Indian Capital Market – Before 1990’s
- India’s Capital Market was dormant till the mid – 1980’s. The long term financing needs of the corporate sector were met by the Development Financial Institutions (DFI’s) namely IDBI, IFCI, ICICI as well as by other investment institutions like LIC, UTI, GIC etc. Working capital needs were met by the Commercial Banks through an elaborate network of bank branches spread all over the country.
- Capital Market activities were limited, mainly due to the easy availability of loans from banks and financial institutions and administered structure of interest rates. However, three important legislations, namely, Capital Issues (Control) Act 1947, Securities Contracts (Regulation) Act, 1956, and Companies Act, 1956 (Now, Companies Act, 2013) were enacted to provide suitable legal framework for the development of capital market in India.
- The pricing of the primary issues was decided by the Office of the Controller of Capital Issues. A few stock exchanges, dominated by Bombay Stock Exchange (BSE), provided the trading platforms for the secondary market transactions under an open outcry system.
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