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Merchant banker:
Any person who is engaged in the business of issues
management either by making arrangement regarding selling, buying or
subscribing to securities as manager consultant, adviser or rendering
corporate advisory services in relation to issue management.
Issue management:
The management of issues for raising funds through
various types of instruments by company is known as “issue management”
Leasing:
A lease is an agreement whereby Lessor conveys to the lessee in
return for rent, the right to uses an asset for agreed period of time.
Lessor:
Lessor is a person who conveys to another person, the right to use
assets in consideration, of a payment of periodical rental under the
agreement.
Lessee:
Lessee is a person who obtains from the lessor, the right to use the
assets for periodical rental payment for an agreed period of time.
Hire purchasing:
An agreement under which goods all let on him and under
which the buyer has an opinion to purchase them in accordance with the
terms of the agreement.
Factoring:
Mutual funds:
Mutual fund is a financial service organization that receivers
money from share holders, invest it, earns return on it, attempt to make it
grow and agrees to pay the shall holder cash on demand for the current value
of his investment.
Credit ratings:
The process of assigning a symbol with specific reference to
the instrument being rated that acts as an indicator of the current opinion on
relating capability on the issuer to service its debt obligation in a timely
fashion
Venture capital:
Venture capital investment is the kind as an activity by
which investors support entrepreneurial talent with finance and business
skills to exploit market opportunity and thus obtain long term capital gains.
Project management:
Project can be defined as a scheduled set of activities aimed at the
creation of a particular asset as per planned specifications, with a view
to generate wealth as estimated for future years.
Non banking financial companies [NBFC]
UNIT-I
Merchant banking:
Overview of Indian financial system:
Financial company:
It include both
1. Assets mgt companies
2. Liability mgt companies
Financial system:
A financial system functions as intermediaries and
facilitates the flow of fund from the areas of surplus to the area of deficit.
Financial system
1. corporate counseling
2. project counseling
3. Pre-investment studies
4. Capitol restructuring
5. Project finance.
6. Issue management
7. Working capital finance
8. mergers and take over
9. venture capital
10.lease financing
11.Foreign currency finance.
12.fixed deposit broking
13. mutual fund
14.relief to sick industry
15. acceptance credit and bill discounting
16.portfolio management
Information
Secrecy
Best advice
Responsible statement
Fair practices
Compliance
True market
Regulations of merchant banking
Memorandum of understanding
Appointment of intermediaries
Underwriting
Offer document to be made public
Dispatch of issue materials
Mandatory collection center
Authorized collection agent
Advertisement
Appointment of compliance officers.
Issue management:
Issue manager;
Any financial institution or intermediaries which can carry
out the activities connected with issue management, he is registered with
SEBI is called issue manager”
Category of issues:
1. Public issue
Issuers supposed to attach the prospects with the share, to sell at
the time of public.
2. Rights issue
Share holder, existing share holder to receive the shares without
prospect
3. Private placement:
Without prospect.
Neither rights nor public people
Obtaining approval
Arranging the under writing
Finalization of prospects
Arranging for press conferences
Arranging for investor conferences
Complain with SEBI guideline
Co-ordination printing and publicity.
Pre issue:
Memorandum of understanding
Optimal capital saturate
Convening meeting
Preparing documents
Appointment of intermediaries.
Certification of SEBI
Submission of offer document.
Deciding collection center
Launching the issue
Issue closer.
Merchant banking in India;
2 categories classified
1. Before 1967
2. After 1967
UNIT-II
Leasing
Characteristics of leasing:
Type of leasing:
1. Financial lease
2. Operational lease
Short term
Transfer of assets unlimited.
Risk is bear to leaser.
3. Consumer leases.
4. Balloon lease
5. Swept lease:
6. Wrap leases
7. Conveyance lease
8. Leverage leases
Advantages of leasing
Lesser:
1. Stable business
2. Minimum risk
3. Tax Benefit
4. Easy fiancé
5. Growth of capital.
6. Wider distribution
7. Second hand mkt.
Lessee:
1. Efficient use of found.
2. Cheaper source.
3. Favorable terms.
4. Protection against obsolescence
5. Avoidance of initial outlay.
Right of Hirer:
1. Right to protection
2. Right of notice.
3. Right Of statement.
4. Right to excess amount.
5. Right of repossession.
1. Ownership
2. Depreciation
3. Capitalization
4. Payout installment
5. Salvage value
6. Magnitude
7. down payout
8. Maintenance charge
9. Suitability
10. Nature of assets
11. Receipts
12. Repossession
13. Taxation
Factoring:
Characteristics of factoring:
Compensation
Recourse
Less dependences
Credit realization
Professnalism
The assignment
The form
Nature
Types of Factors:
1. Domestic Factoring
Disclosed factoring
Undisclosed factoring
Discount factoring
2. Export factoring
3. Cross border factoring
4. Full service factoring
5. With recourse factoring
6. without recourse factoring
7. Advanced & maturity factoring
8. Bank participation factoring
9. Collection& maturing factoring
Forfeiting:
Process of forfeiting:
1. Commercial contract [Export –Import]
2. Transaction [Export- import]
3. Note cataract [Importer bank –exporter]
4. Factoring contract [Exporter – forfeiter]
5. Sale of notes [Exporter – forfeiter]
6. Payment [forfeiter- export]
Advantage of forfeiting:
1. As a sales tool
2. As a protective tool
3. Risk free
4. Simple to use
5. Cost effective