A legal document is a written agreement between two or more parties that can be relied upon in court. They can be used to establish contractual relationships, grant rights, or provide evidence for legal obligations. It is inevitable for banks to ascertain that they could easily take possession of such security based on documents obtained…
TReDS (Trade Receivables Discounting System) is an institutional setup for the flow of finance to micro, small, and medium enterprises (MSMEs) through multiple financiers at a competitive rate. The model outlined for TReDS in the paper, envisages its operation both in the primary market segment as well as a secondary market segment as authorised payment…
The credit facilities given by the banks where actual bank funds are not involved are termed as ‘non-fund based facilities’. Various types of guarantees are issued by the banks on behalf of their customers. Bank Guarantees (BG) is also known as Letter of Guarantees which can be broadly classified as (i) Financial Guarantees and (ii)…
Liquidity ratios are key financial metrics used to evaluate an entity’s ability to meet its short-term obligations without the need for external financing. These ratios are essential for assessing a company’s financial flexibility and operational health, providing critical insights to stakeholders such as investors, creditors, and management. A strong liquidity position reflects a company’s ability…
Working capital is a critical financial metric that represents a company’s ability to meet its short-term obligations using its current assets. It is primarily concerned with two major components of a business: current assets and current liabilities. 1. Understanding Current Assets and Liabilities 2. Net Working Capital (NWC) Net Working Capital (NWC) is defined as…
Working capital finance refers to short-term funding provided to businesses to support their day-to-day operational requirements. It ensures that companies maintain adequate liquidity to cover routine expenses such as inventory procurement, accounts payable, salaries, and other overheads. This form of finance is essential for bridging the gap between expenditure and revenue generation, thereby facilitating uninterrupted…
Reserve Bank of India formulated a scheme whereby a bank may raise funds by issuing Usance Promissory Notes in convenient lots and maturities on the strength of genuine trade bills discounted by it. Under the above scheme, Scheduled Commercial banks and permitted financial entities may invest by way of rediscounting trade bills of other eligible…
Reserve Bank of India has framed guidelines for extending working capital finance to the Information Technology and Software Industry, based on the recommendations of the National Taskforce on Information Technology and Software development. However, said guidelines prepared by the central bank are not mandatory for lenders. They are free to modify RBI framed guidelines, built…
Payments from Government departments or Public sector Units take time for the goods supplied to them. Similarly, a party might have taken a contract for execution and he is entitled to progressive payments based on the PSU/Government departments on work executed, for which the contractor has to submit bills in accordance with the terms and…
IntroductionProjected Financial Statement analysis is a critical internal tool used by organizations to evaluate their future financial trajectory. It builds on historical financial performance and recent earnings to forecast future outcomes. This analytical process supports informed decision-making by assessing various scenarios, such as changes in sales volume or operating expenses, and their potential impact on…