ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Capital MarketSubscribe to Capital Market

Hostile Takeovers

The number of mergers and acquisitions has boomed in India since liberalisation, but few hostile takeovers have succeeded, primarily because of the concentration of promoter shareholding in companies and because takeover regulations favour promoters. Hostile takeovers would facilitate M&A growth, and the success of hostile takeovers is essential to facilitate corporate competence and foster capital market development. To be effective, the anti-takeover mechanisms in India should be practised as a protectionist measure and the takeover regulations must adopt a lenient approach towards hostile takeovers, as in the United States.

Low Public Investment Impacts on Capital Market

The persisting low economic growth is having an impact on the financial sector: apart from the recent disquieting developments, the setback to funds mobilisation through public issues which began in the mid 1990s is contributing to a depressing scenario in the capital market and the secondary segment is in a worse state. This has shifted the impetus to the growth of bank deposit with no improvement however in household savings. The severe liquidity strain in the industrial sector has prompted the postponement of investment decisions by entrepreneurs. This is likely to sharply expand the size of non-performing assets of banks and financial institutions .

Industrial Finance and Capital Market

Given the current state of the financial institutions and banks, it will take many years before they are integrated into the capital market framework thus bridging the artificial gulf that exists today between the two. The basic function of financial institutions and banks and the financial/capital markets is to facilitate the transfer of funds from the surplus to the deficit pockets. The main thrust of policy now should be to create seamless linkages between DFIs/banks and capital markets to facilitate this process of transfer from the ultimate savers to the ultimate users at minimum cost. Such a policy should also ensure a neutral stance towards banks and the capital markets thus making for an environment where there is efficient resource allocation as well as a certain discipline among users of funds.

Financing Capital Investments in Urban Infrastructure

In recent years arranging funds for infrastructural facilities, particularly urban basic services, has become the major plank of urban development policy in India. In the absence of a current account surplus, governments have been forced to look for alternative sources of financing long-term investments needed for urban basic services. This paper examines the nitty-gritty of alternative/unconventional modes of financing infrastructure, particularly, urban basic services in the country and analyses their feasibility in the current urban context.
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