Types of financial

services
Fund based financial services

Bills Discounting
Bill discounting is a short tenure financing instrument
for companies willing to discount their purchase / sales
bills to get funds for the short run and as for the
investors in them, it is a good instrument to park their
spare funds for a very short duration

Accounts Receivable Financing /

Factoring
Factoring is a financial transaction whereby a business sells its
accounts receivable (i.e., invoices) to a third party (called a factor)
at a discount.
A type of asset-financing arrangement in which a company uses
its receivables - which is money owed by customers - as collateral
in a financing agreement. The company receives an amount that is
equal to a reduced value of the receivables pledged.
Factoring is similar to the bill discounting with the only difference
that the factoring firms purchase the receivables outright taking
ownership of the receivables. The entire responsibility of collecting
the book debts passes on to the factor.

Advantages of Factoring
Time Savings. Factoring can save you time and effort that would
otherwise be spent on collecting from customers.
Good Use for Growth. The instant cash to generate growth, may
be hiring another salesperson who will bring in more business.
Or buying an advertisement that will reach new customers. Or
buying apiece of equipment that will accelerate production.
Doesnt Require security. Unlike traditional bank loans, factoring
doesnt require to risk your home or other property as collateral.
Qualify for More Funding. Factoring firms will typically give a
cash advance on up to 80% of receivables. That may be more
than be able to get from a bank.

Forfaiting
It is a form of financing of receivables relating to
international trade. It is a form of supplier credit in
which an exporter surrenders possession of export
receivables, which are usually guaranteed by a bank on
the importers country.
Forfaiting is a mechanism of financing exports by
discounting export receivables evidenced by bills of
exchanges or promissory notes without recourse to the
seller (viz; exporter) carrying medium to long-term
maturities on a fixed rate basis upto 100% of the
contract value.

Venture Capital
Venture capital (VC) is financial capital provided to
early- stage, high-potential, high risk, growth startup
companies The venture capital fund makes money by
owning equity in the companies it invests in, which
usually have a novel technology or business model in
high technology industries, such as biotechnology, IT,
software, etc

Housing Finance
Housing finance refers to providing finance to an
individual or a group of individuals for purchase,
construction or related activities of house/flat etc.
Housing loan is extended by way of term loans; for a
number of years (5-20) at a certain rate of interest and
against some security

Insurance Services
Insurance is a form of risk management in which the
insured transfers the cost of potential loss to another
entity in exchange for monetary compensation known
as premium. Mutual Funds A mutual fund refers to a
fund raised by a financial service company by pooling
the savings of the public. It is invested in a diversified
portfolio with a view to spreading and minimizing the
risk

Fee based services

Fee based income does not involve much risk. But, it
requires a lot of expertise on the part of a financial
company to offer such fee-based services. Example
Corporate advisory services Bank guarantees
Merchant banking Issue management Loan
syndication Credit rating Stock Broking M & A,
Capital restructuring

Merchant banking
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 customer
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

Loan Syndication
It refers to a loan arranged by a bank called lead
manager for a borrower who is usually a large corporate
customer or a government department. It also enables
the members of the syndicate to share the credit risk
associated with a particular loan among themselves

Credit Rating
Credit Rating It is an opinion on the future ability and legal
obligation of an issuer to make timely payments of principal
and interest on a specific fixed income security. As per credit
rating agencies regulations 1999rating means An opinion
regarding securities Expressed in the form of standard
symbols Assigned by a credit rating agency Used by an
issuer of such securities
Evaluates the credit worthiness of a debtor, especially a
business (company) or a government It is an evaluation
made by a credit rating agency of the debtors ability to pay
back the debt and the likelihood of default Some credit rating
agencies; ICRA, CRISIL, S & P, Moodys

Stock Broking
The process of investing in the share market ,either
individually or through a broker is known as stock
broking. This is primarily done by opening a Demat
account. If done through a broker, he opens an
account, helping to operate through onlines tock
broking facility.