Merchant Banking - Copy

8/3/2019 Merchant Banking - Copy

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WELCOME

Capital as such is not evil; it is its wrong use thatis evil. Capital in some form or other will alwaysbe needed.

Mahatma Gandhi


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MERCHANT BANKING

FACTORING AND VENTURE CPTL


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DEFINITION OF MERCHANT

BANKING An institution which covers a wide range of activities

such as management of customer services, portfoliomanagement, credit syndication, acceptance credit,counselling , insurance etc.


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SERVICES OF MERCHANT BANKS Corporate counselling

Project counselling

Loan syndication

Issue management

Portfolio management

Non resident investment

Off shore finance


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FACTORINGDEFINITION:

Factoring is a service of financial nature involving the

conversion of credit bills into cash.


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FUNCTIONS Purchase and collection of debts

Credit investigation and undertaking of credit risk

Sales ledger management Provision of finance against debts, and

Rendering consultancy services.


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TYPES OF FACTORING Full service factoring or without resource factoring

With recourse factoring

Maturity factoring Bulk factoring

Invoice factoring

Agency factoring

International factoring


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VENTURE CAPITALDEFINITION:

A financing institution which joins an entrepreneur

as a co-promoter in a project and shares the risks andrewards of the enterprise.


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SCOPE OF VENTURE CAPITAL Development of an idea-seed finance.

Implementation stage-start up finance.

Fledging stage-additional finance. Establishment stage-establishment finance.


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MONEY MARKET


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DEFINTIONThe money market is the collective name given to thevarious firms and institution that deal in the variousgrades of near market.


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MONEY market Vs CAPITAL market It is a market for short

term.

The central bank andcommercial banks arethe major institutions.

They do not have

secondary markets. Transaction mostly takes

place over the phone andthere is no formal place.

It is a long term fundsmarket

Development banks andinsurance companiesplay a major role.

Deals with instruments

like shares, debentures. Transaction have to be

conducted only throughauthorised dealers.


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CHARACTERISTIC FEATURES Highly organised banking system.

Presence of a central bank.

Availability of proper credit instruments. Existence of sub markets.

Ample resources.

Existence of secondary market.

Demand and supply of funds.

Other factors.


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COMPOSITION OF MONEY MARKETCALL MONEY MARKET.

COMMERCIAL BILLS MARKET OR DISCOUNT

MARKET.ACCEPTANCE MARKET.

TREASURY BILL MARKET.


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CALL MONEY MARKETHigh liquidity.

High profitability.

Maintenance of slr.Safe and cheap.

Assistance to central bank operations.

DRAW BACKS

Uneven development.

Lack of integration.

Volatility in call money rates.


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COMMERCIAL BILLSDEFINITION

An instrument in writing containing an unconditional

order, signed by the maker, directing a certain personto pay a certain sum of money only to, or to the orderof a certain person or to the bearer of the instrument.


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TYPES OF COMMERCIAL BILLSDemand and usance bills

Clean bills and documentary bills

Inland and foreign billsExport bills and import bills

Indigenous bills

Accommodation bills and supply bills.


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MERITS AND DEFECTSSafety

Liquidity

Ideal short terminvestment

Ideal fund management

Statutory liquidityrequired

Source of short termfunds

Hedging facility.

Poor yield

Absence of competitivebids

Absence of activetrading.


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THANK YOU.

Documents

Merchant Banking - Copy