Financial services

Teaser Home Loans

October 14, 2010 By admin Leave a Comment

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When there is too much liquidity in the market, some of it has to be taken off. Teaser Home loans do just that. A Teaser Home Loan is a kind of business finance that is given by the lending market to the borrowing market, when there is an excessive liquidity situation. To minimize the inactivity of the lending market, business finance is doled out as Teaser Home Loans. Economies use this as an accelerator to gain enough activity.

Attractive interest rates and easy payment options characterize Teaser Home Loans. Teaser Home Loans will even have waivers of interest rates. Interest rates might get back to original rates after the-honeymoon’ period. One might tend to think if this business finance model is inspired by the clothing retail market.

Teaser Home Loans will have interest rates a couple of notches below standard rates. Fixed rates might be for a specific period of time, post-which the borrower will have the option to switch to floating rates. In India, affordable housing is the next wave of real estate. Teaser Home Loans provide the perfect business finance option for banks to tap into the customer base of this market. Buyers of economical homes will always flock to the teaser loan avenue.

Banks will not always keep Teaser Home Loan schemes. From a business finance perspective, the viability of long-term Teaser Home Loans is not convincing. So banks usually offer Teaser Home Loans for a finite period of time. For example, the State Bank of India brought out a home loan scheme. 8 percent interest was charged in the first year, and 9 percent from then onwards. From the 4th year, loans lesser than or equal to fifty lakh rupees, was charged at 9.25 percent interest. This is an example of a teaser home loan. Existing customers felt that the Teaser Home Loan was only to attract new customers. Expressing their concerns to the Banking Codes and Standards Board of India (BCSBI), customers felt that the business finance model of teaser loan providers was not inclusive.

Filed Under: Workforce Tagged With: Business, Financial services, India, Interest rate, Loan, Mortgage loan, Mortgages, State Bank of India

Financing Business Ventures in India with a Payday Loan

October 13, 2010 By admin Leave a Comment

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As one of the growing economic superpowers, India is one of the most talked about economic powerhouses in the world. Its economic growth has been exponential and impressive, making it one of the most sought after places for any type of business to reach. Exporting items that will be sold in India is a good way to penetrate that market. Another way is to import unique items form India and to sell them outside of the country. Both of these methods of taking advantage of the global market will require financing and some leeway on the money that you have coming in and going out. If you are just getting started and are searching for a way to finance your business, make sure that you look into getting a payday loan when needed.

If you have your business ready and want to get started, you may still find that the economic logistics can get complicated. You want to expand into Indian business, but you may not have a paycheck coming just when you need it. To get around this, a payday loan can supply the money you need right when you need it. You don’t have to go to extraordinary lengths to time your transactions precisely with the opportunities that come along with your current paycheck. You can instead get money quickly that can be used to get you in the door with Indian businesses.

Once you have a foot hold, you may not need to borrow again, or you may find that these loans serve as a real source of peace of mind just in case you ever need it. You may find that in the long run they come in handy for expansion, emergency business expenses, and other needs that can and will spring up along the road to global business.

Filed Under: Business Culture Tagged With: Business, Finance, Financial services, India, Loan, Los Angeles, Payday Advance Services, Payday loan

Business Finance Analytics

October 8, 2010 By admin Leave a Comment

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Sometimes business finance strategies fall on inert soil. By non-judicious use of business finance, things might go asunder. An approach that incorporates setting objectives to key stakeholders like employees, can work in large businesses. Stakeholders can be made to understand the end results of their performances. So it is important to make them understand the directives. If given the right business finance decision making system, financial performance can be bettered. This is what business finance analytics aims to achieve.

Financial analytics is high on popularity. Business finance information is the most important driver for sound decision making. With so many markets around, it is quite difficult to manage compliance tasks as well. Financial institutions were the first users of finance analytic techniques. Analyzing cash flows, research on equity participation, conduction feasibility studies on mergers and acquisitions are some of the areas that financial analytics delves into.
Financial analytics is a process by which internal and external business finance information is leveraged to produce business intelligence reports. Information will have plenty of pointers to it, most being action plans. India is being eyed as a potential vendor for cost-effective and super-efficient financial analytics. Companies are in the process of identifying existing outsourcing vendors and analyzing their capabilities for this activity.

Financial analytics is the domain of educated business finance professional like chartered accountants, and statistics graduates. Other financially-educated personnel are used as well. A popular business finance study program is the Chartered Financial Analyst (CFA) course being offered by many educational institutions in India.

Globally, the financial analytics market is huge. Touching more than 5 billion US dollars in market potential, it’s the next wave of financial outsourcing opportunity for India to capitalize on. Now all that India has to do is to try to get business finance professional to bite the bait of a highly rewarding career. Often, new avenues are viewed with suspicion in India. Stemming from lack of governmental initiative towards marketing new outsourcing avenues, educated graduates turn down non-established careers. But now the situation has changed. India has risen to business finance analytics in a big way.

Filed Under: Business Culture Tagged With: Business, Business and Economy, Corporate Finance, Finance, Financial Consultants, Financial services, India, Outsourcing

Business Finance Investments in IT: Role of IT Service Management

October 6, 2010 By admin Leave a Comment

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Total cost of ownership is a concept that shows an asset’s real worth. People make the mistake of basing an assets business finance worth on its contract values. Cost potential arises from a variety of possibilities that the asset might be subject to. Even difficult is to calculate the return of business finance investment. Investment values and asset values can be derived from the return-of-investment (ROI) indicator. But ROI sometimes ignores the costs associated with invested business finance.

IT infrastructure costs are constant. Technology upheavals are not overnight affairs. They take time, resources, and sound business finance investment discretion. Many a times, in the mundane chore of carrying out IT tasks, experimentation is kept on the backburner. Controllable as it might seem, IT costs on normal infrastructure maintenance and repair is never assessed for a cost recovery. Presumably, IT business finance theorists feel that IT costs can be reined when the need arises.

So how can a mechanism be established that controls and balances out IT costs? Measures for this are still out in the desert. Considering that IT costs are never in the scheme of things of business finance returns on investment.
In organizations, managements fail to understand the direct and indirect benefits of business finance investments in some areas. IT is one of those. IT is most often than not seen as a support activity. Business finance revenue is not directly attributed to its presence or absence. Now perspectives are changing with the inclusion of IT Service Management (ITSM) in the scheme of things. IT service management deals with the management of IT infrastructure. More on the customer-centricity front, ITSM seeks to map IT directly to business goals.

ITSM allows companies to make more purpose-driven business finance investments. Competitive advantage being built notwithstanding, companies now can crisscross roads of business with the roads of IT. By doing this, companies will arrive at business finance cost models that leverage the linking up of IT with drivers of business goals.

Therefore, ITSM seems to be an excellent choice for companies to standardize their IT business finance decision making.

Filed Under: Business Culture Tagged With: Business, Corporate Finance, Financial services, Investment, IT service management, Rate of return, ROI, Total cost of ownership

Infrastructure Finance in India

September 17, 2010 By admin Leave a Comment

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India’s robust growth during the recent decades can be attributed to infrastructure finance. Leading the developing countries list, India is growing at a rate of over 8 percent GDP. Business finance institutions have been instrumental in providing the financial support in the infrastructure space. Infrastructure needs to be complemented with business finance resources. But India has been well supported with business finance for infrastructure development activities.

Approving the inclusion of business finance in the infrastructure space, the government is laying a lot of impetus on the importance of the role of infrastructure finance companies. That’s specifically the reason why the eleventh five year plan of the Indian government foresees business finance investments in infrastructure to the tune of twenty crores plus. Directing the planning commission to encourage private business finance investment in infrastructure, the prime minister’s office has laid its objective clearly.

With the auguring of non-banking finance companies, the situation looks even better. Business finance in infrastructure will be given support by the Reserve Bank of India, which has developed specialized policy compartment for it. Infrastructure needs these special entities to fund exorbitant amounts that are difficult to raise in the market.
Infrastructure Financing Companies that have good credit ratings and over 300 crores in funds are given the go-ahead. Now that the Reserve Bank of India has made provisions to infrastructure finance companies, business finance in infrastructure will get more thrust.

Borrowers for business finance can expect to get more finance, since infrastructure companies can legally mobilize more than a quarter of its funds. This might not be over-leveraging, but does add more flexibility to the scheme of things in business finance. Single-group multiple borrowings can take more than forty percent over existing funds from infrastructure companies.

Infrastructure finance thrives on funds that have been invested for longer periods of time. Though individual investments are tough to come by, institutions like the World Bank and the Asian Development Bank are providing able assistance. Teaming up with these institutions, the government is ensuring long term investments in infrastructure.

Filed Under: Economic Growth Tagged With: Asian Development Bank, Business, Finance, Financial services, India, Investment, Reserve Bank of India, World Bank

Bridge Loans

September 14, 2010 By admin Leave a Comment

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Bridge loans in business finance are a short term financing arrangement. When long-term loans have phase-by-phase sanctions, the amount in each phase might not be sufficient. Sometimes long term loans in infrastructure can be delayed. To support immediate business finance requirements, bridge loans or swing loans are taken.

Bridge loans are important business finance vehicles. Without it, businesses or individuals can find it difficult to keep their business continuity. One main drawback of bridge loans is that they are expensive. Interest rates are high. Given the fact that most bridge loans are taken in real need, the bridge loan vendor might even demand equity. Collateral for the larger loan is used for bridge loans. Tough to classify it as collateral mortgage, but bridge loans leverage this arrangement for quick cash.

Bridge loans are common in India, given the nature of the Indian economy. Growing economies need flexible business finance options. News articles are abounding with companies taking bridge loans. Recently Sesa Goa took a bridge loan of around ` 2500 crores to fund its investment in Cairn India steel company. GMR infrastructure is another company that took a bridge loan of around $737 million to acquire equity presence in InterGen. The above two examples just highlight the corpus of amounts that companies take with regards to bridge loans.

Unlike other sectors, the real estate sector is often given a cold shoulder by bridge loan providers. Banks shy away from giving bridge loan business finance to this sector. Real estate in India is characterized by a lack of organization. Most real estate ventures are financially insecure, and not backed by fact. Banks face a tough time to convince its stakeholders to agree to giving bridge loans as business finance in this sector.

Even if property developers manage to obtain a bridge loan, it attracts high interest rates. Property developers use bridge loans to -show’ the property and sell advance bookings. Banks would also consider business finance options to semi-completed properties. Once the developers obtain advance booking amounts or bank loans, they use this to close the bridge loans.

Filed Under: Workforce Tagged With: Bridge loan, Business, Finance, Financial services, Loan, Mortgage loan, Real estate, Real estate development

Business Finance Sources

September 13, 2010 By admin Leave a Comment

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Enterprises need to take cognizance about the sources of business finance. Common knowledge as it may be, many people are still not sure where to reach out for funds. Businesses need business finance not just at the initial stages, but also during different stages of business progression. Different businesses will have different sources of finance. It all depends on which business finance source suits which business.

Business finance can be short-term or long-term. Based on the need, both these categories have their respective business finance sources. A trade credit is a short-term business finance option. Any credit that is offered by a supplier to a manufacturer, without the need for immediate cash payment is called as trade credit. For example, a supplier might provide a manufacturer raw material for production. Payment will not be made immediately, but after an agreed period of time.

Some banks provide short-term business finance by allowing businesses to overdraw money from their accounts. Overdraft facilities are made after a prior agreement by the bank with its customer.

Share capital has been on top of the list for long-term business finance options. A company will sell its stocks to shareholders in return for cash. It can also be defined as a process by which a company raises business finance by issuing common or preferential shares to investors. Investors may be individuals or institutions.

Venture capital is germinal business finance, invested purely for long-term results. Venture capital is also known as seed funding. Investment funds or wealth management companies will identify high-potential companies who are at their nascent stages of development. By investing at the grass-roots level itself, venture funds always have a long-term vision in mind. Venture capital is also given to established companies that have business finance needs for expansion or diversification purposes. Often, even expansion or diversification offers potential as that of a new company.

The growth of the IT sector can be largely attributed to venture capitalists who have provided business finance keeping a long-term perspective. From the year 1995, the software, hardware, and IT industry boomed, leaving venture capitalists with enormous wealth.

Filed Under: Business Culture Tagged With: Business, Business and Economy, Company, Corporate Finance, Finance, Financial services, Investment, Venture capital

Commercial Paper

September 10, 2010 By admin Leave a Comment

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In business finance, Commercial Paper (CP) refers to an unsecured payment contract. Maturity of this contract lasts up till 270 days. Commercial paper is a short-term business finance option. Since it is a collateral-less business finance option, only corporations that have favorable credit ratings get funds. Interest rates of commercial papers depend on the demand and supply of other types of prevalent business finance options. Certificate of deposits and commercial bills are some of other types of prevalent short-term financial instruments.

Credit research agencies like Credit Rating Information Services of India Ltd. (CRISIL) and a host of others may be employed by the Reserve Bank of India to determine the credit ratings of the borrowers.

Understanding a CP at a high level would be to look at it as a hand-loan given without any collateral backing. The hand-loan provider would only require a promissory note. It should be noted that the hand-loan provider would only give funds based on reliability and trustworthiness of the borrower.

India, as a rising economy has had numerous benefits from commercial papers. Funds mobilized through commercial papers stood at about forty six thousand crores as of 2008. Given the difficulties posed by the RBI for freewill external borrowings, commercial papers are proving to be an excellent source for short-term business finance.

Indian companies have benefited from the fact that commercial papers provide business finance at a much lower interest rates. Also, it need not come under the scanner of the Securities and Exchange Commission, if the maturity period of the CP is less than a year. Increase in RBI’s lending rate to banks, has increased the demand for commercial papers. RBI’s lending rate, also called the repo rate, has forced banks to also increase their lending rates. So businesses are forced to look for other alternatives. And a CP business finance option is one such enticing alternative.

Commercial papers keep a balanced borrowing power of companies from banks. Their short-term maturity model means that they self-liquidate. Commercial papers are immune to market speculation, which makes them an all the more attractive business finance option.

Filed Under: Imports & Exports Tagged With: Business, Commercial Paper, Federal Reserve System, Finance, Financial services, Interest rate, Reserve Bank of India, United States

External Commercial Borrowings in Indian Business Finance

September 8, 2010 By admin Leave a Comment

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All foreign exchange borrowings by Indian companies come under the scanner of External Commercial Borrowings (ECB) policy. Business finance instruments that fall in the external commercial borrowing category are buyer and supplier credits, bonds, credit from multilateral institutions, and so on.

Buyer’s credit is when business finance is sought from banks in foreign countries. Suppliers credit is when a manufacturer or exporter funds the buyer to buy the exporter’s goods. In the case of supplier’s credit, the exporter will take a promissory note from the importer. A post-dated cheque might also be prepared with the bank of the importer. By discounting the cheque, the exporter might realize the money. All these things happen only between businesses that have maintained a trustworthy relationship.

Another source of external commercial borrowing is foreign currency convertible bond. Before it is realized in the local currency, this bond converts to the local currency from its parent currency. Typically issued by a foreign country in its own currency, businesses other countries buy these bonds and later convert it into the local currency.

External commercial borrowings, and especially foreign currency bonds have been an excellent way for India to raise business finance. Automatic route and approval route are the two ways that Indian companies use to mobilize business finance through external commercial borrowings. External commercial borrowings for investments in real estate, infrastructure does not require approval from the reserve bank of India. These investments come under the automatic route. Government approval is required for all other external borrowings.

Indian companies planning to expand their capabilities have sought foreign currency convertible bonds extensively. To quote some examples that depict the trend in external commercial borrowings; HPCL Mittal Energy, raised business finance to the tune of $175 million through external commercial borrowings. Ranbaxy laboratories raised business finance of around $50 million this year through external commercial borrowings. All this indicates that if the government encourages this trend, local banks are not pressurized to supply monetary resources. Although more external debt might be added to the Indian economy, India’s robust growth ensures that debts don’t remain as debts.

Filed Under: Imports & Exports Tagged With: Business, Business and Economy, Currency, Economy of India, Financial services, Foreign exchange reserves, India, Reserve Bank of India

Short Term Business Finance – Factoring

September 3, 2010 By admin Leave a Comment

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Factoring is a business finance methodology that employs the use of accounts receivable bills to get cash. Account receivable bills will be invoices. Third parties do the factoring. Factors are the names given to them. Factoring cannot be classified as a loan. It is more to do with the purchase of an accounts receivable, deemed as a financial asset. Business finance to be lent is calculated based on the worth of the accounts receivable.

On a macro scale, a factor is a financial institution, and the client will be a company. On receiving the accounts receivables of a company, the financial institution will pay immediate business finance by way of cash to the company. Normally, an amount up to eighty percent of the receivable amount is paid. Also, in factoring invoices are not used as collateral. Rather, they are bought. Therefore it is a kind of sale of an asset, the asset being the receivables.

There are different types of factoring in business finance. Full service factoring is a steady factoring process by the client and the factor. Here, literally all receivables of the company are bought by the factor. Factor charges are determined in advance. Another factoring methodology in business finance is recourse factoring. In recourse factoring, the factor pays the debtor directly after deducting transaction fees from the accounts receivable payment.

A non-recourse factoring system to generate business finance is the maturity factoring methodology. Maturity factoring is a process by which the factor directly deals with the client’s customers to realize the outstanding money. Activities like accounting of the transactions are handled by the factor. Fundamentally, maturity factoring does not advance business finance to the client at the onset of the agreement. It initially deals with the customers of the client, and sees that the customers pay the money. Charging the client on the basis of collections made, the factor pegs the factoring cost on this parameter. If the customer does not pay the invoice, within a stipulated time-frame, the factor will advance business finance to the client, and then approach the client’s customer for the payment.

Filed Under: Business Culture Tagged With: Accounts receivable, Brokers, Business, Cash Flow, Factoring, Finance, Financial services, Loan