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Services
Financial Services offered are mainly 2 types -Fee based merchant banking, broking
services, credit rating, portfolio management
services, underwriting, etc.
-Fund
based
factoring,
leasing,
hire
purchases, housing finance, bill discounting,
Venture Capital, etc.
Leasing
Meaning
Parties In Leasing
Leasing essentially involves the divorce of
ownership from the economic use of an
asset/equipment.
LESSOR: Lessor is the owner of the asset
that is being leased.
LESSEE: Lessee is the receiver of the
services of the asset under a lease contact.
Characteristics of a lease
The
The
The
The
Parties
Asset
Term
Lease Rentals
Classification of Lease
1.
2.
3.
4.
Hire Purchase
Meaning
Various Aspect of HP
Transaction
Goods are let out on finance by a finance company
to the hire purchaser customer.
Buyer is required to pay an equal amount of
periodic installments during a given period.
Ownership transfers at the payment of the last
installment.
The hirer is required to make a down payment of
20-25% of the cost and pay the balance amount
along with interest in advance or arrears over a
time period of 36-48months.
Factoring
Meaning
Also
manages the sales registers, sundry
debts of the commercial firms/trading agents ,
for a commission.
Mechanism
Credit Transaction (1)
Merchant
Agreement (2)
Customer
Receiving
Payment(6)
Factor
Financing (5)
Handing over
Inovice(4)
Factor
Mechanism
Seller does not maintain a collection/credit department.
After sale, a copy of the invoice, delivery challan, the
agreement, other papers are handed over to the Factor.
The Factor receives payment from the buyer on the due
date as agreed, whereby the buyer is reminded of the due
date payment amt. for collection.
The Factor remits the money collected to the seller after
deducting its own service charges at the agreed rate.
Thereafter the seller closes all transactions with the
Factor.
The seller passes on papers to the Factor for recovery of
the amount.
Types of Factoring
Domestic Factoring
Export Factoring
Cross Border Factoring
Seed Money
Start Up
First Stage
Period (Funds
locked in
years)
7-10
5-9
3-7
Risk
Perception
Extreme
Very High
High
Activity to be
financed
For supporting a
concept or idea
or R&D for
product
development
Initializing
operations or
developing
prototypes
Start
commercials
production and
marketing
Financial Stage
Second Stage
Period (Funds
locked in
years)
3-5
Risk
Perception
Sufficiently high
Third Stage
1-3
Medium
Fourth Stage
1-3
Low
Activity to be
financed
Expand market
and growing
working capital
need
Market
expansion,
acquisition &
product
development for
profit making
company
Facilitating public
issue
VC Investment Process
Deal
origination
Screening
Due diligence
(Evaluation)
Deal structuring
Post investment
activity
Exit plan
Definition
A legal contract between two parties
whereby one party called insurer
undertakes to pay a fixed amount of
money on the happening of a particular
event, which may be certain or
uncertain. The other party called
insured ,pays in exchange a fixed sum ,
called premium.
Types Of Insurance
IRDA
Insurance Regulatory and Development
Authority (IRDA) is an autonomous apex
statutory body which regulates and develops
the insurance industry in India.
IRDA batted for a hike in the foreign direct
investment (FDI) limit to 49 per cent in the
insurance sector from the erstwhile 26 per
cent. The FDI limit in insurance sector was
raised to 49% in July 2013.
Housing Finance
Meaning
Housing finance connotes finance (or loans) for
meeting the various needs relating to housing,
namely:
a) Purchase of a flat or house.
b) Acquisition of a plot.
c) Construction of a house.
d) Extension of a house.
e) Repairs, renovation and up gradation of a
house/flat.
Importance
THE END