In India, venture capital has helped fund new entrepreneurs and businesses but performance has been mixed. Venture capital funds raise money from risk-tolerant investors and invest it in startups that need funding but cannot access traditional sources. These startups are often in new areas and have a low probability of success, but the venture capitalist expects a few big successes to generate high returns to offset many failures. Venture funding is usually through equity to maximize returns, with exit planned via the stock market.
The document discusses financing options for eco-housing and affordable housing in India. It describes an innovative model called EcoTRA that establishes escrow accounts to finance climate-friendly improvements to common areas of housing societies, with loan repayments aligned to energy savings. It also proposes an equity-based housing finance model involving informal savings pools, mezzanine financing, and securitization to help low-income households purchase homes. Additionally, it outlines recent RBI initiatives like relaxed norms for home loans up to Rs. 10 lakh and an interest subsidy scheme launched by the government to promote affordable housing.
The document discusses housing finance in India. It provides an introduction to housing loans facilitated by the Reserve Bank of India. It then summarizes the objectives of studying Indian housing finance. It describes direct and indirect housing finance and loan limits under priority sectors. It discusses the growth of housing finance marketing and provides an overview of HDFC, SBI Home Finance, and LIC Housing Finance, including their services and financial performance. The conclusion compares the three companies.
Rising interest rates on housing finance are negatively impacting the Indian economy. Home loan rates have increased substantially from 7% in 2003 to over 12% currently. This is slowing housing demand and the broader real estate sector, which has linkages to 250+ other industries. The housing and construction sectors are seeing major slowdowns. Speculators, banks, housing finance companies, and the overall economy are feeling the effects. Immediate action is needed to address rising interest rates and stabilize the housing market.
The document discusses housing finance in India. It outlines that the Reserve Bank of India facilitates credit to the housing sector per the national policy. It also details that housing loans can have fixed or floating interest rates. Banks provide individual housing loans for home purchases, construction, repairs, and plot purchases. The loans are secured by mortgages on the property. The National Housing Bank was established to promote housing finance institutions and ensure a sound system through regulation and refinancing.
The document discusses key terms related to housing finance in India such as EMI, interest rates, and fees. It then lists the top 10 housing finance companies in India including HDFC, Indiabulls, LIC Housing Finance, Gruh Finance, and Dewan Housing Finance. For each company, it provides a brief overview of their operations, loan products offered, current interest rates, and market performance.
About the housing finances in India. About the national hosing bank and the functions of it. Then about the micro housing finance corporation and the types of loans, housing and its development. Discussion on the urban infrastructure.
This document discusses housing finance in India. It defines housing finance as finance provided to individuals or groups for housing needs such as purchasing or constructing a home. It also describes the different types of housing loans offered, including direct financing to individuals and indirect financing through housing organizations. The document outlines the priority sector limits for housing loans and discusses the role of the National Housing Bank in promoting and supporting housing finance institutions in India.
The document discusses 10 different types of housing finance options in India including home purchase loans, home construction loans, home extension loans, land purchase loans, and loans for NRIs. It provides brief descriptions of each loan type, explaining their purpose and eligibility requirements. The types of housing loans available provide financing solutions for purchasing, building, renovating, or converting residential properties in India.
The document discusses financing options for eco-housing and affordable housing in India. It describes an innovative model called EcoTRA that establishes escrow accounts to finance climate-friendly improvements to common areas of housing societies, with loan repayments aligned to energy savings. It also proposes an equity-based housing finance model involving informal savings pools, mezzanine financing, and securitization to help low-income households purchase homes. Additionally, it outlines recent RBI initiatives like relaxed norms for home loans up to Rs. 10 lakh and an interest subsidy scheme launched by the government to promote affordable housing.
The document discusses housing finance in India. It provides an introduction to housing loans facilitated by the Reserve Bank of India. It then summarizes the objectives of studying Indian housing finance. It describes direct and indirect housing finance and loan limits under priority sectors. It discusses the growth of housing finance marketing and provides an overview of HDFC, SBI Home Finance, and LIC Housing Finance, including their services and financial performance. The conclusion compares the three companies.
Rising interest rates on housing finance are negatively impacting the Indian economy. Home loan rates have increased substantially from 7% in 2003 to over 12% currently. This is slowing housing demand and the broader real estate sector, which has linkages to 250+ other industries. The housing and construction sectors are seeing major slowdowns. Speculators, banks, housing finance companies, and the overall economy are feeling the effects. Immediate action is needed to address rising interest rates and stabilize the housing market.
The document discusses housing finance in India. It outlines that the Reserve Bank of India facilitates credit to the housing sector per the national policy. It also details that housing loans can have fixed or floating interest rates. Banks provide individual housing loans for home purchases, construction, repairs, and plot purchases. The loans are secured by mortgages on the property. The National Housing Bank was established to promote housing finance institutions and ensure a sound system through regulation and refinancing.
The document discusses key terms related to housing finance in India such as EMI, interest rates, and fees. It then lists the top 10 housing finance companies in India including HDFC, Indiabulls, LIC Housing Finance, Gruh Finance, and Dewan Housing Finance. For each company, it provides a brief overview of their operations, loan products offered, current interest rates, and market performance.
About the housing finances in India. About the national hosing bank and the functions of it. Then about the micro housing finance corporation and the types of loans, housing and its development. Discussion on the urban infrastructure.
This document discusses housing finance in India. It defines housing finance as finance provided to individuals or groups for housing needs such as purchasing or constructing a home. It also describes the different types of housing loans offered, including direct financing to individuals and indirect financing through housing organizations. The document outlines the priority sector limits for housing loans and discusses the role of the National Housing Bank in promoting and supporting housing finance institutions in India.
The document discusses 10 different types of housing finance options in India including home purchase loans, home construction loans, home extension loans, land purchase loans, and loans for NRIs. It provides brief descriptions of each loan type, explaining their purpose and eligibility requirements. The types of housing loans available provide financing solutions for purchasing, building, renovating, or converting residential properties in India.
In-house financing allows firms to provide loans to customers to purchase goods or services from that firm, eliminating reliance on financial institutions for customer financing. Major players in housing finance in India include HDFC, SBI Home Finance, HUDCO, LIC Housing Finance, and ICICI Home Finance. HDFC was incorporated in 1977 to promote home ownership through long-term loans. It provides various housing loans for purposes like dwelling houses, land purchase, repairs, and construction for weaker sections. LIC Housing Finance and HUDCO also provide an array of housing loans for individuals and organizations.
This document discusses housing finance in India. It provides information on key players in housing finance such as the National Housing Bank (NHB), Housing and Urban Development Corporation (HUDCO), commercial banks, cooperative banks, and housing finance companies. It describes the roles of NHB and HUDCO in promoting affordable housing. It also discusses the types of housing loans provided and the various institutions that provide long-term financing for housing in India.
Housing finance is important to meet growing housing demand, reduce poverty, and promote equitable growth. Key institutions that provide housing finance include the National Housing Bank, HDFC, LIC Housing Finance, HUDCO, and CIDCO. These institutions aim to increase affordable housing availability through loans for home purchases, construction, repairs and more. CIDCO additionally focuses on developing infrastructure to support new urban populations in India.
This is presentation being presented by Shivi Aggarwal, Radhika Gupta, Sweta Agarwal and Madhusudan Partani Students of FORE School of Management ( FMG-18).
It has Guidelines of HFC, Busniess Model of HDFC
The document discusses SBI home loans. It provides an introduction to SBI as a bank and describes the various types of home loans offered, including home purchase loans, home improvement loans, and loans for NRIs. Key features of SBI home loans are discussed such as eligibility, repayment periods up to 30 years, and floating interest rates starting from 10%. The document outlines the application process and required documents. Various SBI home loan schemes targeting different customer groups like Yuva loans for young customers and loans for women are also mentioned. Finally, it discusses SBI's partnership with Bankbazaar.com to market its home loans online.
The document discusses payment banks in India. Payment banks will help further financial inclusion by providing small savings accounts and payment/remittance services. They can accept deposits up to Rs. 1 lakh and enable digital payments and money transfers through mobile phones. Eleven firms have been granted licenses to start payment banks, including telecom and retail companies. Payment banks have the potential to transform financial services access for underserved populations by leveraging technology and existing customer bases.
Recent development in Indian financial systemSatyamKumar497
The Reserve Bank of India will form a regulatory sandbox for financial technology and set up data science labs to promote innovation in digital lending. It will also conduct open market operations to inject liquidity into the economy. The Insurance Regulatory and Development Authority of India will shift to a risk-based capital regime. The validity of the Aadhaar scheme was upheld by the Supreme Court. An independent payments regulatory board will be set up within the RBI. DBS Bank was named the best bank in the world for 2018 by Global Finance.
REAL ESTATE REGULATORY AUTHORITY (RERA) ACT 2016Khyati Tewari
The document summarizes the Real Estate Regulatory Authority (RERA) Act of 2016 in India. It provides details on the timeline of the bill being introduced in 2013 and passed into law in 2016. Key points include mandatory registration of projects over 5000 sqm, disclosure requirements, escrow accounts, liability for builders, and rights for home buyers. While RERA aims to increase transparency and protect buyers, implementation depends on state governments who can modify rules. Overall, RERA seeks to regulate the real estate sector but challenges remain in coordinating with other agencies and fully addressing consumer concerns.
The Indian financial system consists of both formal and informal sectors. The formal sector is organized, institutional, and regulated, catering to modern sectors of the economy. The informal sector is unorganized, non-institutional, and non-regulated, dealing with traditional and rural areas. The key components of the formal system include regulators like RBI and SEBI, financial institutions like banks and NBFCs, financial markets, instruments, and services. Over time, the Indian financial system has shifted from being primarily private to public sector dominated and is now globalized and privatized with developments like deregulation, privatization of institutions, and growth of new entities.
The National Housing Bank was established in 1988 by an Act of Parliament as the apex institution for the housing finance system in India. It is wholly owned by the Reserve Bank of India. NHB's mission is to promote affordable housing for all segments of the population with a focus on low and moderate income housing. Its vision is to promote inclusive expansion and stability in the housing finance market. NHB aims to develop a sound housing finance system, support housing finance institutions, catalyze funds to all regions and income groups, and ensure market expansion and stability. Sriram Kalyanaraman is the newly appointed Managing Director and CEO of NHB.
Get instant approval on HDFC Home Loan and also calculate your interest rates. Get advantages of HDFC housing Loan and also get instant approval from hdfc bank. For Terms and Conditions read here http://hdfc.unifiedloans.in/home-loan.html
The National Housing Bank (NHB) was established in 1988 to promote affordable housing finance in India. It regulates housing finance companies and provides refinancing to enable more lending. NHB's objectives are to develop a sound housing finance system, increase access to affordable housing credit, and support government housing schemes. It carries out these functions through refinancing, financing housing projects, developing housing finance institutions, and implementing training programs.
The document discusses the Indian capital market. It has two segments - the primary market where new securities are first issued to investors, and the secondary market which is the stock exchange where existing securities are traded. The key functions of the capital market are to mobilize savings, facilitate capital formation and economic growth. It discusses various instruments like equity shares, bonds, and methods of issuance like IPO, right issue, bonus issue etc. Important participants include brokers, banks, mutual funds. The regulator is SEBI and it oversees raising of capital and trading according to guidelines.
The document summarizes the developmental roles of the Reserve Bank of India (RBI) in the banking and non-banking sectors. It discusses how RBI promotes savings, ensures adequate credit flows to neglected sectors, and improves fund allocation to underdeveloped regions. It also outlines how RBI aids the development of the financial system through institutions that cater to diverse economic sectors. RBI provides special attention to agriculture credit and industrial finance. It also regulates and supervises banking and non-banking institutions and controls banks using various instruments.
The document discusses the Discount and Finance House of India Limited (DFHI). Some key points:
1. DFHI was established in 1988 by the Reserve Bank of India and public sector banks to develop the money market and provide liquidity to money market instruments.
2. Its objectives include evening out liquidity imbalances, promoting the secondary market for short-term instruments, and providing safe investment avenues.
3. It deals in treasury bills, government securities, certificates of deposit, commercial papers, and call money. DFHI also offers constituent sub-accounts to allow entities access to government securities.
This document analyzes the scope and growth of payment banks in India following demonetization in 2016. It discusses how payment banks can accept small deposits and facilitate money transfers, bill payments, and fund remittances. Data on transaction volumes from two payment banks shows exponential growth. Allowing payment banks to issue debit cards, offer internet banking, and set up more branches and ATMs could help them penetrate unbanked rural areas. If deposit limits increase over time, payment banks may replace some roles of commercial banks and deepen financial inclusion across India.
There are various types of loans available in India for the borrowers. Loans are designed as per the needs of the loan borrowers. The terms, interest rate and repayment options of the loan are decided as per the type of loan one is borrowing.
COMPARISON OF HOME LOAN SCHEME OF ICICI BANK WITH 3 OTHER PRIVATE BANKSKhushbu Malara
Loan acquired from a financial institution to purchase a home.
Home loans consist of an adjustable or fixed interest rate and payment terms. Home loans may also be referred to as mortgage loans.
A home loan can come in many flavors, the specifics of which will have a major impact on a large chunk of the buyer’s life. Choosing an adjustable or fixed rate, extending the loan for ten, fifteen, or even thirty years, and determining just how much money to invest in the down payment are all critical decisions.
Thus in today economy the home loan is one of the important factor which is considered in this project report and also compare with other industry leaders also.
The document discusses the history and development of housing finance in India. It explains that the Housing Development Finance Corporation was established in 1977 by the government to boost investment in housing. It also discusses the establishment of the National Housing Bank in 1998 by the Reserve Bank of India to provide housing finance to all sections of society. The National Housing Bank functions as a regulatory body for housing finance companies and issues guidelines and directions for them. It also discusses various types of appraisals conducted and fees charged by housing finance companies for disbursing housing loans.
A Perspective: Role of Commercial Banks in Financing Achievement of Sustainab...Dr. Ravi Chandra
The target audience are students and general population interested in Sustainable Development Goals 2030. They will learn about the scale of financing needs of India required to achieve SDG 2030. They will learn about the importance of domestic resource mobilisation to achieve the SDG 2030. They will get a perspective on gross domestic savings, foreign capital flows, public private partnerships and their role towards achievements of SDG 2030.
The need is to sensitize towards the role of savings towards achievement of SDG 2030.
The document discusses monetary and fiscal policy in India, including the concepts and instruments of monetary policy such as bank rate policy, open market operations, and reserve requirements. It also covers fiscal policy and the structure of the Indian financial system, including markets for money, credit, bonds, and foreign exchange. The key instruments of monetary policy in India are discussed as well as the roles of various participants in the financial markets such as banks, financial institutions, and the Reserve Bank of India.
In-house financing allows firms to provide loans to customers to purchase goods or services from that firm, eliminating reliance on financial institutions for customer financing. Major players in housing finance in India include HDFC, SBI Home Finance, HUDCO, LIC Housing Finance, and ICICI Home Finance. HDFC was incorporated in 1977 to promote home ownership through long-term loans. It provides various housing loans for purposes like dwelling houses, land purchase, repairs, and construction for weaker sections. LIC Housing Finance and HUDCO also provide an array of housing loans for individuals and organizations.
This document discusses housing finance in India. It provides information on key players in housing finance such as the National Housing Bank (NHB), Housing and Urban Development Corporation (HUDCO), commercial banks, cooperative banks, and housing finance companies. It describes the roles of NHB and HUDCO in promoting affordable housing. It also discusses the types of housing loans provided and the various institutions that provide long-term financing for housing in India.
Housing finance is important to meet growing housing demand, reduce poverty, and promote equitable growth. Key institutions that provide housing finance include the National Housing Bank, HDFC, LIC Housing Finance, HUDCO, and CIDCO. These institutions aim to increase affordable housing availability through loans for home purchases, construction, repairs and more. CIDCO additionally focuses on developing infrastructure to support new urban populations in India.
This is presentation being presented by Shivi Aggarwal, Radhika Gupta, Sweta Agarwal and Madhusudan Partani Students of FORE School of Management ( FMG-18).
It has Guidelines of HFC, Busniess Model of HDFC
The document discusses SBI home loans. It provides an introduction to SBI as a bank and describes the various types of home loans offered, including home purchase loans, home improvement loans, and loans for NRIs. Key features of SBI home loans are discussed such as eligibility, repayment periods up to 30 years, and floating interest rates starting from 10%. The document outlines the application process and required documents. Various SBI home loan schemes targeting different customer groups like Yuva loans for young customers and loans for women are also mentioned. Finally, it discusses SBI's partnership with Bankbazaar.com to market its home loans online.
The document discusses payment banks in India. Payment banks will help further financial inclusion by providing small savings accounts and payment/remittance services. They can accept deposits up to Rs. 1 lakh and enable digital payments and money transfers through mobile phones. Eleven firms have been granted licenses to start payment banks, including telecom and retail companies. Payment banks have the potential to transform financial services access for underserved populations by leveraging technology and existing customer bases.
Recent development in Indian financial systemSatyamKumar497
The Reserve Bank of India will form a regulatory sandbox for financial technology and set up data science labs to promote innovation in digital lending. It will also conduct open market operations to inject liquidity into the economy. The Insurance Regulatory and Development Authority of India will shift to a risk-based capital regime. The validity of the Aadhaar scheme was upheld by the Supreme Court. An independent payments regulatory board will be set up within the RBI. DBS Bank was named the best bank in the world for 2018 by Global Finance.
REAL ESTATE REGULATORY AUTHORITY (RERA) ACT 2016Khyati Tewari
The document summarizes the Real Estate Regulatory Authority (RERA) Act of 2016 in India. It provides details on the timeline of the bill being introduced in 2013 and passed into law in 2016. Key points include mandatory registration of projects over 5000 sqm, disclosure requirements, escrow accounts, liability for builders, and rights for home buyers. While RERA aims to increase transparency and protect buyers, implementation depends on state governments who can modify rules. Overall, RERA seeks to regulate the real estate sector but challenges remain in coordinating with other agencies and fully addressing consumer concerns.
The Indian financial system consists of both formal and informal sectors. The formal sector is organized, institutional, and regulated, catering to modern sectors of the economy. The informal sector is unorganized, non-institutional, and non-regulated, dealing with traditional and rural areas. The key components of the formal system include regulators like RBI and SEBI, financial institutions like banks and NBFCs, financial markets, instruments, and services. Over time, the Indian financial system has shifted from being primarily private to public sector dominated and is now globalized and privatized with developments like deregulation, privatization of institutions, and growth of new entities.
The National Housing Bank was established in 1988 by an Act of Parliament as the apex institution for the housing finance system in India. It is wholly owned by the Reserve Bank of India. NHB's mission is to promote affordable housing for all segments of the population with a focus on low and moderate income housing. Its vision is to promote inclusive expansion and stability in the housing finance market. NHB aims to develop a sound housing finance system, support housing finance institutions, catalyze funds to all regions and income groups, and ensure market expansion and stability. Sriram Kalyanaraman is the newly appointed Managing Director and CEO of NHB.
Get instant approval on HDFC Home Loan and also calculate your interest rates. Get advantages of HDFC housing Loan and also get instant approval from hdfc bank. For Terms and Conditions read here http://hdfc.unifiedloans.in/home-loan.html
The National Housing Bank (NHB) was established in 1988 to promote affordable housing finance in India. It regulates housing finance companies and provides refinancing to enable more lending. NHB's objectives are to develop a sound housing finance system, increase access to affordable housing credit, and support government housing schemes. It carries out these functions through refinancing, financing housing projects, developing housing finance institutions, and implementing training programs.
The document discusses the Indian capital market. It has two segments - the primary market where new securities are first issued to investors, and the secondary market which is the stock exchange where existing securities are traded. The key functions of the capital market are to mobilize savings, facilitate capital formation and economic growth. It discusses various instruments like equity shares, bonds, and methods of issuance like IPO, right issue, bonus issue etc. Important participants include brokers, banks, mutual funds. The regulator is SEBI and it oversees raising of capital and trading according to guidelines.
The document summarizes the developmental roles of the Reserve Bank of India (RBI) in the banking and non-banking sectors. It discusses how RBI promotes savings, ensures adequate credit flows to neglected sectors, and improves fund allocation to underdeveloped regions. It also outlines how RBI aids the development of the financial system through institutions that cater to diverse economic sectors. RBI provides special attention to agriculture credit and industrial finance. It also regulates and supervises banking and non-banking institutions and controls banks using various instruments.
The document discusses the Discount and Finance House of India Limited (DFHI). Some key points:
1. DFHI was established in 1988 by the Reserve Bank of India and public sector banks to develop the money market and provide liquidity to money market instruments.
2. Its objectives include evening out liquidity imbalances, promoting the secondary market for short-term instruments, and providing safe investment avenues.
3. It deals in treasury bills, government securities, certificates of deposit, commercial papers, and call money. DFHI also offers constituent sub-accounts to allow entities access to government securities.
This document analyzes the scope and growth of payment banks in India following demonetization in 2016. It discusses how payment banks can accept small deposits and facilitate money transfers, bill payments, and fund remittances. Data on transaction volumes from two payment banks shows exponential growth. Allowing payment banks to issue debit cards, offer internet banking, and set up more branches and ATMs could help them penetrate unbanked rural areas. If deposit limits increase over time, payment banks may replace some roles of commercial banks and deepen financial inclusion across India.
There are various types of loans available in India for the borrowers. Loans are designed as per the needs of the loan borrowers. The terms, interest rate and repayment options of the loan are decided as per the type of loan one is borrowing.
COMPARISON OF HOME LOAN SCHEME OF ICICI BANK WITH 3 OTHER PRIVATE BANKSKhushbu Malara
Loan acquired from a financial institution to purchase a home.
Home loans consist of an adjustable or fixed interest rate and payment terms. Home loans may also be referred to as mortgage loans.
A home loan can come in many flavors, the specifics of which will have a major impact on a large chunk of the buyer’s life. Choosing an adjustable or fixed rate, extending the loan for ten, fifteen, or even thirty years, and determining just how much money to invest in the down payment are all critical decisions.
Thus in today economy the home loan is one of the important factor which is considered in this project report and also compare with other industry leaders also.
The document discusses the history and development of housing finance in India. It explains that the Housing Development Finance Corporation was established in 1977 by the government to boost investment in housing. It also discusses the establishment of the National Housing Bank in 1998 by the Reserve Bank of India to provide housing finance to all sections of society. The National Housing Bank functions as a regulatory body for housing finance companies and issues guidelines and directions for them. It also discusses various types of appraisals conducted and fees charged by housing finance companies for disbursing housing loans.
A Perspective: Role of Commercial Banks in Financing Achievement of Sustainab...Dr. Ravi Chandra
The target audience are students and general population interested in Sustainable Development Goals 2030. They will learn about the scale of financing needs of India required to achieve SDG 2030. They will learn about the importance of domestic resource mobilisation to achieve the SDG 2030. They will get a perspective on gross domestic savings, foreign capital flows, public private partnerships and their role towards achievements of SDG 2030.
The need is to sensitize towards the role of savings towards achievement of SDG 2030.
The document discusses monetary and fiscal policy in India, including the concepts and instruments of monetary policy such as bank rate policy, open market operations, and reserve requirements. It also covers fiscal policy and the structure of the Indian financial system, including markets for money, credit, bonds, and foreign exchange. The key instruments of monetary policy in India are discussed as well as the roles of various participants in the financial markets such as banks, financial institutions, and the Reserve Bank of India.
The document discusses various aspects of consumer financing in India including the growth of consumer financing markets such as auto financing, housing financing, and retail credit/durable goods financing. It notes that southern and western states account for 75% of the consumer finance market. It also discusses innovations and opportunities in rural financing, educational financing, and financing through large retail outlets. The use of credit bureaus and credit scoring to assess risk is also summarized.
Housing and Urban Development Corporation (HUDCO)[1].pdfRiyaVerma969022
Financial institutions in India include banks, insurance companies, brokerage firms, and investment dealers that provide financial services and facilitate monetary transactions. Major housing financing institutions in India are the Housing and Urban Development Corporation (HUDCO), which provides long-term financing for housing and urban development projects, and Housing Development Finance Corporation (HDFC), which is a leading private housing finance company that provides home loans. Other specialized housing financing institutions include National Housing Bank, cooperative banks, and insurance organizations such as Life Insurance Corporation of India.
1. A financial system consists of institutions, instruments, and markets that foster savings and channel them to their most efficient uses. It mobilizes and allocates savings, monitors corporate performance, provides payment and settlement systems, and offers diversified investment opportunities.
2. Capital formation involves diverting productive capacity toward making capital goods that increase future productivity. It requires increased savings through various means and the mobilization and investment of those savings through money and capital markets.
3. Banks play a key role in capital formation by accepting deposits and using fractional reserve banking to multiply the money supply through lending, stimulating further economic activity.
The document provides an overview of microfinance concepts and practices. It discusses the goals of microfinance training to understand microfinance globally and locally, its evolution and regulation. It describes how microfinance arose in response to doubts about subsidized credit programs and how more market-based solutions were needed. It outlines typical microfinance activities like small loans, group guarantees, and savings products. The document also discusses the growth of microfinance institutions over the past 20 years, challenges they face, and principles of microfinance like financial sustainability and local institution building.
Building Development: Issues and Way Forward in IndiaDr K M SONI
The document discusses India's Pradhan Mantri Awas Yojana (PMAY) housing program. Key points:
1) PMAY aims to provide housing for all in urban areas by 2022, with an estimated 20 million houses needed. It has 3 phases from 2015-2022 focusing on 500 cities.
2) The program includes in-situ slum rehabilitation, affordable housing through credit links subsidies (up to Rs. 6 lakhs with 6.5% interest subsidy), and public-private partnerships.
3) Implementation is through state and local governments. Credit links subsidies are a central scheme while other components are centrally sponsored.
4) Affordability is
The document provides information about the Low Income Housing Tax Credit (LIHTC) program, including:
- It was established 28 years ago and has financed over 2.6 million affordable housing units, creating 95,000 jobs annually and raising $100 billion in equity capital.
- Each state receives tax credits based on its population that it awards competitively to affordable housing developments. Developers sell the credits to investors to raise equity capital.
- The program has been very successful, with a low foreclosure rate of 0.65%, and it creates safe, decent affordable housing while also stimulating local economies and job growth.
- However, the need for affordable housing still outpaces production, with a shortage of over 5
The document discusses resources for development in Bangladesh. It provides reference books on topics like constitutional law, economics, and Bangladesh studies. It discusses how procurement of internal resources is important for a country's development. Developed countries achieved growth based on their own resources. The document also discusses classification of resources, strategies to increase resource mobilization in public and private sectors, foreign aid, types and role of foreign aid in Bangladesh's economic development, and reasons for continued aid dependence. It provides an overview of topics related to resources and development in Bangladesh.
The presentation summarized the District of Columbia's approach to affordable and mixed-income housing. It discussed defining affordable housing, population growth driving the need for more units, tools used to finance development like tax incentives and the Housing Production Trust Fund, and innovative programs promoting mixed-use development and tenant ownership. Challenges included slow delivery of inclusionary zoning units due to the economy and lack of staff to monitor affordability requirements. Moving forward, the mayor committed $287 million in additional funding with a goal of producing 10,000 affordable units by 2020.
This document provides an overview of housing finance institutions in India. It discusses the National Housing Bank (NHB), which was established in 1987 as the principal agency to promote housing finance institutions. It also describes several major housing finance companies in India, including HDFC, LICHFL, and HUDCO, and outlines their objectives such as promoting home ownership, increasing funds to the housing sector, and providing long-term financing for housing construction. The document concludes by welcoming the reader and providing contact information for the author.
The document discusses India's debt market and reforms taken to develop it. It notes that the debt market is an important source of funds, especially for developing economies like India. It also discusses various reforms taken by the Reserve Bank of India and the government to promote liquidity, deepen the corporate bond market, and improve debt management. This includes setting up a Public Debt Management Agency, shifting regulation of government bonds from RBI to SEBI, allowing banks to hold corporate bonds long-term, and reviewing disclosure requirements. The goal is to better meet real sector needs, ensure financial stability, and develop new classes of investors in India's growing economy.
The document discusses the Pradhan Mantri Jan Dhan Yojana (PMJDY), a national financial inclusion mission launched in India in 2014. It aims to provide universal access to banking services like basic savings accounts, need-based credit, remittances and insurance. The key benefits of accounts under PMJDY include interest on deposits, accidental insurance of Rs. 1 lakh, no minimum balance requirement, life insurance of Rs. 30,000 and easy money transfers. Microfinance is also discussed as a tool to provide financial services like credit, savings and insurance to low-income households for self-employment and poverty alleviation. The evolution, key players and models of microfinance in India are outlined.
This document provides an overview of real estate markets and analysis. It discusses key concepts like the primary and secondary mortgage markets, government agencies that influence markets like Fannie Mae and Freddie Mac, and different types of real estate loans. The roles of money and interest rates are explained. Factors considered in underwriting like loan-to-value ratios and debt-to-income ratios are also summarized.
Capital formation is the process of increasing a country's capital assets through investments that boost productivity and economic development. It relies on domestic savings from households, businesses, and governments, as well as external resources like foreign aid. While capital is important, economic development also depends on other factors like education, government effectiveness, social attitudes, and human resources. Overall, capital formation is necessary but not sufficient for economic progress, which results from a complex interplay of social, cultural, political and economic conditions.
The IMF is an organization of 186 countries that works to promote global economic cooperation and monetary stability. It was established in 1944 with the goal of stabilizing exchange rates and rebuilding the international monetary system after World War II. The IMF is governed by its member countries and led by a Managing Director. It provides loans to countries experiencing economic crises or payment imbalances. India has benefited from IMF membership and assistance over the years.
Financial System and Economic Development.pptxjaheermuktharkp
The financial system plays an important role in a country's economic development in several key ways: 1) It facilitates the savings-investment relationship by inducing public savings and channeling those savings into productive investment. 2) It helps develop the capital market to provide fixed and working capital for businesses. 3) It enables governments to raise short-term and long-term funds through markets like bonds and securities. The financial system is crucial for infrastructure growth, trade development, employment growth, and attracting foreign capital - all of which spur economic development.
The document provides an overview of the housing finance sector in India. It discusses key trends such as higher mortgage penetration in urban areas and increasing urbanization. While mortgage rates are rising in cities, home ownership remains low. Several government initiatives such as the Pradhan Mantri Awas Yojna are expected to boost housing demand. New regulations around real estate may also improve the market. Financial data on selected housing finance companies shows most are profitable with high loan portfolios.
The document provides background information on the Rajasthan State Co-operative Bank Limited (RSCB).
1. RSCB was established in 1953 and serves as the apex institution for district central cooperative banks in Rajasthan.
2. It ensures governance of primary agricultural cooperatives and district central cooperative banks through a democratic election system.
3. Over its 50+ years, RSCB has grown significantly, with share capital increasing 700 times and reserves growing 19,000 times in that period.
This document discusses social cost benefit analysis (SCBA) and the UNIDO approach to SCBA. It is divided into several sections that cover: the rationale for SCBA including market imperfections, externalities, and taxes/subsidies; the UNIDO approach and its 5 stages; calculating net benefits using shadow pricing and choosing a numeraire; the concept of tradable goods; sources of shadow prices; and treatment of taxes in the analysis. The overall document provides an overview of how to conduct SCBA according to the UNIDO methodology.
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2. Housing – A Macro View 1
(in million)
1981
1991
2001
(Source: Census of India, 2001)
Growth Growth
of 1991 of 2001
over
over
1981
1991
(%)
(%)
Population
Rural
523.87
628.70
742.00
20.01
18.02
Urban
159.46
217.60
285.00
36.46
30.97
683.33
846.30
1027.0
0
23.85
21.35
113.96
142.98
177.50
25.47
24.14
22.53
30.58
35.36
---
---
Total
Census Houses
Rural
of which pucca
residential stock (in %)
3. Housing Finance - A Key Driver
for Economy
• It is a basic necessity, for an individual.
• supports economic activities, for a family / community.
• is a catalyst, for creating multiplier effect in other
sectors.
• is a labour intensive activity, for increasing the per
capita income.
• is an engine of growth, for the national economy
4. Housing Finance - A Key Driver for
Economy
• Strengthens the Financial System.
• Leads to Investment Demand.
• Increases the Assets Formation.
• Leads to Formation of Household Physical Assets.
• Serves the Social Cause.
• Key to Development of Human Settlement.
6. Reasons for growth of housing
finance in India
•
•
•
•
Liquidity in the System
Lower Inflation Rate
Softer Interest Rate Regime
Housing Loan has the Lowest Non Performing Assets
(NPAs)
•
•
•
•
•
Fiscal Concessions
Legal Reforms
Wider Network - Banks/Housing Finance Companies
Consumer Friendly Products/Approach
Increasing number of Real Estate Developers
8. Characteristics of housing finance
•
Long term finance with repayments
spread over 15-20 years
•
Most of the people prefer loan at fixed
interest rate.
•
The concept of variable interest rate is
slowly picking up with the expectation
of further southward movement of
interest rate.
9. Characteristics of housing finance
• Market is becoming very competitive after
the entry of banks in financial institutions
in retail lending.
• The spreads are declining the competition
and unless long term funds at reasonable
interest rates are made available, it would
be very difficult to maintain bottomline.
10. Housing shortage and resource
requirement
A. Housing shortage
•
India is a vast country with a population of over 1 billion
people. More than 50 million people are living in slums.
•
India has a current housing shortage of 22 million units
(both in rural and urban areas). It will increase to 42
million by the end of 9th five-year plan.
•
Rural areas are still neglected, both under
infrastructure and housing, resulting in shift towards
urban centres.
11. Housing shortage and resource
requirement
• India is far behind Asian Countries such as
Singapore, Hongkong, Malaysia, Bangkok,
Korea and China in fulfilling this basic human
need.
• These Countries made home ownership their
prime objective in the early 60's, gave stimulus
to the construction industry, made massive
investment in physical infrastructure.
12. Housing shortage and resource
requirement
B. Resources requirement
• It is difficult to make a correct assessment of
requirement of resources required to meet the huge
shortfall in India.
•
But the estimated requirement of resources for meeting
the existing shortfall is Rs. 150000 crores.
• Bulk of these resources will come from the formal sector
such as HFCs, Banks and FIs.
13. Housing loan market in India
• The size of mortgage loan market is relatively very small
compared to developed countries. Our estimated size of
mortgage loans with HFCs is about Rs. 32000 crores.
• In developed countries like UK and USA, the outstanding
mortgage loan to GDP is above 55%, Japan 33%, Korea
over 10%, in Malaysia over 20% and Hongkong over
30%.
• In India the ratio is just around 1.6%. After including
other indirect agencies like Govt. and institutions, the
percentage share will be less than 2%
14. Problems of long term finance in
India
• The mortgage loans are long term loans
for 15-20 years.
• In some countries such as Japan these
are also available for 25-30 years
• There are very limited options for
availability of funds for such a long period
and at a fixed interest rate.
15. Problems of long term finance in
India
• The long term Debt market has not so far
developed or stabilised in India.
• Most of the institutions are suffering from asset
liability mismatch and the consequences would
be felt when liabilities will mature for payment.
• The interest rate risk will be exposed once the
interest rates start moving northwards.
16. What is primary and secondary
market
• The primary market constitutes housing loan
companies (HFC’ s) and the borrower.
•
The (HFC’ s) hold the mortgages of a
borrower in their books.
• The participants in the secondary market are
specialised institution, to whom housing loan
mortgages are sold by (HFC’ s) at a market
determined interest rate.
17. What is primary and secondary
market
• These loans are sold in the market to interested
buyers in the form of mortgage backed
securities (MBS).
• These interested buyers could be insurance
companies, pension funds, mutual funds and
even individuals.
• By this process, the avenues for funds are
increased, there is a greater participation of
individuals and the housing finance company is
able to raise the long-term funds from the
secondary market.
18. Mortgage loan insurance
• In developed economies, the risk of default under
mortgage loans is covered under an Insurance Policy for
a nominal premium.
• As a result the Mortgage loans become risk free and
only 50% risk weight is allotted on Housing Loans, which
vastly improves Capital adequacy ratio.
• In India, in the absence of such Insurance cover, the risk
of non-payment/ failure exists to a larger extent and
hence the risk weight is 100%.
19. • Thanks to NHB, who want to introduce this Scheme by
starting a separate Subsidiary.
• The success of this Scheme will depend on the premium
rate.
• Indians are traditionally and emotionally attached to their
own house therefore, the default ratio is low.
• the recovery percentage is as high as 98 to 99%. Taking
this factor into consideration, RBI has now reduced the
Risk weight to 75% taking into account the good asset
quality.
20. The national housing bank
(amendment) Act, 2000
• The parliament passed the 'National
Housing Bank (Amendment) Act, 2000'
which has come into force from 16th June
2000.
• The need for a summary procedure was
long felt for housing finance institutions for
giving impetus for creation of 'Secondary
Mortgage Market'.
21. National Housing Bank
Profile
• The National Housing Bank (NHB) was established on
9th July 1988 under an Act of the Parliament viz. the
National Housing Bank Act, 1987 to function as a
principal agency to promote Housing Finance Institutions
and to provide financial and other support to such
institutions.
• The Act, inter alia, empowers NHB to:
• Issue directions to housing finance institutions to ensure
their growth on sound lines
22. National Housing Bank
Profile
• Make loans and advances and render any other
form of financial assistance to scheduled banks
and housing finance institutions or to any
authority established by or under any Central,
State or Provincial Act and engaged in slum
improvement and
• Formulate schemes for the purpose of
mobilization of resources and extension of credit
for housing
23. National Housing Bank
Objectives
•
NHB has been established to achieve, inter alia, the following
objectives:
•
a. To promote a sound, healthy, viable and cost effective housing
finance system to cater to all segments of the population and to
integrate the housing finance system with the overall financial
system.
•
b. To promote a network of dedicated housing finance institutions to
adequately serve various regions and different income groups.
•
c. To augment resources for the sector and canalize them for
housing.
24. National Housing Bank
Objectives
•
d. To make housing credit more affordable.
•
e. To regulate the activities of housing finance companies based on
regulatory and supervisory authority derived under the Act.
•
f. To encourage augmentation of supply of buildable land and also
building materials for housing and to upgrade the housing stock in
the country.
•
g. To encourage public agencies to emerge as facilitators and
suppliers of serviced land, for housing.
25. National Housing Bank
Business Activities
•
•
NHB, as the Apex level financial institution for the housing sector in
the country, performs the following roles:
(a) Promotion and Development:
•
NHB operates as a multifunctional Development Finance Institution
(DFI) for the housing sector.
•
The Bank's policies are directed towards promotion and
development of housing finance institutions. NHB has framed
guidelines for HFC’s with a view to promoting their development on
sound and healthy lines.
•
The guidelines are reviewed and modified from time to time in the
light of developments in the financial and housing sectors.
26. National Housing Bank
Business Activities
•
All HFC’ s registered with the National Housing Bank u/s 29A of the
National Housing Bank Act, 1987 and inter alia having minimum net
owned funds of Rs.10.0 crores are eligible for refinance support.
•
It has also contributed to the equity capital of five HFC’ s.
•
NHB has a dedicated Training Division which organizes regular
training programs in areas relating to housing and housing finance
for development of management capabilities of officials working in
the sector.
•
NHB‘ s promotional endeavors are also directed towards capacity
building for the housing finance system besides enlarging the credit
absorption capacity.
27. National Housing Bank
Business Activities
• (b) Regulation and Supervision:
• NHB exercises regulatory and supervisory authority over
the HFC’ s in the matter of acceptance of deposits by
them pursuant to the powers vested in it under the Act.
• As per the amendments to certain provisions of the Act,
which came into effect from June 12, 2000, NHB is
• vested with powers to grant Certificate of Registration to
companies for commencing/carrying on the business of
a housing finance institution.
28. National Housing Bank
Business Activities
• Besides, NHB regulates the deposit acceptance activities
in accordance with the Housing Finance Companies
(NHB) Directions, 2001, amended from time to time, in
the matter of ceiling on borrowings (including public
deposits, rate of interest, period, liquid assets, etc).
• NHB has also issued Directions on prudential norms in
regard to capital adequacy, asset classification,
concentration of credit, income recognition, provisioning
for bad and doubtful debts etc. NHB supervises the
working of HFCs through on-site inspection and off-site
surveillance.
29. National Housing Bank
Business Activities
• C. Finance
• NHB raises resources for the housing sector towards
increasing new housing stock and provides refinance to
a large set of retail lending institutions.
• These include scheduled commercial banks, scheduled
state cooperative banks, scheduled urban cooperative
banks, specialized housing finance institutions, apex cooperative housing finance societies and agriculture and
rural development banks.
30. National Housing Bank
Business Activities
• Refinance is provided by NHB under various schemes,
which are formulated taking into account, several
aspects of the National Housing Policy, the constraints
facing the sector etc.
• NHB has also a window for direct lending to Public
Agencies such as, State Level Housing Boards and Area
Development Authorities for large scale integrated
housing projects and slum redevelopment projects.
• NHB is also operating a special window for extending
financial assistance to the people affected by natural
calamities viz. earthquake, cyclone etc.
31. National Housing Bank
Business Activities
• (d) Resources of NHB
• NHB raises resources from diversified sources,
both domestic and external by issuing Bonds/
debentures, borrowing from RBI and financial
institutions/organizations etc.
• Under the Act, NHB is authorized to issue and
sell Bonds with or without the guarantee of the
Central Government for the purpose of carrying
on its functions.
32. National Housing Bank
Business Activities
• (e) Rural Housing:
• NHB launched the "Swarna Jayanti Rural
Housing Finance Scheme" to mark the golden
jubilee of India's Independence.
• The Scheme seeks to provide improved access
to housing loans to borrowers for
construction/acquisition/ up-gradation of a house
in rural areas of the country.
33. National Housing Bank
Business Activities
• (f) Recent Initiatives
• Securitization of mortgage loans of the retail lending
institutions facilitates for canalizing household savings
into the housing sector is seen as a potentially viable
market oriented alternative.
• Support to Mortgage backed securitization is a major
policy initiative of the Government as manifested in its
National Housing and Habitat Policy announced in 1998.
34. National Housing Bank
Business Activities
• This policy emphasizes NHB‘ s lead role in
mortgage-backed securitization and
development of a secondary mortgage market in
the country.
• As the apex body in housing finance sector in
India, NHB has been playing a lead role in the
sector in matters relating to policy environment
as also operational mechanism for the
development of a secondary mortgage market in
India.
35. National Housing Bank
Business Activities
• In order to resolve the twin problems of
affordability and accessibility affecting the
growth of the housing finance business and the
prospect of home ownership.
• NHB has been entrusted with the responsibility
of launching a Mortgage Credit Guarantee
Scheme for protecting the lenders against
default.
37. Venture capital
• In India, venture capital has been around for
some time now.
• The performance has been mixed.
• The fundamental principal underlying venture
capital fund is "No return without risk and
greater the risk, greater the return".
• Venture capital is a booster for new
entrepreneurs.
38. Venture capital
• A venture capital fund is a fund, which in
many ways is like mutual fund.
• It raises funds from several investors, who
generally have a large appetite for risk and
are looking out for greater returns.
39. Venture capital
• These funds are then invested in several
fledging enterprises, which need funds,
but are unable to access them through the
conventional sources such as banks and
financial institutions.
• Typically, such enterprises are started by
first generation entrepreneurs.
40. Venture capital
• Since most of the ventures financed through this route
are in new areas, the probability of their success is very
low.
•
The venture capitalist is however not worried because
the deal, which succeeds, nets a very high return on his
investments.
• The return generally comes in the form of selling the
stocks when they get listed on the stock exchange.
•
If the venture fails (more often then not), the entire
amount gets written off.
41. Venture capital
• Venture capital funding may be by way of investment in
the equity of the new enterprise or by way of debt or a
combination of both, though equity is the most preferred
route.
• To conclude, a venture financier is one who funds a start
up company, in most cases promoted by a first
generation technocrat promoter with equity.
• Exit is preferably through listing on stock exchanges.
42. Venture capital
• This method has been extremely successful in
USA, and venture funds have been credited with
the success of technology companies in Silicon
Valley.
• The entire computer industry thrives on it.
• One can ask why venture funding is so
successful in USA and has a not-so-impressive
track record in India.
43. Venture capital
• For any venture idea to succeed, there should
be a product which has a growing market with a
scalable business model.
• The IT industry (which is most suited for venture
funding because of its "ideas" nature) in India till
recently had a service centric business model.
• Products developed for Indian markets lack
scale.
44. Venture capital
• Also, till early 90s, under the license raj regime, only
commodity oriented businesses thrived in a deficit
situation.
• To fund a cement plant, venture capital is not needed.
What was needed was ability to get a license and then
get the project funded by the banks and DFI’s.
•
In most cases, the promoters were well established
industrial houses, with no apparent need for funds.
45. Venture capital funding in
India
• Traditionally, the role of venture capital was an
extension of the developmental financial
institutions like IDBI, ICICI, SIDBI, State Finance
Corporations, etc.
• TDICI (now ICICI ventures) and Gujarat Venture
were one of the first venture capital
organizations in India.
• Both these organizations were promoted by the
financial institutions.
46. Venture capital funding in
India
• However, it was realized that the concept of venture
capital funding needed to be institutionalized and
regulated.
• Besides this funding requires different skills in assessing
the proposal.
• Thus dedicated funds providing only venture capital
funds have been formed.
• The sources of these funds are normally the financial
institutions or foreign institutional investors or pension
funds and high net-worth individuals etc.
47. Venture capital funding in
India
• Though an attempt was also made to raise funds from
the public and fund new ventures.
•
Certain venture capital funds are industry specific (i.e.
they fund enterprises only in certain industries such as
pharmaceuticals, InfoTech or food processing, etc)
whereas others may have a much wider spectrum.
• Securities and Exchange Board of India (SEBI) has
come out with guidelines to which a venture capital fund
has to adhere in order to carry out its activities in India.
48. Venture capital funding in
India
• There are a number of funds which are currently
operational in India and involved in funding start-up
ventures.
•
Most of them are not true venture funds as they do not
fund start ups.
• What they do is provide mezzanine or bridge funding
and are better known as private equity players.
• This article aims to give a bird-eye’s view of the various
guidelines a venture fund has to adhere to in India.
49. Venture capital funding in
India
• In 1973, a committee on the development
of small and medium-sized enterprises
highlighted the need to foster venture
capital as a source of funding for new
entrepreneurs and technology.
50. Venture capital funding in
India
• Later, a study was undertaken by the World
Bank to examine the possibility of developing
venture capital in the private sector, based on
which the Indian government took a policy
initiative and announced guidelines for venture
capital funds (VCFs) in 1988.
• However, these guidelines restricted the setting
up of VCFs to the banks or the financial
institutions only.
51. Venture capital funding in
India
• Thereafter, some public sector funds were
established but the activity of venture
capital did not gather momentum as the
thrust was on high-technology projects
funded on a purely financial rather than a
holistic basis.
52. Venture capital funding in
India
• Internationally, the trend favored venture
capital being supplied by smaller-scale,
entrepreneurial venture financiers willing
to take a high risk in the expectation of
high returns, a trend that has continued in
this decade
53. Venture capital funding in
India
•
In September 1995 the Indian government issued guidelines for
overseas investments in venture capital in India.
•
For tax exemption purposes, the Central Board of Direct Taxes
(CBDT) issued guidelines.
•
The flow of investments and foreign currency in and out of India has
been governed by the Reserve Bank of India's (RBI) requirements.
•
Furthermore, as part of its mandate to regulate and to develop the
Indian capital markets, the Securities and Exchange Board of India
(SEBI) framed the SEBI (Venture Capital Funds) Regulations, 1996.
54. Objective and vision for venture
capital in India
• Venture capital is very different from traditional
sources of financing.
• Venture capitalists finance innovation and ideas,
which have a potential for high growth but with
inherent uncertainties.
• This makes it a high-risk, high-return investment.
Apart from finance, venture capitalists provide
networking, management and marketing support
as well.
55. Venture capital funding in
India
• In the broadest sense, therefore, venture
capital connotes human as well as
financial capital.
• In the global venture capital industry,
investors and investee firms work together
closely in an enabling environment that
allows entrepreneurs to focus on value
creating ideas
56. Venture capital funding in
India
• Venture capitalists, meanwhile, drive the
industry through ownership of the levers of
control in return for the provision of capital,
skills, information and complementary
resources.
• This very blend of risk financing and
handholding of entrepreneurs by venture
capitalists creates an environment particularly
suitable for knowledge and technology-based
enterprises
57. Venture capital funding in
India
• Scientific, technological and knowledge-based ideas properly supported by venture capital - can be propelled
into a powerful engine of economic growth and wealth
creation in a sustainable manner.
• In various developed and developing economies, venture
capital has played a significant developmental role.
India, along with Israel, Taiwan and the US, is
recognized for its globally competitive high technology
and human capital.
58. Venture capital funding in
India
• India's recent success story in software and IT is
almost a fairy tale when considering obstacles
such as inadequate infrastructure, expensive
hardware, restricted access to foreign skills and
capital, and limited domestic demand.
• It also indicates the potential India has in terms
of knowledge and technology-based industry.
59. Venture capital funding in
India
• India has the second largest English speaking
scientific and technical manpower in the world.
• Some of its management (IIMs) and technology
institutes (IITs) are known globally as centres of
excellence.
• Every year, over 115,000 engineers graduate
from government-run and private engineering
colleges.
60. Venture capital funding in
India
• Many also graduate with diploma courses
in computers and other technical areas.
Management institutes produce 40,000
management graduates annually.
• All of these candidates are potential
entrepreneurs.
61. • It is also important to recognise that while
India is doing very well in IT and software,
it is still behind in terms of product and
packaged development.
• Many experts believe that just as the US
did in the semiconductor industry in the
eighties, it is time for India to move to a
higher level in the value chain.
62. • This is not expected to happen automatically.
• The sequence of steps in the high technology
value chain is information, knowledge, ideas,
innovation, product development and marketing.
• Basically, India is still at the level of ‘knowledge'.
63. • Given the limited infrastructure, low foreign
investment and other transitional problems, it
certainly needs policy support to move to the
third stage - ie, ideas - and beyond, towards
innovation and product development.
• This is crucial for sustainable growth and for
maintaining India's competitive edge.
• This will take capital and other support, which
can be provided by venture capitalists.
64. Venture capital funding in
India
• India also has a vast pool of existing and ongoing scientific and technical research carried
out by a large number of research laboratories,
including defense laboratories as well as
universities and technical institutes.
• A suitable venture capital environment - which
includes incubation facilities - can help a great
deal in identifying and actualizing some of this
research into commercial production.
65. Venture capital funding in
India
• The development of a proper venture capital
industry, particularly in the Indian context, is
needed if high quality public offerings (IPO's) are
to be achieved.
• In the present situation, an individual investor
becomes a venture capitalist of a sort by
financing new enterprises and undertaking
unknown risks.
•
66. Venture capital funding in
India
• Investors also get enticed into public
offerings of unproven and at times
dubious quality.
• This situation can be corrected by
venture-backed successful enterprises
accessing the capital market.
• This will also protect smaller investors.
67. Income tax benefits
• In order to encourage the development of venture capital
funds, the Income Tax Act, 1961 exempts the income of
a venture capital fund from income tax.
• Income of a Venture Capital fund [section 10(23FB)] (on
and from Financial Year 1999-2000.
• Any income of a Venture Capital Fund ( VCF ) or a
Venture Capital Company ( VCC ) set up to raise funds
for investment in a Venture Capital Undertaking ( VCU )
is exempt.
68. Income tax benefits
• VCC means a company which has been granted
a certificate of registration by SEBI and which
fulfils the conditions laid down by SEBI with the
approval of the Central Government.
• VCF means a fund operating under a trust deed
registered under the Registration Act, 1908,
which has been granted a certificate of
registration by SEBI and which fulfils the
conditions laid down by SEBI with the approval
of the Central Government.
70. Definition
Merchant banking may be defined as, ‘an
institution which covers a wide range
of activities such as management of
customer
services,
portfolio
management,
credit
syndication,
acceptance
credit,
counselling,
insurance etc.
71. The Notification of the Ministry of Finance
defines a merchant banker as, “ any person
who is engaged in the business of issue
management either by making arrangements
regarding selling, buying or subscribing to
the securities as manager, consultant,
advisor or rendering corporate advisory
service
in
relation
to
such
issue
management.
72. • A merchant banker is a financial intermediary who
helps to transfer capital from those who possess it
to those who need it.
• Merchant banking includes a wide range of
activities such as management of customers
securities, portfolio management, project
counseling and appraisal, underwriting of shares
and debentures, loan syndication, acting as
banker for the refund orders, handling interest and
dividend warrants etc.
• Thus, a merchant banker renders a host of
services to corporate and merchant banker
promotes industrial development in the country.
73. Services of merchant banks:
• A merchant banker helps in the process of issue
management and his services are broadly
categorized as pre-issue management and post
issue management.
• The pre-issue management involves the
following:
• Ø Printing prospectus
• Ø Pricing of issues
• Ø Marketing the issue
• Ø Underwriting
• Ø Listing of securities in stock exchange
74. • Post issue management includes the
following:
• Ø Collection of application forms
• Ø Screening the applications
• Ø Deciding allotment procedure
• Ø Mailing of letter of allotment
• Ø Issue of share certificates
• Ø Refund of application money to nonallotters
75. • A merchant banker acts as a liasoning officer at
the event of mergers and acquisitions. He helps
the company in managing its portfolio. A
merchant banker help their clients in off shore
financing such as long term foreign currency
loans, joint ventures abroad, licensing and
franchising, financing exports and imports,
foreign collaboration arrangements etc
76. • The services of Merchant bankers also include
investment advisory to Non-Resident Indians in
terms of identification of investment
opportunities, selection of securities, investment
management etc. They also take care of the
operational details like purchase and sale of
securities, securing necessary clearance from
RBI.
78. • A credit card is a thin plastic card, with a
magnetic strip usually 3-1/8 inches by 2-1/8
inches in size that contains identification
information such as a signature or picture, and
authorizes the person named on it to charge
purchases or services to his account -- charges
for which he will be billed periodically.
• Today, the information on the card is read by:
automated teller machines (ATMs), store
readers, and bank and Internet computers.
79. Who invented credit cards?
• A credit card is an automatic way of offering
credit to a consumer.
• Credit is a method of selling goods or services
without the buyer having cash in hand.
• A credit card is only an automatic way of
offering credit to a consumer.
• Today, every credit card carries an identifying
number that speeds shopping transactions.
80. • Imagine what a credit purchase would be like
without it, the sales person would have to record
your identity, billing address, and terms of
repayment.
• According to Encyclopedia Britannica, "the use
of credit cards originated in the United States
during the 1920s, when individual firms, such as
oil companies and hotel chains, began issuing
them to customers."
81. • However, references to credit cards have
been made as far back as 1890 in Europe.
• Early credit cards involved sales directly
between the merchant offering the credit
and credit card, and that merchant's
customer.
82. • Around 1938, companies started to accept
each other's cards.
• Today, credit cards allow you to make
purchases with countless third parties.
83. The shape of credit cards
• Credit cards were not always been made
of plastic.
• There have been credit tokens made from
metal coins, metal plates, and celluloid,
metal, fiber, paper, and now mostly plastic
cards.
84. First bank credit card
• The inventor of the first bank issued credit card
was John Biggins of the Flatbush National Bank
of Brooklyn in New York.
• In 1946, Biggins invented the "Charge-It"
program between bank customers and local
merchants.
• Merchants could deposit sales slips into the
bank and the bank billed the customer who used
the card.
85. Diners club credit card
• In 1950, the Diners Club issued their credit card in the
United States.
• The Diners Club credit card was invented by Diners'
Club founder Frank McNamara and it was intended to
pay restaurant bills.
• A customer could eat without cash at any restaurant that
would accept Diners' Club credit cards.
• Diners' Club would pay the restaurant and the credit card
holder would repay Diners' Club.
86. • The Diners Club card was at first technically a
charge card rather than a credit card since the
customer had to repay the entire amount when
billed by Diners Club.
• American Express issued their first credit card in
1958.
• Bank of America issued the BankAmericard
(now Visa) bank credit card later in 1958.
87. Popularity of credit cards
• Credit cards were first promoted to traveling
salesmen (more common in that era) for use on
the road.
• By the early 1960s, more companies offered
credit cards, advertising them as a time-saving
device rather than a form of credit.
• American Express and MasterCard became
huge successes overnight.
88. • By the mid-'70s, the U.S. Congress begin
regulating the credit card industry by
banning such practices as the mass
mailing of active credit cards to those who
had not requested them.
• However, not all regulations have been as
consumer friendly.
89. • In 1996, the U.S. Supreme Court in Smiley
vs. Citibank lifted restrictions on the
amount of late penalty fees a credit card
company could charge.
• Deregulation has also allowed very high
interest rates to be charged.
90. Understanding credit cards
• Credit Card – A credit card is a financial
instrument, which can be used more than once
to borrow money or buy products and services
on credit. Banks, retail stores and other
businesses generally issue these.
• Credit limit – The maximum amount of charges
a cardholder may apply to the account.
91. • Annual fee – A bank charge for use of a credit card
levied each year, which ranges depending upon the type
of card one possesses. Banks usually take an initial fixed
amount in the first year and then a lower amount as
yearly renewal fees.
• Revolving Line Of Credit - An agreement to lend a
specific amount to a borrower and to allow that amount
to be borrowed again once it has been repaid. Most
credit cards offer revolving credit.
92. • Personal Identification Number (PIN) - As a
security measure, some cards require a number
to be punched into a keypad before a
transaction can be completed. The number can
usually be changed by the cardholder.
• Teaser Rate - Often called the introductory rate,
it is the below-market interest rate offered to new
customers to switch credit cards.
93. • Joint Credit - Issued to a couple based
on both of their assets, incomes and credit
reports. It generally results in a higher
credit limit, but makes both parties
responsible for repaying the debt.
94. Types of cards
• MasterCard – Master Card is a product of MasterCard
International and along with VISA are distributed by
financial institutions around the world.
• Cardholders borrow money against a line of credit and
pay it back with interest if the balance is carried over
from month to month.
• Its products are issued by 23,000 financial institutions in
220 countries and territories.
•
cards in circulation, whose users spent $650 billion in
more than 16.2 million locations.
95. • VISA Card – VISA cards is a product of VISA USA and
along with MasterCard is distributed by financial
institutions around the world.
•
A VISA cardholder borrows money against a credit line
and repays the money with interest if the balance is
carried over from month to month in a revolving line of
credit.
• Nearly 600 million cards carry one of the VISA brands
and more than 14 million locations accept VISA cards.
96. • Affinity Cards - A card offered by two
organizations, one a lending institution, the other
a non-financial group.
• Schools, non-profit groups, pro wrestlers,
popular singers and airlines are among those
featured on affinity cards.
• Usually, use of the card entitles holders to
special discounts or deals from the non-financial
group.
97. • Classic Card – Brand name for the
standard card issued by VISA.
• Gold Card/Executive Card – A credit
card that offers a higher line of credit than
a standard card. Income eligibility is also
higher.
• In addition, issuers provide extra perks or
incentives to cardholders.
98. • Standard Card – It is the most basic card
offered by issuers.
• Platinum Card – A credit card with a
higher limit and additional perks than a
gold card.
99. • Titanium Card – A card with an even higher
limit than a platinum card.
• Secured Card – A credit card that a cardholder
secures with a savings deposit to ensure
payment of the outstanding balance if the
cardholder defaults on payments.
• It is used by people new to credit, or people
trying to rebuild their poor credit ratings.
100. • Smart Card – Smart cards, sometimes called chip
cards, contain a computer chip embedded in the plastic.
•
Where a typical credit card's magnetic stripe can hold
only a few dozen characters, smart cards are now
available with 16K of memory.
• When read by a special terminals, the cards can perform
a number of functions or access data stored in the chip.
• These cards can be used as cash cards or as credit
cards with a preset credit limit, or used as ID cards with
stored-in passwords.
101. • Charge Card – Falls between a debit and credit
card. Works like the latter and you don't have to
be an accountholder.
• Just pay up in full when the bill arrives with the
mail.
• No outstanding are allowed, in other words, no
revolving credit facility either.
• American Express and Diners are providers.
102. • Rebate Card – This is a card that allows
the customer to accumulate cash,
merchandise or services based on card
usage.
103. • Cash Card – Cash cards, similar to pre-paid
phone cards, contain a set amount of value,
which can be read by a special cash card
reader.
• Participating retailers will use the reader to debit
the card in increments until the value is gone.
• The cards are like cash -- they have no built-in
security, so if lost or stolen, they can be used by
anyone.
104. • Travel Card – These work mostly as debit
cards for the limited purpose of travel.
• Citibank Dollar Card, American Express,
Bobcard Global and Hongbank Bank
Thomas Cook International Card are
among the players in this section.
105. • Debit Card – It is the accountholder's mobile ATM.
• Open an account with a bank that offers a debit card,
and payments for purchases are deducted from your
bank account.
• The retailer swipes the card over an electronic terminal
at his outlet, you enter the personal identification number
on a PIN pad and the money is immediately debited at
the bank.
• Citibank and a few domestic banks like Times Bank offer
this.
106. Cost implications for the banks
•
•
Credit card issuers (banks) have several types of costs:
Interest Expenses.
•
Banks generally borrow the money that they then lend to their
customers.
•
As they receive very low-interest loans from other firms, they may
borrow as much as their customers require, while lending their
capital to other borrowers at higher rates.
•
If the card issuer charges 15% on money lent to users, and pays 5%
on that same amount, they are essentially making 10% on the loan.
•
This 5% difference is the "interest expense."
107. • Operating Costs.
• This is the cost of running the credit card portfolio,
including everything from paying the executives who run
the company and their secretaries to printing the plastics
to mailing the statements to running the computers that
keep track of every cardholder's balance to taking the
many phone calls which cardholders place to their issuer
to tracking down fraud rings to protect the customers.
• The expenses involved in taking phone calls from
customers are usually the greatest of these categories.
108. •
Charge Offs.
•
Some customers never pay their credit card bill.
•
In any given year, anywhere from 4% to 9% of the money that a
bank lends to its credit card customers will never be repaid.
•
Some credit card issuers have had various troubles and seen this
number rise to over 20%.
•
As this number climbs or becomes erratic, officials from the Federal
Reserve take a close look at the finances of the bank and may
impose various operating strictures on the bank, and in the most
extreme cases, may close the bank entirely.
109. • Rewards Costs.
• Many credit card customers receive rewards, such as
airline miles or cash back, as an incentive to use the
card.
• Rewards are generally tied to spending money on the
card, which may or may not include balance transfers,
cash advances, or other special uses.
• These rewards rarely cost credit card issuers less than
0.25% or more than 2%, and in fact will usually run in the
0.5% to 1% range, as a percentage of purchases.
110. •
Fraud costs.
•
Where a card is stolen, or an unauthorized duplicate made, a most
card issuers will refund some or all of the charges that the customer
would have otherwise received, for things they didn't buy.
•
These refunds will in some cases be at the expense of the
merchant, especially in mail order cases where the merchant cannot
claim sight of the card, but in other cases, these costs must be
borne by the card issuer.
•
The cost of fraud is high; in the UK in 2004 it was over £500 million.
111. •
Offsetting those costs are the following revenues:
•
Interchange fees.
•
Interchange fees are charged by the merchant's acquirer to a cardaccepting merchant as component of the so-called merchant discount fee.
•
The merchant pays a merchant discount fee that is typically 2 to 3 percent
(this is negotiated, but will vary not only from merchant to merchant, but also
from card to card, with business cards and rewards cards generally costing
the merchants more to process), which is why some merchants prefer cash,
debit cards, or even checks.
•
The majority of this fee, called the interchange fee, goes to the issuing
bank, but parts of it go to the processing network, the card brand (American
Express, Visa, MasterCard, etc.), and the merchant's acquirer.
112. •
The interchange fee that applies to a particular merchant is a
function of many variables including the type of merchant, the
merchant's average ticket dollar amount, whether the cards are
physically present, if the card's magnetic stripe is read or if the
transaction is hand-keyed, the specific type of card, when the
transaction is settled, the authorized and settled transaction
amounts, etc.
•
For a typical credit card issuer, interchange fee revenues may
represent about fifteen percent of total revenues, but this will vary
greatly with the type of customers represented in their portfolio.
•
Customers who carry high balances will have low interchange
revenues, while customers who use their cards for business and
spend hundreds of thousands of dollars a year on their cards will
have very healthy interchange revenues.
113. •
Charging interest on outstanding balances.
•
Customers who do not pay in full the amount owed on their monthly
statement (the "balance") by the due date (that is, at the end of the
"grace period") owe interest ("finance charges").
•
These customers are known in the industry as "revolvers". Those
who pay in full (pay the entire balance) do not.
•
These customers are known in the industry as "transactors" or
"convenience users".
•
Interest charges vary widely from card issuer to card issuer.
114. •
Fees charged to customers.
•
The major fees are for:
•
(1) late payments;
•
(2) charges that result in exceeding the credit limit on the card (whether
done deliberately or by mistake);
•
(3) Returned check fees or payment processing fees (eg phone payment
fee);
•
(4) cash advances and convenience checks (often 3 percent of the amount);
•
115. • (5) transactions in a foreign currency (as much as 3
percent of the amount; a few financial institutions
charge no fee for this -- it is worth noting as an aside
that the credit card issuer charges a fee on top of
the international bank rate when converting
currency, which in most circumstances is a better
rate than is available elsewhere, even with the fee
added on); and
(6) membership fees (annual or monthly), sometimes
a percentage of the credit limit.