Financial Serices, Capital Market, Fund Based Services,

1. Dr Raju Indukoori
Financial Services

2. Raju Indulkoori
FINANCIAL SERVICES
• These are the commercial services offered to
individuals, business houses, governments in the
course of savings, investment, risk management,
lending and borrowing.
• They are different from financial assets, securities
and instruments which are owned to hold inherent
value.
• These services are provided for a fee, commission,
brokerage, etc,..
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Who offers Financial Services?
o Financial institutions : Specialized service as a product
like Banking, Insurance, Asset Management (Mutual Fund),
Registrar, Depository, etc,.
o Financial Intermediaries : Bridge the gap between the
seller and buyer or demand and supply. Stock Brokers and
Forex dealers are the few to mention.
o Financial Markets : They offer services like Listing,
delisting, online trading, clearing, settlement, risk
management in Equity, Debt, Derivatives and Forex Markets.
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Types of Financial Services
I. Banking Services
II. Insurance Services
III. Investment Management Services
IV. Capital Market Services
V. Non Banking Financial Services
VI. Corporate Services
VII. Merchant Banking Services
VIII.Global Financial Services
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5. I. Banking Services
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6. Raju Indulkoori
Banking is the process of accepting the deposits from public and
converting them as assets by giving loans to the public.
• Rate of interest is offered on deposits and charged on loans.
• The difference between the offer rate and loan rate is the profit for a
bank.
• Deposits are the liabilities and loans are the assets for a bank.
• Asset liability Management is more important to a bank.
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o They are the RBI regulated banks under Banking Regulation
Act, 1949.
o These are the banks which come under the II Schedule of RBI
Act 1934 and function for their commercial motives to
maximize profits
o They are classified based on II Schedule of RBI Act 1934
A. Scheduled Commercial Banks: 186
1.Public Sector Banks: 19
2.Private Indian Banks
3.Private Foreign Banks
4.State Cooperative Banks
5.Regional Rural Banks
B. Non Scheduled Commercial Banks: 1487
https://rbidocs.rbi.org.in/rdocs/Content/pdfs/nonschedulecoop.pdf
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• Accepting Deposits
• Giving loans and advances
• Cross Selling
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9. II. Insurance Services
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 Insurance is the contract between two parties i.e. insurer who
protects from the risk and insured (policy holder) who is protected for
a service charge paid by the insured to the insurer.
 It is a risk management tool for financial loss
 It is used to hedge against risk of contingent loss or loss due to
uncertainty.
 Its usage history goes back to 3 BC by Chinese and Babylonian traders.
 It has both underwriting and investing depending on the policy
contract.
 Insurance regulatory and Development Authority of India (IRDAI) is the
body regulating and promoting insurance and reinsurance industry in
India.
 There are 90 insurance companies registered with IRDA.
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Type of Insurance Number of Companies
Life Insurance
https://www.irdai.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo129&mid=3.1.9
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Non Life Insurance or General Insurance 34
ReInsurance 2

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 Term Insurance
 Endowment
 Whole Life Insurance
 Money Back
 ULIP
 Single premium
 Pension Plans
General Insurance
• Health: Group and Personal.
• Transport Insurance
– Auto / Motor Insurance
– Marine Insurance
– Aviation Insurance
• Fire insurance
• Property Insurance
• Liability Insurance
• Travel Insurance
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Life Insurance
1. LIC Insurance Corporation
Of India.
2. ICICI Prudential Life Insurance.
3. SBI Life Insurance.
4. HDFC Standard Life Insurance.
5. Max Life Insurance.
6. Bajaj Allianz Life Insurance.
7. Birla Sun Life Insurance.
8. Reliance Nippon Life Insurance.
9. Tata AIA Life Insurance
10. PNB Metlife India Insurance
General Insurance
Public Sector
1. National Insurance
2. The New India Assurance Co. Ltd.
3. The Oriental Insurance Co. Ltd.
4. United Insurance Co Ltd
Private Sector
5. Bajaj Allianz General Insurance
6. Tata AIG General Insurance
7. HDFC ERGO General Insurance
8. Bharti AXA General Insurance Company Ltd.
9. Reliance General Insurance Company.
10. Kotak Mahindra General Insurance
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14. III. Investment Management Services
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1. Asset Management Services or Mutual Funds
2. Portfolio Management Services
3. Wealth Management Services
4. Investment Advisory Services
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It is a fund established in the form of a trust by a sponsor to
raise monies by the Trustees through the sale of units to the
public under one or more schemes for investing in securities in
accordance with these regulations – The SEBI (Mutual Funds)
Regulations 1993.
A mutual fund comprises of four separate entities, namely
1.Sponsor
2.Mutual fund trust
3.Asset Management Company (AMC)
4.Custodian
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17. SEBI (Mutual Funds) Regulations, 1996. states as follows.
• The sponsor establishes the mutual fund and gets it registered with SEBI.
* The mutual fund needs to be constituted in the form of a trust and the
instrument of the trust should be in the form of a deed registered under the
provisions of the Indian Registration Act, 1908.
* The sponsor establishes the mutual fund and gets it registered with SEBI.
* The sponsor is required to contribute at least 40% of the minimum net worth
(र 10 crore) of the AMC.
* The board of trustees manages the MF and the sponsor executes the trust deeds
in favour of the trustees.
* It is the job of the MF trustees to see that schemes floated and managed by the
AMC appointed by the trustees are in accordance with the trust deed and SEBI
guidelines.
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18. Based on the Asset
A. Fixed Income or debt funds
B. Equity funds
C. Money Market
D. Mixed or balanced funds
E. Index Funds
F. Fund of Funds
Based on the Objectives
A. Sector Funds
B. Diversified Funds
C. Specialized funds
D. Growth Funds
E. Retirement Funds
F. Tax saving funds
G. Contra funds
H. Value funds
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19. 1.Equity Schemes (10 categories): Large Cap, Mid Cap, Small Cap, Multi Cap,
Large & Mid Cap, Dividend Yield, Value, Contra, Sectorial/Thematic and ELSS.
2.Debt schemes (16 categories) : Low Duration, Ultra Short Duration, Liquid,
Overnight, Short Duration, Medium Duration, Money Market, Medium to Long
Term Duration, Long Duration, Corporate Bond, Dynamic Bond, Banking & PSU,
Credit Risk, Floater, Gilt and Gilt fund with 10 year constant duration.
3.Hybrid Schemes (6 categories) : Balanced Hybrid, Aggressive Hybrid,
Conservative Hybrid, Dynamic Asset Allocation / Balanced Advantage, Multi
Asset Allocation, Equity Savings and Arbitrage Fund.
4.Solution Oriented Schemes (2 categories) : Children’s fund and Retirement
fund.
5.Other Schemes (2 categories): Index fund / ETFs and Fund of Funds.
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21. # Distributor Commission
Average
AUM in Rs Crs
for the year 2018-19
1 NJ India Invest 808 62,947
2 Axis Bank 556 52,923
3 HDFC Bank 497 72,944
4 SBI 488 64,280
5 ICICI Bank 355 41,803
6 ICICI Securities 319 34,510
7 Kotak Mahindra Bank 255 37,555
8 Prudent Corporate Advisory 235 19,033
9 Citi Bank 182 28,664
10 IIFL Wealth Management 176 30,568
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• It is a personalised portfolio management service where there
is no pooling of assets like a mutual fund.
• This is more of a equity portfolio
• This is not a common fund but investment on one name.
• Every trade transaction by the fund manager is taxable in the
on the investor.
• According to SEBI, the minimum investment in PMS is Rs. 25
lakh. Best performing portfolio managers may increase this
limit due to increasing demand.
• There are 354 registered Portfolio managers with SEBI.
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• It is similar to Portfolio Management Services (PMS) in
terms of customization and personalised management.
• It varies from PMS as it is not limited to equity securities
but diversified into variety of investment products
• Wealth Products comprises of equity, debt, derivatives, real
estate, bullion, antiques, arts and any other investment
avenue.
• In India ASK Wealth Management is the first WMS company.
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SEBI has put the following in the list of Investment advisory
services related to tax, insurance, investments, lending,
borrowing, etc.
• Financial Planning
• Tax Planning
• Investment Advisory
• Real Estate planning.
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25. IV. Capital Market Services
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 These are the services offered by various financial
institutions to companies, financial institutions and
governments in the process of raising capital and
maintaining the liquidity for the same,
 The type and cost of services depends on the volume,
technology, urgency and risk associated with respective
process or product.
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A. Primary Market Services
1. Public Issue Services
2. Credit Evaluation Services
3. Underwriting Services
4. Registrar Services
B. Secondary Market Services
1. Stock Exchange Services
2. Stock Broking Services
3. Depository Services
4. Depository Participant’s Services
5. Clearing Services
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Primary Market refers to the market for fresh issue of securities by
companies, financial institutions and governments. They can be
classified as follows.
1. Public Issue Services
2. Credit Evaluation Services
3. Underwriting Services
4. Registrar Services
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These are the services offered by various financial institutions to
variety of investors in private or public in the process of issuing
financial instruments or securities. They are a kind of New security
issue services. The issues are as below.
• Equity
• Debt
• Mutual fund units
• Gold equivalents
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• Credit evaluation is the process of assessing and affirming
the credit risk associated with a person, firm or
government as required by the stake holders like investors,
regulators, suppliers and shareholders.
• It considers the following parameters
• Credit history
• Borrowing capacity
• Ability to repay
• Promptness in repayment
• Optimum utilization of borrowed funds
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a. Credit Rating
b. Credit Ranking
c. Credit Score
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• It is an agreement with or without conditions to subscribe to
the securities of a body corporate when the existing
shareholders of such body corporate or the public do not
subscribe to the securities offered to them.
• Underwriter means a person who engages in the business of
underwriting of an issue of securities of a body corporate.
• The issue should get 90% subscription to be successful. Failure
to do so will result in refund. This is where underwriters plugin
to the need of the issuer guaranteeing the success.
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Registrars are the institutions that register and maintain detailed
records of the transactions of investors or applicants or securities holders
for the convenience of
• Companies : issuing bonds, shares and convertible securities.
• Governments : Issuing bonds.
• Mutual Funds : issuing closed ended and open ended units.
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Pre Issue Services
In general for issue of securities including shares, bonds and debentures following
is the sequence of he whole process undertaken by a registrar.
1. Invite applications: From prospective investors by distributing the
applications.
2. Collect applications: from investors.
3. Maintain applications: Investors applications along with other attachments.
4. Assist issuer : Determine securities allotment basis or criteria as per the regulations
and guidelines of SEBI and stock exchange/s.
5. Finalize Allotment: List of persons entitled to allotment of securities made.
6. Send allotment letters.
7. Send security certificates: In terms of allotment and send partial of
8. Send Refund orders : Full or in part based on the allotment.
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Pre Issue Services
In the whole issue process the registrar coordinates with
• Issuer
• Investor
• Merchant bank/s
• Commercial Bank
• Depository participant
• Stock Exchange
• Underwriter
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Post Issue Services
1. Security Transfer in offline.
2. Send Quarterly and Annual reports.
3. Annual General Meetings (AGM) communication.
4. Corporate Actions
• Monetary: Dividends and interest payments linked to Bank accounts
• Non Monetary: Stock split, Bonus and rights issues and Buyback or
Stock Repurchase
5. Major consequences
• Insolvency
• Mergers and Acquisitions
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Secondary markets are the markets for trading of issued
financial securities and related services. Broadly they can be
classified as follows
1.Stock Exchange Services
2.Index Services
3.Stock Broking Services
4.Depository Services
5.Depository Participant’s Services
6.Clearing Services
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 Stock exchanges are the most popular financial markets
across the world.
 It is the form of secondary market for stocks and also
known as securities exchange and bourse.
 It facilitates securities exchange platform for equity
shares, bonds, debentures, derivatives and closed-ended
mutual funds.
 It is a kind of aggregation model where all prospective
buyers and sellers are pooled together at one place for
securities trading.
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The services offered by stock exchanges can be classified as follows
a. Listing
b. Trading
c. Securities Lending and Borrowing (SBL)
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 Once the public issue whether IPO or FPO, the securities have to
be available for trading.
 This is mandatory for equity products as there is no maturity or
payback guarantee of investment.
 For debt products it optional depending on the terms of the
issue.
 All Stock exchanges including NSE and BSE provide Listing
services which enhances liquidity of the securities offered in the
public issue.
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Buying and selling of securities across the country
happens on stock exchanges through their members or
stock brokers. The securities includes the following.
 Equity Products
 Debt Products
 Indices
 Exchange Traded Funds (ETFs)
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 Securities Lending and Borrowing (SLB) is a scheme that has been
launched to enable settlement of securities sold short.
 Short Selling is selling of a stock that the seller does not own at
the time of trade.
 Short selling can be done by retail as well as institutional
investors.
 The Securities Lending and Borrowing mechanism allows short
sellers to borrow securities for making delivery.
 SLB enables lending of idle securities by the investors through the
clearing corporation/clearing house of stock exchanges to earn a
return through the same.
 Securities in the F&O segment are eligible for short selling.
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These are the services provided by specialized
companies making the stock market more attractive for
investors. The criteria is
 Investible
 Transparent
They offer
• Index building
• Index maintenance
• Data pooling and building archives.
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• A stock market index is a measure of the relative value of a group
of stocks in numerical terms. As the stocks within an index change
value, the index value changes. An index is important to measure
the performance of investments against a relevant market index.
• Index is the indicative average of stock prices of selected
companies based on volume or capitalization.
• Each stock exchange has a bench mark index.
• Index provides the direction of the market to traders and
investors.
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Nifty : Index of National Stock Exchange (NSE) Provided by NSE Indices Limited
and it is the biggest index services provider in India.
Sensex : Index of Bombay Stock Exchange (BSE) provided Asia Index private
limited which is joint venture between S&P Dow Jones Indices and BSE Ltd
Other Indices
• Broad market indices: Nifty Midcap, smallcap.
• Sectoral Indices: IT, Auto, Bank, Pharma, Financial Services
• Thematic Indices: MNC, India Consumption, Emerge
• Strategy Indices: Arbitrage, High Beta, low volatility etc..
• Fixed Income Indices: Corporate, Money Market and Maturity based.
• Hybrid Indices: 6 in NSE with a mix of equity and debt indices.
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 Stock brokers are the members with stock exchanges
 They offer all the services of the stock exchanges
 In addition to the above mentioned, they also offer the
services like cross selling, public issue distribution, mutual
fund distribution, etc..
 The charge brokerage on every transactions which differs
for
 Intra day trade
 Investment
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These are the services related to electronic form of
financial securities like equity shares, bonds,
debentures, mutual funds and insurance policies. These
are offered by Central Securities Depositary (CSD) who
provide
*Dematerialization Services
*Security transfer services
*Value added services
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50. There are 2 Central Securities Depositary (CSD) in India.
1. National Securities Depository Limited (NSDL)
2. Central Depository Services Limited (CDSL)
*Depository participants(DPs) are the members of either NSDL
or CDSL or both who offer depository services.
*Most of the commercial banks and stock brokers extend their
services in Depository.
*There are 1272 DPs with CDSL and 287 with NSDL.
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• Dematerialization (Demat) : Converting physical or paper form into
electronic form.
• Rematerialization (Remat): Converting Electronic form of securities into
physical or paper form
• Holding the securities : Annual Charges
• Securities Transfer (Debit / credit): Volume based charges.
• Market Transfer
• Off Market Transfer
• Inter depository Transfer
• Public Issue participation : Now it is mandatory to have demat account.
• Transmission : Devolution by death, succession, inheritance, bankruptcy,
marriage, etc..
• Corporate Actions
• Monetary : Dividends and interest payments linked to Bank accounts
• Non Monetary: Stock split, Bonus and rights issues
• Mortgage services: For Security based lending and borrowing.
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52. * Depository participants(DPs) are the members of either NSDL
or CDSL or both who offer depository services through Dmat
Accounts.
* Most of the commercial banks and stock brokers extend their
services in Depository.
* There are 1272 DPs with CDSL and 287 with NSDL.
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 These services stand between trading and depository or banking.
 All securities traded should be cleared and settled for all the
individual or corporate accounts at the end of the day.
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# Name of the Corporation
1 India International Clearing Corporation (IFSC) Ltd
2 India Clearing Corporation Ltd
3 Metropolitan Clearing Corporation of India Ltd
4 Multi Commodity Exchange Clearing Corporation Ltd
5 National Commodity Clearing Ltd
6 National Securities Clearing Corporation Ltd
7 NSE IFSC Clearing Corporation Ltd

54. Trading
CLEARING
SERVICES
Bank
depository
Settlement
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55. Raju Indulkoori
V. Non Banking Financial Services
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These services are provided by Non Banking Financial companies
(NBFCs) which are registered with RBI and or SEBI to do lending,
investment and related activities. They are like banks but differ
as follows as the NBFC
• provides banking services but doesn’t hold bank license.
• don’t do payment and settlement.
• cannot issue cheques drawn on itself
• cannot accept demand deposits.
• not required to maintain Reserve Ratios with RBI
• Depositors cannot avail Deposit insurance facility of
• Deposit Insurance
• Credit Guarantee Corporation
• cannot indulge Primarily in agricultural, industrial activity, sale-
purchase, construction of Immovable Property
• has 100% FDI.
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RBI named and defined them individually as follows.
1. Asset Reconstruction Company (ARC)
2. Asset Financing Company (AFC)
3. Core Investment Company (CIC)
4. Infrastructure Finance Company (IFC)
5. Infrastructure Debt Fund Company (IDF)
6. Investment and Credit Companies (ICC)
7. Micro Finance Institutions (MFIs)
8. Public Deposit Accepting Companies
9. Chit Fund Companies
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 Asset Reconstruction Company (ARC) buys the NPAs of banks and
financial institutions with mutually agreed fair price.
 ARCs recover the value from the original borrowers.
 The difference between the buying price and recovered value becomes
profit for ARCs.
 Banks and financial institutions sell their NPAs to ARCs to clean up their
balance sheets and enabling them to focus on normal banking activities
without financial distress.
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RBI
 ARCs are regulated by RBI. All ARCs should be registered with the RBI.
 The RBI Raised the minimum net owned fund limit from Rs 2 Crore to
Similarly, the ARCs have to maintain a capital adequacy ratio of 15% of
its risk weighted assets.
SARFAESI
 The Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest (SARFAESI) Act, 2002
 It was enacted in December 2002.
 It provides the legal basis for the setting up ARCs in India.
 Section 2 (1) of the Act explains the meaning of Asset Securitization.
 ARCs are elaborated under Section 3 of the of the Act.
 The SARFAESI Act helps reconstruction of bad assets without the
intervention of courts.
 ARC should have a minimum net owned fund of Rs 2 crore.
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# ARC Place # ARC Place
1 CFM Asset Reconstruction Private Limited Ahmedabad 15 Indiabulls Asset Reconstruction Private Limited Mumbai
2
Rare Asset Reconstruction Limited (Erstwhile
Rare Asset Reconstruction Private Limited)
Ahmedabad 16 Invent Assets Securitisation & Reconstruction Pvt. Ltd. Mumbai
3 ANA ARC Private Limited Bengaluru 17
JM Financial Asset Reconstruction Company Limited
(Erstwhile JM Financial Asset Reconstruction Company
Private Limited)
Mumbai
4 Omkara Assets Reconstruction Private Limited Chennai 18 Lone Star India Asset Reconstruction Private Limited Mumbai
5 MAXIMUS ARC Limited Hyderabad 19 Pegasus Assets Reconstruction Pvt. Ltd. Mumbai
6
Pridhvi Asset Reconstruction and Securitisation
Company Ltd.
Hyderabad 20 Phoenix ARC Private Limited Mumbai
7 Aditya Birla ARC Limited Mumbai 21 Reliance Asset Reconstruction Company Limited Mumbai
8
Ambit Flowers Asset Reconstruction Private
Limited
Mumbai 22 Suraksha Asset Reconstruction Private Limited Mumbai
9 ARCION Revitalization Private Limited Mumbai 23 International Asset Reconstruction Company Pvt. Ltd. New Delhi
10 ASREC (India) Limited Mumbai 24
Alchemist Asset Reconstruction Company Limited
(Erstwhile Dhir & Dhir Asset Reconstruction &
Securitization Company Limited)
New Delhi
11 Asset Reconstruction Company (India) Limited Mumbai 25
Assets Care & Reconstruction Enterprise Ltd. (Erstwhile
Assets Care Enterprise Ltd.)
New Delhi
12
Edelweiss Asset Reconstruction Company
Limited
Mumbai 26 Encore Assets Reconstruction Company Private Limited New Delhi
13 India Resurgence ARC Private Limited Mumbai 27 Prudent ARC Limited New Delhi
14
India SME Asset Reconstruction Company
Limited
Mumbai 28 UV Asset Reconstruction Company Limited New Delhi

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Asset Financing Company (AFC) finances physical assets supporting
business or economic activity. They are also known as Hire purchase
companies. They finance movable and immovable machines or motors or
equipment like
 Automobiles: 4 Wheelers, 2 wheelers, cars, tractors
 Industrial Machines
 Earth moving equipment : Cranes , Bull dozer
 Generators
Some of the popular AFCs are as follows
• Sundaram finance
• Ashok Leyland Finance
• Shriram Transport Finance
• DFL Finance
• ESS KAY Finance
• Mahindra & Mahindra Finance
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It is the company or financial institution registered with RBI to do core
Investment activities i.e owning or acquisition of securities. Some of them
are as follows
• TATA Sons Ltd (Formerly Tata Sons Limited)
• TATA Capital
• JSW Investments
• L & T Finance Holdings
• Morgan Stanley India Securities
• Garware Holdings
• Shriram Capital
• L&T Infrastructure Development Projects
• GMR Airports
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 IFCs deploys a minimum of three-fourths of their total assets in
infrastructure loans.
 The net owned funds are more than 3 billion and a minimum crediting
rating of 'A' and the Capital to Risk-Weighted Assets Ratio is 15%.
 IFCs Registered with RBI are as follows
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# IFC
1 Srei Infrastructure Finance Ltd
2 Tata Cleantech Capital Limited
3 L & T Infrastructure Finance Company Limited
4 Indian Railway Finance Corporation Ltd
5 Power Finance Corporation Ltd.
6 REC LIMITED (Formerly known as Rural Electrification Corporation Ltd.)
7 PTC India Financial Services Ltd.
8 India Infrastructure Finance Company Limited

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 IDFs facilitate long term debt into infrastructure projects.
 They raise capital through Multiple-Currency bonds of minimum 5-year
maturity.
 Only Infrastructure Finance Companies (IFC) can sponsor IDF-NBFCs.
 Some of the IDFs are as follows
 India Infra debt Limited
 L & T Infra Debt Fund Limited
 IDFC Infrastructure Finance Limited (Formerly IDFC Infra Debt Fund Limited )
 Kotak Infrastructure Debt Fund Limited
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 These are the companies which are investors as well as do
lending or credit extension activities.
 They are registered with RBI
 There are 9,355 ICCs registered with RBI
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7. Public Deposit Accepting Companies
• These are the NBFCs which are having requisite investment
grade rating are authorized to accept fresh public deposits.
• There are 81 registered NBFCs which authorised to accept
deposits.
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Micro Finance Institutions (MFI)
 MFI is a company or an organization that offering financial
services to low income populations. India has become vibrant
market for micro credit / micro finance / micro loans.
 Vikram Akula scaled up the scope of this business through SKS
Micro finance which became much bigger than Bangla Grameen
Bank lead by Noble Laureate Muhammad Yunus.
 It was popular as it is considered to be a big channel for
Financial Inclusion.
 MFI services include Loans, Insurance, Accept deposits and Recurring
Saving deposits.
 There 96 MFIs registered with RBI.
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9. Chit Fund
• It is a pool of money floated by money in a group.
• These are the financial institutions who do periodic collections
and distribute in lump sum.
• The fund is for the benefit of all the members of the chitfund.
• The organizer is known as foreman.
• Chitfund is regulated by respective state Governments and RBI
gave the status of NBFC.
• Margadarsi Chitfund and Shriram Chit Fund are some of the
know brands in Chit Fund.
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69. VI. Corporate Services
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Accounting, auditing, book keeping, treasury investment
management are internal to a company. Apart from these
financial services they demand need based services which
required specialized focus and efforts. Following are the some
of specialized corporate services.
A. Factoring
B. Forfaiting
C. M&A Services
D. Offshore Bundled Services
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1. It is type funding the debtor by selling the receivables
to a third party known as factor. It is actually account
receivables factoring and in short popular as Factoring.
It is also known as debtor financing,
2. Part of doing business in England till 1400 and became a
merchant bank activity in USA since 1620.
3. In India factoring presence was felt by RBI and set up a
committee to know the feasibility.
4. SBI and Canara Bank are the first factors.
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1. Advance Factoring: An advance of more than half of the value is paid
which is equivalent financing or funding.
2. Maturity Factoring / Collection Factoring: No advance is paid.
3. Disclosed and Undisclosed factoring: It is all about disclosing the name
of the factor in the invoice to the buyer.
4. Domestic and Cross border Factoring
5. Bank Participation Factoring
6. Full factoring / Conventional factoring: Combination of advance and
non Recourse factoring
7. Non Recourse Factoring: Buyer default risk is covered
8. Recourse Factoring: Buyer default risk is with seller.
9. Invoice Discounting
10. Bank Factoring: Receivables less advance which is known as factor
reserve is funded by a bank.
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73. Source : Efinancemanagement.com
Raju Indulkoori 73

74. Raju Indulkoori
1.Canbank Factors Limited
2.Hongkong & Shanghai Banking Corporation Limited
3.SBI Factors and Commercial Services Private Limited
4.Export Credit Guarantee Corporation of India Limited
5.India Factoring And Finance Solutions Private Limited
6.Reliance Capital Limited
7.AVS Financial Services Private Limited
8.Global Trade Consultancy Services
9.Shree Shyam Financial Services
10.Drip Capital Services India LLP
11.Penta Consulting Private Limited
12.Bhakti Holdings Private Limited
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75. Raju Indulkoori
1.It is similar to factoring but happens for a medium term in foreign
trade. The word Is derived from the French word forfait, meaning to
relinquish a right. Ex: The exporter’s right to receive payment from the
customer - the importer.
2.Forfaiting is a financial service providing medium-term financial support
for export or import of capital goods. The Forfaiter is the third party
providing the support.
3.The Forfaiter provides medium-term finance to, and will commonly also
take on certain risks from, the importer; and takes on all risk from the
exporter, in return for a margin.
4.Payment may be by negotiable instrument, enabling the Forfaiter to lay
off some risks.
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76. Raju Indulkoori
1.Similarities
1.Both involves sale of financial assets from the seller’s receivables.
2.Funding is the objective.
2.Differences
1.Forfait supports the buyer (importer) as well as the seller (exporter), Whereas factor
supports only sellers. Factors supporting buyers is known as reverse factoring.
2.Unlike factoring where it is applicable to any business vertical, forefaiting is
available only for export or import transactions related to capital goods.
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77. Raju Indulkoori
These are the services offered in the process of business combination and
separation in domestic and global scenario.
1.Corporate Valuation
2.Target Search
3.Pre merger activities
4.Post Merger integration
5.Tax consultancy : Multi State, Country Specific and Global
6.Accounting and Auditing
7.Risk Advisory: Financial, Political, business, economical and Cyber Risk
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78. Raju Indulkoori
These are the services offered to new or foreign companies.
o Company Incorporation
o Legal advisory
o Maintain books and records
o Compiling annual accounts
o Conducting annual audits
o Filing tax returns
o Providing local Directors
o Providing registered office address
o Providing meeting rooms for Board meetings
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79. VII. Merchant Banking Services
Raju Indulkoori 79

80. Raju Indulkoori
 These are the services offered to companies in manufacturing,
services, financial markets and other areas where a specialized
service is required.
 Merchant Banks are often referred to Investment banks which is
not real. In India we don’t have specialized investment banks like
in USA, Europe and Japan which was root cause of 2008 recession.
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81. Raju Indulkoori
Any corporate body engaged in the business of issue management
either by making arrangements regarding selling, buying, or
subscribing to securities or acting as manager, consultant advisor or
rendering corporate advisory services in relation to such issue
management.
- SEBI (Merchant Banking) Rules 1992.
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82. Raju Indulkoori
• There are 215 Merchant banks registered with SEBI.
• They are categorized as follows.
Category Description of role and activities
Net Worth
Requirement
(Minimum in Rs Cr)
1
Act as Issue Manager, underwriter, advisor, consultant or
portfolio manager
5
2
Act as co-manager, underwriter, advisor, consultant or
portfolio manager
0.50
3
Act as co-managers without undertaking portfolio
management
0.20
4 Only act as an advisor or consultant for the issue NA
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83. Raju Indulkoori
1. Corporate counseling
2. Corporate restructuring
3. Investment Advisory
4. Issue management
5. Portfolio management
6. Leasing services
7. Loan syndication
8. Providing assistance for technical and financial collaborations
9. Offshore Bundled Services
10. Merger and Acquisition Services
11. Project advisory : Project identification, evaluation, appraisal and
implementation
12. Underwriting
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84. Raju Indulkoori
Leading Merchant Bankers in India
Public Sector Private Sector Foreign Sector
SBI Capital
Markets
Axis Bank Barclay Securities
(India)
Punjab National
Bank
Bajaj Capital
Bank of America
IFCI Financial
Services
ICICI Securities
Citi Group Global
Markets India
Kotak Mahindra Capital
Company
Goldman Sachs (India)
Securities
Reliance Securities Morgan Stanley India
Tata Capital Markets
Yes Bank
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85. Raju Indulkoori
VIII Global Financial Services
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86. Raju Indulkoori
1. Investment Banking
2. Savings and loan associations
3. Mutual savings banks
4. Credit unions
5. Pension Funds
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87. Raju Indulkoori
• Meryl Lynch
• Goldman Sachs
• Morgan Stanley
• Credit Suisse First Boston
• Dean Witter
• Deutsche bank
• ABN Amro
• Chase Manhattan
• Lehman Brothers
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