The document provides an overview of various fund based financial services. It discusses topics like leasing, hire purchase, factoring, venture capital, insurance, mutual funds and housing finance. For each topic, it provides definitions, key aspects, types and mechanisms. The summary is as follows: The document defines and compares various fund based financial services like leasing, hire purchase, factoring and their mechanisms. It also discusses venture capital process, insurance types and regulation in India. Different mutual fund schemes and housing finance products are outlined. Key intermediaries and regulations for different financial sectors are highlighted.

1. Fund Based Financial Services
- Presented By :
- Gaurav
- Mehak
- Swati
- Saumya
- Srikriti

2.  The finance industry encompasses a broad range of
organizations that deal with the management of money.
 Among these organizations are Asset Management Companies
like leasing companies, merchant bankers and Liability
Management Companies like discounting houses and
acceptance houses, and general financial institutions like
banks, credit card companies, insurance companies, consumer
finance companies, stock exchanges.
 The term ‘Financial Services’ in a broad sense means “mobilizing
and allocating savings.” Thus, it includes all activities involved in
the transformation of savings into investment.
FINANCIAL SERVICES: MEANING

3.  Following are some of the examples of financial services:
 Leasing, credit card services, factoring, portfolio
management, financial consultancy services, Underwriting,
discounting and rediscounting of bills, Depository services,
housing finance, Hire purchases, Mutual Fund
management.
 The financial services can also be called ‘financial
intermediation’. It is the process by which funds are
mobilized from a large number of savers and make them
available to all those who are in need of it.

4. The financial intermediaries in India can be classified as:
 Capital Market Intermediaries which constitutes
Term Lending Institutions and Investing Institutions
which mainly provide long term funds.
 Money Market Intermediaries which consists of
commercial banks, Cooperative Banks, and other
financial agencies which supply only short term funds.
Classification of Financial Services
Industry

5. 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.
Types of Financial Services

6. Leasing

7.  A lease may be defined as :
 a contractual arrangement / transaction in which
 a party owning an asset / equipment (lessor)
 provides the asset for use to another / transfer the right to use
the equipment to the user (lessee)
 over a certain / for an agreed period of time
 for consideration in form of / in return for periodic payment
(rental)
 at the end of the period of contract (lease period) ,the asset
/equipment reverts back to the lessor
 unless there is a provision for the renewal of the contract.
Meaning

8.  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.
Parties In Leasing

9.  The Parties
 The Asset
 The Term
 The Lease Rentals
Characteristics of a lease

10. Classification of Lease
1. Financial lease and operating lease
2. Sales and lease back and direct lease
3. Single investor lease and leveraged lease
4. Domestic lease and international lease

11. Hire Purchase

12. It is defined as a peculiar kind of transaction in which the goods are
let on hire with an option to the hirer to purchase them with the
following stipulations:
 -payment to be made in installments over a specified period
 -the possession is delivered to the hirer at the time of entering in to
the contract
 -the property in the goods passes to the hirer on payment of the
last installment
 -each installment is treated as hire charges so that if default is made
in payment of any installment the seller becomes entitled to take
away the goods &
 -the hirer is free to return the goods with out being required to pay
any further installments falling due after the return.
Meaning

13.  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.
Various Aspect of HP Transaction

14.  The interest on each hire purchase installment is
computed on the basis of flat rate of interest is
applied to the declining balance of original loan
amount to determine the interest component of
installment for a given flat rate of interest, the
equivalent effective rate of interest is higher.

15. Leasing VS Hire Purchase

16. Factoring

17. Meaning
Undertakes the task of realizing ‘receivables’, i.e.
accounts receivables, book debts, bills receivables etc .
Also manages the sales registers, sundry debts of the
commercial firms/trading agents , for a commission.

18. …Mechanism
Merchant Customer
Factor
Credit Transaction (1)
Agreement (2)
Factor
Financing (5)
Handing over Inovice(4)
Factoring Contract for sale of receivables.(3)
Receiving
Payment(6)

19. 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.

20. Types of Factoring
 Domestic Factoring
 Export Factoring
 Cross Border Factoring

21. WHAT IS VENTURE CAPITAL
Money provided by investors to startup firms and small
businesses with perceived long-term growth potential.

22. Venture Capital Financing

23.  Bank of England Quarterly Bulletin : Venture capital is an activity by
which investors support entrepreneurial talent with finance and
business skills to exploit market opportunities and thus obtain
long-term capital gains.
 Venture Capitalists generally:
 Finance new and rapidly growing companies.
 Purchase equity securities.
 Assist in the development of new products or services.
 Add value to the company through active participation.

24. Financial Stage Period (Funds locked
in years)
Risk Perception Activity to be
financed
Seed Money 7-10 Extreme
For supporting a
concept or idea or
R&D for product
development
Start Up 5-9 Very High
Initializing operations
or developing
prototypes
First Stage 3-7 High
Start commercials
production and
marketing
Stages & Risk of Financing

25. Financial Stage Period (Funds locked
in years)
Risk Perception Activity to be
financed
Second Stage 3-5 Sufficiently high
Expand market and
growing working
capital need
Third Stage 1-3 Medium
Market expansion,
acquisition & product
development for
profit making
company
Fourth Stage 1-3 Low Facilitating public
issue

26. Deal origination
Screening
Due diligence
(Evaluation)
Deal structuring
Post investment activity
Exit plan
VC Investment Process

28.  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.
Definition

29. Types Of Insurance

30.  Till end of FY 1999-2000, two state-run insurance
companies, Life Insurance Corporation (LIC); General
Insurance Corporation (GIC) were the monopoly
insurance provider in India.
 Under GIC there were four subsidiaries:
National Insurance Company Ltd.
Oriental Insurance Company Ltd.
New India Assurance Company Ltd.
United India Insurance Company Ltd.
ORIGIN AND GROWTH OF
INSURANCE SECTOR

32.  In fiscal 2000-01, the Indian federal government lifted
all entry restrictions for private sector investors.
 Foreign investment insurance market was also
allowed with 26 percent cap.
 GIC was converted into India's national reinsurer,
from December 2000.
 All the subsidiaries working under the GIC umbrella
were restructured as independent insurance
companies.

33.  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.
IRDA

34. Mutual Fund Services

35. A mutual fund is a pool of money from numerous
investors who wish to save or make money. Investing
in a mutual fund can be a lot easier than buying and
selling individual stocks and bonds on your own.
Investors can sell their shares when they want.
What is a Mutual Fund?

36. Professional Management
Each fund's investments are chosen and monitored
by qualified professionals who use this money to
create a portfolio.
Fund Ownership
As an investor, you own shares of the mutual fund,
not the individual securities. All shareholders share in
the fund's gains and losses on an equal basis,
proportionately to the amount they've invested.
What is a Mutual Fund?

37. Mutual Funds are Diversified
By investing in mutual funds, you could diversify your
portfolio across a large number of securities so as to
minimize risk. By spreading your money over
numerous securities, which is what a mutual fund
does, you need not worry about the fluctuation of the
individual securities in the fund's portfolio.
What is a Mutual Fund?

38.  Mutual funds Schemes can be segregated into two heads –
1. Schemes according to Maturity Period:
 Open-ended Fund/ Scheme
 Open-ended schemes are those schemes where investors can redeem
and buy new units all throughout the year as per.
 Close-ended Fund/ Scheme
 The fund is open for subscription only during a specified period at the
time of launch of the scheme. Investors can invest in the scheme at the
time of the initial public issue and there after they can buy or sell the
units of the scheme on the stock exchanges where the units are listed.
Types Of Mutual Fund Schemes

39. 2. Schemes according to Investment Objective:
Growth / Equity Oriented Scheme
Income / Debt Oriented Scheme
Balanced Fund
Money Market Mutual Fund (are low risk funds offers
highest possible current income consistent with
preservation of capital)

40.  All mutual funds in India today are regulated by SEBI.
 The Association of Mutual Funds of India (AMFI) is a
self-governing association of Indian Mutual Funds
that regulates its members' sales, distribution and
communication practices. Investors can invest in
Indian mutual funds directly or through distributors
under codes of practice developed by AMFI.
Regulation & Distribution

41. Housing Finance

42.  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.
Meaning

43.  Create & meet a growing housing demand
 Reduce poverty
 Prevent slum proliferation
 Engine of equitable economic growth
 Take part in financial sector liberalization
Importance

44.  The following is the list of different types of Home Loans you can
avail from the market:
 Home Purchase Loans
 Home Construction Loans
 Home Improvement Loans
 Home Extension Loans
 Home Conversion Loans
 Land Purchase Loans
 Stamp Duty Loans
 Bridge Loans
 Balance Transfer Loans
 Loans to NRIs
Types Of Home Loan

45. THE END