Management vision2020

Depository Services Depository             In the traditional mode of purchase and sale of securities, there is physical movement of securities, which invariably proved to be a long drawn ordered for an investor. Many problems are encountered in the market both by the individual and the institutional investors because of these physical movements like: ·          Time consuming process of transfer of shares. ·          Heavy paper work ·          Risk due to transition like loss of certificates etc. ·          Forgery, theft, mutilation etc. Depository provides an answer to these problems. Depositories provide an electronic transfer of securities. It provides scipless transfer of ownership, maintaining beneficial holdings on behalf of individual investors, prov...

Forfaiting             A form of financing of receivables arising from international trade is known as forfaiting. Within this arrangement, a bank/financial institution undertakes the purchase of trade bills/promissory notes without recourse to the seller. Purchase is through discounting of the documents covering the entire risk of non-payment at the time of collection. All risks become the full responsibility of the purchaser (forfaiter). Forfaiter pays cash to the seller after discounting the bills/notes. Modus Operandi   Following are the salient steps involved in forfaiting: Commercial Contract             Exporter and importer enter into a commercial contract. The contract provides the basic terms of the arrangement, such as cost of forfaiting, margin to cover risk, commitment charges, days of grace, fee to compensate the forfaiter for loss of inter...

Factoring             Factoring can be defined as an agreement in which receivables arising out of sale of goods/services are sold by a firm (Client)  to a financial intermediary (Factor), as a result of which the title of the goods and services represented by the  said receivables passes on to the Factor. A Factor then becomes responsible for all credit control, sales accounting and debt collection from the credit customers. Thus under factoring the seller does not maintain a credit / collection department. After each sale a copy of the invoice and delivery note, the agreement and other related papers are handed over to the factor. The factor in turn receives payment from the buyer on the due date as agreed, where the buyer is reminded of the due date payment account for collection. The factor then remits the money collected to the seller after deducting and adjusting its own service charges at an agreed date. Thereaf...

Venture Capital A form of equity financing designed specially for funding high risk and high reward projects is known as ‘Venture Capital’. It helps in financing high-tech projects, research and development projects etc., Thus it is a typical ‘private equity investment.’ Venture Capitalists finance high risk return ventures, usually in new enterprises small or medium ones to produce new products, in expectation of high gains or spectacular returns. They continuously involve themselves with the clients’ investments, either by providing loans or managerial skills or any other support. The basic objective of venture capitalists is to make capital gain or equity investment at the time of exit and to get regular return on debt financing. They provide value-added services to the invested firms without any interference of the management but usually make huge capital gains at the time of exit. Liquidity of the venture capital depends upon the success of the new venture or product. It was...

Merchant Banking             The term ‘Merchant Banking’ originated among Dutch & Scottish traders and later on developed and professionalized in Britain . “Merchant Bank is an organisation that underwrites securities for corporations, advices such clients on mergers and amalgamations and is involved in the ownership of commercial ventures.”             In India , Merchant banks/bankers carryout the following services: (1)    Corporate Counseling : guide the client on organisational goals. (2)    Project Counseling : project financing. (3)          Pre investment Studies : provides solution for explorative alternative avenues of capital investment. (4)          C apital Restructuring : analysing capital structure ratio, asset restructure ratio and debt coverage r...