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SOURCES OF FUNDS


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Group members Arpit .Ganorkar

Namrata .Kamble 21

Preeti. Komurlekar 28

Rajesh .Kumbhar 29


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Sources of Funds

Companies raising funds for through varioussorces. Sourcing money may be done for avariety of reasons. Traditional areas of needmay be for capital asset acquirement - newmachinery or the construction of a new buildingor depot. The development of new products canbe enormously costly and here again capitalmay be required. Normally, such developmentsare financed internally, whereas capital for theacquisition of machinery may come fromexternal sources.


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Capital market


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Securities Exchange Board of

India ( SEBI April 12 , 1992)


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Equity shares

Equity shares/capital represents ownershipcapital 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.


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Preference shares.


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Types of preference

sharesCumulativeNon-cumulative

ConvertibleNon convertible

Redeemable

Non-redeemable

Transferable

Non-transferable


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Debentures


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Types of debentures


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Non-Convertible

Non-convertible debentures, which aresimply regular debentures, cannot beconverted into equity shares of the liable

company. They are debentures without theconvertibility feature attached to them


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BONDS

In finance a bond is a debt security, in which theauthorized issuer owes the holders a debt and, dependingon the terms of the bond, is obliged topay interest (the coupon to use and/or to repay the

principal at a later date, termed maturity A bond is aformal contract to repay borrowed money with interest atfixed intervals (semi annual, annual, sometimes monthly).Thus a bond is like a loan the holderof the bond is the

lender (creditor), the issuerof the bond is the borrower(debtor), and the couponis the interest. Bonds providethe borrower with external funds to finance long-term investments.


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Types of Bonds


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Non-Banking Financial

Institutions ( NBFC)Non-bank financial companies (NBFCs)are finance institutions thatprovide 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 takedeposits from the public. Nonetheless,

all operations of these institutions arestill exercised under bank regulation


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Types of NBFC


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Classification of NBFC on basis of

funds which they provided1. 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 assetis tangible property.

Types of lease

Fixed term tendency Periodic tendency

Tendency at will


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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.


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Treasury bills

Treasury bill is a basically an instrument ofshort term borrowing by Government of India

It is a particular kind of finance bill or

promissory notes issued by RBI on behalf ofgovernment.

T bills are bills which does not arise from anygenuine transaction in goods.

They are negotiable securities and issueddiscount and are paid at par on maturity.


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Commercial paper


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Bills of exchange

it is a document guaranteeing the paymentof specific amount of money either on

demand or at a set time.It is a bill which is transferable

It is negotiable document.


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Certificate of Deposit

CD is the marketable receipt of fundsdeposited in bank for a fixed period at

specific rate of interest

They are bearer documents/instrumentsand readily negotiable.

They are attractive both to the investor

and bankers.

Documents

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