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Financial System: It is a set of all financial institution which facilitates financial transactions
in financial markets. It brings under its fold the financial markets and the financial institution
which support the system.
Definition
Indian Financial system is a complex well integrated set of sub system of financial
institutions, market, instruments and services which facilitates the transfer and allocation of
funds efficiently and effectively .System helps to mobilize the surplus funds and utilizing in
productive manner
IFS
Fin
Fin
Fin market instrument Fin services Regulatory
institutions
s
Short,medi
Non Mutual Capital money um depositorie
Banking insurance Min of fin
banking funds market market s
long
Non bank
Credit
private fin equity debt Tresury bill RBI
rating
companies
hire
foreign Public issue NSE Futures cp IRDA
purchase
Privite Merchant
RRB BSE Options CD
placement banking
Functions
IFS COMPONENTS
Financial Markets
Financial Institution
Financial Instruments
Financial Services
Regulatory Authority
Financial Markets
Financial market is a place or mechanism which facilitates the transfer of resources from one
entity to another
1) Money market- money market is collective name given to the various firms and
institutions that deal in various grades of near money
2) Capital market- capital market refers to the market for long term funds. it includes
institutions and mechanism for effective pooling of long term funds. it includes shares
debentures bonds and securities
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Financial Institutions
They are intermediaries who facilitate smooth functioning of financial system by making
investors and borrowers meet. Financial institution can be divided under 2 head- banking and
non banking
Financial Instruments
It is a claim against a person or an institution for payment at future date of sum of money or a
periodic payment in form of interest or dividend.
Financial Services
It is product or services offered by financial industries to its customers like stock broking,
insurance mutual funds etc .there are various assets based and fee based services
Regulatory Authorities
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
4. To provide platform for sellers and buyers of fund to meet for exchange process
5. Serves as intermediaries for mobilizing savings
6. Assist process of economic growth
7. Caters financial needs or provides long term fund for the company
1. Capital market
2. Money market
3. FOREX (foreign exchange )market
4. Derivative Market
Capital Market: capital market refers to institutional arrangement for facilitating the
borrowing and lending of long term funds.It includes shares debentures bonds and securities
1. Credit function-To provide long term permanent capital for the company by
mobilization of savings from investors to companies and entrepreneurs
2. Liquidity function- market provides and exchange mechanism for buyers and seller
of securities there by allows better liquidity (conversion of asset to cash)
3. Transfer function- it helps in transfer of resources / assets from one place to another
and helps in securing foreign capital
Features
1. 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. This is the most common method followed by joint stock
companies to raise capital through the issue of securities it is also called as IPO –
Initial public offering/ FPO follow public offering
2. Rights issue: under this method shares are offerd to existing share holders.
3. Bonus shares: share given to shareholders out of accumulated profit as a substitute
for dividend
4. 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
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
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
2)Commercial Bills Market: is a market for bills of exchange arising out of trade
transaction .bills of exchange is short term negotiable instrument between debtor and creditor.
the creditor can discount the bill of exchange to commercial bank before the due date and can
avail 90m to 95 percentage of money
Features
3)Treasury bill Market: It is a market for Treasury bill. Treasury bills or T bills are kind of
finance bills which are in the nature of promissory note issued by the government under
discount for fixed period not exceeding 1 yea rcontaining a promise to pay the amount stated
on the instrument.
Features
Types
Ordinary treasury bills-are issued to public, commercial banks and other financial
institutions for raising short term fund for government
Ad hoc treasury bills-are issued in favour of RBI
4)Commercial papers
It is unsecured promissory notes which are issued by well reputed companies with minimum
face value of 5 lakhs
Features
5) Certificate deposits
It is unsecured negotiable short term instrument in bearer form issued by commercial banks
and developed financial institutions
Features
Features of FI
1. It provides liquidity position of the entity by maintaining cash inflows and out flows
2. FI periodically adjust their deposits rates in tune with market trend
3. Large scale operation and usage of formal mechanism reduces operation cost
4. It can spread risk by giving a large number of loans with varying degreeof risk and
return
Function of FI
1. Facilitating exchange of goods and services
2. Management of liquidity risk
3. Monitoring of investment project
4. Resolving marketing imperfection by accepting funds from surplus units and channel
to deficit units
5. Mobilizing saving
6. Accelerating industrialization
7. Provides information about market and trend to end users
b)
i. Public sector banks- include all banks in which government has
major share holdings. SBI & it s & subsidiaries and all
nationalized banks belongs to this category eg; SBI ,
Indianbank, Bank Of India, Canara Bank
ii. Private sector-banks in which owned by shareholders. At
present there are 30 private sector bankeg south indian bank,
iii. Foreign banks-banks belong to foreign country and started their
branches in india.eg; standard chartered bank,citi bank
c) Non scheduled bank-banks which are not under the scheduled of RBI.
At present in India there are no bon scheduled bank
2. RRBs: Regional Rural Bank s are to be set-up mainly with a view to develop
rural economy by providing credit facilities for the purpose of development of
agriculture, trade, commerce, industry and other productive activities in the rural
areas. Such facility is provided particularly to the small and marginal farmers,
agricultural labourers, artisans, and small entrepreneurs and for other related
matters.
Unorganized sector
Indigenous Banks-Indigenous bankers are private firms or individuals who operate as banks
and as such both receive deposits and give loans. The Banking Commission (1972) had
grouped them under four main sub-groups Gujarati shroffs, Shikarpuri or Multani shroffs,
Chettiars of the South, and Marwari Kayas of Assam.
Moneylender - Money lender is a person or group who typically offers small personal loans
at high rates of interest. They play an active role in lending to people with less access to
banking activities, such as the unbanked or underbanked or in situations where borrowers do
not have good credit history. In India licensed money lenders are governed by Money
Lenders Acts of respective states.
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Non Banking Financial Institutions: These are institutions which do not have full
license or is not supervised by a National or International Banking Regulatory Agency. They
facilitate bank related financial services such as investment, risk pooling, market brokering
etc .
Features of NBFI
Role of NBFI
It promotes savings
Functions of DFI
1. Undertakes financial function- includes granting long term and short term loans
2. subscribing shares and debenture of company, guaranteeing loans,
3. Act as a catalyst for development of industry
4. Promotes development of entrepreneurial cult
5. Provides technical and managerial advices to the industry.
6. Helps in identification, evaluation and execution of new investment projects.
7. Helps in balanced economic growth
8. Helps in optimal utilization of resources
Types of DFI
The Industrial Development Bank of India was set up in July 1964 as a wholly owned
subsidiary of the Reserve Bank of India.. After a decade of its working, it was delinked from
RBI in 1976, when its ownership was transferred to the Government of IndiaIDBI is now the
principal financial institution for coordinating the working of institutions engaged in
financing, promoting or developing industry, assisting the development of such institutions
and providing credit and other facilities for the development of industry.
Functions Of Idbi:
Act an apex financial institution and coordinates the working of other financial
institutions.
It assists in the development of other financial institutions.
It provides credit, Technical and Administrative for promotion and expansion of
industry.
It provides refinance to scheduled banks and cooperative banks.
It is the principle financial institution for coordinating in conformity with national
priorities, promoting or developing industries.
Direct assistance like giving concessions in the form of interest longer repayment
period, longer grace period and lower margin requirement
Undertaking market and investment research and surveys.
Seed capital assistance through SFC’S and SID’S.
Provides help for preparation of project profile.
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Functions Of IFCI
Objectives Of Ifci:
Under the provision of the State Financial Corporation Act, 1952, the SFCs are set up in the
different states for providing term finance to medium and small scale industries.
Constitution
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The State Finance Corporations management is vested in a Board of ten directors. The State
Government appoints the managing director generally in consultation with the Reserve Bank
and nominates three other directors.The insurance companies, scheduled banks, investment
trusts, co-operative banks and other financial institutions elect three directors. Thus the
majority of the directors are nominated by the government and quasi-government institutions.
Objectives
1. To provide long term and short financial assistance to small and medium industries
2. Ensures balanced regional development
3. Higher investment and broad ownership of industries
4. Employment generation.
The life insurance business was nationalised on 19th January, 1956 and the Life Insurance
Corporation of India came into being on 1st September, 1956 to carry on life business in
India with capital of Rs.5 crores contributed by the Central Government. The Corporation is a
body corporate having perpetual succession with a common seal with powers to acquire, hold
and dispose of property and may by its name sue and be sued.
Functions.
1. to carry on life insurance business
2. to invest the funds of the Corporation in such manner as the Corporation may think fit
3. to acquire, hold and dispose of any property for the purpose of its business;
4. to transfer the whole or any part of the life insurance business carried on outside India
to any other person or persons,
5. to advance or lend money upon the security of any movable or immovable property or
otherwise;
6. to borrow or raise any money in such manner and upon such security as the
Corporation may think fit;
7. to carry on either by itself or through any subsidiary any other business in any case
where such other business was being carried on by a subsidiary of an insurer whose
controlled business has been transferred to and vested in the Corporation by this act;
8. to do all such things as may be incidental or conducive to the proper exercise of any
of the powers of the Corporation.
9. In the discharge of any of its functions the Corporation shall act so far as may be on
business principles.C was established in 1956
Export-Import Bank of India is the premier export finance institution in India, established
in 1982 under the Export-Import Bank of India Act 1981. Exim Bank of India has been both
a catalyst and a key player in the promotion of cross border trade and investment
Objectives
1. To ensure and integrated and co-ordinated approach in solving the allied problems
encountered by exporters in India.
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.Functions
The State Industrial Development Corporations have been set up by the State Governments as
companies wholly owned by them. At present, 22 such SIDCs are functioning in India.
SIDCs are not merely financing agencies, but are intended to act as instruments for
accelerating the pace of industrialization in the respective States. State Industrial
Development Corporation operate at slightly higher level than SFCs though these institutions
are also primarily working as development banks promoting industrial projects in small and
medium scale.
Constitution
Board of directors-11
Managing director-1
General manager-4
Deputy general manager-7
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Superintendent
Head office – Bangalore
3 zone-Bangalore, Hubli, Mysore
Objectives
1. To develop the small sector industries
2. To formulate policies to direct t support to industries
3. To provide entrepreneurship training
4. Assist in projects
Function of SIDC
MUTUAL FUNDS
Definition:
An investment vehicle that is made up of a pool of funds collected from many investors for
the purpose of investing in securities such as stocks, bonds, money market instruments and
similar assets. Mutual funds are operated by money managers, who invest the fund's capital
and attempt to produce capital gains and income for the fund's investors
A mutual fund is an investment security type that enables investors to pool their money
together into one professionally managed investment. Mutual funds can invest in stocks,
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bonds, cash and/or other assets. These underlying security types,called holdings combine to
form one mutual fund, also called a portfolio.
Features
Function
Diversification- allows investors to invest their money in a number of different assets at
once, making multiple investments with one purchase
Investor Choices--Mutual funds vary in the types of assets that they hold. This allows
individual investors to purchase shares in funds that meet their particular needs and
preferences.
Professional Management- The fund manager manages the fund and analysis risk and return
with a mutual fund for all of the fund's shareholders.
Investor Goals
Mutual funds exist to meet a wide range of investor goals. Some mutual funds target steady,
long-term growth, while others focus on more short-term goals.
• By structure
Open-ended Funds
An Open-ended Fund is one that is available for subscription all through the year. These do
not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value
(NAV) related prices.
Close-ended Funds
A Close-ended Fund has a stipulated maturity period, which generally ranges from 3 to 15
years. The fund is open for subscription only during a specified period. Investors can invest
in the scheme at the time of the new fund offer and thereafter they can buy or sell the units of
the scheme on the Stock Exchanges, if they are listed. The market price at the stock exchange
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could vary from the scheme's NAV on account of demand and supply situation, unit holders'
expectations and other market factors.
• By investment objective
Growth Funds
The aim of Growth Funds is to provide capital appreciation over the medium to long term.
Such schemes normally invest a majority of their corpus in equities. Growth schemes are
ideal for investors who have a long-term outlook and are seeking growth over a period of
time.
Income Funds
The aim of Income Funds is to provide regular and steady income to investors. Such schemes
generally invest in fixed income securities such as bonds, corporate debentures and
Government securities.
Income Funds are ideal for capital stability and regular income. Capital appreciation in such
funds may be limited, though risks are typically lower than that in a growth fund.
Balanced Funds
The aim of Balanced Funds is to provide both growth and regular income. Such schemes
periodically distribute a part of their earning and invest both in equities and fixed income
securities in the proportion indicated in their offer documents. This proportion affects the
risks and the returns associated with the balanced fund - in case equities are allocated a higher
proportion, investors would be exposed to risks similar to that of the equity market.
Balanced funds with equal allocation to equities and fixed income securities are ideal for
investors looking for a combination of income and moderate growth.
Unit-3COMMERCIAL BANKS
Banking--As per Sec.5 (b) of the B R Act “Banking' means accepting, for the purpose of
lending or investment, of deposits of money from the public repayable on demand or
otherwise and withdrawable by cheque, draft, order or otherwise."
The commercial banks help in mobilising savings through network of branch banking and
channelize them into productive investments.
2. Financing Industry:
They provide short-term, medium-term and long-term loans to industry. Besides, they
underwrite the shares and debentures of large scale industries
3. Financing Trade:
The commercial banks help in financing both internal and external trade.. They help in the
movement of goods from one place to another by providing all types of facilities such as
discounting and accepting bills of exchange, providing overdraft facilities, issuing drafts, etc.
4. Financing Agriculture:
The commercial banks help the large agricultural sector in developing countries in a number
of ways. They provide loans to traders in agricultural commodities. animal husbandry, dairy
farming, sheep breeding, poultry farming, pisciculture and horticulture.
The commercial banks advance loans to consumers for the purchase of such items as houses,
scooters, fans, refrigerators, etc. In this way, they also help in raising the standard of living of
the people in developing countries by providing loans for consumptive activities.
They provide loans for the education of young person’s studying in engineering, medical and
other vocational institutes of higher learning. They advance loans to young entrepreneurs,
medical and engineering graduates, and other technically trained persons in establishing their
own business.
The commercial banks help the economic development of a country by faithfully following
the monetary policy of the central bank
PRIMARY FUNCTION:
1) Acceptance of deposits – deposits constitute the main source of funds for commercial
banks. Banks receive deposits from the public on various accounts..
2) Lending of funds: Banks earn income in the form of interest through granting
loans and advances of various forms.
Loans- lump sum amount is given to the customer for a fixed period of time .
customer should repay the amount with interest within fixed time There are two types
of loans:
3) Creation of Credit: A unique function of the bank is to create credit. Banks supply
money to traders and manufacturers. They also create or manufacture money. Bank
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deposits are regarded as money. They are as good as cash. The reason is they can be
used for the purchase of goods and services and also in payment of debts. When a
bank grants a loan to its customer, it does not pay cash. It simply credits the account
of the borrower. He can withdraw the amount whenever he wants by a cheque. In this
case, bank has created a deposit without receiving cash. That is, banks are said to have
created credit. It is said that “banks are not merely sources of money, but also in an
important sense, manufacturers of money.”
4) Remittance of Funds: Commercial banks, on account of their network of branches
throughout the country, also provide facilities to remit funds from one place to
another for their customers by issuing bank drafts, mail transfers or telegraphic
transfers on nominal commission charges. As compared to the postal money orders o
other instruments, bank drafts have proved to be a much cheaper mode of transferring
money and has helped the business community considerably.
SECONDARY FUNCTIONS
Secondary banking functions of the commercial banks include:
1. Agency Services
2. General Utility Services
1. Agency Services: Banks also perform certain agency functions for and on behalf of their
customers. The agency services are of immense value to the people at large. The
various agency services rendered by banks are as follows:
(a) Collection and Payment of Credit Instruments: Banks collect and pay various credit
instruments like cheques, bills of exchange, promissory notes etc., on behalf of
their customers.
(b) Purchase and Sale of Securities: Banks purchase and sell various securities like shares,
stocks, bonds, debentures on behalf of their customers.
(c) Collection of Dividends on Shares: Banks collect dividends and interest on shares and
debentures of their customers and credit them to their accounts.
(d) Acts as Correspondent: Sometimes banks act as representative and correspondents of
their customers. They get passports, traveller’s tickets and even secure air and sea
passages for their customers.
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(f) Execution of Standing Orders: Banks execute the standing instructions of their
customers for making various periodic payments. They pay subscriptions, rents,
insurance premia etc., on behalf of their customers.
(g) Acts as Trustee and Executor: Banks preserve the ‘Wills’ of their customers and
execute them after their death.
2 General Utility Services: In addition to agency services, the modern banks provide
many general utility services for the community as given.
a) Locker Facility: Bank provide locker facility to their customers. The customers can
keep 1. their valuables, such as gold and silver ornaments, important
documents; shares and debentures in these lockers for safe custody.
b) Traveller’s Cheques and Credit Cards: Banks issue traveller’s cheques to help
their customers to travel without the fear of theft or loss of money. With this facility,
the customers need not take the risk of carrying cash with them during their travels.
c) Letter of Credit: Letters of credit are issued by the banks to their customers
certifying their credit worthiness. Letters of credit are very useful in foreign trade.
d) Collection of Statistics: Banks collect statistics giving important information
relating to trade, commerce, industries, money and banking. They also publish
valuable journals and bulletins containing articles on economic and financial matters.
e) Acting Referee: Banks may act as referees with respect to the financial standing,
business reputation and respectability of customers.
f) Underwriting Securities: Banks underwrite the shares and debentures issued by the
Government, public or private companies.
g) Gift Cheques: Some banks issue cheques of various denominations to be used on
auspicious occasions.
h) Income-tax Consultancy: Banks may also employ income tax experts to prepare income tax
returns for their customers and to help them to get refund of income tax.
i) Merchant Banking: Some commercial banks have opened merchant banking
divisions to provide merchant banking services.
1. Liquidity:
it is the capacity of the bank to produce cash when demanded. Liquid assets are those which
can be converted into cash without loan and within a short period.e.g treasury bills or
exchange etc
2. Safety:
Banks must excurses the greatest care and vigilance in the matter of investing its funds
received from public in the form of deposits. a bank must estimate the amount of risk
attached to various types of available assets, compare estimated risk, consider both long-run
and short- run consequences and strike a balance.
3. Profitability: The main objective of a bank is to earn income to meet all its expenses and
pay a fair return to its stake holders.
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7. Lender of last resort: In the event of emergency banks approach the RBI for
financial accommodation. The scheduled banks can borrow from RBI on the basis of eligible
securities or by rediscounting their bill of exchange.RBI is ready to help banks in distress and
hence it is referred as lender of last resort.
8. Bank of settlement and clearance: it enables the member banks to adjust their
claims against each other in the books of RBI without paying or receiving cash.
9. Information and research: RBI undertakes collection and dissemination of
information and conducts research in this field, it issues several periodicals, publications also
attempts the significance of economic and fiscal developments in the country.
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Factoring
Factoring is a continuing arrangement between the financial institutions (factor) and
business concern (client) which sells goods and services to trade customers whereby, the
factor purchases the clients’ accounts receivables and give payment to client
It is a transaction in which a business sells its accounts receivable, or invoices, to a third party
commercial financial company, known as a “factor.” This is done so that the business can
receive cash more quickly than it would by waiting 30 to 60 days for a customer payment.
Factoring is sometimes called “accounts receivable financing.”
A Financial Intermediary
That buys invoices of a manufacturer or a trader, at a discount, and
Takes responsibility for collection of payments.
Factor-financing company
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Features of factoring
1. There are three parties to factoring one is the company which initiates the process by
selling the receivables, second party is the debtor and the third party is the factor
which is usually bank or financial institution.
2. Some of the basic services provided are: Administration of sales ledger, Collection of
debit purchased, Advisory services relating to expenses and credit and financial
dealings, Covering the credit risk involved.
3. It enables conversion of outstandingreceivables in to cash
4. Factor will not pay full amount of the debts to the client but pay only part amount
which may be between 50 to 80 percent and rest of payment is made after the
collection of money from the debtors.
5. The factor charges fees for providing this service and this fee vary depending on the
type of factoring, market conditions, quality of debt and so on.
Advantages of factoring :
4. It is a cost effective way of outsourcing your sales ledger at the same time managing your
business.
5. Factoring firms are specialized in their field thus the company might get useful information
about the creditworthiness of its customers.
7. Factors check the credibility of company’s customers which help business trade with better
quality customers.
Disadvantages of factoring :
1. Cost: Factoring is a costly mean of financing as the cash price of the invoices is discounted
by the factor company, the upfront cash price being usually 70-90% of the face value,
depending on the credit history of the customers and the nature of selling company’s business
which reduces the profit margin of the selling company.
2. Selling company gets locked in to the relationship with the factor as they rely completely
on the services of a factor because of the cash flow implications of any arrangements.
3. Possible harm to the customer: Selling company fully gives the charge of collecting
invoice to the factoring company and pays more attention on money collection methods
which impairs company’s relationship with their customers.
4. Company image distortion: In the past, factoring was considered a sign on the financial
difficulties of the company. However in recent times this perception has changed and it has
considered a normal way of doing business.
5. Impose constrains the way of doing business: In the case of non-recourse factoring the
factoring company pre-approve the selling company’s customers, which cause delay in
placing new orders. Also the factoring company applies its credit limits to individual
customers and will apply credit limits to individual customers.
6. The selling company may have to pay extra to remove its liability for bad debtors.
7. Some customers might want to deal directly with the selling company instead of dealing
with factor
Mechanism of Factoring
The Client (Seller) sells goods to the buyer and prepares invoice with a notation that
debt due on account of this invoice is assigned to and must be paid to the Factor
(Financial Intermediary).
The Client (Seller) submits invoice copy only with Delivery Challan showing receipt
of goods by buyer, to the Factor.
The Factor, after scrutiny of these papers, allows payment (, usually up to 80% of
invoice value). The balance is retained as Retention Money (Margin Money). This is
also called Factor Reserve.
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The drawing limit is adjusted on a continuous basis after taking into account the
collection of Factored Debts.
Once the invoice is honored by the buyer on due date, the Retention Money credited
to the Client’s Account.
Till the payment of bills, the Factor follows up the payment and sends regular
statements to the Client.
Parties
Lessee: A party who makes use of property owned by another party (the lessor) and pays the
lessor, usually in the form of rentals.
Lessor: Company, Bank or leasing entity that is the owner of the leased equipment .
Features of leasing
Benefits of leasing:
The most important merit of leasing is flexibility. The leasing company modifies the
arrangements to suit the leases requirements.
In the leasing deal less documentation is involved, when compared to term loans from
financial institutions.
It is an alternative source to obtain loan and other facilities from financial institutions.
That is the reason why banking companies and financial institutions are now entering
into leasing business as this method of finance is more acceptable to manufacturing
units.
The full amount (100%) financing for the cost of equipment may be made available
by a leasing company. Whereas banks and other financial institutions may not provide
for the same.
The ‘Sale and Lease Bank’ arrangement enables the lessees to borrow in case of any
financial crisis.
The lessee can avail tax benefits depending upon his tax status.
Permits alternative use of funds: enables use of asset without the huge capital
expenditure.
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Disadvantages of Leasing:
Venture Capital
Money provided by investors to startup firms and small businesses with perceived long-term
growth potential. This is a very important source of funding for startups that do not have
access to capital market
Venture capital is a form of equity financing designed especially for funding high risk,
technology and high reward new projects. It is a capital provided by the firm of professionals
who invest alongside management in young, rapidly growing or changing companies that
have potential for high growth.
Features:
The advantages
New innovative projects are financed through venture capital which generally offers
high profitability in long run.
In addition to capital, venture capital provides valuable information, resources,
technical assistance, etc., to make a business successful.
It is easy for the entrepreneurs to get funds from Venture fund by just convincing the
officials than convincing tons of underwriters, investors etc
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It reduces the time gap between technological innovations and its commercial
exploitation.
It helps in developing new process and projects.
It induces the entry of large no of technocrats in industry.
It acts as an intermediary between the investors and entrepreneurs in search of needed
capital.
Disadvantages
It refers to providing finance to the individual or group of individuals for the purchase,
construction or related activities of house or flat. It is a type of instalment credit which forms
the largest single source of housing finance. It is availed for construction, extension,
purchase, combined for purchase and construction.
Vehicle Loans Service: it is given to purchase a new or used vehicle of any made to
individuals, professionals and business people.It is extended for a period from 1 to 5 years
and rate of interest varies from bank to bank.
Consumer Finance: it refers to the raising of finance by individuals for meeting their
personal expenditure or for acquisition of durable consumer goods and for purchase /
creation of an asset. It is an important asset based financial service in India with an
objective of providing finance on easy terms and at door steps of consumer. It is generally
extended for a period from 1 to 5 years.