central bank are : having the monopoly of note-issue; acting as banker to the government; serving as bankers' bank; functioning as the lender of the last resort; controlling and regulating the credit; and maintaining the external stability.

1. Economic Growth:
The central banks in the developing countries should aim at promoting the process of economic growth. Economic growth requires sufficient financial resources. The central bank can ensure adequate monetary expansion in the country. Moreover, as a banker to the government, the central bank can provide funds for initiating investment in the public sector.

2. Internal Price Stability:

Along with the objective of economic growth, the central bank should also attempt to maintain internal price stability. The developing countries are susceptible to inflationary pressures mainly due to supply -in elasticitys in the short period. The central bank should adopt such a monetary policy that can control inflationary tendencies and ensure price stability.

3. Development of Banking System:

The developing and underdeveloped countries do not have well-developed banking system. In such an economy, the central bank should not only take measures to develop an integrated commercial banking system, but also should not hesitate undertaking directly the commercial banking functions.

4. Branch Expansion:
In developing countries, the commercial banks generally concentrate their branches in the urban areas. In order to extend credit facilities to the agricultural sector, the central bank should prepare programme for branch expansion in the rural areas.

5. Development of Financial Institutions:

Development of the leading sectors of the economy such as agriculture, industry, foreign trade, etc. requires long-term finances. For this, the specialised financial institutions should be established which provide term-loans to these sectors.

6. Development of Banking Habits:

Through its various credit control instruments (i.e., bank rate, variable cash-reserve ratio, etc.) and by providing discounting facilities to the commercial banks, the central bank exercises full control over the activities of commercial banks. This creates public confidence in the banking system and helps in the development of banking habits of the people.

7. Training Facilities:
A major difficulty in developing the banking system in developing countries is the lack of trained staff. The central bank can provide training facilities to meet the personnel requirements of the banks.

8. Proper Interest Rate Structure:

The central bank can help in establishing a suitable interest rate structure to influence the direction of investment in the country. In underdeveloped countries, a policy of low interest rate is necessary for encouraging investment and promoting development activities. Again, by adopting different interest rates, the central bank can increase productive investment and discourage unproductive investment.

9. Other Promotional Roles:

The central bank can provide a number of other promotional facilities. For example, (a) it can adopt policies to provide help to the various priority sectors, such as agriculture;, cooperative sector, small scale sector, export sector, etc. (b) it can provide guidelines to be followed by the planners about some definite patterns of economic and investment policies; (c) it can publish information regarding the state of the economy and promote research in money and banking.

Role of Bangladesh Bank in the Development of the Countrys Economy

Bangladesh Bank is an adviser of government for taking decision in the future. And also Bangladesh Bank is the head of the countrys commercial Bank and others financial institution of our country.

FUNCTIONS OF BANGLADESH BANK

GENERAL FUNCTIONS 1. Bank of issue 2. Banker, Agent & Adviser to the Government 3. Custodian of the cash reserves of the commercial Bank 4. Custodian of the nations reserves of international currency 5. Lender of last resort 6. Central clearance, settlement and transfer 7. Controller of credit 8. Promoter of economic development

FUNCTIONS AS GOVERNMENT BANK

1. Maintain government fund and accounts 2. Collection and transfer of money 3. Handling of government monetary transaction 4. Sanctioning and supervision of loan

5 Maintaining relation with foreign bank 6. Adviser and agent of government 7. Implementation of government monetary policy

FUNCTION AS A BANKER OF OTHER:

Central bank performs the following functions as a banker of other banks. 1. Scheduling bank 2. Functions as a clearing house 3. Sanction of loan 4. Supervision of loan 5. Assistance in collecting credit 6. Audit of accounts 7. Collection and preservation of deposits 8. Acts as adviser and agent

OTHER FUNCTIONS
In addition to above function, central bank also provides some others functions. These are as follows

1. Economic research 2. Collection and supply of data: 3. Preparation of report and publication:

DEVELOPMENT FUNCTION OF BANGLADESH BANKS

The objective of central bank is to ensure economic development. According to the direction of Govt. central bank undertake different development activities and tries to implement. These development activities are as follows:

1. Development of different production oriented sectors:

Central bank helps to argent extent in the production oriented sectors like the development of agriculture and industry etc. For this reason it extend helping hands to establish specialized banks like agricultural bank, industrial bank, investment bank etc.

2. Development of banking system:

Central bank is always engaged in the development of banking system as the leader of banking empire. For this reason, central bank set up different rules and regulations when banking institutions are in danger, central extends it help.

3. Development of foreign trade:

Central bank under take different activities for the development of foreign trade (i.e. import and export). Central bank tries to stabilize exchange rate of a country. It creates confidence among the foreign exporters about countrys banking system.

4. Improving the quality of economic plan:

Central bank is the top most financial institution in the country and the banker of Govt. So it helps for the development of the quality of economic plan taken by Govt.

5. Improving the quality of manpower:

Central bank tries to improve the quality of manpower in the banking sector. For the development of its own manpower inside the bank, the central bank arranges training facilities. It motivates scheduled commercial banks to manage adequate training facility for the development of quality of their manpower.

6. Development of natural resources:

Central bank provides assistance and help to extract natural resources for use of these resources to the enhancement of the economic welfare of the people. For this reason it extends financial help assistance those institution engaged in extracting these natural resources.

ROLE OF COMMERCIAL BANKS IN THE ECONOMIC DEVELOPMENT OF A COUNTRY

Commercial banks play an important and active role in the economic development of a country. If the banking system in a country is effective, efficient and disciplined, it brings about a rapid growth in the various sectors of the economy. The economic significance of commercial banks is given in brief. 1. Banks promote capital formation 2. Investment in new enterprises 3. Promotion of trade and industry 4. Development of agriculture 5. Balanced development of different regions 6. Influencing economy activity 7. Implementation of Monetary policy 8. Monetization of the economy 9. Export promotion cells

(1) Banks promote capital formation. The commercial banks play an important role in
rising of the financial resources. They encourage savings by giving various types of incentives to the savers. They expand branches of the banks in rural and urban areas and mobilize savings even at far of places. These savings are then made available to the businesses which make use of them for productive purposes in the country.

(2) Investment in new enterprises. Businessmen normally hesitate to invest their money
in risky enterprises. The commercial banks generally provide short and medium term loans to entrepreneurs to invest in new enterprises and adopt new methods of production. The provision of timely credit increases the productive capacity of the economy.

3) Promotion of trade and industry. With the growth of commercial banking in the 19th
and 20th centuries, there is vast expansion in trade and industry. The use of bank draft, cheque, bill of exchange credit cards etc has revolutionized both national and international trade.

(4) Development of agriculture. The commercial banks, particularly in developing

countries, are now providing credit for the development of agriculture and small scale industries in rural areas. The provision of credit to agriculture sector has greatly helped in raising agricultural productivity and income of the farmers. This has led to increased demand for industrial goods and expansion of industry.

(5) Balanced development of different regions. The commercial banks play an

important role in achieving balanced in different regions of the country. They help in transferring surplus capital from developed regions to the less developing regions. The traders, industrialists etc of less developed regions are able to get adequate capital for meeting their business needs. This, in turn, increases investment, trade and production in the economy.

(6) Influencing economy activity. The banks can also influence the economic activity of
the country through its influence on (a) availability of credit and (b) the rate of interest. If the commercial banks are able to increase the amount of money in circulation through credit creation or by lowering the rate of interest, it directly affects economic development. A low rate of interest can encourage investment. The credit creation activity can raise aggregate demand which leads to more production in the economy.

(7) Implementation of monetary policy. The central bank of the country controls and
regulates volume of credit through the active cooperation of the banking system in the country. If helps in bringing price stability and promotes economic growth within shortest possible period to time.

(8) Monetization of the economy. The commercial banks by opening branches in the rural
and backward areas are reducing the exchange of goods through barter. The use of money has now greatly increased the volume of production of goods. The non-monetized sector (barter economy) is now being converted into monetized sector with the help of commercial banks.

(9) Export promotion cells. In order to increase the exports of the country, the commercial
banks have established export promotion cells. They provide information about general trade and economic conditions both inside and outside the country to its customers. The banks are, therefore, making positive contribution in the process of economic development.

Commercial Banks Contribution in the Development progression of Bangladesh

An attempt will be made here to examine the nature and extent of involvement by commercial banks in conventional development financing in Bangladesh. In this case, we have considered the following performance indicators of commercial banks on the basis of availability of data during the period of the nineties : 1. Borderless of Branches; 2. Sharing Deposits and Advances; 3. Regional Distribution of Deposits and Advances; 4. Aid in Agriculture and Allied Activities; 5. Financing Industries Term Loan and Working Capital; 6. Promotion of Export and Import; 7. Financing for Infrastructure; and 8. Financing for Poverty Alleviation.

Borderless of Branches
The NCBs have the largest branch network among the commercial banks of Bangladesh. The network rapidly increased during the years of concentration on deposit mobilization and provision of banking services in rural areas. The respective share of PCBs in the network has increased during last decades significantly. The number of branches of FCBs as percentage of branch network of the banking sector is almost stable. In regard to distribution of branches in urban and rural areas, NCBs occupy about two thirds of their branch network in rural areas, while PCBs have very little presence in the rural outlets. The FCBs, however, have no rural branch network.

By increasing of branches to the remote rural areas, our commercial banks are contributing to the development of agriculture, livestock, horticulture industry etc.

Share of Deposits and Advances

The nationalized and private commercial banks are the backbone of the financial system of Bangladesh. However, the private banks (local and foreign) are growing and increasing their market shares. Compared with the distressed nationalized banking sector, the growth of private banking is a healthy development for a sound financial system.

Regional Distribution of Deposits and Advances

The mobilization of deposits from and dispersal of advances to the various regions other than the geographical areas of traditional concentration reflect the policy of following the balanced development financing approach. The share of Dhaka and Chittagong divisions in total deposits of NCBs, PCBs and FCBs is still a large part. The share of other four administrative divisions in total outstanding advances of NCBs, PCBs, and FCBs were only a few. This indicates a very high concentration of deposit mobilization and lending operations in Dhaka and Chittagong divisions by all types of banks (especially in case of PCBs and FCBs) at the cost of development of other divisions and results in pumping out of money from underdeveloped to developed areas which is contrary to a decentralized development financing strategy. But now commercial banks are trying to decentralize the savings to the non-developed areas.

Agricultural Financing
Given the role of the agriculture in the economic development of Bangladesh, it is imperative to invest considerable resources for agricultural development of the country. The agriculture sector, the lifeline of the rural economy, which contributes about 30% to the GDP of the country and constitutes the chief source of supply of food, is continuously being deprived of the needed capital. The role of PCBs in agricultural financing is meager due to lack of rural branch network and risk averse behavior. FCBs are almost absent in agricultural financing. On the other hand, the share of NCBs in the total outstanding advances in this sector has increased.

Industrial Term Loans and Working Capital Financing

This is a new phenomenon in commercial bank lending in Bangladesh. Term loans are designed to fund long and medium term business investments, such as the purchase of equipment or the construction of physical facilities, covering a period of more than one year. The bulk of the financing for longterm investment is currently supplied by commercial banks as term loans.

Foreign Trade Financing

Trade financing may be both domestic and international. Financing of international trade has direct relevance to the development of our economy, particularly in the context of developing countries. In Bangladesh, export being the thrust sector is financed at the administered interest rate within a band of 12-14 per cent. Again, import of capital goods, industrial raw materials, semi-processed inputs, etc are directly linked to economic development.

Financing for Infrastructure

Availability of infrastructure is one of the objective conditions of undertaking development efforts in an economy. A well-knit transport and communication network facilitates the quick movement of people and goods. Besides, increasing construction activities comprising housing, office premises and other ancillary buildings are the manifestations of development.

Financing for Poverty Alleviation

The major objective of economic development has been to alleviate poverty by uplifting bottom line population to the development stream through institutional credit. The attainment of this objective deserves urgent attention when about half of the population of Bangladesh is considered as poor and one fourth of the population as hard core poor. In this endeavor, the role of commercial banks does not appear to be commendable.

Role of Specialized Banks in the Economy

Specialized banks are foreign exchange banks, industrial banks, development banks, exportimport banks catering to specific needs of these unique activities. These banks provide financial aid to industries, heavy turnkey projects and foreign trade.

The importance of Specialized Banks(SB) may be attributed to the following:

They constitute an important source of long-term finance to industry. Over a period of time, there has been a steady growth in the number of industrial units assisted, and in the amount of loan sanctioned and distributed by SB. SBs have played an important role in the development of (a) Small scale industry, and (b) Projects in backward areas. They have helped new and small entrepreneurs in setting up industry. Through their operations involving underwriting of and direct subscription to the issue of shares and debentures, they have been important players in the capital market. These operations have a favourable impact on the ability of industrial concerns to raise funds from capital market. These institutions have improved the allocation of funds to industry and thus, have aided in better use of the available resources for the economic development of the country. SBs have been a source of technical and managerial advice to the industry. They have also helped in identification, evaluation and execution of new investment projects. These institutions have been helpful in the establishment of concerns which required extra-ordinarily large amounts of finance for their projects with a long gestation period.

Role of Specialized Banks in Bangladesh

The specialized banks consist of other development banks of the Bangladesh and also some NGOs that extend micro credit to the people. Some banks are completely government-owned institutions established mainly to provide medium and long-term credits to the industrial, agricultural, and real estate sectors of the economy and to promote the establishment of private development banks in the country. The main focus of these specialized institutions is to promote and accelerate the socio-economic development of the country by performing banking, financing and investment operations and to establish and participate in agricultural, commercial and industrial ventures based on the Islamic concept of banking.

Specialized banks in Bangladesh

Grameen Bank(GB) Bangladesh Krishi Bank(BKB) The Dhaka Mercantile Co-operative Bank Limited (DMCBL) Bangladesh Development Bank Ltd(BDB) Rajshahi Krishi Unnayan Bank(RKUB) BASIC Bank Limited (Bangladesh Small Industries and Commerce Bank Limited) Bangladesh Somobay Bank Limited(Cooperative Bank) (BSBL) Ansar VDP Unnyan Bank(AVUB)

Role of Specialized Banks in the economy of Bangladesh

Bangladesh Development which is merge of Bangladesh Shilpa Bank & Bangladesh Shilpa Rin Shangtha aids industrial development by providing credit facilities & equity supportfor accelerating the process of industrialization of the country. Play unique role in the capital market growth by providing bridge financing, debenture financing assistance to the public limited companies.

Bangladesh Krishi Bank(BKB) provides credit facilities to individual & corporate bodies engaged in crop production, horticulture, forestry & fisheries. It also offers financial & technical assistance to agro-based & cottage industries. BKB is supposed to give preference to the credit needs of small farmers & other disadvantaged group therefore has to fulfill both social & economic objectives. As the largest development partner in the countrys northwest region, Rajshahi Krishi Unnayan Bank(RKUB) aims at overall development of farmers & all sectors & subsectors of agriculture in this region. Besides, catering to agricultural credit the bank performs ancillary functions as financing agri-business & agro-based industries & poverty alleviation programs. Grameen Bank popularly known as the bank of the poors is famous for its nondepository micro-credit functions over the country which helps to alleviate the extreme poverty of the very lower class people , that ultimate increase the per capita income level of the country.

Role of Investment Banks in the Development of Economy

In the universal banking system, banks perform tasks of both commercial banks and investment banks. Investment Banking an American synonym of merchant banking. Investment banks provide advice on mergers and acquisitions and are involved in financing industrial corporations through buying shares and selling them in relatively small lots to investors.

Investment Banking Activities

The activities of Investment Banks are of two types: 1). Financial Intermediation & 2). Proprietary Trading Financial Intermediation activities are consist of . Financial Advisory Primary Market & Secondary Market. Of the above categories of functions, many other activities are related with each category which are shown in the graph below.

Figure 1: Investment banking activities

Role of Investment Corporation of Bangladesh as An Investment Bank in the Country

About Investment Corporation of Bangladesh:
Investment Corporation of Bangladesh (ICB) established on 1 October 1976 under the Investment Corporation of Bangladesh Ordinance 1976. It is an investment bank established to accelerate the pace of industrialization and develop a sound securities market in Bangladesh. Initially, the activities of ICB were limited to underwriting public issue of shares, bridge financing, debenture financing and opening/maintaining investors' accounts (Investors' Scheme). ICB had largely expanded its areas and scope of activities and now provides various types of investment and banking services. Added activities include providing debenture loans to companies and loans to investors on margin trading basis, providing advances against ICB unit certificates, leasing of industrial equipment, managing unit fund and mutual funds, and participating in stock exchange for trading securities.

Objectives
To encourage and broaden the base of investment. To develop the capital market. To provide for matters ancillary thereto. To mobilize savings. To promote and establish subsidiaries for business development.

Basic Functions
Underwriting of initial public offering of shares and debentures Underwriting of right issue of shares Direct purchase of shares and debentures including Pre-IPO placement and equity participation Managing investors account Managing Open End and Closed End Mutual Funds Operating on the Stock Exchanges

Providing investment counsel to issuers and investors Participating in Government divestment Program Participating in and financing of, joint-venture projects Dealing in other matters related to capital market operations Trusty, Custodian, Bank Guarantee Consumer Credit

Business Policy
To act on commercial consideration with due regard to the interest of industry, commerce, depositors, investors and to the public in general. To provide financial assistance to projects subject to their economic and commercial viability. To arrange consortium of financial institutions including merchant banks to provide equity support to projects and thereby spread the risk of underwriting. To develop and encourage entrepreneurs. To diversify investments. To induce small and medium savers for investment in securities. To create employment. To encourage Investment in IT sector. To encourage Investment in joint venture capital/project.

Continued Operations of ICB

Private Placement Custodian and Banker to the Issues (IPO) Mergers and Acquisitions Corporate Financial Advice Lease Finance Portfolio Investment Advance Against Unit Certificate Schemes Advance Against Mutual Fund Certificate Schemes Consumer Credit Scheme

Bank Guarantee Training Program Trustee to the Debentures and Securities Assets

Role of Merchant Banks in Economic Development

Need for Merchant Banking is felt in the wake of huge public savings lying untapped. M e r c h a n t b a n k e r s c a n p l a y h i g h l y s i g n i f i c a n t r o l e in mobilising funds of savers to investible channels assuring promising returns oninvestments and thus can assist in meeting thewidening demand for investible funds for economic activity. W i t h g r o w t h o f m e r c h a n t b a n k i n g p r o f e s s i o n corporate enterprises, Undertaking expansion, modernisation, diversification of the existing enterprises. This reinforces the need for a vigorous role to be played by merchant banking.

Reasons why Specialist merchant banks have crucial role to play in the economy
Growing industrialization and increase of technologically advanced industries. Need for encouragement of small and medium industrialists, who require specialist services. Growing complexity in rules and procedures of the government. Need to develop backward areas and states which require different criteria Exploring the possibility of joint ventures abroad and foreign markets. Promoting the role of New Market in mobilizing savings from the public

Services Provided by Merchant Bankers : 1).Corporate Counseling

It denotes advise provided by a merchant banker to a corporate unit to ensure better corporate performance in terms of image building among investors, steady growth through good working, appreciation in market value of its equity shares. The counseling is limited to only opinions and suggestions and any detailed analysis would form part of a specific service. The scope of corporate counseling is restricted to the explanation of concepts, procedures and laws to be observed by the client company.

2.Project Counselling
Project counselling is a very important and lucrative merchant banking service. It covers development of an idea into a project, preparation of the project report, estimation of the cost of the project and deciding upon the means of financial and techno-economic appraisal of projects for capital issue/financing etc.

3 Management of Capital Issues:

(a) Pre-issue Management: Steps required to be taken to manage Pre-issue activity as as follows: 1) Obtaining stock exchange approvals to memorandum and articles of association. 2) Taking action as per SEC guidelines. 3) Finalizing the appointments of the following agencies. a) Co-managers/Advisors to the issue. b) Underwriters to the issue. c) Brokers to the issue. d) Bankers to the issue and refund Banker. e) Advertising agency. f) Printers and Registrar to the issue. 4) Advise the company to appoint auditors, legal advisers and broad base Board of Directors. 5) Drafting of prospectus. 6) Obtaining approvals of draft prospectus from the company's legal advisors, underwriting financial institutions/ Banks. 7) Obtaining consent from parties and agencies acting for the issue to be enclosed with the prospectus. 8) Approval of prospectus from Securities and Exchange Commission of Bangladesh(SEC). 9) Filing of the prospectus with Registrar of Companies(ROC) 10 ) Making an application for enlistment with Stock Exchange along with copy of the prospectus. 11) Publicity of the issue with advertisement and conferences. 12) Open subscription list.

(b) Post-issue Management: Steps involved: 1) To verify and confirm that the issue is subscribed to the extent of 90% including development from underwriters in case of under subscription. 2) To supervise and co-ordinate the allotment procedures of registrar to the issue as per prescribed Stock Exchange guidelines. 3) To ensure issue of refund order, allotment letters/certificates within the prescribed time limit of 10 weeks after the closure of subscription list 4) To report periodically to SEC about the progress in the matters related to allotment and refunds. 5) To ensure the listing of securities at stock Exchanges. 6) To attend the investors for managers regarding the public issue.

4. Portfolio Management
It involves selection of Securities and constant shifting of the portfolio in the light of varying attractiveness of the constituents of the portfolio. It involves selecting and revising the spectrum of securities to the portfolio based on the characteristics of an investor. The objectives of portfolio management is to maximize the yield and minimize the risk along with other objectives like stability of income, capital growth, liquidity, safety, tax incentives, etc.

References:
1. 2. 3. 4. Muraleedharan. D, Modern Banking- Theory and practices. Machiraju. H.R, Merchant Banking (4th edition). Laxmi Narasaiah. M and Venkata Naidu. G, Role of Banking in Rural development. Bank related different websites.