All questions of Sources of finance for Grade 12 Exam

Explanation:

Equity shares are not preferred by investors who want steady income because they do not offer fixed or predictable returns. Here are the reasons why equity shares are not suitable for investors seeking steady income:

1. Volatility of Returns: Equity shares are subject to market fluctuations and can experience significant price volatility. The value of equity shares can rise or fall based on various factors such as market conditions, company performance, and investor sentiment. This makes it challenging to predict or rely on consistent income from equity shares.

2. Dividend Payments: While equity shareholders are entitled to receive dividends, the payment and amount of dividends are not guaranteed. Companies may choose to distribute dividends based on their profitability and financial position. In some cases, companies may not pay any dividends if they decide to reinvest profits back into the business for growth opportunities.

3. Capital Appreciation Focus: Equity investors primarily aim to generate returns through capital appreciation, i.e., an increase in the value of their shares over time. This focus on long-term capital gains means that the income from equity shares can be irregular and not suitable for investors seeking stable and predictable income.

4. Risk Factors: Investing in equity shares carries inherent risks, including the risk of losing the entire investment. Companies may face financial difficulties, market downturns, or other unforeseen events that can negatively impact the value of equity shares. The higher risk associated with equity investments makes them unsuitable for investors who prioritize steady income and capital preservation.

5. Time Horizon: Equity investments are typically considered suitable for investors with a longer time horizon who can withstand short-term fluctuations. Investors seeking steady income often have shorter investment horizons and may need regular income to meet their financial obligations. Equity shares may not align with their income requirements due to the potential for inconsistent returns.

In conclusion, investors who want steady income are likely to prefer other investment options such as bonds, debentures, or fixed-income securities that offer predictable returns and lower risk compared to equity shares.

This simply means it's has unlimited liability

Lease Financing

Lease financing is a type of financing in which one party (lessor) grants the other party (lessee) the right to use an asset in exchange for a periodic payment. This type of financing is commonly used to acquire equipment, machinery, vehicles, and other tangible assets. The lease agreement specifies the terms and conditions of the lease, including the duration of the lease, the periodic payment, and the option to purchase the asset at the end of the lease term.

Advantages of Lease Financing

1. Lower initial cost: Lease financing allows businesses to acquire assets without having to make a large upfront payment, which can be beneficial for businesses with limited capital.

2. Tax benefits: Lease payments are considered as an operating expense, which can be deducted from taxable income, thereby reducing tax liability.

3. Flexibility: Lease financing offers businesses the flexibility to upgrade or replace assets without having to worry about disposing of the old assets.

4. Preservation of credit lines: Lease financing does not require collateral or a down payment, which means businesses can preserve their credit lines for other purposes.

Disadvantages of Lease Financing

1. Higher overall cost: Lease financing may have a higher overall cost compared to purchasing the asset outright, especially if the lessee decides to purchase the asset at the end of the lease term.

2. Limited ownership rights: The lessee does not own the asset, which means they have limited ownership rights and cannot use the asset as collateral for other financing.

3. Restrictions on usage: Lease agreements may contain restrictions on the usage of the asset, which can limit the lessee's ability to use the asset as they see fit.

In conclusion, lease financing can be a useful financing option for businesses that want to acquire assets without having to make a large upfront payment. However, it is important for businesses to carefully consider the advantages and disadvantages of lease financing before entering into a lease agreement.

GDRs (Global Depository Receipts) Conversion into Shares

GDRs are financial instruments that allow investors to invest in foreign companies without purchasing their shares directly. GDRs are issued by depository banks in international markets and represent shares of foreign companies. GDRs are denominated in a foreign currency and traded on foreign stock exchanges.

One of the advantages of investing in GDRs is that they can be converted into shares of the foreign company. The conversion process is straightforward and can be done at any time.

Conversion Process of GDRs into Shares

The conversion of GDRs into shares can be done by following the below mentioned steps:

Step 1: Contact the depository bank

Investors who want to convert their GDRs into shares need to contact the depository bank that issued the GDRs. The depository bank will provide the necessary information and instructions for the conversion process.

Step 2: Provide necessary documents

Investors need to provide the necessary documents to the depository bank, such as the GDR certificate, identity proof, and other relevant documents.

Step 3: Pay conversion fees

Investors may have to pay conversion fees to the depository bank for the conversion process. The fees may vary depending on the depository bank.

Step 4: Receive shares

After completing the conversion process, investors will receive the shares of the foreign company in their demat account.

Conclusion

In conclusion, GDRs can be converted into shares at any time. The conversion process involves contacting the depository bank, providing necessary documents, paying conversion fees, and receiving shares in the demat account. The advantage of GDRs is that they allow investors to invest in foreign companies without purchasing shares directly and provide an easy way to convert GDRs into shares.

Yes the correct answer is D
on the generation basis these are
1 internal sources
2 external sources
on the period basis
long term
short term
medium term
on the basis of ownership
owners fund
and borrowed fund

The correct answer is option 'B', Different States.

State Industrial Development Corporations (SIDCs) are government entities established by different states in India to promote industrial development within their respective states. These corporations play a vital role in attracting investments, facilitating industrial growth, and providing support to industries.

**Role and Functions of State Industrial Development Corporations:**

1. **Promoting Industrial Development:** SIDCs are responsible for promoting industrial development within their respective states. They identify potential industries and encourage them to set up their operations by offering various incentives and support.

2. **Providing Infrastructure:** SIDCs develop and provide infrastructure facilities like industrial estates, industrial parks, and special economic zones (SEZs) to facilitate industrial growth. These facilities include land, industrial sheds, warehouses, power supply, water supply, and other necessary amenities.

3. **Attracting Investments:** SIDCs actively work towards attracting domestic and foreign investments to their states. They organize investment promotion events, roadshows, and participate in trade fairs to showcase the investment opportunities and incentives available.

4. **Facilitating Clearances:** SIDCs assist industries in obtaining necessary clearances and approvals from government agencies. They act as a single point of contact for industries, reducing bureaucratic hurdles and ensuring a smooth process.

5. **Providing Financial Assistance:** SIDCs provide financial assistance to industries in the form of term loans, working capital loans, and equity participation. They collaborate with financial institutions and banks to offer attractive financing options to industries.

6. **Skill Development:** SIDCs also focus on skill development and training programs to enhance the employability of the local workforce. They partner with educational institutions and training centers to provide industry-specific training and skill upgrades.

7. **Promoting MSMEs:** SIDCs actively support Micro, Small, and Medium Enterprises (MSMEs) by providing them with necessary guidance, financial assistance, and infrastructure support. They play a crucial role in nurturing and promoting the growth of MSMEs.

Overall, State Industrial Development Corporations play a pivotal role in driving industrial development, attracting investments, and supporting industries in their respective states. They act as catalysts for economic growth, job creation, and overall development of the industrial sector.

International credit and investment corporation of India

Unit Trust of India was established by the Indian Government.

The Unit Trust of India (UTI) is a financial institution that was established on February 1, 1964, by an Act of Parliament. It was created with the objective of encouraging small investors to participate in the Indian capital market and mobilizing savings from the public.

Establishment of UTI:
The establishment of UTI was a significant step taken by the Indian Government to promote the culture of investment and savings in the country. Prior to the establishment of UTI, the Indian capital market was primarily dominated by institutional investors, and small investors had limited access to investment opportunities. The government recognized the need to create a platform that would allow small investors to participate in the capital market and benefit from the growth of the Indian economy.

Role and Functions of UTI:
1. Mobilizing Savings: UTI's primary role is to mobilize savings from the public. It offers various investment schemes and products that cater to the different needs and risk appetites of investors.

2. Investment Management: UTI manages the funds collected from investors and invests them in a diversified portfolio of securities. It aims to generate attractive returns for its investors while managing risks effectively.

3. Promoting Small Investors: UTI focuses on promoting investment among small investors by offering affordable investment options and creating awareness about the benefits of investing in the capital market. It aims to democratize the investment process and provide opportunities for wealth creation.

4. Market Stabilization: UTI also plays a crucial role in stabilizing the Indian capital market. It acts as a counter-cyclical investor, buying securities when the market is down and selling them when the market is up. This helps in reducing volatility and promoting stability in the market.

Conclusion:
The establishment of UTI by the Indian Government was a significant step towards promoting investment and savings among small investors. It has played a crucial role in mobilizing savings, managing investments, promoting small investors, and stabilizing the Indian capital market. UTI continues to be a prominent financial institution in India and has contributed significantly to the growth and development of the country's capital market.

Equity shares provide the shareholders with voting rights in company meetings, allowing them to participate in important decisions related to the business's operations and management.

The correct answer is D: Share Capital.
Explanation:
Money obtained by the issue of shares is known as share capital. Share capital represents the funds raised by a company through the sale of its shares to investors. This capital serves as a permanent source of financing for the company's operations and investments.
Here is a detailed explanation of the options:
A: Debts
- Debts refer to borrowed funds that need to be repaid with interest.
- Unlike debts, share capital does not have to be repaid to shareholders.
B: Loans
- Loans are also borrowed funds that need to be repaid with interest.
- Share capital is not a loan and does not require repayment to shareholders.
C: Reserve Funds
- Reserve funds are a portion of a company's profits that are set aside for future use.
- Share capital and reserve funds are different concepts. Share capital represents the initial funds raised, while reserve funds are accumulated from profits.
D: Share Capital
- Share capital represents the funds raised by a company through the sale of its shares to investors.
- It is a permanent source of financing for the company and does not have to be repaid.
In conclusion, money obtained by the issue of shares is known as share capital, which distinguishes it from debts, loans, and reserve funds.

ADR stands for American Depository Receipts. It is a financial instrument that represents shares in a foreign company that are traded on a U.S. stock exchange. ADRs allow U.S. investors to invest in foreign companies without having to directly purchase the shares on a foreign stock exchange. Here is a detailed explanation of ADR:
1. Definition:
- ADRs are certificates issued by U.S. banks that represent a specific number of shares in a foreign company.
- They are denominated in U.S. dollars and trade on U.S. stock exchanges.
2. Purpose:
- ADRs provide U.S. investors with a way to invest in foreign companies without the need to open brokerage accounts in foreign markets.
- They allow investors to diversify their portfolios internationally and gain exposure to foreign markets.
3. Types of ADRs:
- Level 1 ADRs: These are the most common type and are traded over-the-counter (OTC). They do not require compliance with U.S. Securities and Exchange Commission (SEC) reporting requirements.
- Level 2 ADRs: These are listed on a U.S. stock exchange and require compliance with SEC reporting requirements.
- Level 3 ADRs: These are also listed on a U.S. stock exchange and can be used to raise capital through public offerings.
4. Benefits of ADRs:
- Increased liquidity: ADRs are traded on U.S. stock exchanges, which have higher trading volumes compared to some foreign markets.
- Currency risk mitigation: ADRs are denominated in U.S. dollars, reducing the risk of currency fluctuations for U.S. investors.
- Access to global markets: ADRs provide access to companies from various countries and sectors, allowing investors to diversify their portfolios.
5. Risks of ADRs:
- Political and economic risks: Investing in foreign companies exposes investors to political and economic risks specific to those countries.
- Currency risk: Although ADRs are denominated in U.S. dollars, changes in exchange rates can still impact their value.
- Regulatory risks: ADRs are subject to the regulations of both the U.S. and the foreign country, which may affect their trading and liquidity.
In conclusion, ADRs are a popular investment vehicle that allows U.S. investors to gain exposure to foreign companies. They provide benefits such as increased liquidity and access to global markets, but also come with risks associated with foreign investments.

Expand GDR - Global Depository Receipts
Global Depository Receipts (GDR) are financial instruments that represent ownership in a foreign company's shares. They are created and traded on international stock exchanges, allowing investors to diversify their portfolio and invest in companies outside their home country.
Key Points:
- GDRs are issued by international banks and are denominated in a currency other than the company's domestic currency.
- They provide investors with an opportunity to invest in foreign companies without directly buying their shares on a foreign stock exchange.
- GDRs are typically listed on major international stock exchanges, such as the London Stock Exchange or the Luxembourg Stock Exchange.
- They are traded and settled in a similar way to ordinary shares, allowing investors to easily buy and sell them.
- GDRs are popular among global investors as they provide exposure to international markets and companies, diversifying their investment portfolio.
- Companies issue GDRs to raise capital from global investors, which can be used for expansion, acquisitions, or other corporate purposes.
- GDRs also enable companies to enhance their visibility and access a wider investor base.
- Investors in GDRs are entitled to dividends and capital gains, similar to shareholders of the underlying company.
- GDRs carry currency risk, as they are denominated in a foreign currency. Fluctuations in exchange rates can affect the returns for investors.
- GDRs are subject to regulations and disclosure requirements of the stock exchange where they are listed, as well as the regulatory authorities in the home country of the issuing company.
In conclusion, GDRs (Global Depository Receipts) are financial instruments that allow investors to gain exposure to foreign companies' shares. They provide an avenue for diversification and allow companies to raise capital from global investors. However, investors should be aware of the associated risks, such as currency fluctuations.

Answer:

Depository Receipts
Depository receipts are financial instruments that represent ownership of a company's shares. They are typically created when shares of a company listed in one country are delivered to a depository bank, which then issues depository receipts that can be traded on foreign exchanges.

Types of Depository Receipts
There are two main types of depository receipts:

1. American Depository Receipts (ADRs): ADRs are issued by a depository bank in the United States and represent ownership of foreign company shares. They trade on U.S. exchanges and are denominated in U.S. dollars.

2. Global Depository Receipts (GDRs): GDRs are issued by a depository bank outside the United States and are used to facilitate the trading of foreign company shares on international markets. They can be listed on multiple exchanges and are usually denominated in a currency other than the local currency of the company.

Conversion Process
When a company's ordinary shares are delivered to a depository bank, the bank creates and issues the corresponding depository receipts. This process involves the following steps:

1. Delivery of Ordinary Shares: The company delivers its ordinary shares to the depository bank.

2. Creation of Depository Receipts: The depository bank creates the depository receipts in the form of ADRs or GDRs, depending on the market where they will be traded.

3. Issuance to Investors: The depository receipts are then issued to investors, who can buy and sell them on the respective exchange where they are listed.

4. Trading on Foreign Exchanges: Investors can trade the depository receipts on foreign exchanges, allowing them to gain exposure to the company's shares without directly owning the underlying shares.

5. Dividend Payments: Dividends paid by the company are typically distributed to depository receipt holders through the depository bank.

Advantages of Depository Receipts
Depository receipts offer several advantages for both companies and investors:

1. Access to International Capital: Companies can raise capital from international investors by listing their depository receipts on foreign exchanges.

2. Diversification: Investors can diversify their portfolios by investing in companies from different countries and industries through depository receipts.

3. Liquidity: Depository receipts provide investors with liquidity, as they can be easily bought and sold on the exchanges where they are listed.

4. Currency Flexibility: GDRs are denominated in a currency other than the local currency of the company, providing investors with the flexibility to invest in a different currency.

Conclusion
Depository receipts, such as GDRs, are created when a company's ordinary shares are delivered to a depository bank. These financial instruments allow investors to trade the company's shares on foreign exchanges and provide companies with access to international capital. They offer various advantages, including diversification, liquidity, and currency flexibility.

Equity shares typically carry the highest risk in terms of dividend payments. Unlike preference shares, which have a fixed dividend rate, equity shareholders' dividends depend on the company's profitability. If the company doesn't make profits, equity shareholders may not receive any dividends.

The primary difference between debentures and equity shares is that debentures receive priority in dividend payments. When a company distributes profits, debenture holders are entitled to their fixed interest payments before anything is paid to equity shareholders.

The significance of issuing sweat equity shares to employees is that it rewards and motivates employees for their contributions to the company. It serves as an incentive for employees to work towards the company's success.

Industrial Finance Corporation of India (IFCI)

IFCI, also known as the Industrial Finance Corporation of India, is a development financial institution that was established in July 1948. It was the first development bank in the country and played a crucial role in promoting industrial development and providing financial assistance to various industries.

Establishment and Objectives

IFCI was established under the Industrial Finance Corporation Act of 1948. Its primary objective was to provide long-term financial assistance to medium and large-scale industries in India. The institution aimed to bridge the gap between the demand and supply of long-term funds required by industries for their expansion and modernization.

Functions and Role

IFCI has been instrumental in facilitating the industrial growth of the country. Some of its key functions and roles include:

1. Financial Assistance: IFCI provides financial assistance to industries in the form of term loans, underwriting, direct subscription to shares and debentures, guarantees, and other forms of credit.

2. Project Financing: It offers project financing to industrial projects by assessing their technical feasibility, financial viability, and creditworthiness. IFCI also assists in the preparation of project reports and provides guidance in project implementation.

3. Promoting Capital Markets: IFCI has been actively involved in promoting the development of capital markets in India. It has played a crucial role in introducing innovative financial instruments and encouraging the participation of small investors in the capital market.

4. Rehabilitation of Sick Units: IFCI is responsible for the rehabilitation of sick industrial units. It helps in reviving and restructuring financially distressed units by providing financial and technical assistance.

5. Advisory Services: The institution provides various advisory services to industries, including project appraisal, restructuring, and modernization. It also offers consultancy services for the preparation of feasibility reports and market studies.

Impact and Evolution

Over the years, IFCI has played a significant role in the industrial development of India. It has contributed to the growth of various sectors, including manufacturing, infrastructure, and services. The institution has adapted to changing economic conditions and has evolved its products and services to meet the emerging needs of industries.

In conclusion, the Industrial Finance Corporation of India (IFCI) was established in July 1948 to provide long-term financial assistance to industries. It has played a crucial role in promoting industrial development, facilitating project financing, promoting capital markets, rehabilitating sick units, and providing advisory services to industries.

Short term finance:
- Short term finance refers to the funds that are borrowed or invested for a period of less than one year. It is usually used to meet the immediate working capital needs of a business.
Examples of short term finance:
1. Trade Credit: This refers to the credit extended by suppliers to their customers. It allows businesses to purchase goods and services on credit and pay for them at a later date. Trade credit is a common form of short term finance.
2. Bank Overdraft: A bank overdraft is a facility provided by a bank that allows a business to withdraw more money from its bank account than it actually has. It provides businesses with a flexible source of short term finance to cover temporary cash flow shortages.
3. Short Term Loans: These are loans that are taken for a short period of time, usually less than a year. They are used to meet immediate cash flow needs and are repaid within a short period of time with interest.
4. Invoice Financing: This involves borrowing against the value of outstanding invoices. Businesses can receive immediate cash by selling their unpaid invoices to a finance company at a discount.
5. Commercial Paper: Commercial paper is an unsecured promissory note issued by a company to raise short term funds. It is usually issued to meet short term cash flow needs and is repaid within a few months.
Conclusion:
Trade credit is an example of short term finance. It allows businesses to purchase goods and services on credit and pay for them at a later date. Other examples of short term finance include bank overdrafts, short term loans, invoice financing, and commercial paper.

No par stock shares can be issued in the United States. These shares have no fixed face value and are issued with a focus on the real net worth of the company.

Commercial Banks
Commercial banks are financial institutions that provide various banking services to individuals, businesses, and governments. These services include accepting deposits, granting loans, facilitating transactions, and offering other financial products and services.

Punjab National Bank (PNB)
Punjab National Bank is a commercial bank based in India. It is one of the largest public sector banks in the country and offers a wide range of banking services such as savings accounts, current accounts, fixed deposits, loans, credit cards, and more. PNB operates through a vast network of branches and ATMs across India, catering to the banking needs of individuals and businesses.

Canara Bank
Canara Bank is another commercial bank in India. It is a public sector bank and provides various banking services to its customers. These services include deposit accounts, loans, credit cards, insurance, wealth management, and other financial products. Canara Bank has a significant presence in India with a large number of branches and ATMs.

State Bank of India (SBI)
The State Bank of India (SBI) is the largest commercial bank in India. It is a public sector bank and offers a comprehensive range of banking services to its customers. SBI provides services like savings accounts, current accounts, loans, credit cards, investment options, and more. With its extensive branch and ATM network, SBI serves millions of customers across India and even has a presence in other countries.

All of These
The correct answer is option 'D' - All of these. All three banks mentioned - Punjab National Bank, Canara Bank, and State Bank of India - are commercial banks. They operate as financial institutions, providing banking services to individuals, businesses, and governments. These banks play a crucial role in facilitating economic activities by accepting deposits, lending money, and facilitating financial transactions.

In summary, all three banks mentioned, Punjab National Bank, Canara Bank, and State Bank of India, are commercial banks that offer a range of banking services to their customers.

Understanding Dividends
Dividends are a portion of a company's earnings distributed to its shareholders. They represent a share of the profits, and only shareholders are entitled to receive them.
Why Only Shares?
- Ownership Stake: When you own shares in a company, you hold an ownership stake. This means you are entitled to a portion of the company's profits, which is distributed as dividends.
- Profit Distribution: Dividends are a way for companies to reward shareholders for their investment. They signal a company's profitability and financial health.
Other Financial Instruments
- Bonds: Bonds are debt instruments where investors lend money to an entity (government or corporation) in exchange for periodic interest payments and the return of principal at maturity. They do not receive dividends.
- Debentures: Similar to bonds, debentures are also long-term debt instruments issued by companies to raise capital. Investors receive interest payments, but no dividends.
- Loans: Loans represent borrowed funds that must be repaid with interest. They do not provide any profit-sharing benefits, unlike shares.
Conclusion
In summary, dividends are exclusive to shares because they represent a share in the company's profits. Bonds, debentures, and loans involve interest payments but do not equate to profit sharing, making option 'C' the correct answer.

Mahindra and Mahindra was the first company in India to issue convertible zero interest debentures in January 1990.

Explanation:

Convertible Zero Interest Debentures:
- Convertible zero interest debentures are a type of financial instrument that combines the features of a debenture and a convertible security.
- These debentures are issued by companies to raise long-term funds from investors.
- They carry no interest payment obligations to the debenture holders, but they can be converted into equity shares of the issuing company at a predetermined price.

Mahindra and Mahindra:
- Mahindra and Mahindra is an Indian multinational automobile manufacturing corporation.
- It is a part of the Mahindra Group, which is a conglomerate with interests in various sectors including automotive, aerospace, agribusiness, hospitality, and more.
- The company was founded in 1945 and is headquartered in Mumbai, Maharashtra, India.

First Company to Issue Convertible Zero Interest Debentures:
- In January 1990, Mahindra and Mahindra became the first company in India to issue convertible zero interest debentures.
- This move was significant as it introduced a new financial instrument in the Indian market and provided an innovative way for companies to raise funds.
- The issuance of convertible zero interest debentures allowed Mahindra and Mahindra to attract investors who were looking for an opportunity to participate in the company's growth potential without the burden of interest payment obligations.

Impact and Significance:
- Mahindra and Mahindra's issuance of convertible zero interest debentures set a precedent for other companies in India to follow suit.
- It opened up new avenues for companies to raise funds and expand their operations.
- The introduction of this financial instrument provided investors with a unique investment opportunity, as they could convert their debentures into equity shares and potentially benefit from the company's growth in the future.
- This move also showcased Mahindra and Mahindra's innovative approach to fundraising and its ability to adapt to changing market dynamics.

In conclusion, Mahindra and Mahindra was the first company in India to issue convertible zero interest debentures in January 1990. This move had a significant impact on the Indian market and paved the way for other companies to explore this financial instrument for raising funds.

The primary preference of preference shares is that they receive dividends before equity shareholders. This means that when the company distributes profits, preference shareholders are entitled to their fixed dividend payments before anything is paid to equity shareholders.

Equity shares represent ownership interest in a company. Unlike preference shares or debentures, equity shareholders have a say in the management of the company and may receive dividends based on the company's profitability. They do not have a fixed rate of interest, and their returns depend on the company's performance.

The key advantage of issuing shares with differential rights is that they offer flexibility in tailoring shareholder rights. This allows the company to customize the rights associated with different classes of shares to meet specific objectives or requirements.

Debentures are typically associated with a floating charge on a company's assets. A floating charge is a security interest over a class of assets, which allows the company to continue to use and dispose of these assets in the ordinary course of business.

Life Insurance Corporation (LIC) - Establishment Year
LIC is one of the largest insurance companies in India, providing various life insurance products to individuals. It plays a crucial role in the Indian insurance sector. The establishment year of LIC is as follows:
Answer: C. 1956
Explanation:
- LIC was set up in the year 1956 under the Life Insurance Corporation Act passed by the Parliament of India.
- The act nationalized the private insurance industry in India and established a state-owned insurance company named Life Insurance Corporation of India (LIC).
- LIC was created by merging around 245 insurance companies and provident societies into a single entity.
- The primary objective of LIC is to provide life insurance coverage to individuals, promote savings, and mobilize funds for the nation's development.
- LIC operates through a wide network of branches and agents, providing life insurance policies and services to millions of customers across the country.
Key Points:
- LIC was established in 1956 under the Life Insurance Corporation Act.
- The act nationalized the private insurance industry in India.
- LIC is a state-owned insurance company.
- It was created by merging multiple insurance companies and provident societies.
- LIC's objective is to provide life insurance coverage and promote savings.
- It operates through a wide network of branches and agents.

The main purpose of issuing sweat equity shares is to reward employees for their contributions to the company. These shares are typically issued at a discount or for non-cash considerations to motivate and retain key employees.

Equity shares can be issued with differential rights as to voting, dividend, or other matters, as permitted by the Companies Act. This allows companies to tailor the rights associated with their equity shares to meet specific needs or goals.