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Stock exchanges enhance the marketability of securities and thereby provides liquidity to investments. 

1. From the investor’s point of view, this market imparts liquidity to the long-term securities held by them providing an auction market for these securities. 

2. Generally, in the stock market securities are held for long term and get matured after a long time period. But stock market facilitates to sold the securities easily and at any time the security holders want and convert it into cash. 

3. It operates through the medium of stock exchanges which regulates the trading activities in this market and ensures a measure of safety and fair dealings to the investors.

Yes, I agree with the statement. Stock market contributes to better allocation of capital and intensifies capital formation. The shares of profit making companies are quoted at higher prices and are actively traded so such companies can easily raise fresh capital from stock market. The general public hesitates to invest in securities of loss making companies. So stock exchange facilitates allocation of investor’s fund to profitable channels. Stock exchange intensifies the process of capital formation through creating the habit of saving, investing and risk taking among the investing class by converting their savings into profitable, safe investments.

Stock exchange indicates about the good or bad health of an economy. For the smooth and orderly functioning of corporate sector in a free market economy, stock exchanges are indispensable, 

Because of the different roles played by them for different groups. 

1. Stock exchange indicates about the good or bad health of an economy. It is an investment intermediary which facilitates economic and industrial development of a country. 

2. All the stock markets influence economic activities through the creation of liquidity. 

3. It increases the business and earnings of people and gives a positive impact to the growth of an economy. 

4. Stock exchanges formulate rules and regulations and build a trust between the members and investors so that members may net exploit the investors, with this belief more number of investors are added into it, which is really helpful for the economic growth. 

5. Through easy funds mobilizing, the boosted production fetches more capital, enhancing economic development. 

6. It operates through the medium of stock exchanges which regulates the trading activities in this market and ensures a measure of safety and fair dealings to the investors. 

7. Stock exchanges play a key role in allocating capital to the corporate sector, which has significant effects on the economy as a whole. 

8. Stock exchanges maintain an official list of securities that could be purchased and sold on its floor. In entrepreneurial- oriented countries, the growth of listed companies contributes a wide portion of a nation’s increase in GDP. 

9. Stock exchange provides a central market for purchase and sale of securities. It provides ready and continuous outlet for buying and selling of securities. Buyers and sellers strongly believe that they would be able to buy and sell securities as and when they want.

The importance of a stock exchange from the viewpoint of society: 

1. Rapid capital formation: 

(a) Many people save their money and are ready to invest where they can get high rate of returns, when they check with the good companies with high premium amount they tempted to invest in securities. 

(b) This habit leads to investment of savings in corporate and government securities. 

(c) The high returns of dividend from these securities may further be invested in buying more securities. 

(d) This flow of funds leads to rapid and continuous capital formation. 

2. Economic development: 

(a) It is the market in which existing securities are purchased and sold. 

(b) This process is called as disinvestment and reinvestment. 

(c) Through easy funds mobilisation, this leads to more capital, enhancing economic development of the country. 

3. National projects: As stock exchange promotes, the capital formation by rating and approving the projects which brings national prosperity can be easily undertaken. 

Value Points: 

1. National prosperity. 

2. This habit leads to investment of savings in corporate and government securities. 

3. Easy funds mobilizing. 

4. Enhancing economic development.

5. Promoting the people to come with the projects.

6. Helping and providing the people a platform to buy and sell the securities.

7. Readiness to cooperate.

Stock exchange performs a number of functions in respect of marketability of different types of securities for investors and borrowing companies. 

It’s important functions are: 

1. Continuous and ready market for securities: 

(a) Stock exchange provides a central market for purchase and sale of securities. 

(b) It provides ready and continuous outlet for buying and selling of securities. 

(c) It facilitates and helps all buyers to buy and sell securities as and when they want. 

2. Facilitates evaluation of securities: 

(a) It is useful for the correct evaluation of industrial securities. 

(b) It publishes price quotation of the shares of the companies that have been listed with them after thorough analysis of demand and supply position. 

(c) This enables investors to know the true worth of their holdings at any time. 

3. Checks on brokers: 

(a) It checks and controls the activities of brokers and protect the investors from being received, 

(b) While dealing, if any broker is found indulging in malpractices as overcharging or giving wrong information, his/her licence may be cancelled.

4. Provides safety and security in dealings: 

(a) All activities of the stock exchange are controlled by the provisions of the Securities Control (Regulation) Act and all this creates confidence in the minds of investors. 

(b) Each and every dealings and transactions are conducted as per well-defined rules and regulations, fraudulent practices stands checked effectively ensuring safety, security and justice in dealings. 

5. Regulates company management: 

(a) The companies which are listed also have to operate within the strict rules and regulations. 

(b) This ensures safety of dealing through stock exchange. 

(c) All of them have to work under the vigilance of stock exchange authorities. 

6. Intensifying capital formation and promoting the habit of saving and investment: 

(a) The stock market offers attractive opportunities of investment in various securities. 

(b) It encourages people to save more and invest in securities of corporate sector rather than investing in unproductive assets such as gold, silver, etc. 

(c) It also creates a habit of risk taking among the investing class by converting their savings into profitable and help them for safe investments. 

7. Facilitates raising of new capital: It facilitates an entrepreneur of existing companies for the need for more capital for further development, organisation or expansion and help them to meet the need. 

8. Facilitates public borrowing: It serves as a platform for marketing government securities. It enables government to raise public debt easily and quickly. 

9. Facilitates healthy speculation:To ensure liquidity and demand of supply of securities, the stock exchange permits healthy speculation of securities and always keeps the exchange active.

10. Serves as economic barometer:Stock exchange indicates the state of health of companies and the national economy. It acts as a barometer of the economic situation/conditions and is thus referred as pulse of economy or economic mirror.

11. Facilitates bank lending: Banks easily know the prices of quoted securities. They offer loans to customers against corporate securities. This gives convenience to the owners of securities. 

Value Points: 

1. Helpfulness The stock market helps to value the securities on the basis of demand and supply factors. 

2. Quest for knowledge  The valuation of securities is useful for investors, government and creditors. 

(a) The investors know the value of their investment. 

(b) The creditors know the value of credit worthiness. 

(c) Government knows to impose taxes on value of securities. 

3. Truthfulness and equality- Only listed companies can operate in stock exchange. 

4. To protect national property and economic growth  In stock exchange securities of various companies are bought and sold. This process of disinvestment and reinvestment helps to invest in most productive investment proposal and this leads to capital formation and economic growth. 

5. Readiness to cooperate and ensures safety of dealing through stock exchange. 

6. Encourage and promotes the habit of savings and honest investment: It offers attractive opportunities of investment in various securities. It encourages people to save more and invest in securities of corporate sector rather than investing in unproductive assets such as gold, silver, etc. 

7. Better transparency, genuine settlement cycle, honest transaction, etc.

He should contact NABARD for this purpose.

Functions of NABARD are:

1. NABARD is empowered to undertake inspection of RRBs and Cooperative Banks, other than the Primary Cooperative Banks.

2. To open a new branch, a recommendation of NABARD is imperative by RRBs or Cooperative Banks to seek permission from RBI.

3. RRBs and Cooperative Banks, along with RBI, are required to file returns and documents with NABARD.

The importance of a stock exchange from the view point of entrepreneurs /companies: 

1. Recognition: The market values of companies’ shares are published in important dailies. This enhances the reputation of good companies/ entrepreneurs. 

2. Wide market: The securities of some companies are listed in some stock exchanges. The market for the securities of such companies is considerably widened. Thus, larger amounts of capital may be raised from different types of investors. 

3. Higher share values: People have a tendency to buy shares that have some premium value. Demand of such shares increases. This leads to further increase in the price of such shares. 

Value Points: 

• Enhances the reputation of good companies 

• Universal 

• Social services 

• National awareness 

• Readiness to cooperate 

• Helpfulness 

• Consideration for others 

• Friendship

From the viewpoint of investors 

1. Dissemination of useful information: 

(а) Stock exchange publishes useful information regarding price lists, quotations, etc., of securities through newspapers and journals. 

(b) All the shareholders who wish to buy and sell their securities accordingly use the provided information. 

2. Ready market: It gives a ready market for the security holders, so that all those who wish and are in need of money can easily convert their shares into cash online or through intermediaries. – 

3. Investors’ interests protected: Stock exchanges formulate rules and regulations so that members may not exploit the investors. 

4. Genuine guidance about the securities listed: The investors can safely depend upon the information provided by the stock exchanges. 

5. Barriers of distance removed: 

(a) Stock exchange removes the barriers of distance with regard to securities listed there. 

(b) Without listing the shares in stock exchange the securities can be sold out in a limited market only. 

6. Knowledge of profit or loss on investments: The investors can estimate the profit or loss on the total amount of investments in securities, by comparing the original amount invested and the price of securities on a particular day.

Value points:

1. Sharing the information

2. Helpfulness

3. Quest for knowledge

4. Discipline in following rules and regulations

5. Resourcefulness

6. Equality for all regarding the brokerage

7. Team spirit

8. Universal Shareholders shows the spirit of enquiry.

Harsh should contact SIDBI for financial assistance in opening his innovative venture. Features of SIDBI are: 

1. The financial assistance of SIDBI to the small scale sector is channelised through the following two routes: 

(a) Indirect Assistance 

(b) Direct Assistance 

2. It stimulate and promote the participation of private capital (Indian) in such industrial units; 

3. SIDBI has taken over there sponsibility of administering following two funds which were previously administered by IDBI i.e. 

(a) Small Industries Development Fund 

(b) Small Industries Development Assistance Fund. 

4. SIDBI’s financial assistance to SSS is primarily channelised through the existing credit delivery system consisting of commercial banks, co-operative banks, RRBs and SFCs. 

5. Refinance loans and advances extended by the primary lending institutions to small scale industrial units, along with providing them even resource support. 

6. Discounts and rediscounts bills arising from sale of machinery to or its manufacture by industrial units in the small-scale sector.

Activities of the stock exchange are controlled by the provisions of the Securities Control (Regulation) Act and all this creates confidence in the minds of investors. As transactions are conducted as per well defined rules and regulations, fraudulent practices stands checked effectively ensuring safety, security and justice in dealings