Understanding Indian Financial System: Features, Objectives, and Role

1. UNIT 1 INDIAN FINANCIAL SYSTEM

2. Financial System: It is a set of inter related activities or services working together to achieve some predetermined purpose or goal. It includes different markets, the institutions, instruments, services and mechanisms which influence the generation of savings, investment, capital formation and growth. Indian financial system Definition According to Prof. S. B. Gupta financial system is a set of institutional arrangements through which financial surpluses available in the economy are mobilized.

3. FEATURES OF FINANCIAL SYSTEM: • It is a set of inter related activities or services • Services are working together to achieve predetermined goals. • The system allows transfer of money between savers and borrowers. • It is applicable at global, regional and firm level. • It includes financial institutions, markets, instruments, services, practices and transactions. • The main objective is to formulate capital, investment and profit generation. OBJECTIVES OF FINANCIAL SYSTEM: • To mobilize the savings: Transactions • Savings into Industrial Investment: Capital Investment • Helps in capital formation • Helps in growth of economy

4. Functions • Link between savers and investor: It helps in utilizing savings from savers and channelizes it to productive investors • Review the performance of market and products: Helps in assessing the performance of market, institutions and instruments and take required actions. • Provides payment mechanism: It helps in exchange of goods and services by providing systematic payment mechanism • Transfer of resource across borders: Financial system helps in transfer of capital resources from one place to another. • Managing and controlling risk: Financial transaction involves risk. Efficient system helps us to control risk and increase the return. • Lowering cost of transactions: Formal mechanism reduces transaction cost there by increasing returns • provides information Government: central bank and various institution who are part of system provides various information to investors and dealers • It promotes self-employment opportunities

5. Role and Importance of Financial System: • It links the savers and investors. It helps in mobilizing and allocating the savings efficiently and effectively. • It plays a crucial role in economic development through saving investment process. This savings investment process is called capital formation. • It helps to monitor corporate performance. • It provides a mechanism for managing uncertainty and controlling risk. • It provides a mechanism for the transfer of resources across geographical boundaries. • It offers portfolio adjustment facilities( monetary policy that allows the banks to borrow money through repurchase agreements).(provided by financial markets and financial intermediaries). • It helps in lowering the transaction costs and increase returns. This will motivate people to save more. • It promotes the process of capital formation.

7. Meaning:Financial Institutions: an Institution which collects funds from the public and places them in financial assets, such as deposits, loans, bonds other than tangible property are called financial institutions. • Definition: It is an establishment that focus on dealing with financial transactions such as Investments, loans and deposits. • Features of Financial Institution • It is an Institution as well as Intermediary. • It channelizes savings fund into investment fund. • It creates financial assets such as deposits, loans, securities etc. • It includes banking and non banking institutions. • And also includes both organized and unorganized institutions. • Established with a clear operating function. • Regulated by the government and regulating authority.

8. Classification of financial institutions: 1. Banking Institutions: These are the type of financial institutions which involve in accepting public deposits and lending the same to the needy customers. These are fundamentally established to earn profit, secondarily to safe guard the interest of the members. Its types are: • Commercial Banks: also called as Business banks • Public sector: Refer to a type of commercial banks that are nationalized by the government of a country. Public sector banks operate under the guidelines of Reserve Bank of India (RBI), which is the central bank • Private sector: Refer to a kind of commercial banks in which major part of share capital is held by private businesses and individuals. These banks are registered as companies with limited liability. • Regional Rural Banks (RRBs): Credit for Agriculture and other rural sectors. • Foreign banks: Refer to commercial banks that are headquartered in a foreign country, but operate branches in different countries. Citibank, American Express Bank, Standard & Chartered Bank

9. Cooperative banks: These are established to safeguard the interest of its members. These are organized on a cooperative basis, accept deposit and lend money to the required money to the required members. Co-Operative Banks are small financial institutions that offer the lending facility to the small businesses in both urban and non-urban regions. These are monitored and regulated by the Reserve Bank of India (RBI) and come under the Banking Regulations Act, 1949 as well as the banking laws act, 1965. Limited funds Do not operate mutual funds Objective to provide loans to farmers and small businessmen. Do not operate in national level and international level TYPES: Primary Credit Society: Village level and Town level (watch everyone avoid frauds) Central Co operative bank: A District level (same district) State Co operative bank: These are at the apex(highest level) co operative banks in all the states of the country.

10. 2. Non Banking Institutions: The non banking institutions that provide banking services without meeting the legal definition of a bank. • Provident and Pension Fund • Small Saving Organization • Life Insurance Corporation(LIC) • General Insurance Corporation(GIC) • Unit Trust of India(UTI) • Mutual Funds • Investment Trust etc. Unorganized Financial institutions: These are comprised with private money lenders, pawn brokers, indigenous bankers, traders etc. they lend money to the public from their own fund.(Operations and activities are not regulated by RBI). Organized Financial institutions: They follow high degree of institution and instrumentalization. (Operations and activities are regulated by RBI).

11. Financial Markets: Financial market refers to institutional arrangement for dealing in financial assets and credit instruments of different types such as currency, cheques, shares debentures bills of exchange etc. It is a place or mechanism which facilitates the transfer of resources from one entity to another. The financial market is a market in which people and entities can trade financial securities commodities and fungible items of value at lower transaction cost and at prices that reflect supply and demand. Features of financial market • Market involves large volume of transaction on daily basis. • There are various segments in financial market like stock market, forex market, money market etc. • Market in highly volatile in nature. Prices of instrument will change every day every minute. There is no stability in market. • Since market is highly volatile there is scope for speculation or making quick profit. • Market is dominated by intermediaries and private dealers. • Indian financial market is well integrated/ connected with world market

12. Its not any physical market place, Its simply a set of transactions. • IT includes money market which channels wholesale funds Usually for less than one year dominated by major Banks and institutions. • It Includes securities or capital market which deal with long dated securities shares, debentures, bonds etc. • It Includes foreign exchange markets and also Includes future & options market to provide means of hedging. Functions of the Financial Markets Person A is having a powerful idea and Person B is having surplus funds. The Role or function of the financial markets (bonds and Stock markets) is get people like A and B together. This requires flow of funds from savers to borrowers. This flow can occur in two ways; Direct Finance and Indirect finance route. Direct Finance: Borrowers borrow funds directly from the lenders in the financial markets by selling them securities (financial instruments), which are claims on the borrower’s future income or assets. Indirect Finance: Borrowers borrow funds through financial intermediaries(banks, insurance companies, pension funds) in the form of loans and deposits.

13. Function of financial markets • Easy Access: Both investors and industries need each other. The financial market provides a platform where both the buyers and sellers can find each other easily without spending too much time, money or effort. • Liquidity: The instruments sold in the financial market tend to have high liquidity. This means at any given time the investors can sell their financial commodities and convert them to cash in a very short period. This is an important factor for investors who do not want to invest long term. • Price Determination: (New and Existing) Demand and supply of an asset in a financial market help to determine their price. Investors are the supplier of the funds, while the industries are in need of the funds. Thus, the interaction between these two participants and other market forces helps to determine the price. • Mobilizing Funds: In a successful economy, money should never sit idle. Investors that have savings must be linked with industries that require investment. So financial markets will enable this transaction, where investors can invest their savings according to their choices and risk assessment. This will utilize idle funds and the economy will boom. • Exchange process: Financial markets permit the transfer of funds (purchasing power) from one agent to another for either investment or consumption purposes.

14. Creation and allocation of credit: Financial markets facilitate the transfer of real economic resources from lenders to ultimate borrowers. They provide a sign for the allocation of funds in the economy based on the demand and to the supply through the mechanism called price discovery process. • Economic growth: Financial markets help to efficiently direct the flow of savings and investment in the economy in ways that facilitate the accumulation of capital and the production of goods and services. The combination of well-developed financial markets and institutions, as well as a diverse array of financial products and instruments, suits the needs of borrowers and lenders and therefore the overall economy • Long term financial needs: Financial markets allows companies to finance themselves by raising capital, either by issuing bonds (debt securities) or shares (titles of property). This allows them to finance business growth and their projects, by having access to long-term finance, rather than short term finance such as bank loans. • Information Aggregation and Coordination: Financial markets act as collectors and aggregators of information about financial asset values and the flow of funds from lenders to borrowers.

15. Types of Financial Market Thestock market is where traders buy and sell shares of ownership in publicly-traded companies. The bond market involves buying and selling bonds (corporate or government debt). The real estate market trades homes, commercial property or land. The futures market offers buyers a place to purchase futures contracts, which gives the buyer an obligation to purchase an asset (including stocks, bonds, commodities, grain, precious metals, or any other asset) at a set price at a future point in time. The Commodity Market for commodities such as energy, metals and agricultural products. The Foreign Exchange market for trading currencies The Reinsurance market for insurance purchased by the insurance companies. The money market short term debt instruments such as treasury bills, commercial paper, bill of exchange etc Organized Financial Market consists of : • Capital market • Money market

16. Capital Market: is a market for financial assets which have a long or definite maturity. The capital market instruments become mature for the period above one year. It is also called as long term securities market. Features of Capital Market: 1. Link between Savers and Investment Opportunities: Capital market is a link between saving and investment process. The capital market transfers money from savers to entrepreneurial borrowers. 2. Deals in Long Term Investment: Capital market provides funds for long and medium term. It does not deal with channelizing saving for less than one year. 3. Utilizes Intermediaries: Capital market makes use of different intermediaries such as brokers, underwriters, depositories etc. These intermediaries act as working organs of capital market and are very important elements of capital market. 4. Determinant of Capital Formation: The activities of capital market determine the rate of capital formation in an economy. Capital market offers attractive opportunities to those who have surplus funds so that they invest more and more in capital market and are encouraged to save more for profitable opportunities. 5. Government Rules and Regulations: The capital market operates freely but under the guidance of government policies. These markets function within the framework of government rules and regulations, e.g., stock exchange works under the regulations of SEBI which is a government body.

17. 6. Dealing in marketable and non-marketable securities: Capital market deals in both marketable and non-marketable securities. Marketable securities are those which can be transferred e.g. shares, debentures etc. Non-marketable securities are those which cannot be transferred e.g. term deposits with banks, loans and advances of banks and financial institutions. 7. Includes both individual and institutional investors: capital market comprises both individual and institutional investors. Individual investors are general public and institutional investors include mutual funds, pension funds, LIC etc. 8. Includes both primary and secondary markets: primary market relates to issue of fresh securities in the market and secondary market deals with sale and purchase of existing securities through stock exchange. Roles/Importance/Significance Of Capital Market Helps in raising long-term funds: Capital market enables Corporates, industrial organisations, financial institutions, trusts and the government to get long-term funds from both domestic and foreign markets. Channelize saving of people to productive uses:Capital market mobilizes idle funds from people for further investments in the productive channels of an economy. In that sense, it activates the idle monetary resources and puts them in proper investments. Helps in capital formation: Capital formation is the net addition to the existing stock of capital in the economy. Through mobilization of idle resources to industries, it helps in increasing capital formation.

18. Encourages to Save: With the development of capital market, the banking and non-banking institutions provide facilities, which encourage people to save more. provides income to investors: by investing in shares and other securities investors get income in the form of dividend/interest and capital appreciation. Encourages to Invest:The capital market facilitates lending to the corporates and the government and thus encourages investment. It provides investment facilities through banking and non-banking financial institutions. Various financial assets, e.g., shares, debentures, bonds, etc., encourages savers to lend to the govern­ment or invest in industry. Provide liquidity to investment: liquidity means how easily and how quickly assets can be converted into cash. through capital market, investors can convert their money into securities, and when they need money they can easily sell them and get cash. Attracts foreign investors: capital market provide an opportunity to Foreign institutional investors and foreign individual investors and non-resident Indians to invest in Indian securities market. Capital market organized in three categories: Primary or New issue:Primary market is the place where securities which are issued to the public for first time. Companies raise capital through issue of instruments through primary market. New companies and existing companies raise capital through primary market.

19. Features: • Securities are issued by the company directly to the investors. • Primary market related with the new issues. Whenever a company issues new shares or debentures, it is known as Initial Public Offer (IPO). • Company raise fund for their formation and expansion through primary market. • There is no any fixed location for primary market. Institutions which deals with issue of shares forms market. • It deals with shares and debentures. • The issuing company receive money and provides security certificates to the investors. • Price of securities doesn’t fluctuate in the primary market. • Primary market comes before the secondary market. • In the case of primary markets, legal and regulatory requirements are strict • The primary market helps the company to create their goodwill.

20. Functions of Primary Market • Origination- primary market facilitates all activities for origination of shares. • It provides Guarantee for issue through underwriting. • It facilitates distribution of shares to geographically dispersed investors. • Aids in expansion/diversification/modernization of existing units. • To provides working avenues for major players of primary market like merchant bankers, underwriting, brokers, advertisement agencies etc. Methods of issue in primary market • Public through prospectus: Under this method, issuing company directly offers to the general public/ institutions a fixed number of shares at a stated price through a document called prospectus. • Rights issue: under this method shares are offered to existing share holders. • Bonus shares: share given to shareholders out of accumulated profit as a substitute for dividend. • Private Placements: It is a way of selling securities privately to a small group of investors. shares are offered to few group of customers under reservation method

21. PRIMARY MARKET PLAYERS OF PRIMARY MARKET • Merchant bankers: MB’s are those who render a wide range of services such as corporate counselling, project counselling, loan syndication, issue management, underwriting of public issue, acting as mangers, consultants or advisors to an issue etc. they play a significant role in the marketing of corporate securities. • Registrars: are intermediaries who undertake all activities connected with the new issue management such as collecting applications from investors, keeping all records with regard to applications received, money received etc. and also assisting the companies in the allotment of shares and helping to dispatch all letters certificates to investors. • Collecting and Coordinating Bankers: Collecting bankers collect the money in the form of cash, cheques, etc., for the subscriptions and the coordinating bankers correlate the collection information on subscriptions and convey the same to the underwriters and merchant bankers. A collecting banker may double up as coordinating bankers too. • Underwriters and Brokers: Underwriters subscribe to a certain amount of capital in the issue. They have to fill the gap, if any, due to the failure of subscription as planned, buy back by their own. Brokers place the new issue in the market through their wide network and through sub-brokers.

22. 5. Transfer agents: The transfer are those who maintain the record of holders of securities on their own behalf or on behalf of the firm and deal with all activities connected with the transfer/redemption of such company’s securities. 6. Debenture Trustees: The debenture trustees are those who act as trustees for securing any issue of debentures of a body corporate under a trust deed executed by a company for the benefit of the debenture holder. 7. Portfolio managers: The portfolio managers are those who advise or direct or undertake the management or administration of a portfolio of securities or funds the client on behalf of the client as per the agreement with the client. 8. Printers, advertising agencies and mailing agencies: related to printing, advertising and mailing without which the day-to-day operations in a primary market cannot function.

23. Secondary market: It is a market for secondary sale of securities, such shares quoted in the stock exchange market. It provides continuous and regular market for buying and selling. It is also called as stock market. Features • Market for securities: where securities of corporate bodies, government and semi-government bodies are bought and sold. • Deals in second hand securities : It deals with shares, debentures bonds and such securities already issued by the companies. • Regulates trade in securities: It regulates the trade activities so as to ensure free and fair trade. • Specific location : dealings happens in Stock exchange on the floor of market Continuous and ready market for securities. • It provides ready outlet for buying and selling of securities. • Secondary market comes after Primary market. • It Encourages New Investment: The rates of shares and other securities often fluctuate in the share market. Many new investors enter this market to exploit this situation. This leads to an increase in investment in the industrial sector of the country. • It Creates Liquidity: The most important feature of the secondary market is to create liquidity in securities. Liquidity means immediate conversion of securities into cash. This job is performed by the secondary market.

24. Functions of Secondary market: • Economic Barometer: A stock exchange is a reliable barometer to measure the economic condition of a country. Every major change in country and economy is reflected in the prices of shares. The rise or fall in the share prices indicates the boom or recession cycle of the economy. • Pricing of Securities: The stock market helps to value the securities on the basis of demand and supply factors. The securities of profitable and growth oriented companies are valued higher as there is more demand for such securities. • Safety of Transactions: In stock market only the listed securities are traded and stock exchange authorities include the companies names in the trade list only after verifying the soundness of company. • Contributes to 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. • Spreading of Equity Cult: Stock exchange encourages people to invest in ownership securities by regulating new issues, better trading practices and by educating public about investment. • Providing Scope for Speculation: To ensure liquidity and demand of supply of securities the stock exchange permits healthy speculation of securities. • Liquidity: The main function of stock market is to provide ready market for sale and purchase of securities. The presence of stock exchange market gives assurance to investors that their investment can be converted into cash whenever they want. The investors can invest in long term investment projects without any hesitation, as because of stock exchange they can convert long term investment into short term and medium term.

25. Better Allocation of Capital: 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. • Promotes the Habits of Savings and Investment: The stock market offers attractive opportunities of investment in various securities. These attractive opportunities encourage people to save more and invest in securities of corporate sector rather than investing in unproductive assets such as gold, silver, etc. Derivative Market: A derivative is a contract between two parties which derives its value/price from an underlying asset. The most common types of derivatives are futures, options, forwards and swaps. The value of the underlying asset is bound to change as the value of the underlying assets keep changing continuously.

26. MONEY MARKET: It is a market for dealing financial assets and securities which have a maturity period of up to one year. It is a market for short term funds. Features of Money Market • It is market purely for short-term funds or financial assets called near money. • It deals with financial assets having a maturity period up to one year only. • It deals with only those assets which can be converted into cash readily without loss and with minimum transaction cost. • Generally transactions take place through phone i.e., oral communication. Relevant documents and written communications can be exchanged subsequently. There is no formal place like stock exchange as in the case of a capital market. • Transactions can to be conducted without the help of brokers. • It is not a single homogeneous market. There are various sub-markets such as Call money market, Bill market, etc. • Money market establishes a link between RBI and banks and provides information of monetary policy and management.

27. Features of developed Money Market: • Summarized below are some of the important features of a developed money market: • It has an organized banking system. • It consists of several sub-markets that deal with different types of credit instruments. • A developed money market consists of near- money assets of various types like bills of exchange, treasury bills and bonds. • It also has access to financial sources from within the country as well as from foreign investments. • The money market securities are considered to be highly liquid and are fixed income securities that have a shorter maturity term. • Issuers of the money market instruments have good credit ratings. Therefore, it is obvious that the money market instruments are safe for investment purposes. • One of the main features of money market instruments is that they are issued at a discounted price to face value.

28. Money market instruments 1) Call money Market: money at call and short notice-it is a market for extremely short period of time like one day to fourteen days. Features • Issued for short period from 1 day to 14 days. • It is highly liquid. • Interest rates vary from day to day and even hour to hour according to demand and supply. • Its used for adjusting cash reserve and day to day transactions. • Call money is repayable on demand at the option of either the lender or the borrower.

29. Commercial Bills Market: Commercial Bills Market or Discount Market. A Commercial Bill arises out of a genuine trade transaction. A bill of exchange is an important commercial bill which is drawn by the seller on the buyer for the amount due to him. The maturity period of bill may vary from three to six months. The buyer accepts it immediately agreeing to pay the amount mentioned therein after a certain specified date. Thus, a bill of exchange contains a written order from the creditor to the debtor, to pay a certain sum, to a certain person, after a creation period. A bill of exchange is a “self-liquidating” paper and negotiable/it is drawn always for a short period ranging between 3 months and 6 months. Features: • Commercial bills can be traded by offering the bills for rediscounting. Banks provide credit to their customers by discounting commercial bills. • This credit is repayable on maturity of the bill. • In case of need for funds, and can rediscount the bills in the money market and get ready money. • Commercial bills ensure improved quality of lending, liquidity and efficiency in money management. • It is fully secured for investment since it is transferable by endorsement and delivery and it has high degree of liquidity.

31. 3)Treasury bill Market: Government is going to the financial market to raise money, it can do it by issuing two types of debt instruments – treasury bills and government bonds. Treasury bills are issued when the government need money for a shorter period while bonds are issued when it need debt for more than say five years. • Treasury bills; generally shortened as T-bills, have a maximum maturity of a 364 days. Hence, they are categorized as money market instruments (money market deals with funds with a maturity of less than one year). • Treasury bills are presently issued in three maturities, namely, 91 day, 182 day and 364 day. Treasury bills are zero coupon securities and pay no interest. Rather, they are issued at a discount (at a reduced amount) and redeemed (given back money) at the face value at maturity.

32. 4)Commercial papers: It is unsecured promissory notes which are issued by well reputed companies with minimum face value of 5 lakhs. Short-term unsecured promissory notes issued by companies. Commercial paper is a money-market security issued (sold) by large corporations to obtain funds to meet short-term debt obligations (for example, payroll) and is backed only by an issuing bank or company promise to pay the face amount on the maturity date specified on the note. Features • It is promissory note issued by a company. • Buyers are banks, insurance companies, and other firms. • Minimum face value of cp is 5 lakhs. • It is used for seasonal requirement and working capital management.

33. 5) Certificate deposits: a certificate issued by a bank to a person depositing money for a specified length of time at a specified rate of interest. A certificate of deposit is an agreement to deposit money for a fixed period with a bank that will pay you interest. You can choose to invest for three months, six months, one year, or five years. You will receive a higher interest rate for the longer time commitment. Features • It is short term borrowings by banks. • Rate for interest is higher than normal fixed deposits. • It is transferable from one person to another before maturity

34. FINANCIAL INSTRUMENTS: Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership interest in an entity (share), or a contractual right to receive or deliver cash (bond). Features: • Liquidity, for the quick conversion into cash. • Collateral value for pledging of instruments for obtaining loan. • Price fluctuations of security. • Tax status (free bonds) • Transferability, allows easy transfer of instruments.

35. CLASSIFICATION OF FINANCIAL INSTRUMENTS 1) Term Financial Instruments: These are the tradable financial assets and exchanged on term basis, were these are classified into short term, medium term, long term securities. • Short term securities: This sub category comprises securities with maturity of one year or less. • Medium term securities: This sub category comprises securities with maturity from 1 to 5 years. • Long term securities: This sub category comprises securities with maturity longer than those of short and medium term securities. 2) Type based securities: Financial securities are classified into primary, secondary and innovative instruments. • Primary Instruments/securities: (Equity, Preference and debentures). “A financial instrument whose value is not derived from that of another instrument, but instead is determined directly by the market”. • Secondary Instruments/securities: (Mutual Funds, Commercial Paper, Certificate of deposits).“A financial instrument issued directly by the financial institutions to an investor”. • Innovative instruments: (Derivates, Securitized assets, Foreign currency mortgages etc).“These are the financial innovative instruments to suit the need of cooperates and investors group”.

36. FINANCIAL SERVICES • Financial services are services offered by financial institutions like banks, credit card companies, insurance companies, stock brokerage companies etc. Classification of Financial Services • Fund Based Services: Fund based or asset based financial services are those services which are rendered for commission basis or for a certain amount of interest. • Leasing: A lease transaction is a commercial arrangement whereby an equipment owner or Manufacturer conveys to the equipment user the right to use the equipment in return for a rental. In other words, lease is a contract between the owner of an asset (the lessor) and its user (the lessee) for the right to use the asset during a specified period in return for a mutually agreed periodic payment (the lease rentals). • Factoring: Factoring is a financial transaction whereby a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount.

37. Bills discounting: Trading or selling bills to financial institution prior to its maturity period for discount rate is called discounting bill of exchange. The rate of discount depends on the time left before the bill mature and risk attached to it. • Venture capital: Venture capital is a way of financing by investor to companies for its start up and to promote project. Investor joins entrepreneurs as co-promoter and share risk and returns. • Loan: Loan is a oral or written agreement between lender and borrower for temporary transfer of property(cash) from lender to borrower where borrower promises to return the same property or cash along with predetermined interest as per the agreement. • Housing finance: Housing finance is a finance facility provided by financial institutions company on acquisition or construction of houses, which includes acquisition or development of land in connection there with. • Hire purchase: hire purchase system is a method of selling goods on credit where purchaser is allowed to purchase goods and allowed him to pay the amount in installment basis and the title of the goods transferred from seller to buyer at the end of final installment.

38. 2. Fee Based Services: • Portfolio management: it is a method of managing and allocating funds on various best alternatives to reduce the uncertainty. • Loan syndication: is the process where large number of lender contributes amount and grant loans to company or any project and share risk and returns of the same. • Corporate counseling: refers to a set of activities performed to ensure the efficient running of a corporate enterprise and to improve the performance. • Foreign collaboration: is an alliance in corporate to carry on agreed task collectively with the participation of resident and non resident entities.