1.

capitals Capital: In simple words the term capital means the amount of money invested by the owner in the business to start a business. In case of Joint Stock Company the term share capital refers to the amount of money raised by the issue of shares. Kind of Capital: Authorized Capital: The authorized capital is also called nominal or registered. This is the maximum amount of capital which a company is authorized to issue. The amount of authorized capital is mentioned in the capital clause of memorandum of association along with Its division into shares of fixed amount. Issued Capital: Issued capital is that part of authorized capital which is offered to the public for subscription or for the sale of shares. For example, if the authorized capital of a company is 10 Million and the company issues shares valuing 7 million $ then the issued capital of the company is 7 million $. Subscribed capital
The individual subscribed share value and liability of the total share capital of a company. In detail:

Par value of that part of the authorized share capital which has been issued (sold) as shareswhether their purchasers (shareholders) have paid for them or not. A firm can, at any time, issue new shares up to the full amount of authorized share capital. Also called subscribed capital, issued share capital or subscribed share capital.

Un-issued Capital: The Portion of the authorized capital, which is not offered to the public for the sale of shares are known as un-issued capital. In the above example the un-issued capital of the company is 3 million $. Called-up Capital: The part of the subscribed capital, which in fact the company asks the shareholders to pay, is called the called up capital. Anonymous

2.

Working capital Talking about Circulating capital or working capital is the funds which are invested in current assets of a business. The current assets of a firm are cash on hand, demand deposits, readily marketable securities, inventories of goods and accounts receivable. Circulating capital is also sometimes called revolving capital because of the constant turnover of funds. The working capital is required for the purchase of raw material, salaries, wages, rent and other day to day expenditure. The circulating capital required by a firm depends upon a number of factors such as nature of business, rapidity of turn over period, length of period of manufactures, etc. in retailing services, for instance, the working capital can be rapidly recovered by the sale of goods. The requirements of working capital are, therefore, rather small in this business. A manufacturing concern, on the hand, has a slower turnover of circulating capital. Therefore, it needs larger amount of working capital to carry on business. In banking, the requirements of funds for working capital are very high. Short term financing is better suited to satisfy the circulating capital needs of a business, short term debt financing includes debts which have a maturity date of less than one year. It may here be noted that there is a minimum level of working capital current assets which is always needed by a firm during periods of an operating cycle. This can be called as permanent investment of the firm in current assets. The funds needed above this permanent level du8ringa year may be regarded at temporary needs. Anonymous

3.

Working capital There are two kinds of financial of capital requirements of a business. One of them is the capital which is required by a business to own durable assets such as building, land and machinery. This type of capital is called fixed capital or startup capital. The second capital is required for investment in short term assets such as purchase of raw material, payment of salaries, wages and rents. The capital is termed as current or working capital. Fixed capital as the name signifies is the fund which is used for meeting the permanent or long term needs of the business. Before a business is carried out the long term needs of a business are land, building, equipments and other sundry expenses. Circulating or working capital is the fund which is invested in current assets of a business. The current assets of a business are cash on hand, current deposits, readily marketable securities, inventories of goods and accounts receivable. Circulating capital is also sometimes called revolving capital because of the constant turnover of funds. The working capital is required for the purchase of raw material, salaries, wages and other day to day expenses. So this is also called operating capital or working capital for the business. Anonymous

4.

Working capital The assets invested

in

the

business

by

the

owner

are

termed

as

capital.

Registered capital:- the maximum amount which is registered with the registrar of the company. Issued capital:- the part /entire registered capital which is issued to the public. Paid up capital:- the capital which is paid by the public. called up capital:- the part of capital which is payable ( has not been paid) by the public.

NON FUND BASED LIMITS Deferred Payment Guarantees For acquisition of capital goods (Plant/Machinery including generators) and where there is provision for suppliers credit by the Manufacturer/Supplier.

Term Of Payment

In tune with credit extended by the manufacturer/supplier.

Security

1st Charge on fixed assets financed by us. Collateral Security and Personal/Third Party guarantee shall be insisted wherever required. Bank guarantees in lieu of Earnest Money Deposit, Security Deposit, Bid Bonds, Advance Payment, Performance, Retention Money etc., shall be issued depending on the nature of business, requirement, Margin, security, commission, period of guarantee shall be as per Bank's norms. Letters of Credit for purchase of raw materials/inputs and capital goods shall be opened as per the terms of supplier of such goods/services. Margin, security, commission shall be as per Bank's norms. Wherever necessary, Letters of Credit of Revolving type also shall be opened.

Bank Guarantee

Letters Of Credit DA/DP Terms

Deferred Payment Guarantees For acquisition of capital goods (Plant/Machinery including generators) and where there is provision for suppliers credit by the Manufacturer/Supplier. Term Of Payment In tune with credit extended by the manufacturer/supplier. Security 1st Charge on fixed assets financed by us. Collateral Security and Personal/Third Party guarantee shall be insisted wherever required. Bank Guarantee Bank guarantees in lieu of Earnest Money Deposit, Security Deposit, Bid Bonds, Advance Payment, Performance, Retention Money etc., shall be issued depending on the nature of business, requirement, Margin, security, commission, period of guarantee shall be as per Bank's norms. Letters Of Credit DA/DP Terms Letters of Credit for purchase of raw materials/inputs and capital goods shall be opened as per the terms of supplier of such goods/services. Margin, security, commission shall be as per Bank's norms. Wherever necessary, Letters of Credit of Revolving type also shall be opened.

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Pari passu charge Pari Passu is a term used in banking transactions which means that the charge to be created is in continuation of an earlier charge which might be held by the same institution or by an other institution. What is meant by Parri Passu Charge? Parri Passu is derived from Latin for 'with equal progress'. The phrase is used to indicate simultaneous and equal change or to describe similar ranking of securities or lenders; for example, when a new issue of shares is made, they could be said to rank pari passu, ie, equally with existing shares for the purposes of dividend payments. A common agreement between joint lenders is a pari passu clause under which, in the event of a shortfall, they agree to share equally whatever is available. The use of "Pari Passu" when creating a charge means that when company Y goes into dissolution, the assets over which the charge has been created will be distributed in proportion to the creditors' respective holdings. Therefore, if the Bank X has tendered a loan facility of 60 million PKR while another creditor, say Z, has tendered 40 million PKR, the recovery after selling assets of Company Y to which joint pari passu charge attached, shall be distributed in the ratio of 6:4 amongst X and Z. Where preferential rights attach to assets of the company, the preferential creditors rank higher in the distribution stakes i.e. they are paid in priority to other creditors of the company.
Read more: http://wiki.answers.com/Q/What_is_the_meaning_of_pari_passu_charge#ixzz1j7dHvtwo

6. Pari passu charge means when more than one creditor has a charge like mortgage on the same property though created at different times, if they agree among themselves, their charge/mortgage will rank equal in enforcement. For e.g. A Bank having a charge on 1.1.2007 and B Bank has a charge on the same property on 2/2/2008, normally A Bank has the priority. Only after satisfying the dues of A Bank, B bank can claim any surplus realised over and above the dues to A Bank. But if both the banks agree that their charges are pari passu , they can have the share of the proceeds of the sale of the property in enforcement of their mortgages equally i.e. pro rata to their advances or outstandings depending upon the wording of the document under which the pari passu charge has been agreed among them. Re counter guarantee means if A bank on behalf of its client B gives a guarantee to C, the bank will take a counter guarantee from B and any of his associates if stipulated a counter guarantee that in case C enforces the guarantee against A, B and his associates, if any, will make good the amount to A. Omnibus counter guarantee is taken where number of guarantees are issued up to a total limit, and the limit is maintained by issue of guarantees, one counter guarantee will be taken to cover all those guarantees which are issued within the total limit up to which the bank issues guarantees under the omnibus guarantee.

1. What is the difference between primary security and collateral security?

Primary security is the asset created out of the credit facility extended to the borrower and / or which are directly associated with the business / project of the borrower for which the credit facility has been extended. Collateral security is any other security offered for the said credit facility. For example, hypothecation of jewellery, mortgage of house, etc.

2. Under the Scheme, any third party guarantee obtained for the credit facilities will make them ineligible for guarantee cover. What is third party guarantee?
As per the extent guidelines no third party guarantee should be obtained if the account is to be covered under the Credit Guarantee Scheme. However, in case the constitution of the borrower is proprietary or partnership, the personal guarantee of proprietor/ partner is not treated as third party guarantee. Personal guarantee of directors, were borrower constitution is a company would be treated as third party guarantee.

Collateral The last decade has seen an enormous growth in the use of securities as collateral. Purchasing securities with borrowed money secured by other securities or cash itself is called "buying on margin". Where A is owed a debt or other obligation by B, A may require B to deliver property rights in securities to A, either at inception (transfer of title) or only in default (non-transfer-of-title institutional). For institutional loans property rights are not transferred but nevertheless enable A to satisfy its claims in the event that B fails to make good on its obligations to A or otherwise becomes insolvent. Collateral arrangements are divided into two broad categories, namely security interests and outright collateral transfers. Commonly, commercial banks, investment banks, government agencies and other institutional investors such as mutual funds are significant collateral takers as well as providers. In addition, private parties may utilize stocks or other securities as collateral for portfolio loans in securities lending scenarios. On the consumer level, loans against securities have grown into three distinct groups over the last decade: 1) Standard Institutional Loans, generally offering low loan-to-value with very strict call and coverage regimens, akin to standard margin loans; 2) Transfer-of-Title (ToT) Loans, typically provided by private parties where borrower ownership is completely extinguished save for the rights provided in the loan contract; and 3) Non-Transfer-of-Title Credit Line facilities where shares are not sold and they serve as assets in a standard lien-type line of cash credit. Of the three, transfer-of-title loans have fallen into the very high-risk category as the number of providers have dwindled as regulators have launched an industry-wide crackdown on transfer-of-title structures where the private lender may sell or sell short the securities to fund the loan. See sell short. Institutionally managed consumer securities-based loans, on the other hand, draw loan funds from the financial resources of the lending institution, not from the sale of the securities.