OUR OWN PUBLICATION FROM 1ST JULY, 2018 FOR B.COM

1. B.COM FIRST SEMESTER COMPLETE NOTES (CHOICE BASED) WITH SOLVED FINANCIAL ACCOUNTING BOOK
2. B.COM 3RD SEM COMPLETE NOTES WITH SOLVED BOOKS OF:
*ADVANCED FINANCIAL ACCOUNTING
*BUSINESS STATISTICS SOLVED PAPERS OF LAST 7 YEARS
* FINANCIAL MANAGEMENT BOOK
3. B.COM 5TH SEMESTER COMPLETE NOTES WITH SOLVED BOOKS OF MANAGEMENT ACCOUNTING OF JAIN AND NARANG

Tuesday, March 04, 2014

IGNOU SOLVED ASSIGNMENTS: ECO - 01 (2015 - 16)

TUTOR MARKED ASSIGNMENT
Course Code: ECO - 01
Course Title: Business Organisation
Assignment Code: ECO – 01/TMA/2015-16
Coverage: All Blocks
Maximum Marks: 100
Attempt all the questions.
Dear Students,
As explained in the Programme Guide, you have to do one Tutor Marked Assignment in this Course.
Assignment is given 30% weightage in the final assessment. To be eligible to appear in the Term-end examination, it is compulsory for you to submit the assignment as per the schedule. Before attempting the assignments, you should carefully read the instructions given in the Programme Guide.
This assignment is valid for two admission cycles (July 2015 and January 2016). The validity is given below:
1. Those who are enrolled in July 2015, it is valid up to June 2016.
2. Those who are enrolled in January 2016, it is valid up to December 2016.
You have to submit the assignment of all the courses to The Coordinator of your Study Centre. For appearing in June Term-End Examination, you must submit assignment to the Coordinator of your study centre latest by 15th March. Similarly for appearing in December Term-End Examination, you must submit assignments to the Coordinator of your study centre latest by 15th September.

Attempt all the questions.
1. What are the essential requisites of an ideal form of business organization? Explain the criteria for the selection of the form of organisation.                                     (20)
2. Differentiate between the following:                                (4×5)
(a) Commerce and Industry
(b) Wholesalers and Retailers
(c) Public limited Company and Co-operative Organisation
(d) Primary Market and Secondary Market
3. Write short notes on the following:                    (4×5)
(a) Listing of a security on a stock exchange
(b) Insurable business risk
(c) Warehousing
(d) Development Bank
4. What is channel of distribution? Discuss various factors which influence the choice of channel of distribution.  (20)
5. (a) What is stock exchange? Explain its various functions.                                         (10+10)
(b) “There is no difference between money market and capital market”. Comment upon the statement.
Solution
1. What are the essential requisites of an ideal form of business organization? Explain the criteria for the selection of the form of organisation.                                                                                                     (20)
And: Before we discuss how to select a particular form of business organisation in a given situation, we should know the essentials of an ideal form of organisation. This may help you in the evaluation of each form of organisation in the right perspective and take the final decision about the choice of a particular form more judiciously. The requisites of an ideal form of organisation are as follows:
1. Ease of formation: An important factor for preferring a particular form of organisation to another is the ease with which a business can be brought into existence. The comparative ease of difficulty in forming a particular form of organisation mainly depends on three factors: {i) formation expenses by way of registration fee, stamp duty, fees of legal experts, charges involved in the drafting of documents, obtaining licenses, etc., (ii) legal formalities, and (iii) procedural delays, etc. Unless it is very essential, it is better to go for an organisation which is easy to form.
2. Scope of raising capital: The choice of organisation mainly depends on the amount of capital required which is determined by the nature of business and the scale of operations. For example, if you want to open a retail shop in groceries, the amount of capital needed will not be much. But if you want to set up a sugar factory, you may require a large amount of capital. Ideal form of organisation is one which provides scope for raising the amount of capital as and when required.
3. Extent of liability: we know that the element of risk and uncertainty is prevalent in each business. In view of this, normally, the businessmen prefer limited liability. Obviously, limited liability is considered as an important feature of a good form of organisation. However, a certain amount of risk is also found to be important to provide the needed spur for initiative, drive, and involvement in business. Many times, the absence of such spur leads to weakness, inefficiency and even dishonesty on the part of management personnel.
4. Flexibility of operations: The form of organisation should be very flexible and adaptable to changing business conditions without much difficulty or complication. For example, if you want to expand your business, diversify or modernize the plant and equipment, the organisation should be able to meet all requirements.
5. Stability and continuity: Stability and long life of business is desirable from the point of view of owners, employees, and customers. Employees always prefer a stable and continuous employment. If the business is stable, the owner should be able to formulate plans for the future and to make investments paying for a considerable length of time. From the customers' point of view also, regular supply of goods and services is expected to meet their needs. An ideal form of organisation is one which provides reasonable amount of stability to the business.
6. Effectiveness of management: As you know that the success of any business enterprise depends on the efficiency of management. Managerial efficiency depends on skills, motivation, flexibility, adaptability, etc. It is difficult for an individual to possess all these qualities.
7. Extent of government control and regulations: If the governmental control and regulations are too many, the enterprise may have to divert a lot of time, money and energy for complying with legal formalities and instructions. In some cases there may be too much interference by the government officials in the day-to-day business of the firm. No doubt, the investors, creditors, and customers trust the business enterprises whose activities are properly regulated by the government. But too much government interference is not favoured by the entrepreneurs because it mars their initiative and disrupts the working of their business.
8. Business secrecy: In business, it is important to maintain business secrets without leaking them out to competitors. Therefore, a form of organisation which enables, retention of business secrets is preferred to the one wherein business secrets are difficult to preserve.
9. Tax burden: Business taxes like sales tax, excise duty, and customs duty are charged on certain products and services. Hence, such taxes affect all forms alike and they will not affect the choice. But the income tax liability is different from one form of organisation to the other. Naturally, the form of organisation which attracts the minimum amount of this tax liability is considered as an ideal form. From this point of view company form of organisation is considered to be best because it enjoys a number of tax reliefs which are not available in case of other forms of organisation.
10. Ownership prerogatives: Some persons have a very strong desire to control the entire business activities themselves and place a great value upon their right of personal leadership. Some persons are desirous of sharing the responsibilities and risks of a business. Some people may want to own a part of the capital without a strong desire to control the affairs of the business. You can also find some persons who are not ready to bear the business risk. An ideal form of organisation takes care of such prerogatives of the owners.
CRITERIA FOR THE SELECTION OF THE FORM OF ORGANIZATION:
Choice of a suitable form of business organisation assumes great importance at the time of initiating or launching a new business enterprise because it is the form of organisation which ultimately determines the power and responsibility of the entrepreneur. The choice is dependent on the following factors.
1. Nature of business: Choice of a suitable form of organisation is dependent on the nature of the proposed business. The organisational requirements are different for different types of business. For example, a big cement manufacturing activity and a retail cement shop cannot have the same form of organisation. Similarly, the form of organisation suitable for a textile mill is not suitable for a tailoring shop.
2. Volume of business: The expected volume of business also influences the decision about the suitable form of organisation. If the volume of business is small, you need small amount of capital and run less risk. In that case sole proprietorship may be quite suitable. But if the volume of business is large, you need more capital anti run Ignore risk which a single owner may find it difficult to cope with. So, partnership form or a company form would be considered more suitable.
3. Area of operation: The area of operation of the business also influences the choice of form of organisation. If the area is limited and confined to a particular locality, the suitable form of organisation may be sole proprietorship. In case the area is widespread, the suitable form may be a joint stock company.
4. Desire for control: The extent of control and supervision will also determine the choice of organisation. If it is desired to have a direct control over the business operations, a sole proprietorship or a partnership form of business should be adopted. In case if you feel that there is no need for direct control, the company form of organisation is the best.
5. Capital requirements: The form of organisation will also depend on the extent of financial requirements of the business. A business which requires a small amount of capital can be organised on sole proprietorship or partnership basis. But if the financial requirements are huge, then the joint stock company form of organisation may be preferred.
6. Government regulations: As you know the governmental controls and regulations are more in company form and cooperative form of organisations compared to the remaining two forms. If you do not want too much government control and regulation, you should choose either sole proprietorship form or partnership form.
2. Differentiate between the following:                                               (4×5)
(a) Commerce and Industry
Ans: Comparison between Industry and Commerce:
1) MEANING: Industry- Extraction, reproduction, conversion, processing and construction of useful products.
Commerce- Activities involving distribution of goods and services.
2) SCOPE: Industry- Consists of all activities involving conversion of materials and semi-finished products into finished products.
Commerce - Comprises trade and auxiliaries to trade.
3) CAPITAL: Industry- Generally large amount of capital is required.
Commerce- Need for capital is comparatively less.
4) RISK: Industry- Risk involved is usually high.
Commerce- Relatively less risk is involved.
(b) Wholesalers and Retailers
Ans: Difference between wholesalers and Retailers
BASIS OF DISTINCTION
WHOLESALER
RETAILERS
PURCHASE AND SALE
They purchase goods from manufacturer and sells to retailer
They purchase goods from wholesaler and sell them to consumer.
QUANTITY
They buy and sell goods in large quantities.
They buy and sell goods in small quantities
SPECIALISATION
They specialize in purchase and sale of one quantity
They provide all types of goods and they do not specialize in one type of goods.
CAPITAL
They require a large amount of capital.
They require a less amount of capital.
PRICE
Wholesale price is lower than retail price.
Retail price is more than wholesale price.
LINK
Wholesalers are link between manufacturer and retailer.
They are a link between wholesaler and consumer.
LOCATION
Location of wholesaler shop is not important.
Location of a retail shop plays an important role as it as should be centrally located.
CREDIT TRANSACTION
They sell goods on credit.
They sell goods in cash.
SCOPE
Its scope is vast.
Its scope is limited.

(c) Public limited Company and Co-operative Organisation
Ans: We can explain the difference between Public Limited Company and cooperative society as under these headings:
1. LEGISLATION:  Public Limited Company: A Public Limited Company is controlled by the company ordinance 1984.
Cooperative society: A cooperative society is controlled by the co-operative society act 1912.
2. FORMATION: Public Limited Company: Public Limited Company formation procedure is difficult.
Cooperative society: Cooperation society formation is easy.
3. NUMBER OF MEMBERS: Public Limited Company: Public limited company is formed at least by two members and private by seven members.
Cooperative society: Co-operative society is formed at least by ten members above than 18 years.
4. OBJECTIVE: Public Limited Company: Public Limited Company basic objective to earn maximum profit.
Cooperative society: Co-operative society main objective is to improve the economic conditions of the members.
5. LIABILITY: Public Limited Company: Public Limited Company shareholders liability is limited.
Cooperative society: Cooperative society liability may b limited or unlimited.
6. RIGHT OF TRANSFER: Public Limited Company: Public Limited Company shares can be transferred freely.
Cooperative society: Cooperative society shares can not be transferred to the nonmembers.
(d) Primary Market and Secondary Market
Ans: Difference between Primary Market and Secondary Market
Primary Market
Secondary Market
It is the market where the securities are issued for the first time. It is also referred as New issue market.
It is the market where the existing securities are traded. It is also called stock Exchange.
The prices of the securities are determined by the company.
The prices of the securities are determined by the forces of demand and supply of the securities.
Here, only buying of the securities take place.
Here, buying and selling of the securities, both take place.
 Securities are sold by the company directly to the investors.

Ownership of the securities is exchanged among the investors. The company is not involved at all.
Purpose of primary market is to provide capital for setting new business.
The main purpose of secondary market is to provide liquidity of securities.

3. Write short notes on the following:                                                   (4×5)
(a) Listing of a security on a stock exchange
Ans: A company, desirous of listing its securities on the Exchange, shall be required to file an application, in the prescribed form, with the Exchange before issue of Prospectus by the company, where the securities are issued by way of a prospectus or before issue of 'Offer for Sale', where the securities are issued by way of an offer for sale.  The company shall be responsible to follow all the requirements specified in the Companies Act, the listing norms issued by SEBI from time to time and such other conditions, requirements and norms that may be in force from time to time and included hereafter in these Bye-laws and Regulations to make the security eligible to be listed and for continuous listing on the Exchange. The Exchange may grant approval to the issuer for any security sought to be listed on the Exchange on completion of the listing conditions, requirements and norms by the issuer, as may be specified by the Exchange from time to time. Such security shall be called listed security.
(b) Insurable business risk
Ans: Business risk means possibility of some occurrence, which might lead to some loss for the business. No business can run without some element of risk in it. In fact business means assuming risk. Uncertainty is the main cause of business risk. Fluctuations in demand or prices, wrong estimates of demand and supply, changes in government policies are some of the examples of uncertainly, which influence the business. Out of several business risks, some risks are insured by an insurance risk. Such types of risk are called insurable business risk. All the business risk can be insured because the insurance company gives insurance cover to only those risks which can be anticipated. For example, risk of one’s life, risks caused by enemy action during a war etc.
(c) Warehousing
Ans: Warehousing refers to the storage of goods on a large scale and as a specialised function. It involves providing facilities for preservation of goods in proper condition so as to prevent Loss or damage, and making the goods available to traders or dealers for sale. Warehouses are places where storage facility exists. Thus, warehousing is an essential aid to trade or ancillary of trading activity. It creates both time and place utilities, as goods stored in warehouses can be available whenever and wherever needed by buyers. Manufacturers, wholesalers as well as dealers can make use of warehousing facilities to bridge the gap between the time when goods are procured or manufactured and the time they are demanded by customers. The warehousing also arises from the modem systems of production and distribution of goods. Large scale production generally takes place in anticipation of demand for goods, but not necessarily in response to specific orders of customers. Such goods cannot be sold immediately after production. The manufacturers thus need adequate facilities for storage of their products to meet the demand schedule of customers. Again, there are certain products which have seasonal demand, but produced through but the year.
(d) Development Bank
Ans: Development banks are specialized financial institutions which provide medium and long term finance to private entrepreneurs and help in economic development of the country. It is considered as a hybrid institution which combines in itself the functions of a finance corporation and a development corporation. They also act as a catalytic agent in promoting balanced and viable development by assuming promotional role of discovering project ideas, undertaking feasibility studies and also provide technical, financial and managerial assistance for the implementation of project.
In India ‘Industrial Development Bank on India’ (IDBI) is the unique example of development bank. It has been designated as the principal institution of the country for co-ordinating the working of the institutions engaged in financing, promoting or development of industry. Some other examples of development banks are Industrial Development Bank of India, National Bank for Agriculture and Rural Development, Small Industries Development Bank of India, State Industrial Development Corporation, State Financial Corporation, etc.

4. What is channel of distribution? Discuss various factors which influence the choice of channel of distribution. (20)
Ans: Channel of distribution: The prime of object of production is its consumption. The movement of product from producer to consumer is an important function of marketing. It is the obligation of the producer to make goods available at right place, at right time right price and in right quantity. The process of making goods available to the consumer needs effective channel of distribution. Therefore, the path taken by the goods in its movement is termed as channel of distribution. The goods may be sent to the consumer directly or indirectly through middlemen. The channel of distribution may be classified as:
1.       Direct channel of distribution
2.       Indirect channel of distribution
The producer can select any channel depending on nature of product. Same channel of distribution cannot be used for all products because all products are not similar.
The following factors concerning the product, affect the selection of the channel of distribution:
Every producer, in order to pass on the product to the consumer, is required to select a channel for distribution. The selection of the suitable channel of distribution is one of the important factors of the distribution decisions. The following factors affect the selection of the channel of distribution:
A. Factors Pertaining to the Product: Keeping in view the nature, qualities and peculiarities of the product, could only the channel for distribution be properly made. The following factors concerning the product, affect the selection of the channel of distribution:
(1)   Price of the Product: The products of a lower price have a long chain of distributors. As against it, the products having higher price have a smaller chain. Very often, the producer himself has to sell the products to the consumers directly.
(2)   Perishability: The products which are of a perishable nature need lesser number of the intermediaries or agents for their sale. Under this very rule, most of the eatables (food items), and the bakery items are distributed only by the retail sellers.
(3)   Size and Weight: The size and weight of the products too affect the selection of the middlemen. Generally, heavy industrial goods are distributed by the producers themselves to the industrial consumers.
(4)   Technical Nature: Some products are of the nature that prior to their selling, the consumer is required to be given proper instructions with regard to its consumption. In such a case less of the middlemen arc) required to be used.
(5)   Goods Made to Order: The products that are manufactured as per the orders of the customers could be sold directly and the standardized items could be sold off only by the middlemen.
(6)   After-Sales Service: The products regarding which the after-sales service is to be provided could be sold off either personally or through the authorized agents.
B. Factors pertaining to the Consumer or Market: The following are the main elements concerned with the consumer or the market:
(1)   Number of Customers: If the number of customers is large, definitely the services of the middlemen will have to be sought for. As against it, the products whose customers are less in number are distributed by the manufacturer himself.
(2)   Expansion of the Consumers: The span over which are the customers of any commodity spread over, also affects the selection of the channel of distribution. When the consumers are spread through a small or limited sphere, the product is distributed by the producer himself or his agent. As against it, the goods whose distributors are spread throughout the whole country, for such distributors, services of wholesaler and the retailer are sought.
(3)   Size of the Order: When bulk supply orders are received from the consumers, the producer himself takes up the responsibility for the supply of these goods. If the orders are received piece-meal or in smaller quantities, for it the services of the wholesalers could be sought. In this way, the size of the order also influences the selection of the channel of the distribution.
(4)   Objective of Purchase: If the product is being purchased for the industrial use; its direct sale is proper or justified. As against it, if the products are being purchased for the general consumption, the products reach the consumers after passing innumerable hands.
(5)   Need of the Credit Facilities: If, for the sale of any product, it becomes necessary to grant credit to any customer, it shall be helpful for the producer that for its distribution, the services of the wholesalers and retailer businessmen be sought. In this way, the need of the credit facilities too influences the selection of the channel of distribution.
C. Factors Pertaining to the Middlemen: The following are the main factors concerned with the middlemen:
(1)   Services Provided by Middlemen: The selection of the middlemen is made keeping in view their services. If some product is quite new and there is the need of its publicity and promotion of sales, then instead of adopting the agency system, the work must be entrusted to the representatives.
(2)   Scope or Possibilities of Quantity of Sales: The same channel should be selected by means of which there is the possibility of more sales.
(3)   Attitude of Agents towards the Producers' Policies: The producers generally prefer to select such middlemen who go by their policies. Very often when the distribution and supply policies of the producers being disliked by the middlemen, the selection of middlemen becomes quite limited.
(4)   Cost of Channel of Distribution: While selecting the channel of distribution, the cost of distribution and the services provided by the middlemen or agents too must be kept into consideration. The producers generally select the most economical channel.
D. Factors Pertaining to the Producer Or Company: The following factors, concerning the producer, affect the selection of the channel of distribution:
(1)   Level of Production: The manufacturers who are financially sound and are of a larger category, are able to appoint the sales representatives in a larger number and thug could distribute the commodities (products) in larger quantities. As against it, for the smaller manufacturers, it becomes necessary to procure the services of the wholesalers and the retail traders.
(2)   Financial Resources of the Company: From the financial point of view, the stronger company needs less middlemen.
(3)   Managerial Competence and Experience: If some producer lacks in the necessary managerial experience or proficiency, he will depend more upon the middlemen. The new manufacturers in the beginning remain more dependent upon the middlemen.
E. Other Factors
(1)   Distribution Channel of Competitors:  While determining the channel of distribution, the channels of distribution of the competitors too must be borne in mind.
(2)   Social Viewpoint: What is the attitude of society towards the distribution, this fact too must be kept into consideration while selecting the middlemen. 
(3) Freedom of Altering: While selecting the agents, this fact too must be kept into mind that in case of need, there must be the liberty of changing or replacing the agents (middlemen).
5. (a) What is stock exchange? Explain its various functions.
Answer: Meaning of Stock Exchange
Stock exchange is a specific place, where trading of the securities, is arranged in an organized method. In simple words, it is a place where shares, debentures and bonds (securities) are purchased and sold. The term securities include equity shares, preference shares, debentures, government bonds, etc. including mutual funds.
According to the Securities Contracts (Regulation) Act 1956, the term 'stock exchange' is defined as ''An association, organization or body of individuals, whether incorporated or not, established for the purpose of assisting, regulating and controlling of business in buying, selling and dealing in securities."
Presence and vibrant functioning of a stock exchange is necessary for a developing economy. It reflects healthy financial and investment conducive atmosphere in the economy. The Indian securities market is considered as one of the most promising emerging markets. It is one of the top eight markets of the world. The stock exchange plays a vital role in the process of raising resources for the development of corporate sector. In the absence of the stock exchange it would be impossible for private enterprises, industries and entrepreneurs to survive and grow.
Functions of stock exchange in capital market
Presence and vibrant functioning of a stock exchange is necessary for a developing economy. It reflects healthy financial and investment conducive atmosphere in the economy. The Indian securities market is considered as one of the most promising emerging markets. It is one of the top eight markets of the world. The stock exchange plays a vital role in the process of raising resources for the development of corporate sector. In the absence of the stock exchange it would be impossible for private enterprises, industries and entrepreneurs to survive and grow. A stock exchange plays a significant role in a capital market which is mentioned below:
Primary Functions:
a)      Encourages capital formation: A common investor is attracted to capital market. Today investor prefers to divert his surplus and savings in the securities like shares, debentures, mutual funds etc. As a result new capital formation is speeded up.
b)      Resource Mobilsation: Due to continuous buying and selling of the securities the resources of the economy flow from one company to other company giving comparatively higher returns. This helps mobilisation of resources.
c)       Flexibility in investments: The stock exchanges provide liquidity to the investment made in the securities. As there are multiple options, investors can flexibly go on switching their investment where it is more beneficial?
d)      Value addition to the securities: Listing of shares on a stock exchange adds to the prestige and reputation to companies. With the advantage of listed shares it can raise loans from corporate sector.
e)      Protects investor’s interest: All the transactions in the stock exchanges are effected and controlled by the Securities Control (Regulation) Act 1956. The stock exchanges protect the interests of the investors through the strict enforcement of their rules and regulations. The malpractices of the brokers are punishable with heavy fine, suspension of their membership and even imprisonment.
Secondary Functions
a)      Motivation to Management: A stock exchange allows the trading of listed securities only. Listing procedure requires complying with certain guidelines for protecting the interests of investors and obviously is under strict supervision of stock exchange. If companies do not comply with the rules and regulations of the exchange, the shares of a company can be delisted. To avoid such unfavorable and undesirable consequences every company manages its affairs more cautiously and effectively.
b)      Best utilization of capital: The stock exchange regulates and controls the flow of investment from unproductive to productive, uneconomic to economic, unprofitable to profitable enterprises. Thus, savings of the people are channelized into industry yielding good returns and underutilization of, capital is avoided. As the stock exchange provides an account of price variations of the securities listed on it (upward or downward fluctuations) it would be an opportunity for the investors to switch their investments. This would, keep companies performing in the best possible way. 
c)       Help in repaid economic development: The stock exchanges help in the process of rapid economic development by speeding up the process of capital formation and resource mobilization. It helps in raising the medium and long term capital for the development and expansion of the companies. New industries and commercial enterprises easily get capital funds through a stock exchange.    

(b) “There is no difference between money market and capital market”. Comment upon the statement.   (10+10)
Ans: Capital Market and Money Market: Capital Market is generally understood as the market for long-term funds. This market supplies funds for financing the fixed capital requirement of trade and commerce as well as the long-term requirements of the Government. The long-term funds are made available through various instruments such as debentures, preference shares, and common shares.
The money market is the centre for dealing mainly of short character, in monetary assets; it meets the short term requirements of borrowers and provides liquidity or cash to the lenders. It is a place where short term surplus investible funds at the disposal of financial and other institutions and individuals are bid by borrowers, again comprising institutions and individuals and also by the government."
Distinction between Capital Market and Money Market
The capital market should be distinguished from money market. The capital market is the market for long-term funds. On the other hand money market is primarily the market for short-term funds. However, the two markets are closely related as the same institution many a times deals in both types of funds, i.e. short-term as well as long-term. The main points of distinction between the two markets are as under:
Capital Market
Money Market
1. It provides finance/money capital for long-term investment.
1. It provides finance/money for short-term investment.
2. The finance provided by the capital market may be used both for fixed and working capital.
2. The finance provided by money market is utilized, usually for working capital.
3. Mobilisation of resources and effective utilization of resources through lending are its main functions.
3. Lending and borrowing are its principal functions to facilitate adjustment of liquidity position.
4. It’s one of the constituents, Stock Exchange acts as an investment market for buyers and sellers of securities.
4. It does not provide such facilities. The main components include call loan market, collateral loan market, and bill market and acceptance houses.
5. It acts as a middleman between the investor and the entrepreneur.
5. It acts as a link between the depositor and the borrower.
6. Underwriting is one of its primary activities.
6. Underwriting is a secondary function.

7. Its investment institutions raise capital from public and invest in selected securities so as to give the highest possible return with the lowest risk.
7. It provides outlets to commercial banks, business corporations, non-bank financial concerns and other for their short-term surplus funds.
8. It provides long-term funds to Central and State Governments, public and local bodies for development purposes.
8. It provides short-term funds to Government by purchasing treasury bills and to others by discounting bills of exchange etc.