The basic work of a bank is to accept the surplus and / or investible money from public and lend the same to the needy persons known as Depositors and Borrowers respectively.
Introduction: Before globalization and liberalization or after that, the basic function of a Public Sector Lenders even today remains the same i.e., working capital finance. The working capital finance normally a short term running credit for a maximum period of one year.
This quantum of finance is assessed under various methods like Turnover Method, Flexible Bank Finance method etc. Whichever way we assess the quantum of finance, it basically depends upon two documents: The audited Balance Sheet and P&L account. The projected balance sheet is submitted to the bankers for the purpose of assessing the quantum of finance based on the balance sheet. It is interesting to note at this point that a full year’s need for working capital of a borrower is based on audited balance sheet which is the snapshot of the business concern as on a particular day. Whichever method we decide the quantum of finance one single element "The Margin" plays a crucial role in finalizing the working capital limits. This entire article is devoted to the clear and unambiguous understanding of the concept of margin.
What is margin?
Traditionally, when a new officer takes charge of the credit department, he is bombarded with technical jargons like "Audited Balance Sheet", "Turnover", Projected Sales", "P&L Account" "Current Assets", "Current Liabilities" etc. From the day the officer begins the career till the cessation of service one item that is often referred in assessment of working capital limits is the margin.
Anyone would have got their first lesson in starting the credit department is first to bifurcate the balance sheet as per the needs of the bankers. The rudimentary lessons are taught in basic segregation of balance sheet into Long Term Sources, Long Term Uses, Short Term Sources and Short Term Uses.
Diese Geschichte stammt aus der October 2016-Ausgabe von BANKING FINANCE.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent ? Anmelden
Diese Geschichte stammt aus der October 2016-Ausgabe von BANKING FINANCE.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent? Anmelden
The Future Of Banking: Voice Banking
The Banking industry has undergone a series of transformative changes over the years, driven by technological advancements. One of the most exciting and disruptive innovations in the financial sector is voice Banking.
RBI CIRCULAR
1. Please refer to paragraph 4 of Statement on Developmental and Regulatory Policies issued as a part of the Bi-monthly Monetary Policy Statement for 2024-25 dated April 05, 2024 read with Paragraph 1.10 of the 'Operating Guidelines for Small Finance Banks' dated October 6, 2016.
UNLOCKING SOCIAL IMPACT: THE RISE OF SOCIAL BONDS IN SUSTAINABLE INVESTING
In the context of financial markets, social bonds refer to a specific type of bond issued by governments, municipalities, or organizations to raise capital for projects with social or environmental benefits.
MODERN AND CREATIVE WAYS OF MONEY LAUNDERING: A SNEAK PEEK IN MODUS OPERANDI
Every year, an astonishing $800 billion to $2 trillion circulates through the global economy as laundered money, making up 2-5% of global GDP.
TRANSFORMING FINANCE: UNDERSTANDING THE EVOLUTION OF FINTECH INNOVATION AND REGULATORY FRAMEWORKS
The constantly evolving field of financial technology, or FinTech, has brought about a significant transformation of the world's financial scene.
FINTECHS: ISSUES AND CHALLENGES
Fintech is a combination of two words \"financial\" and \"technology\".
WHY CBDC WHEN WE HAVE UPL..??
The world is rushing to develop Cash 2.0. Globally, central banks are in pursuit of Central Bank Digital Currency (CBDC) projects.
Insolvency's Group Tangle
The Insolvency and Bankruptcy Code (IBC) has been around for nearly seven years, and in these seven years, it has been amended six times. However, it is yet to address a significant concern: group insolvencies.
Why mot retirees don't find refuge in reverse mortgage
It would be the deal of the century, or so Andre-Francois Raffray could have thought. The Frenchman had in December 1965 stuck a deal with 90-year-old Jeanne Calment to pay her 2,500 francs every month until she died.
The rise and rise of mutual funds
It is curious that the cake cutting and champagne popping that accompanied the Nifty's new lifetime high in recent weeks, was not in evidence when the mutual fund industry topped Rs. 50 lakh crore in assets.