Derivatives are financial contracts that derive their value from an underlying asset. These contracts play a significant role in the financial markets and exhibit several key characteristics and functions. Characteristics of Derivatives Hedging Hedging involves purchasing one asset to reduce the risk of loss associated with another asset. In finance, this risk management technique focuses…
In today’s Budget 2025 presentation, Finance Minister Nirmala Sitharaman announced several development measures across six key areas, focusing on the poor, youth, farmers, and women. Key Focus Areas Major Announcements on Taxation, Business Growth, Infrastructure, and Fiscal Policies To know the tax slabs for FY 2025-26, read: “NO INCOME TAX ON INCOME UP TO ₹12…
Options are contracts through which a seller gives a buyer the right, but not the obligation, to buy or sell a specified asset (Ex: Foreign currency, shares, equities, commodities etc.) at a predetermined price, by a certain date. It means they acquire or dispose of the underlying asset at that price called the strike price.…
A “right debenture” is a form of convertible debenture, granting the holder additional rights beyond just receiving interest payments. It allows the holder to convert the debenture into a certain number of shares of the issuing company at a predetermined price within a specific timeframe, essentially giving them the option to become part-owners of the…
The Government of India has introduced the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) to enhance access to credit for Micro, Small, and Medium Enterprises (MSMEs). The scheme provides a 60% guarantee coverage through the National Credit Guarantee Trustee Company Limited (NCGTC) to Member Lending Institutions (MLIs) for credit facilities up to ₹100 crore. Key…
Introduction The Banking Regulation Act of 1949 is the primary legislation governing banking activities in India. Bank regulation involves establishing and enforcing rules for banks and other financial institutions. It aims to maintain the stability and integrity of the financial system, protect consumer interests, and promote fairness and efficiency in markets. The Reserve Bank of…
International factoring usually has two factors viz. export factor and import factor. The export factor looks at financing the exporter and collection of account receivables. The import factor evaluates the importer in respect of collecting the dues in time and assessment of chances of default by the importer. The exporter on receipt of export order…
Public Deposits Public deposits refer to unsecured deposits raised by companies from the public, primarily to finance their working capital requirements. These deposits serve as a short-term financing option for companies. In India, companies are subject to strict regulatory limits regarding public deposits. A company can accept deposits from the public up to a maximum…
Accruals are a method of accounting that records transactions when they occur, while trade credit is a financial arrangement that allows a buyer to purchase goods or services without paying immediately. Accruals Accrual accounting is an accounting method that records revenues and expenses before payments are received or issued. In other words, it records revenue…
The primary objective of working capital management is to ensure the efficient management of current assets, including cash, raw materials, work-in-process, finished goods, and receivables. Achieving this involves determining the optimal investment level in each component to support smooth business operations and financial health. The Role of Cash in Working Capital Management Cash is the…
