Question

What is "Qualified Institutional Placement"?

• A. An agency that helps in providing jobs to students
• B. It is business school method of providing jobs
• C. It is a way of starting business in the U.S
• D. It is a way of raising money in India
• E. None of the above

Hint:

Always link QIP with Indian capital markets: it is a SEBI-approved method for listed companies to raise funds from institutional investors quickly and efficiently.

Answer 1

The Correct Option is D

Step 1: Understanding the concept.
Qualified Institutional Placement (QIP) is a capital-raising tool introduced by the Securities and Exchange Board of India (SEBI). It allows listed companies in India to raise funds by issuing equity shares, fully convertible debentures, or other securities to Qualified Institutional Buyers (QIBs) without needing to submit pre-issue filings to market regulators.
Step 2: Purpose of QIP.
The main purpose of QIP is to make fundraising easier, faster, and cost-effective for Indian companies. Instead of going through lengthy approval processes for international listings or public issues, companies can directly access domestic institutional investors like mutual funds, insurance companies, banks, and foreign institutional investors registered with SEBI.
Step 3: Eliminating options.
- (A) Wrong, QIP is unrelated to job agencies.
- (B) Wrong, it has no link with business school placements.
- (C) Wrong, it is not a U.S. business start-up concept.
- (D) Correct, it is indeed a way of raising money in India.
- (E) Wrong, since (D) is correct.
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