Leasing is a contract granting or letting the possession of a fixed asset such as land, buildings, machinery etc for a specified period for a stated consideration. The agreement between lessor and lessee in the lease agreement by the Lease Company. Lease facility provides an opportunity to use the asset without owning it.
Hire Purchasing: Arrangement wherein the buyer pays some advance and takes the possession of the asset from the seller with an undertaking that the balance amount along with interest will be paid to the seller owes an agreed period in equal installments. The buyer becomes the owner only after paying the last installment.
Bill Discounting: When the banker provides ready money against an endorsed bill to the customer before the date of maturity by charging some commission (discount) the bill is said to be discounted.It offers financial services commission.
Venture Capital: Provide start-up finance to the entrepreneurs who have just set up or are in the process of setting a company. They also finance for existing high risk small businesses suffering from capital inadequacies but having growth and profit potential especially in various fields of high technology. In public sector, state and central governments, nationalized banks and development financial institutions provide venture capital.
In Private Sector, wealthy individuals either individually or in groups or as financial services provide venture capital. Normally, the venture capital companies take part in the ownership of the start-up company. The entrepreneur welcomes such a move because he finds shortage of capital at the time of starting his venture and he finds it difficult to raise his resources as he is new to the business. The venture capital companies remain with such enterprising firms till they reach a take-off stage. When the firm starts making profits the venture capital companies sell their share-holding in the firm at the market price, make profits and then search for another enterprising firm is also know as financial functions.
Housing Finance Companies: Housing Finance Companies Provide financial services for acquiring the house property against the security of the same. The housing loan along with the interest is to be repaid inequated monthly installments (EMI) over a given period of time.
Financial Services for Mutual Benefit: The companies whichFinance for
mutual benefit are called Mutual Benefit Finance Companies. These companies are not allowed to advertise solicitDeposits from their members.
Residual Non-Banking Servicer : These companies accept Deposits under schemes similar to recurring deposits of banks and Invest in safe and relatively liquid securities.
Factor in : Factoring is an arrangement to purchase the book debts of a company. It is a relationship between financial institution (factor)and a business concern (supplier) that sells/provides goods or financial services to its customer.The factor purchases book debts either with or without resource to theSupplier. He also controls the credit extended to the customers and administerssales ledger of the supplies. On purchasing the book debts/ bills receivables fordiscount, the factor pays the trader a balance in case. The factor collects themat the end of the maturity. The trader funds arrangement conveniently as hisfunds are not blocked in bills receivables or book debts and flow of funds isensured to take care of working capital required.
