This document discusses micro equity finance as a potential financial product for small and micro enterprises in India. It notes that over 90% of Indian establishments currently have limited sources of financing beyond self-finance or loans. Micro equity finance could help more establishments access capital market financing through a structured process where financiers gradually decrease their equity stake in customer enterprises over time as the customers buy back shares periodically. This would help customers eventually take full ownership of the capital in their enterprises while providing a new financing option accessible to more small businesses. The document outlines the proposed process, stages, and precautions for implementing micro equity finance through MFIs and banks.
This document discusses leasing, which allows one party to use an asset owned by another party. There are two main types of leases: operating/service leases and financial/net leases. Operating leases provide maintenance services while financial leases do not. Leasing offers advantages over ownership like facilitating asset acquisition and improving financial position, but parties must consider tax and ownership implications.
This document discusses commodity markets and futures trading. It begins with an introduction to commodity derivatives and their history. It then covers the evolution of commodity markets from early civilizations to modern organized exchanges around the world and in India. The main commodities traded are described as well as the advantages and disadvantages of commodity futures. Examples of commodity futures spreads and exchanges in India are provided before concluding with a discussion of how commodity exchanges have developed over time.
This document provides an overview of the Indian money market, including its meaning, key features, instruments, and recent developments. It discusses the structure and components of the Indian money market, such as the call money market, commercial bills market, acceptance market, and treasury bill market. It also outlines some features and deficiencies of the Indian money market, such as the existence of unorganized sectors, absence of integration, and limited instruments. Recent developments that have helped strengthen the Indian money market are also summarized, such as the integration of organized and unorganized sectors, introduction of new instruments, and establishment of organizations to support the market.
The document discusses stock exchanges in India. It defines a stock exchange as a market where existing securities are traded and outlines some key stock exchanges in India like Bombay Stock Exchange. It describes the functions of stock exchanges like providing liquidity and safety for investors. The document also discusses concepts like listing of securities on an exchange, online trading systems, demat accounts, and the roles of different participants in stock trading like brokers and speculators.
Clearing and settlement involves matching trades, determining obligations, and exchanging securities for cash. It is facilitated by clearing members, clearing banks, depositories, and the clearing corporation. Key risks include counterparty default and liquidity issues. The clearing corporation manages these risks through activities like trade confirmation, multilateral netting to determine obligations, collecting margins, and imposing limits. It acts as the central counterparty to assume default risk and ensure settlement is completed as required by market rules.
Interest Rate Swap Valuation Introduction and Practical GuideDmitryPopov47
An interest rate swap is an agreement between two parties to exchange future interest rate payments over a set period of time. It consists of a series of payment periods, called swaplets. The most popular form of interest rate swaps is the vanilla swaps that involve the exchange of a fixed interest rate for a floating rate, or vice versa. There are two legs associated with each party: a fixed leg and a floating leg. Swaps are OTC derivatives that bear counterparty credit risk beside interest rate risk.
Interest rate swaps are the most popular OTC derivatives that are generally used to manage exposure to fluctuations in interest rates. Swaps can be also used to obtain a marginally lower interest rate. Thus they are often utilized by a firm that can borrow money easily at one type of interest rate but prefers a different type. They also allow investors to adjust interest rate exposure and offset interest rate risks. Speculators use swaps to speculate on the movement of interest rates. More and more swaps are cleared through central counterparties nowadays (CCPs). This presentation gives an overview of interest rate swap product and valuation model.
Commodity exchanges allow traders to buy and sell commodities and commodity derivatives like futures contracts. They provide a standardized marketplace where prices are set and trading rules established. The major commodity exchanges in India are the National Commodity and Derivatives Exchange, Multi Commodity Exchange of India, and National Multi Commodity Exchange of India which trade agricultural commodities and other raw materials.
Financial markets facilitate the buying and selling of financial instruments between savers and investors. They act as intermediaries that allow households to deposit surplus funds with banks or purchase securities from businesses, and allow businesses to access funds from households. Financial markets have several key functions, including mobilizing savings, facilitating price discovery, providing liquidity to financial assets, and reducing transaction costs. The major financial markets in India are the money market, stock market, and bond market. The money market deals in short-term debt instruments with maturities of up to one year and includes sub-markets for call money, treasury bills, commercial paper, and certificates of deposit.
This document discusses leasing, which allows one party to use an asset owned by another party. There are two main types of leases: operating/service leases and financial/net leases. Operating leases provide maintenance services while financial leases do not. Leasing offers advantages over ownership like facilitating asset acquisition and improving financial position, but parties must consider tax and ownership implications.
This document discusses commodity markets and futures trading. It begins with an introduction to commodity derivatives and their history. It then covers the evolution of commodity markets from early civilizations to modern organized exchanges around the world and in India. The main commodities traded are described as well as the advantages and disadvantages of commodity futures. Examples of commodity futures spreads and exchanges in India are provided before concluding with a discussion of how commodity exchanges have developed over time.
This document provides an overview of the Indian money market, including its meaning, key features, instruments, and recent developments. It discusses the structure and components of the Indian money market, such as the call money market, commercial bills market, acceptance market, and treasury bill market. It also outlines some features and deficiencies of the Indian money market, such as the existence of unorganized sectors, absence of integration, and limited instruments. Recent developments that have helped strengthen the Indian money market are also summarized, such as the integration of organized and unorganized sectors, introduction of new instruments, and establishment of organizations to support the market.
The document discusses stock exchanges in India. It defines a stock exchange as a market where existing securities are traded and outlines some key stock exchanges in India like Bombay Stock Exchange. It describes the functions of stock exchanges like providing liquidity and safety for investors. The document also discusses concepts like listing of securities on an exchange, online trading systems, demat accounts, and the roles of different participants in stock trading like brokers and speculators.
Clearing and settlement involves matching trades, determining obligations, and exchanging securities for cash. It is facilitated by clearing members, clearing banks, depositories, and the clearing corporation. Key risks include counterparty default and liquidity issues. The clearing corporation manages these risks through activities like trade confirmation, multilateral netting to determine obligations, collecting margins, and imposing limits. It acts as the central counterparty to assume default risk and ensure settlement is completed as required by market rules.
Interest Rate Swap Valuation Introduction and Practical GuideDmitryPopov47
An interest rate swap is an agreement between two parties to exchange future interest rate payments over a set period of time. It consists of a series of payment periods, called swaplets. The most popular form of interest rate swaps is the vanilla swaps that involve the exchange of a fixed interest rate for a floating rate, or vice versa. There are two legs associated with each party: a fixed leg and a floating leg. Swaps are OTC derivatives that bear counterparty credit risk beside interest rate risk.
Interest rate swaps are the most popular OTC derivatives that are generally used to manage exposure to fluctuations in interest rates. Swaps can be also used to obtain a marginally lower interest rate. Thus they are often utilized by a firm that can borrow money easily at one type of interest rate but prefers a different type. They also allow investors to adjust interest rate exposure and offset interest rate risks. Speculators use swaps to speculate on the movement of interest rates. More and more swaps are cleared through central counterparties nowadays (CCPs). This presentation gives an overview of interest rate swap product and valuation model.
Commodity exchanges allow traders to buy and sell commodities and commodity derivatives like futures contracts. They provide a standardized marketplace where prices are set and trading rules established. The major commodity exchanges in India are the National Commodity and Derivatives Exchange, Multi Commodity Exchange of India, and National Multi Commodity Exchange of India which trade agricultural commodities and other raw materials.
Financial markets facilitate the buying and selling of financial instruments between savers and investors. They act as intermediaries that allow households to deposit surplus funds with banks or purchase securities from businesses, and allow businesses to access funds from households. Financial markets have several key functions, including mobilizing savings, facilitating price discovery, providing liquidity to financial assets, and reducing transaction costs. The major financial markets in India are the money market, stock market, and bond market. The money market deals in short-term debt instruments with maturities of up to one year and includes sub-markets for call money, treasury bills, commercial paper, and certificates of deposit.
Treasury operations in banks involve managing investments, foreign exchange transactions, derivatives trading, and funds management. This includes maintaining statutory liquidity and cash reserve ratios, deploying surplus funds, hedging risks, and trading in financial markets. Key functions of the treasury division are investments in securities, currency trading, derivatives trading like swaps and options, and funds management activities. The treasury aims to meet regulatory requirements, earn profits, and mitigate risks through its operations.
Trading has changed from local to global and so have the processes from paper to Online. The result is change in process from T+3 to T+1 and real time trading and settlement of a trade.
Stock brokers in the secondary market facilitate trading of securities on the stock exchange by acting as an intermediary between buyers and sellers, charging a brokerage fee. They execute orders for clients, maintain records of trades and settle transactions. Brokers may also provide investment advice, research reports, and other services to help investors make informed decisions.
This document provides an introduction to options, including the different types (calls and puts), how they work, key terminology, and factors that influence pricing. An option gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price on or before expiration. The buyer pays a premium to the seller for this right. Key terms discussed include strike price, expiration date, and long/short positions. Factors like time to expiration, volatility, and interest rates impact an option's price. The Black-Scholes model is commonly used to price options based on these variables.
This document summarizes regulations for merchant banking in India according to SEBI guidelines. Merchant bankers require authorization from SEBI to operate and are classified into four categories based on activities and minimum net worth requirements ranging from Rs. 1 crore to no minimum. SEBI guidelines require merchant bankers to meet qualifications, infrastructure standards, and maintain records and financial statements. Merchant bankers are prohibited from insider trading and SEBI can inspect records and suspend or cancel authorizations for violations. In conclusion, the role of merchant bankers is defined differently in various countries, and in India their scope is limited to capital market activities.
This document discusses various types of financial services including leasing, hire purchase, and venture capital. It provides details on:
- The process of leasing, including the steps and types (finance lease, operating lease, sale and leaseback).
- How hire purchase works, including terms, process, and features.
- The meaning of venture capital, how it provides funding to startups and small businesses, and characteristics like long time horizon and equity participation.
- The development of venture capital in India, including the first VCFs established and rules/regulations from SEBI and the Indian Venture Capital and Private Equity Association.
Speculators - Meaning, Types, Speculative Transactions, Advantages and Limita...RajaKrishnan M
This document discusses speculation and speculators. It defines speculation as attempting to profit from anticipated price movements rather than long-term investment. There are four types of speculators: bulls anticipate price rises; bears anticipate declines; stags cautiously invest in new issues; lame ducks struggle when unable to meet commitments. Speculative transactions include options, margin trading, arbitrage, wash sales, and cornering/rigging markets. Speculation provides liquidity and risk-bearing but can also cause bubbles and volatility.
The document discusses various types of orders that can be placed for trading stocks, including:
1) Market orders that are executed immediately at the current market price;
2) Price-contingent orders like limit orders that are executed only if a stock reaches a specified price, and stop orders that are executed if a stock falls below or rises above a price limit.
It provides examples of limit buy and sell orders, as well as stop-loss and stop-buy orders, and explains how these conditional orders work. A matrix is also included that organizes the different types of trades based on the price condition and trading action.
Derivatives are financial instruments whose value is derived from an underlying asset such as commodities, currencies, bonds or stocks. Forwards and futures are types of derivatives that allow parties to lock in prices for assets that will be delivered or settled for in the future. Forwards are private, bilateral contracts while futures are standardized contracts traded on an exchange with clearing houses that act as intermediaries, reducing counterparty risk. Key differences between forwards and futures include their level of standardization, margin requirements, market liquidity and mode of delivery or settlement.
This document provides an overview of financial markets. It discusses what finance is, the components of the financial system like markets and intermediaries, and how capital is transferred from savers to borrowers through direct markets and intermediaries. It also describes the importance of well-functioning financial markets for economic growth. Finally, it outlines the main types of financial markets like money markets, capital markets, primary and secondary markets, spot and derivatives markets.
- The document provides an overview of mutual funds including their concept, workings, history, structure, types, and regulations in India.
- Mutual funds pool money from investors and invest it professionally in securities like stocks and bonds. They provide investors diversification, professional management, and low costs.
- The mutual fund industry in India has grown significantly since the 1990s and is now regulated by SEBI. Key entities involved include sponsors, trustees, asset management companies, and custodians.
- Mutual funds can be categorized by structure (open-ended or closed-ended), investment objective (growth, income, balanced), or type (equity, debt, liquid/money market funds). Regulations govern
Financial services refer to services provided by the finance industry, including banks, credit card companies, insurance companies, brokerages, and investment funds. These institutions offer products and services like loans, insurance, credit cards, investment opportunities, money management, and market information. Financial services play important roles in facilitating economic transactions, mobilizing savings, allocating capital, monitoring managers, and transforming risk. They also help people better manage their finances and make investments.
A swap is an agreement between two counterparties to exchange cash flow streams, such as interest payments or currencies. The main types of swaps discussed are interest rate swaps, currency swaps, and forex swaps. An interest rate swap involves exchanging interest payments, such as a fixed rate for a floating rate. A currency swap exchanges principal and interest payments in different currencies. A forex swap is an agreement to buy one currency now and sell it back in the future at an agreed upon exchange rate.
The 5 step investment process involves:
1) Understanding the client's needs, risk tolerance, and goals to set a benchmark.
2) Deciding on an asset allocation across classes like fixed income, equity and real estate based on macro conditions.
3) Selecting a portfolio strategy that conforms to the client's investment policies and objectives.
4) Choosing specific assets within each class like individual stocks and bonds.
5) Evaluating the portfolio's performance against its benchmark to determine if the client's objectives are being achieved.
Integrated treasury management in banksSahas Patil
This document discusses integrated treasury management in banks. It describes the functions of a bank's treasury, including reserve management, liquidity management, risk management, and derivatives trading. It outlines the structure of an integrated treasury with front, middle, and back offices. It discusses various money market instruments in India like treasury bills, commercial papers, certificates of deposit, repos, and the Liquidity Adjustment Facility operated by the RBI. Maintaining an integrated treasury allows banks to improve profitability, manage risk, and utilize funds more efficiently.
As you may be aware, life expectancy of individuals has increased; which brings with it rise in medical and living costs during old age. Therefore, it is imperative to make provision for expenses wisely. All of us want to maintain our standard of living during our old age as well, but to do so we need to actually start thinking and planning for our retirement right from the beginning of our career when we are young. This ppt aims to help you understand how you can identify and establish your financial goals.
The document describes various types of financial assets including money market securities like treasury bills, commercial paper, repurchase agreements, and bankers' acceptances. It also discusses fixed income securities like bonds and their characteristics. Additionally, it covers equity securities such as preferred stock, income trusts, and common stock. The document also briefly outlines derivative securities including options and futures.
The document discusses various aspects of securities markets and financial markets. It describes the key components and participants in primary and secondary markets. The primary market, also called the new issue market, deals with the initial sale of new securities to investors. Major functions of the primary market include origination, underwriting, and distribution of new securities issues. Common methods to float new issues include public issues, rights issues, and private placements. The secondary market provides for the trading of previously-issued securities among investors.
Venture capital is a form of financing provided to startup companies and small businesses that are deemed to have high growth potential. It allows entrepreneurs to focus on developing and growing their businesses in the initial phases without having to generate cash flows or profits. Venture capital is typically invested in companies in exchange for equity in the companies. Venture capital funding is available in different stages from seed funding to later expansion stages. While venture capital provides benefits like expertise and funding, it also involves risks and giving up some control for the entrepreneurs. The top industries attracting venture capital in India include IT/ITES, energy, manufacturing, financial services and healthcare. Cities like Mumbai, Bangalore, Delhi, Chennai and Hyderabad attract most of
The document discusses various alternative funding sources for entrepreneurs and startups beyond traditional loans. It outlines options such as crowdfunding, incubators/accelerators, convertible notes, equity funding, grants and subsidies from government organizations, venture capital, angel investing, royalty financing, leasing equipment, and viability gap funding. Specific Indian government programs to support startups are also described, including funds set up by SIDBI and other state governments.
Treasury operations in banks involve managing investments, foreign exchange transactions, derivatives trading, and funds management. This includes maintaining statutory liquidity and cash reserve ratios, deploying surplus funds, hedging risks, and trading in financial markets. Key functions of the treasury division are investments in securities, currency trading, derivatives trading like swaps and options, and funds management activities. The treasury aims to meet regulatory requirements, earn profits, and mitigate risks through its operations.
Trading has changed from local to global and so have the processes from paper to Online. The result is change in process from T+3 to T+1 and real time trading and settlement of a trade.
Stock brokers in the secondary market facilitate trading of securities on the stock exchange by acting as an intermediary between buyers and sellers, charging a brokerage fee. They execute orders for clients, maintain records of trades and settle transactions. Brokers may also provide investment advice, research reports, and other services to help investors make informed decisions.
This document provides an introduction to options, including the different types (calls and puts), how they work, key terminology, and factors that influence pricing. An option gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price on or before expiration. The buyer pays a premium to the seller for this right. Key terms discussed include strike price, expiration date, and long/short positions. Factors like time to expiration, volatility, and interest rates impact an option's price. The Black-Scholes model is commonly used to price options based on these variables.
This document summarizes regulations for merchant banking in India according to SEBI guidelines. Merchant bankers require authorization from SEBI to operate and are classified into four categories based on activities and minimum net worth requirements ranging from Rs. 1 crore to no minimum. SEBI guidelines require merchant bankers to meet qualifications, infrastructure standards, and maintain records and financial statements. Merchant bankers are prohibited from insider trading and SEBI can inspect records and suspend or cancel authorizations for violations. In conclusion, the role of merchant bankers is defined differently in various countries, and in India their scope is limited to capital market activities.
This document discusses various types of financial services including leasing, hire purchase, and venture capital. It provides details on:
- The process of leasing, including the steps and types (finance lease, operating lease, sale and leaseback).
- How hire purchase works, including terms, process, and features.
- The meaning of venture capital, how it provides funding to startups and small businesses, and characteristics like long time horizon and equity participation.
- The development of venture capital in India, including the first VCFs established and rules/regulations from SEBI and the Indian Venture Capital and Private Equity Association.
Speculators - Meaning, Types, Speculative Transactions, Advantages and Limita...RajaKrishnan M
This document discusses speculation and speculators. It defines speculation as attempting to profit from anticipated price movements rather than long-term investment. There are four types of speculators: bulls anticipate price rises; bears anticipate declines; stags cautiously invest in new issues; lame ducks struggle when unable to meet commitments. Speculative transactions include options, margin trading, arbitrage, wash sales, and cornering/rigging markets. Speculation provides liquidity and risk-bearing but can also cause bubbles and volatility.
The document discusses various types of orders that can be placed for trading stocks, including:
1) Market orders that are executed immediately at the current market price;
2) Price-contingent orders like limit orders that are executed only if a stock reaches a specified price, and stop orders that are executed if a stock falls below or rises above a price limit.
It provides examples of limit buy and sell orders, as well as stop-loss and stop-buy orders, and explains how these conditional orders work. A matrix is also included that organizes the different types of trades based on the price condition and trading action.
Derivatives are financial instruments whose value is derived from an underlying asset such as commodities, currencies, bonds or stocks. Forwards and futures are types of derivatives that allow parties to lock in prices for assets that will be delivered or settled for in the future. Forwards are private, bilateral contracts while futures are standardized contracts traded on an exchange with clearing houses that act as intermediaries, reducing counterparty risk. Key differences between forwards and futures include their level of standardization, margin requirements, market liquidity and mode of delivery or settlement.
This document provides an overview of financial markets. It discusses what finance is, the components of the financial system like markets and intermediaries, and how capital is transferred from savers to borrowers through direct markets and intermediaries. It also describes the importance of well-functioning financial markets for economic growth. Finally, it outlines the main types of financial markets like money markets, capital markets, primary and secondary markets, spot and derivatives markets.
- The document provides an overview of mutual funds including their concept, workings, history, structure, types, and regulations in India.
- Mutual funds pool money from investors and invest it professionally in securities like stocks and bonds. They provide investors diversification, professional management, and low costs.
- The mutual fund industry in India has grown significantly since the 1990s and is now regulated by SEBI. Key entities involved include sponsors, trustees, asset management companies, and custodians.
- Mutual funds can be categorized by structure (open-ended or closed-ended), investment objective (growth, income, balanced), or type (equity, debt, liquid/money market funds). Regulations govern
Financial services refer to services provided by the finance industry, including banks, credit card companies, insurance companies, brokerages, and investment funds. These institutions offer products and services like loans, insurance, credit cards, investment opportunities, money management, and market information. Financial services play important roles in facilitating economic transactions, mobilizing savings, allocating capital, monitoring managers, and transforming risk. They also help people better manage their finances and make investments.
A swap is an agreement between two counterparties to exchange cash flow streams, such as interest payments or currencies. The main types of swaps discussed are interest rate swaps, currency swaps, and forex swaps. An interest rate swap involves exchanging interest payments, such as a fixed rate for a floating rate. A currency swap exchanges principal and interest payments in different currencies. A forex swap is an agreement to buy one currency now and sell it back in the future at an agreed upon exchange rate.
The 5 step investment process involves:
1) Understanding the client's needs, risk tolerance, and goals to set a benchmark.
2) Deciding on an asset allocation across classes like fixed income, equity and real estate based on macro conditions.
3) Selecting a portfolio strategy that conforms to the client's investment policies and objectives.
4) Choosing specific assets within each class like individual stocks and bonds.
5) Evaluating the portfolio's performance against its benchmark to determine if the client's objectives are being achieved.
Integrated treasury management in banksSahas Patil
This document discusses integrated treasury management in banks. It describes the functions of a bank's treasury, including reserve management, liquidity management, risk management, and derivatives trading. It outlines the structure of an integrated treasury with front, middle, and back offices. It discusses various money market instruments in India like treasury bills, commercial papers, certificates of deposit, repos, and the Liquidity Adjustment Facility operated by the RBI. Maintaining an integrated treasury allows banks to improve profitability, manage risk, and utilize funds more efficiently.
As you may be aware, life expectancy of individuals has increased; which brings with it rise in medical and living costs during old age. Therefore, it is imperative to make provision for expenses wisely. All of us want to maintain our standard of living during our old age as well, but to do so we need to actually start thinking and planning for our retirement right from the beginning of our career when we are young. This ppt aims to help you understand how you can identify and establish your financial goals.
The document describes various types of financial assets including money market securities like treasury bills, commercial paper, repurchase agreements, and bankers' acceptances. It also discusses fixed income securities like bonds and their characteristics. Additionally, it covers equity securities such as preferred stock, income trusts, and common stock. The document also briefly outlines derivative securities including options and futures.
The document discusses various aspects of securities markets and financial markets. It describes the key components and participants in primary and secondary markets. The primary market, also called the new issue market, deals with the initial sale of new securities to investors. Major functions of the primary market include origination, underwriting, and distribution of new securities issues. Common methods to float new issues include public issues, rights issues, and private placements. The secondary market provides for the trading of previously-issued securities among investors.
Venture capital is a form of financing provided to startup companies and small businesses that are deemed to have high growth potential. It allows entrepreneurs to focus on developing and growing their businesses in the initial phases without having to generate cash flows or profits. Venture capital is typically invested in companies in exchange for equity in the companies. Venture capital funding is available in different stages from seed funding to later expansion stages. While venture capital provides benefits like expertise and funding, it also involves risks and giving up some control for the entrepreneurs. The top industries attracting venture capital in India include IT/ITES, energy, manufacturing, financial services and healthcare. Cities like Mumbai, Bangalore, Delhi, Chennai and Hyderabad attract most of
The document discusses various alternative funding sources for entrepreneurs and startups beyond traditional loans. It outlines options such as crowdfunding, incubators/accelerators, convertible notes, equity funding, grants and subsidies from government organizations, venture capital, angel investing, royalty financing, leasing equipment, and viability gap funding. Specific Indian government programs to support startups are also described, including funds set up by SIDBI and other state governments.
The document discusses venture capital, including its definitions, features, types of financing, and role in supporting new businesses. Venture capital refers to investment in startups and small companies with high growth potential. It provides not just funding but also managerial expertise to help companies grow. Venture capital involves risk but can offer high returns. Key types of venture financing discussed are equity, convertible loans, income notes, and debentures. The document also outlines the venture capital process, including deal origination and screening of opportunities.
The issues of proper Financial Management and Corporate Governance have taken a centre stage. The Public Sector Banks as well as Private Sector Banks are witnessing acute rise in nonperforming assets, moving up to 4.6% in March, 2015, whereas stressed advances have increased to 11.1% of the total advance, from 8% about 2 year ago. The major reasons as per a research of a large sample are as follows:
There is no limit to the financial benefits that an MSME registration certificate can proffer for your small business. Here is a comprehensive guide that will familiarize you with the numerous reforms introduced by the government for the growth of MSMEs in India.
The document discusses venture capital, which provides financing to new companies with high growth potential. It defines venture capital and outlines its key features, including supporting entrepreneurial talent, providing management skills, and involving high-risk, high-return financing. The document then details the typical venture capital process of deal origination, screening, evaluation, deal structuring, and various exit options. It also reviews the advantages and disadvantages of venture capital, major venture capital funds in India, and SEBI regulations of venture capital.
The document discusses venture capital finance and the venture capital process. It explains that venture capital is a form of financing provided to startups and growing companies. Venture capital investments go through several stages from seed funding to help get a company started, to multiple rounds of funding as the company grows and achieves milestones. The document outlines the typical stages a company goes through to acquire venture capital financing and the roles that venture capitalists play in supporting the growth of portfolio companies beyond just providing money.
The document discusses venture capital finance and the venture capital process. It explains that venture capital is a form of financing provided to startups and growing companies. Venture capital investments go through several stages from seed funding to help establish an idea, to multiple growth stages where capital is used to expand operations and marketing. The final stage is an initial public offering where the company sells shares to the public and founders can gain liquidity. In addition to funding, venture capital firms provide operational support and access to networks to help portfolio companies succeed.
Funding Sme – The Challenges And Risk Within - Alternative financing sources ...Resurgent India
Securitization of Trade Credit: Trade credit is an important source of financing for MSMEs, as they sell on credit to their large customers and then wait for long periods for payment. If these receivables (trade credit) could be packaged as a securitized asset, which would essentially be a commercial paper with the credit rating of the large firm, it could help MSMEs reduce their investment in working capital and their need for finance significantly. The credit worthiness of a typical MSME would also improve, qualifying it for greater bank funding. Though the securitization process which is similar to factoring, could be more cost-effective than bank funding, factoring, and letters of credit.
This document provides an investment memorandum for IGT Financial Services, a proposed social sector organization seeking equity investment. It outlines IGT's mission to improve quality of life for underprivileged communities. The organization will provide microfinance, microinsurance, and other services through a rural-focused NBFC-MFI model. Projections show the business growing to serve over 5 million customers within 5 years and generating annual revenue of over $90 million. The memorandum requests $2.3 million in seed funding and outlines plans for future funding rounds and exit opportunities.
The document discusses venture capital, which provides long-term risk funding for high-risk, high-growth potential projects. Venture capitalists invest money and provide management support to new companies. They typically take an equity stake and later sell their shares once the company becomes profitable. Venture capital is available in various forms like equity, loans, or income notes. It plays a role in commercializing new technologies and developing entrepreneurship. The Indian venture capital industry is growing but still in its early stages.
Portfolio Management Services (PMS) allow individual investors to have a professionally managed portfolio tailored to their specific investment goals. When investing in PMS, investors own individual securities rather than units of a fund. PMS accounts require a minimum investment of Rs. 5 lacs and charge fees including management charges of 1-3% and sometimes performance fees if returns exceed a threshold. Registered PMS providers in India include Geojit BNP Paribas, ICICI Prudential, and Motilal Oswal.
The document discusses venture capital financing in India. It begins with acknowledging those who created the presentation. It then provides an overview of venture capital, describing it as private equity funding provided at various stages of a company's growth. Examples are given of active venture capital firms in India and the industries and startups they invest in. The presentation outlines the advantages and disadvantages of venture capital financing. It discusses the various stages of venture capital financing and exit strategies. It concludes by noting the impact of COVID-19, with investments dropping but sectors like fintech and healthcare faring better.
Policy Paper on Promoting Own Account Enterprises (OAEs) - Foundation for MSM...TheBambooLink
We are delighted that this unique Award Programme for “Responsible Indian BMOs” has now successfully entered its fifth year. This year is special, as with the support of the Office of Development Commissioner, Ministry of MSME, we have taken the Award Programme to a new height by organizing “Cluster Conclave and 5th BMO Award: Innovate to Lead”.
Policy Paper on Promoting Own Account Enterprises (OAEs) : Foundation for MSM...TheBambooLink
Micro, Small and Medium Enterprise (MSME) sector is a key player in generating employment and contributing to the India’s GDP and industrial output. There are 6.34 Crore enterprises in various industries, employing close to 11.1 Crore people.1 In all, the MSME sector accounts for 29 percent of India’s GDP and 40 percent of exports.
Economics project on start ups in India (1)Dipti Chauhan
It is a secondary research on the startups in India.we analysed the startup industry in India. We contacted many new startups about their experience in the industry.
Venture capital involves investing in young, growing companies with potential for significant growth. It provides long-term funding through purchasing equity shares. Venture capitalists assist companies in areas like product development, networking, and preparing for IPOs or acquisitions. India's venture capital industry is regulated by SEBI and governed by tax rules. It focuses on sectors like software, biotech and clean energy and cities like Bengaluru, Mumbai and Delhi. Success requires a supportive regulatory environment, adequate exit options for investors, and infrastructure like incubators.
Venture capital involves funds provided to startup companies and small businesses with exceptional growth potential. Venture capitalists invest in young companies and assist with management, networking, and preparing companies for public offerings or acquisition. In India, venture capital is regulated by SEBI and income tax laws, which provide tax exemptions to venture funds. The venture capital industry can support innovation and entrepreneurship in India by helping small businesses access financing.
It help you to become a successful entrepreneur,advantages& risk associated with that. And also helps finance you business successfully in different stages.
Similar to Micro equity finance for indian establishments (20)
2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
The Rise of Generative AI in Finance: Reshaping the Industry with Synthetic DataChampak Jhagmag
In this presentation, we will explore the rise of generative AI in finance and its potential to reshape the industry. We will discuss how generative AI can be used to develop new products, combat fraud, and revolutionize risk management. Finally, we will address some of the ethical considerations and challenges associated with this powerful technology.
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby...Donc Test
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1. Micro Equity Finance
A Sought financial product
to empower
Over 90 percent Indian Establishments
Major Sources
of Finance for
Indian
Establishments
Stock Markets
Family &
Friends
Cooperatives
MFIs
Banks
Private Lenders /
Equities
Government
Funding
2. Untapped Micro Equity Market in India
1. Inclusive Finance is not just meant for allowing the poor open bank account;
but it should also mean to assure that poor among us are allowed to access
the surplus of capital hold by rich among us.
2. For inclusive growth ( Sabka Saath Sabka Vikaas) we need to ensure justice in
provisioning supply of capital to the rich and poor. It is not justified that
corporate avail capital from stock market at zero cost whereas poor have no
choice except availing loans at cost over average rate of interest.
3. Still 98.5% Indian commercial establishments are not registered as company
under Ministry of Corporate Affairs. Only equity finance can induce more
and more establishments to convert into companies.
4. India has high potential to convert informal sector establishments to convert
them into formal sector establishments condition they are induced by
suitable products and mechanism. Micro equity can be one sought product.
5. Despite rise in business of private equities, India’s 80% establishments are
yet not allowed to get equity finance from any source. Had they been tapped
by any source, Indian capital market could become world’s largest with
inclusion of as much as 50 million establishments into capital market.
3. Major Sources of finance for Indian Establishments
1. According to All India Report on Sixth Economic Census 2016, there are
around 58.49 millions establishments providing employment for 131.29
million workers in activities excluding crop production, plantation, public
administration, defense, and compulsory social security in India.
2. Major source of finance for 80.1% Indian establishments is Self–finance. Just
2.2% urban establishments are financed through borrowings from financial
institutions against 2.4% rural establishments financed by this source.
3. Just 1.36% establishments (7,93,446 out of 5,84,95,359) are registered as
companies under Ministry of Corporate Affairs (MCA). It means still 98.64%
Indian establishments are unable to access stock market for capital support.
4. The equity support for MSMEs from SME Exchange is negligible because
during 2015-16 only 50 companies out of registered 21,33,885 Udhyog
Aadhar succeeded raising amount of Rs. 379 crores through SME platform.
5. Indian Banks being constrained for investing less than 30% paid up capital of
any company, opted investing major amount on listed companies. But after
global financial crisis with fall in international trade, these companies found
difficult to grow further. Ultimately these companies kept loosing their stock
prices and also burdened Indian banks with as much as 55% of total NPAs.
4. Private equity is gaining grounds in Indian Market
1. Generally equity is considered as tradable stocks in the capital market. But
recent growth trend in private equities for unlisted companies outside stock
market opened gateway for equity business to serve unlisted companies.
2. While Indian stock exchange observed 6.5% decline (Rs. 19,36,844 crores) in
market capitalisation during 2015-16 compared to 2014-15, India registered
36% growth in FDI (Rs. 1,44,674 crores) during April to September 2016,
mainly due to private equities.
3. The performance of SME Exchange to support only 50 companies raising Rs.
379 crores with no trading during 2015-16 shows that 99% smaller and micro
establishments are still looking to access private equity for their growth.
4. According to Report on Fifth Annual Employment – Unemployment Survey
2015-16 average monthly income for 94.7% Workers in India is less than Rs.
20,000. India’s 45% workers with monthly income below Rs. 20,000 through
Self-Employed Establishments are deprived of equities from any source.
5. Since private equity players have yet not reached 41.9 million Own Account
Establishments in India, banks (with restriction to invest less than 30% paid
up capital in any company) can opt strategy to invest in MFIs with intention
to use their network for reaching potential establishments with micro equity.
5. Micro Equity for Indian Micro Establishments
1. The micro and tiny establishments in the unorganized sector with inability to
access the SME exchange are facing shortage of required capital for growth.
2. Notably banks in general don’t prefer targeting customers who seek loan
under Rs. five lakhs; and MFIs in rare cases extend loan over Rs. 50,000 and
in no case sanction loan above Rs. five lakh.
3. Thus the financial needs of micro and tiny enterprises ( for amount between
Rs. 50,000 to Rs. 5 lakhs) in general is not fulfilled through stock market. For
banks they are smaller ticket size whereas for MFIs they are too large.
4. 60 millions Self Employed Workers engaged in Micro or Tiny Establishments
with financial need between Rs. 50,000 to Rs. 5 lakhs is too big to ignore.
There is huge untapped market for MFIs in India who could arrange supply of
formal finance under ticket size in range of Rs. 50,000 to 5 Lakh. Still private
equity players are not tapping this market, so MFIs could easily tap them.
5. Considering the fact that 27.46% establishments (16 out of 58 millions) are
engaged into sales and trade activities in India where rate of profit could be
higher; MFIs should prefer using ‘Micro Equity Finance’ so as to earn better
returns over investments against interest rate changed over loan under
present regulations for MFIs in India.
6. Defining the Product of Micro Equity Finance
• The Micro Equity Finance may be defined as participative finance product used
to support micro enterprises through providing capital on terms of sharing
floated risk and reward in the enterprise.
• In India the amount of equity finance in range between Rs. 50,000 to Rs.
5,00,000 could be set limit for Diminishing Micro Equity which may be
appropriate to serve as much as 90% credit accounts.
• The process of Micro Equity starts with collective investment in any enterprise
by two or more parties; but ends with complete conversion of ownership for
one party who purchases the shares of other/s in that particular enterprise
during a time frame.
• Whole process needs three different set of contracts defining –
• Collective Investment in any project / enterprise by two or more parties
• Terms of diminishing share in enterprise / project for different partners
• Contracts defining terms of selling out the undivided share of one or more
partners in the enterprise / project to the other partner.
• After completion of Micro Equity Contract, complete ownership of total
enterprise capital / asset is transferred in favour of the customer.
7. Different Stages under Micro Equity Finance
Initial
Stage
• Financier makes fractional investment in Customer’s Enterprise
• Customer Invites investment from financier on profit / loss sharing
basis with option to periodically buy back investor’s share.
Middle
Stage
• Financier receives amount for sell of unit share along with profit /
Loss against outstanding investment in customer’s enterprise. Rate
of profit keeps decreasing with diminishing share in enterprises.
May also need to adjust customer’s account in case the customer
do not buy back unit share according to scheduled repayment.
• Customer periodically keep buying back investor’s unit shares in the
enterprise and shares proportionate profit / loss according to
investor’s outstanding share in the enterprise. May buy back more
unit share if financial conditions allow the customer do so.
Final
Stage
• After selling out all shares in the enterprise the Financier declares
customer as sole owner of the enterprise.
• The Customer becomes sole owner of the enterprise after buying
back investor’s all share in the enterprise.
8. Micro Equity may also help in National Accounting
• Under Micro Equity Finance it may be possible for financier to envisage how
much value addition is created, how much income is earned and how much
capital accumulation is done through equity finance. Under debt financing we
may not be able to calculate net value addition, income or capital formation.
Lending on interest terms Micro Equity Finance
Loan Amount in Rs. 1,20,000 Equity Investment in Rs. 1,20,000
Rate of Interest 24% Profit / Loss Sharing Ratio 24% to 0%
Interest charged over Principal Profit / Loss Shared from Profit
Total Repayable Amount 1,48,800 Total Receivable by end 1,59,000
Max. Monthly Installment 12,400 Max. Monthly Installment 16,000
Min. Monthly Installment 12,400 Min. Monthly Installment 10,500
Months for Repayment 12 Months for Repayment 12
Gross Income to MFI 28,800 Gross Income to MFI 39,000
Income earned by Customer ? Income earned by Customer 1,41,000
Capital Accumulation ? Capital Accumulation 1,20,000
Gross Value Addition ? Gross Value Addition 3,00,000
10. Process involved under Micro Equity Finance
1. Identifying the geography after economic survey of the village / town area.
2. Explaining the model to the target group, identification of potential customer,
analyzing constraints and prospects for customer’s livelihood.
3. Prepare the customer realize the significance of equity to increase income
through existing livelihood; and eagerness to share returns with the investor.
4. Filling Application, appraisal of applicant, counter party check and explaining
the transactional cash flow to the customer, fixing co-obligant and finalizing
sought measures to mitigate the financial risk; and approving application and
approving amount for finance against collateral.
5. Signing the Micro Equity agreement between the investor and Customer;
Transferring sought amount into customer’s account after handing estimated
repayment schedule to customer with option to buy back investor’s share.
6. The customer periodically buys back investor’s unit share. After personal
verification, the Investor prepares notes on cash flow of customer’s activity.
7. Repayment of amount by customer in accordance to the actual cash flow
retrieved in customer’s business activity / livelihood. The investor makes
adjustment into Customer’s account after each received repayment.
8. Closing customer’s account after receipt of sought repayment amounts.
11. Banks and MFIs can execute Micro Equity
1. With no source of equities between Rs. 50,000 to Rs. 5 Lakhs for 50 millions
micro enterprises, Indian banks / MFIs should try exploring this opportunity.
2. Considering the limitation about investment and limited exposure to the
micro and tiny enterprises, it would be better for banks to invest in MFIs for
reaching the micro and tiny enterprises. This may allow banks get better
returns with lesser hassle and lower chances for NPAs.
3. Considering the growth trend in private equities, if banks pass on equities to
MFI asking to finance micro equities, it may open avenues for banks to draw
private equity investors to subscribe bank’s capital.
4. Equity support from banks to MFI for micro equity finance may open
avenues to earn better returns through micro equity at one hand and get
additional loans through bank’s equities on other hand.
5. According to Section 19 (2) of Banking Regulation Act, any bank can invest
any amount less than 30% of paid up capital in any particular company; bank
also needs to assure that total investment in all companies should be less
than 30% of its own paid up capital. If Section 19 (2) is edited it may allow
banks to invest any suitable amount in any company and banks can also
directly execute Diminishing Micro Equity Finance.
12. • Since the returns under Micro Equity Finance is linked with actual profit /
loss of enterprise, the Weighted Risk for this product could be 100%.
• It should not be used as general financial product. It should only be used for
customers with potential to yield better returns over investment duly
supported with relevant source to prove the transactional account genuine.
• There may be customers seeking this product to cheat financier with false /
manipulated cash flow to draw attention of financier / investor. Thus it is
always required to check and verify the transactional accounts as genuine.
• Investor needs to guide the customer transact digitally. In case where digital
transaction is not feasible, there should be receipts and vouchers to check
and verify the genuineness of submitted transactional account.
• Further it is expected that genuine transactional account may vary from the
proposed transactional account and accordingly the received amount may
keep varying from proposed repayments. In such cases the customer’s ledger
should be provisioned with option to edit repayment with modified rate of
profit / risk sharing or equity buy back.
• The risk can be further mitigated if actual transactions be made digitally and
provisioned to share between investor and customer.
Weighted Risk under Micro Equity Finance
13. • Since the return over investment under Micro Equity Finance may not be fixed,
but just predicted according to submitted business plan, there is high
probability that on monthly basis the actual repayment may differ from
scheduled repayment. In such cases the team has to -
1. Check and verify all related receipts and vouchers to ensure that transactional
account submitted by the customer is not fake / scripted.
2. Adjust customer’s ledger to update the entries about equity buy back,
retrieved profit / loss share and percentage of profit / loss to share according
to outstanding percentage share in the enterprise / project.
3. Field staff need to periodically visit and observe performance of customer’s
activity to ensure that business is going smoothly. They need to behave like
sleeping but aware partner in customer’s enterprise.
4. Periodically update the customer about investor’s outstanding share in
customer’s enterprise and accordingly liable percentage of profit / loss
sharing ratio from actual retrieved profit.
5. There should be counter checking system at field level staff so as to ensure
that field level staff could not find any chance to take bribe from customer by
making undue favour for the customer and ditch the investor. On random
basis the filed executive may check their sub ordinates and similarly the
manager should check the filed executive.
6. Before signing the agreement, it should be ensured that the customer has no
problem in appointing the common arbitrator referred by the investor.
Sought Precautions under Micro Equity Finance
14. Micro Equity may help building Capital for India
Micro Finance Institutions (MFIs) / Livelihood Service Institutions (LSIs)
Extend micro Equity support to Micro
and Tiny Enterprises
Helping Micro enterprises build
required capital base
Indian Scheduled Commercial banks
Invest in Equities of MFIs/LSIs
May ask MFIs / LSIs to maintain
separate account for Micro Equity
Potential Investors for Banks
Invest in equities of Indian Banks
May buy bank’s shares with condition
of equity assets
15. Micro Equity may support transactional tax system
1. Micro Equity Finance may be a better product than subsidized loans for micro
enterprises as it needs no subsidy; and also helps to develop transparent
accounting system where customers may be asked to transact digitally.
2. Since under Micro Equity Finance, the returns are linked with actual cash flow
of the customer’s business only, the Banks / MFI’s would be required to obtain
record of actual transactions held in customer’s livelihood activity.
3. The transactional records provided by the customer to Banks / MFIs would
ultimately help us calculate the volume of transactions, value additions,
income generation, capital accumulations and paid taxes. This may help us
retrieve better estimates required under national accounting and taxation.
4. India may need to develop technical support system for micro and tiny
entrepreneurs to use mobile app to maintain transactional records along with
financial entries related to investment, sale purchase and taxation. The cost of
the app may be borne by Government through taxes raised under this system.
5. If India resolves promoting product like Micro Equity Finance it would be easier
for the Government to implement the system of Transactional tax even among
50 million informal sector enterprises. Such system may also enable banks to
collect taxes for the Central and State Governments.
16. References for source of data used above
1. http://www.mca.gov.in/MinistryV2/paidupcapitalreports.html
2. Report on Fifth Annual Employment – Unemployment Survey 2015-16
3. All India Report on Sixth Economic Census 2016 (Table 3.9 & 4.12)
4. https://dbie.rbi.org.in/DBIE/dbie.rbi?site=publications
5. https://rbidocs.rbi.org.in/rdocs/Speeches/PDFs/PPT1102166AB61D0F35C54
6539EF4DCD3C83B3668.pdf
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