SOURCES OF FUNDS

Group members
Arpit .Ganorkar
Namrata .Kamble Rajesh .Kumbhar 21
29

Preeti. Komurlekar 28

Sources of Funds
Companies raising funds for through various sorces. Sourcing money may be done for a variety of reasons. Traditional areas of need may be for capital asset acquirement - new machinery or the construction of a new building or depot. The development of new products can be enormously costly and here again capital may be required. Normally, such developments are financed internally, whereas capital for the acquisition of machinery may come from external sources.

Capital market

Securities Exchange Board of India ( SEBI April 12 , 1992)

Equity shares
Equity shares/capital represents ownership capital and its owner. It is also called ordinary shares.

It is evaluated equity capital.

The portion of equity capital offered by company to the investor is issued capital.

Preference shares.

Types of preference shares

Cumulative
Non-cumulative Convertible Non convertible Redeemable Non-redeemable

Transferable
Non-transferable

Debentures

Types of debentures

Non-Convertible
Non-convertible debentures, which are simply regular debentures, cannot be converted into equity shares of the liable company. They are debentures without the convertibility feature attached to them

BONDS
In finance a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest (the coupon to use and/or to repay the principal at a later date, termed maturity A bond is a formal contract to repay borrowed money with interest at fixed intervals (semi annual, annual, sometimes monthly). Thus a bond is like a loan the holder of the bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is the interest. Bonds provide the borrower with external funds to finance longterm investments.

Types of Bonds

Non-Banking Financial Institutions ( NBFC)

Non-bank financial companies (NBFCs) are finance institutions that provide banking services without meeting the legal definition of a bank, i.e. one that does not hold a banking license. These institutions are not allowed to take deposits from the public. Nonetheless, all operations of these institutions are still exercised under bank regulation

Types of NBFC

Classification of NBFC on basis of funds which they provided

1. Leasing companies

A lease is a contractual arrangement calling for the lessee(user) to pay the lessor (owner) for use of an asset. A rental agreement is a lease in which the asset is tangible property.
Types of lease Fixed term tendency

Periodic tendency
Tendency at will

Money market
It is market for short term funds Types of money market Instruments.

Treasury bill (T- bills)

Commercial bill.

Certificate of deposit
Bills of exchange.

Treasury bills
Treasury bill is a basically an instrument of short term borrowing by Government of India It is a particular kind of finance bill or promissory notes issued by RBI on behalf of government. T bills are bills which does not arise from any genuine transaction in goods. They are negotiable securities and issued discount and are paid at par on maturity.

Commercial paper

Bills of exchange
it is a document guaranteeing the payment of specific amount of money either on demand or at a set time. It is a bill which is transferable
It is negotiable document.

Certificate of Deposit
CD is the marketable receipt of funds deposited in bank for a fixed period at specific rate of interest They are bearer documents/instruments and readily negotiable. They are attractive both to the investor and bankers.