Read the passage carefully and answer the questions that follow. Over the past 18 months, corporate India and the world of finance has been roiled by a peculiar problem: the promoters of a slew of companies have been eased out of board rooms because they pledged their shares to avail loans and then defaulted. The suicide of Cafe Coffee Day’s V.G. Siddhartha in July this year; the roller-coaster ride that Yes Bank Ltd’s stock went through when its former promoter Rana Kapoor dealt with lenders; and even the unfolding financial scandal at Karvy Stock Broking Ltd have one thing in common—the use, or rather, overuse of a humble instrument called LAS (loan against shares). The product has been in existence since trading began in Indian markets. It was primarily meant as a tool for stock market operators, who used their existing shares as security to borrow and speculate in the market. It was meant to be short term. And the sums were supposed to be small. Traditional banks even have an upper limit: Rs.20 lakh, if the collateral is purely shares (not applicable to brokerage firms). But mutual funds and non-banking financial companies (NBFCs) have no such limit. Caught in a credit squeeze and a slowdown in traditional bank lending, promoters increasingly began to rely on pledged share to raise funds. In many cases, those funds came in through channels that are relatively less regulated than traditional banks, setting up a perfect storm. When economic growth began to fall and “sentiments" began to collapse, lenders inevitably began calling in on the pledge or, in some cases, even selling the equity, reducing company promoters to minor shareholders in their own firms. The fortunes of at least six big promoters are on the line, including Zee Entertainment Enterprises Ltd’s Subhash Chandra and Reliance Group’s Anil Ambani. The sparkling diamonds, or shares, which are forever, are usually never meant to be sold. It is the equivalent of bringing out the family silver. “How do you get funding in any market—you borrow, beg or steal," said Amit Tandon, managing director of Institutional Investors Advisory Services (IIAS). “In a bad market such as this, borrowing is not happening because no one will lend. You are too proud to beg. So, you steal from your existing pool which is shares, pledge them, and borrow." Perhaps, the promoters never thought they would lose control. Perhaps, corporate India never anticipated a multi-quarter economic slowdown. Perhaps, internal risk-management mechanisms were extremely weak resulting in risky hedges and abuse of LAS. One thing is certain though: The unfolding saga of India Inc.’s troubled dalliance with LAS captures, in many ways, the degree of desperation among certain sections of the business community. It is a cautionary tale which could only get worse before it gets any better. As per regulations issued by capital market regulator Securities and Exchange Board of India (SEBI), a company needs to disclose the amount of pledged shares, when the pledge is created, to whom the shares are pledged, and for what reason they have been pledged. However, an analysis done by Mint shows that despite regulatory tightening, the disclosures are missing. In the case of at least four companies including Yes Bank, firms have not even disclosed to whom the shares have been pledged—a clear violation of disclosure norms. Other companies such as Zee Entertainment, the Adani Group, GMR Group and Vedanta Ltd practice a more innovative strategy. They disclose the name of the trustee but not the pledgee, giving investors no indication regarding the purpose of the pledge. For quite some time, SEBI and RBI have been on the same page regarding the need to crack down on excessive pledging. T he capital market regulator had expressed concern particularly about how regulated mutual funds have now assumed the role of lenders, rather than acting on behalf of investors. Several mutual funds have begun to invest in LAS products in their fixed maturity plan schemes, that is, papers with pledged shares as the underlying collateral. Due to a fear of default, the funds sometimes roll over the maturity date in the hope that a stake sale would result in realization of dues. SEBI has taken one step after another to stem this practice. Q. Why did the promoters of many companies not find a seat in the board room?

They were interested in dealing in stocks, rather than managing the companies.

They pledged their shares for loans, but could not settle the due.

The stocks of the companies plummeted and they became minor shareholders.

Read the passage carefully and answer the questions that follow. Over the past 18 months, corporate India and the world of finance has been roiled by a peculiar problem: the promoters of a slew of companies have been eased out of board rooms because they pledged their shares to avail loans and then defaulted. The suicide of Cafe Coffee Day’s V.G. Siddhartha in July this year; the roller-coaster ride that Yes Bank Ltd’s stock went through when its former promoter Rana Kapoor dealt with lenders; and even the unfolding financial scandal at Karvy Stock Broking Ltd have one thing in common—the use, or rather, overuse of a humble instrument called LAS (loan against shares). The product has been in existence since trading began in Indian markets. It was primarily meant as a tool for stock market operators, who used their existing shares as security to borrow and speculate in the market. It was meant to be short term. And the sums were supposed to be small. Traditional banks even have an upper limit: Rs.20 lakh, if the collateral is purely shares (not applicable to brokerage firms). But mutual funds and non-banking financial companies (NBFCs) have no such limit. Caught in a credit squeeze and a slowdown in traditional bank lending, promoters increasingly began to rely on pledged share to raise funds. In many cases, those funds came in through channels that are relatively less regulated than traditional banks, setting up a perfect storm. When economic growth began to fall and “sentiments" began to collapse, lenders inevitably began calling in on the pledge or, in some cases, even selling the equity, reducing company promoters to minor shareholders in their own firms. The fortunes of at least six big promoters are on the line, including Zee Entertainment Enterprises Ltd’s Subhash Chandra and Reliance Group’s Anil Ambani. The sparkling diamonds, or shares, which are forever, are usually never meant to be sold. It is the equivalent of bringing out the family silver. “How do you get funding in any market—you borrow, beg or steal," said Amit Tandon, managing director of Institutional Investors Advisory Services (IIAS). “In a bad market such as this, borrowing is not happening because no one will lend. You are too proud to beg. So, you steal from your existing pool which is shares, pledge them, and borrow." Perhaps, the promoters never thought they would lose control. Perhaps, corporate India never anticipated a multi-quarter economic slowdown. Perhaps, internal risk-management mechanisms were extremely weak resulting in risky hedges and abuse of LAS. One thing is certain though: The unfolding saga of India Inc.’s troubled dalliance with LAS captures, in many ways, the degree of desperation among certain sections of the business community. It is a cautionary tale which could only get worse before it gets any better. As per regulations issued by capital market regulator Securities and Exchange Board of India (SEBI), a company needs to disclose the amount of pledged shares, when the pledge is created, to whom the shares are pledged, and for what reason they have been pledged. However, an analysis done by Mint shows that despite regulatory tightening, the disclosures are missing. In the case of at least four companies including Yes Bank, firms have not even disclosed to whom the shares have been pledged—a clear violation of disclosure norms. Other companies such as Zee Entertainment, the Adani Group, GMR Group and Vedanta Ltd practice a more innovative strategy. They disclose the name of the trustee but not the pledgee, giving investors no indication regarding the purpose of the pledge. For quite some time, SEBI and RBI have been on the same page regarding the need to crack down on excessive pledging. T he capital market regulator had expressed concern particularly about how regulated mutual funds have now assumed the role of lenders, rather than acting on behalf of investors. Several mutual funds have begun to invest in LAS products in their fixed maturity plan schemes, that is, papers with pledged shares as the underlying collateral. Due to a fear of default, the funds sometimes roll over the maturity date in the hope that a stake sale would result in realization of dues. SEBI has taken one step after another to stem this practice. Q. Which of the following statements are true regarding the financial instrument ‘loan against shares’ (LAS)?

Traditional banks don’t have any upper limit while issuing loans though LAS.

NBFCs do not have the authority to issue loans through LAS.

The financial instrument LAS primary was designed to issue loans for long term.

Read the passage carefully and answer the questions that follow. Over the past 18 months, corporate India and the world of finance has been roiled by a peculiar problem: the promoters of a slew of companies have been eased out of board rooms because they pledged their shares to avail loans and then defaulted. The suicide of Cafe Coffee Day’s V.G. Siddhartha in July this year; the roller-coaster ride that Yes Bank Ltd’s stock went through when its former promoter Rana Kapoor dealt with lenders; and even the unfolding financial scandal at Karvy Stock Broking Ltd have one thing in common—the use, or rather, overuse of a humble instrument called LAS (loan against shares). The product has been in existence since trading began in Indian markets. It was primarily meant as a tool for stock market operators, who used their existing shares as security to borrow and speculate in the market. It was meant to be short term. And the sums were supposed to be small. Traditional banks even have an upper limit: Rs.20 lakh, if the collateral is purely shares (not applicable to brokerage firms). But mutual funds and non-banking financial companies (NBFCs) have no such limit. Caught in a credit squeeze and a slowdown in traditional bank lending, promoters increasingly began to rely on pledged share to raise funds. In many cases, those funds came in through channels that are relatively less regulated than traditional banks, setting up a perfect storm. When economic growth began to fall and “sentiments" began to collapse, lenders inevitably began calling in on the pledge or, in some cases, even selling the equity, reducing company promoters to minor shareholders in their own firms. The fortunes of at least six big promoters are on the line, including Zee Entertainment Enterprises Ltd’s Subhash Chandra and Reliance Group’s Anil Ambani. The sparkling diamonds, or shares, which are forever, are usually never meant to be sold. It is the equivalent of bringing out the family silver. “How do you get funding in any market—you borrow, beg or steal," said Amit Tandon, managing director of Institutional Investors Advisory Services (IIAS). “In a bad market such as this, borrowing is not happening because no one will lend. You are too proud to beg. So, you steal from your existing pool which is shares, pledge them, and borrow." Perhaps, the promoters never thought they would lose control. Perhaps, corporate India never anticipated a multi-quarter economic slowdown. Perhaps, internal risk-management mechanisms were extremely weak resulting in risky hedges and abuse of LAS. One thing is certain though: The unfolding saga of India Inc.’s troubled dalliance with LAS captures, in many ways, the degree of desperation among certain sections of the business community. It is a cautionary tale which could only get worse before it gets any better. As per regulations issued by capital market regulator Securities and Exchange Board of India (SEBI), a company needs to disclose the amount of pledged shares, when the pledge is created, to whom the shares are pledged, and for what reason they have been pledged. However, an analysis done by Mint shows that despite regulatory tightening, the disclosures are missing. In the case of at least four companies including Yes Bank, firms have not even disclosed to whom the shares have been pledged—a clear violation of disclosure norms. Other companies such as Zee Entertainment, the Adani Group, GMR Group and Vedanta Ltd practice a more innovative strategy. They disclose the name of the trustee but not the pledgee, giving investors no indication regarding the purpose of the pledge. For quite some time, SEBI and RBI have been on the same page regarding the need to crack down on excessive pledging. T he capital market regulator had expressed concern particularly about how regulated mutual funds have now assumed the role of lenders, rather than acting on behalf of investors. Several mutual funds have begun to invest in LAS products in their fixed maturity plan schemes, that is, papers with pledged shares as the underlying collateral. Due to a fear of default, the funds sometimes roll over the maturity date in the hope that a stake sale would result in realization of dues. SEBI has taken one step after another to stem this practice. Q. What does the author mean by the expression: ‘It is a cautionary tale which could only get worse before it gets any better.’?

The incident can get become worse before showing signs of improvement, and all businessmen should learn from it.

The tale is a proverbial one and some experience is to be gained from it.

No promoter should ever take loan through LAS and the situation should be remembered by all.

Read the passage carefully and answer the questions that follow. Over the past 18 months, corporate India and the world of finance has been roiled by a peculiar problem: the promoters of a slew of companies have been eased out of board rooms because they pledged their shares to avail loans and then defaulted. The suicide of Cafe Coffee Day’s V.G. Siddhartha in July this year; the roller-coaster ride that Yes Bank Ltd’s stock went through when its former promoter Rana Kapoor dealt with lenders; and even the unfolding financial scandal at Karvy Stock Broking Ltd have one thing in common—the use, or rather, overuse of a humble instrument called LAS (loan against shares). The product has been in existence since trading began in Indian markets. It was primarily meant as a tool for stock market operators, who used their existing shares as security to borrow and speculate in the market. It was meant to be short term. And the sums were supposed to be small. Traditional banks even have an upper limit: Rs.20 lakh, if the collateral is purely shares (not applicable to brokerage firms). But mutual funds and non-banking financial companies (NBFCs) have no such limit. Caught in a credit squeeze and a slowdown in traditional bank lending, promoters increasingly began to rely on pledged share to raise funds. In many cases, those funds came in through channels that are relatively less regulated than traditional banks, setting up a perfect storm. When economic growth began to fall and “sentiments" began to collapse, lenders inevitably began calling in on the pledge or, in some cases, even selling the equity, reducing company promoters to minor shareholders in their own firms. The fortunes of at least six big promoters are on the line, including Zee Entertainment Enterprises Ltd’s Subhash Chandra and Reliance Group’s Anil Ambani. The sparkling diamonds, or shares, which are forever, are usually never meant to be sold. It is the equivalent of bringing out the family silver. “How do you get funding in any market—you borrow, beg or steal," said Amit Tandon, managing director of Institutional Investors Advisory Services (IIAS). “In a bad market such as this, borrowing is not happening because no one will lend. You are too proud to beg. So, you steal from your existing pool which is shares, pledge them, and borrow." Perhaps, the promoters never thought they would lose control. Perhaps, corporate India never anticipated a multi-quarter economic slowdown. Perhaps, internal risk-management mechanisms were extremely weak resulting in risky hedges and abuse of LAS. One thing is certain though: The unfolding saga of India Inc.’s troubled dalliance with LAS captures, in many ways, the degree of desperation among certain sections of the business community. It is a cautionary tale which could only get worse before it gets any better. As per regulations issued by capital market regulator Securities and Exchange Board of India (SEBI), a company needs to disclose the amount of pledged shares, when the pledge is created, to whom the shares are pledged, and for what reason they have been pledged. However, an analysis done by Mint shows that despite regulatory tightening, the disclosures are missing. In the case of at least four companies including Yes Bank, firms have not even disclosed to whom the shares have been pledged—a clear violation of disclosure norms. Other companies such as Zee Entertainment, the Adani Group, GMR Group and Vedanta Ltd practice a more innovative strategy. They disclose the name of the trustee but not the pledgee, giving investors no indication regarding the purpose of the pledge. For quite some time, SEBI and RBI have been on the same page regarding the need to crack down on excessive pledging. T he capital market regulator had expressed concern particularly about how regulated mutual funds have now assumed the role of lenders, rather than acting on behalf of investors. Several mutual funds have begun to invest in LAS products in their fixed maturity plan schemes, that is, papers with pledged shares as the underlying collateral. Due to a fear of default, the funds sometimes roll over the maturity date in the hope that a stake sale would result in realization of dues. SEBI has taken one step after another to stem this practice. Q. What does the analysis done by Mint show?

The analysis shows that regulations issued by SEBI mandate a company to disclose the amount of pledged shares, when the pledge is created, to whom the shares are pledged, and for what reason they have been pledged.

The analysis shows that at least four companies are in violation of the regulatory norms issued by SEBI.

The analysis shows that many companies disclose the name of the trustee but not the pledgee, giving investors no indication regarding the purpose of the pledge.

Read the passage carefully and answer the questions that follow. Over the past 18 months, corporate India and the world of finance has been roiled by a peculiar problem: the promoters of a slew of companies have been eased out of board rooms because they pledged their shares to avail loans and then defaulted. The suicide of Cafe Coffee Day’s V.G. Siddhartha in July this year; the roller-coaster ride that Yes Bank Ltd’s stock went through when its former promoter Rana Kapoor dealt with lenders; and even the unfolding financial scandal at Karvy Stock Broking Ltd have one thing in common—the use, or rather, overuse of a humble instrument called LAS (loan against shares). The product has been in existence since trading began in Indian markets. It was primarily meant as a tool for stock market operators, who used their existing shares as security to borrow and speculate in the market. It was meant to be short term. And the sums were supposed to be small. Traditional banks even have an upper limit: Rs.20 lakh, if the collateral is purely shares (not applicable to brokerage firms). But mutual funds and non-banking financial companies (NBFCs) have no such limit. Caught in a credit squeeze and a slowdown in traditional bank lending, promoters increasingly began to rely on pledged share to raise funds. In many cases, those funds came in through channels that are relatively less regulated than traditional banks, setting up a perfect storm. When economic growth began to fall and “sentiments" began to collapse, lenders inevitably began calling in on the pledge or, in some cases, even selling the equity, reducing company promoters to minor shareholders in their own firms. The fortunes of at least six big promoters are on the line, including Zee Entertainment Enterprises Ltd’s Subhash Chandra and Reliance Group’s Anil Ambani. The sparkling diamonds, or shares, which are forever, are usually never meant to be sold. It is the equivalent of bringing out the family silver. “How do you get funding in any market—you borrow, beg or steal," said Amit Tandon, managing director of Institutional Investors Advisory Services (IIAS). “In a bad market such as this, borrowing is not happening because no one will lend. You are too proud to beg. So, you steal from your existing pool which is shares, pledge them, and borrow." Perhaps, the promoters never thought they would lose control. Perhaps, corporate India never anticipated a multi-quarter economic slowdown. Perhaps, internal risk-management mechanisms were extremely weak resulting in risky hedges and abuse of LAS. One thing is certain though: The unfolding saga of India Inc.’s troubled dalliance with LAS captures, in many ways, the degree of desperation among certain sections of the business community. It is a cautionary tale which could only get worse before it gets any better. As per regulations issued by capital market regulator Securities and Exchange Board of India (SEBI), a company needs to disclose the amount of pledged shares, when the pledge is created, to whom the shares are pledged, and for what reason they have been pledged. However, an analysis done by Mint shows that despite regulatory tightening, the disclosures are missing. In the case of at least four companies including Yes Bank, firms have not even disclosed to whom the shares have been pledged—a clear violation of disclosure norms. Other companies such as Zee Entertainment, the Adani Group, GMR Group and Vedanta Ltd practice a more innovative strategy. They disclose the name of the trustee but not the pledgee, giving investors no indication regarding the purpose of the pledge. For quite some time, SEBI and RBI have been on the same page regarding the need to crack down on excessive pledging. T he capital market regulator had expressed concern particularly about how regulated mutual funds have now assumed the role of lenders, rather than acting on behalf of investors. Several mutual funds have begun to invest in LAS products in their fixed maturity plan schemes, that is, papers with pledged shares as the underlying collateral. Due to a fear of default, the funds sometimes roll over the maturity date in the hope that a stake sale would result in realization of dues. SEBI has taken one step after another to stem this practice. Q. Which of the following is the author’s opinion regarding shares?

The author compares ‘share’ with ‘sparling diamond’.

The author thinks that usually one should never sell ‘shares’.

The author draws an analogy between ‘shares’ and ‘family silver’.

Choose the most appropriate option to change the voice (active /passive) form of the given sentence. I am to do it immediately.

It is supposed to be done by me immediately.

It has to be done by me immediately.

It is to be done by me immediately.

It is being done by me immediately.

Choose the most appropriate option to change the Narration (direct/indirect) form of the given sentence. Meena inquired of me why I had done that.

Meena told me, “Why did I do that?”

Meena said to me, “Why did you do that?”

Meena said to me, “Why did you do this?”

Meena asked me, “Why did you did this?”

Identify the segment in the sentence, which contains the grammatical error. The egg were fragile, with the thin outer shell protecting its liquid interior until it was put in the boiling water.

it was put in the boiling water.

protecting its liquid interior until

Choose the most appropriate option to change the voice (active / passive) form of the given sentence. Somebody built the house last year.

The house has been built last year.

The house is built last year by someone.

The house was being built last year by somebody.

Identify the segment in the sentence, which contains the grammatical error. Once upon a time, a daughter complained to her father that his life was miserable and that she didn’t know how she was going to make it.

life was miserable and that she

complained to her father that his

didn’t know how she was going to make it.

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	Company Wise Preparation 18 docs\|28 tests

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