Factoring: : Concept, Types, Functions of factor, Legal Aspects, Evaluation of factoring, Factoring services in India, Factoring vis-à-vis bill discounting, credit insurance, forfeiting. Reason for slow growth of Factoring in India. Bill financing: bill of exchange, definition, steps in bill discounting, bill market in India. Concept: Factoring is the fund based financial service which is rendered by specialized persons known as factors. Cash is the scarce resource for every business unit. Business house who sells goods on credit basis have to wait till long in order to receive the payments for the goods and services they have provided to the customer. In such trade cash gets locked in the form of receivables which needs time for realization. …show more content…
They are as follows. 1. Full factoring: It is the most comprehensive form of factoring. It is the combination of almost all the factoring services. Also known as old line factoring . it provides entire line of services like collection, credit protection , sales ledger administration and short term finance. 2. Recourse factoring : Under this type of factoring the factor has the right to demand the payment from the seller in case of default by the buyer. This means that the factor does not take the risk associated with receivables. The factor is entitled to recover the amount paid in advance from the client. In this case , the factor charges the customer for maintain the sales ledger and other debt collection services. He charges interest on the amount for the period drawn by the client . 3. Non – recourse factoring: In this case factor assumes the risk on the bad debts. In case of default he has no right to recover the amount from the supplier and can proceed against the customer. If in case the customer refuses to repay the amount than only the factor has right to proceed against the supplier. This kind of factoring arrangements are found in developed countries like U.S.A. and U.K, where reliable credit rating services are …show more content…
Many of the suppliers of goods services experience difficulty in collecting their book debts. Delay in collection leads towards liquidity problems, delayed production and supply affecting economic growth. The Vaghul committee report had observed that introduction of factoring services help in great extent to solve financial problems of the suppliers. The RBI formed a committee headed by C.S. Kalyansundram , a former managing director of the State Bank of India to examine the need for the factoring organization in India. The committee submitted its report in 1988 and recommended introduction of such services in India .RBI issued guidelines for factoring services in India in 1990. The SBI factors and commercial services Private limited was the first factoring company.it started its operations in Aril 1991.In 1992, Canbank Factors limited was allowed to operate in southern part of India. The first private sector factoring company – Foremost Factors limited commenced operations from 1997. Now they are permitted to operate over wide market. Factors inhibiting growth of factoring in India: Factoring industry has grown to the major extend all over the world. More than 1 lakh business houses are using factoring services over 7 million customers worldwide. The factoring volume is quite low in India. The factors inhibiting growth of factoring volumes
...-based, charge-based, and contractual payment systems. (p. 7). CRC Press. Retrieved from http://books.google.com/books?id=sCzhN9HruM0C&dq=fee schedule based payment&source=gbs_navlinks_s
From time to time, lenders and their attorneys announce that lender liability is no longer an issue with which the lending community needs to be concerned. What usually prompts this proclamation of the death of lender liability is a recent case in which a court has summarily rejected a borrower’s claim that the lender violated the duty of good faith and fair dealing. Many courts have rejected borrowers’ lawsuits which are based on allegations of the violation of the lender’s duty of good faith. Nevertheless, lender liability should continue to be an area of concern to lenders.
Prior to the winding-up of an insolvent company, its creditors may individually enforce any measure available to them in order to obtain payment of the debt owed to them by such company. However, upon the opening of the winding-up proceedings these individual actions are replaced by a collective insolvency regime which attempts to ensure the rateable and equitable distribution of the assets of the insolvent company among its creditors. This distribution is known as pari passu distribution.
· There is the possibility of the supplier integrating forwards in order to obtain higher prices and margins. This threat is especially high when
Wilson, Beth Anne, & Keim, Geoffrey N. (2006). India and the Global Economy. Business Economics, 41(1), 28-36.
(1) A party to a contract ´deals as consumer´ in relation to another party if -
so doing the business in India which is the Metro Cash & Carry that can be applied in
Political factors: In India, there are very tough regulations put in place by the Indian govt. to avoid the monopoly conditions and govt. control remains at the top. This company is generally the state owned company therefore the decision making is very hard for the company and company has to follow the political changes which happen in the India. India has disputes with the Pakistan and China, which is continuously affecting the industry.
The market for IT industry was huge and expanding at a fast pace. However the market leaders were Accenture and IBM which had a negligent market share and rest was captured by small enterprises. Indian companies also ventured in the industry and due to their competition, IT multinational giants had to increase their base in India. Due to high opportunities, attrition rate was also high in this industry. As a result Indian companies like Wipro, Infosys increased their base level salaries. During this phase, Indian economy was transforming towards an era of information and knowledge. This can be seen from the fact that contribution of services towards the economy’s GDP was higher than 18% in 2001 as against in 1980. No other industry had done better standing against global competition. The annual exports had always been over 50% over a decade. U.S.A. share represents highest with 61% and about a third of Fortune 500 companies outsource their software work to India. To foster development, Indian government has taken a number of steps like liberalization of policies and providing necessary capital and infrastructure to foster growth. Thus Indian environment has been conducive for growth. (Ref: Indian Embassy.org) Competitor analysis- The market for IT industry was fairly competitive with IBM and Accenture as global leaders and rest of the market was pretty diffused. IBM and Accenture had strong brand and a global presence with a large customer base. They also offered panoply of services viz. technology implementation, business consulting, offshore services, customer relationship management etc. Both offered breadth and depth of services. IT market in India offered technical and business consulting with Tata Consultancy Services which was the market leader in IT exports and Wipro Technologies and Infosys being other major market players. TCS offered consultancy services, IT services, asset based solution etc. Wipro was third largest IT provider with service offerings in IT consulting, software solutions, BPO etc. Both had a strong global presence. Intensity of Rivalry: Rivalry amongst competitors was pretty intense as can be seen the Indian competition caused IBM to increase their presence in India. However leaders like IBM and Accenture had a wide range of service offerings so competition was only amongst few sectors. Rivalry was to hire the top talent as human capital is the most important thing in the IT sector. This is the reason that attrition rate lead to a rise in pay packages.
This paper provides the details about the Current law and FMCB deal with peer-to-peer lending. Here current law describes about the Securities which are offered globally.
The will be in question the adequate amount of compensation, the degree that the all parties involved have failed to perform and will suffer forfeiture along with the behavior of the parties that have failed to perform with the values of goods faith and fair dealing.
The management of cash is essential to the survival of any organization. Managing an organization’s financial operation requires knowledge of the economy and ways to maximize revenue. For any organization to operate on a daily basis adequate cash flow is required. Without cash management the organization will be unable to function because there is no cash readily available in case of inconsistencies in the market. Cash is also needed to keep the cycle of the company’s operations going.
When two parties enter into negotiation, or a transaction, that are perceivable as a part of a contract intended by the parties to be concluded in future, a relationship of a legal nature is presumed to begin. Thus, where a person asks the banker to open an account for him, and is yet to lodge cash or a cheque for collection, a contractual relation is said to arise. The actual transactions in the account will only strengthen the relationship in terms of the benefits and obligations flowing from a contract.
Also, in instances where the issuer fails to pay the principal amount back to the bond holder,
It investigates the various schemes under financial inclusion plan. The study will pave way to identify the achievements of PMJDY scheme & its contribution towards inclusive growth.