VAT registration Your business may be required to register for VAT if it meets certain criteria. It can also be beneficial for some businesses to register for VAT even if they are not required to.Kate Fishe r of CJ Fisher & Co explains the circumstances under which your business should be VAT registered When does a business need to be VAT registered? A business must register to pay VAT when the value of its taxable supplies exceeds the registration threshold (£79,000 per annum in 2013/14). If my turnover is below the threshold, might it still be wise to be VAT registered? Yes, if you make all or the overwhelming majority of your sales to VAT-registered businesses, because you will be able to reclaim VAT on any business expenses you incur. ‘Voluntary registration’ is the term given to becoming VAT registered even though your turnover is below the registration threshold. What does the registration process involve? You will need to complete a VAT application form, which is available from HM Revenue & Customs (HMRC). This can be completed online or you can fill out a paper copy and send it back to HMRC. There is no charge for completing the form. Once registered, you will then have to complete quarterly VAT returns online - regardless of how you originally registered. When do I need to register? You need to register if at the end of any month, the value of your taxable supplies in the previous 12 months or less exceeds the registration threshold, or if at any time you expect the value of your taxable supplies in the next 30 days alone to exceed the registration threshold. Currently, my turnover is too low, but if it looks like I'll exceed the threshold next year... As I’ve said, it can be beneficial if you make all or most of your sales to VAT- registered businesses, because you can reclaim VAT on any business expenses you incur. If I’ve only just gone over the threshold, but I won't exceed it next year, can I argue my case with HMRC?
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VAT registrationYour business may be required to register for VAT if it meets certain criteria. It can also be beneficial for
some businesses to register for VAT even if they are not required to.Kate Fisher of CJ Fisher & Co explains
the circumstances under which your business should be VAT registeredWhen does a business need to be VAT registered?
A business must register to pay VAT when the value of its taxable supplies exceeds the registration threshold
(£79,000 per annum in 2013/14).
If my turnover is below the threshold, might it still be wise to be VAT registered?
Yes, if you make all or the overwhelming majority of your sales to VAT-registered businesses, because you will be
able to reclaim VAT on any business expenses you incur. ‘Voluntary registration’ is the term given to becoming VAT
registered even though your turnover is below the registration threshold.
What does the registration process involve?
You will need to complete a VAT application form, which is available from HM Revenue & Customs (HMRC). This can
be completed online or you can fill out a paper copy and send it back to HMRC. There is no charge for completing the
form. Once registered, you will then have to complete quarterly VAT returns online - regardless of how you originally
registered.When do I need to register?
You need to register if at the end of any month, the value of your taxable supplies in the previous 12 months or less
exceeds the registration threshold, or if at any time you expect the value of your taxable supplies in the next 30 days
alone to exceed the registration threshold.
Currently, my turnover is too low, but if it looks like I'll exceed the threshold next year...
As I’ve said, it can be beneficial if you make all or most of your sales to VAT-registered businesses, because you can
reclaim VAT on any business expenses you incur.
If I’ve only just gone over the threshold, but I won't exceed it next year, can I argue my case with HMRC?
If you can provide evidence and explain why the value of your taxable supplies will not go over the de-registration
threshold (£77,000 in 2013/14) in the next 12 months, you may not have to register. However, you still have to inform
HMRC National Registration Service that you have reached the limit.
Can I reclaim VAT on business purchases before I registered?
Subject to certain conditions, you can reclaim any VAT you incurred before you registered. This would include VAT
on goods you bought for your business within the past three years and which you have not yet sold; and VAT on any
services you received not more than six months before your date of registration
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<< BACKWHO HAS TO BE REGISTERED FOR VAT?Any dealer conducting a business or intending to conduct a business may apply to be registered for VAT. However all persons conducting a business must register for VAT from the date they commence business if they believe their taxable turnover will exceed a threshold of Rs.40 lakhs in 12 consecutive calendar months.
All dealers must register for VAT if their taxable turnover exceeds Rs.10 lakhs for the preceding three consecutive calendar months.
Regardless of their taxable turnover the following dealers must register for VAT at the commencement of their business:
Every dealer importing goods in the course of business from outside the territory of India;
Every person residing outside the State but carrying on business within the State;Every dealer registered or liable to be registered under the Central Sales Tax Act 1956, or any dealer making purchases or sales in the course of inter-state trade or commerce or dispatches any goods to a place outside the State otherwise than by way of sale;Every dealer liable to pay tax at Special rates specified in Schedule VI of the AP VAT Act 2005;Every commission agent, broker, del credere agent, auctioneer or any other mercantile agent by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of his non-resident principal;Every person availing an industrial incentive in the form of a tax holiday or tax deferment;Every dealer executing any works contract exceeding Rs 5 lakhs for the State Govt. or a local authority and any dealer executing works contracts and opting to pay tax by way of composition.
<< BACK
CAN I APPLY FOR VOLUNTARY REGISTRATION?Yes. However, your activities must constitute a business for VAT purposes and you will be required to meet the conditions laid down in the AP VAT Act 2005. WHEN DO I BECOME LIABLE TO REGISTER FOR VAT?If you are in business in the categories listed in the Answer to the Question 1 above, you must register prior to the commencement of your business. For other businesses, if you are commencing a business and expect your taxable turnover to exceed, in 12 consecutive calendar months Rs.40 lakhs you must register for VAT at the commencement of the business.
If you intend to make inter-state purchases or sales or intend to dispatch goods outside the State other than by way of sale, then you must apply for VAT registration before applying for CST registration.
Other dealers have to consider their taxable turnover for the preceding 3 months and preceding 12 months. If during the past 3 months their taxable turnover exceeded Rs.10 lakhs, or exceeded Rs. 40 lakhs in the past 12 months, they must apply for VAT registration by the 15th of the following month.
Illustration: If your taxable sales exceeded Rs.10 lakhs during the preceding 3 months ending August 2005 say on 25.08.2005, your liability to be registered as VAT dealer arises at the end of August 2005.
The time to apply for VAT registration in this case is on or before 15.09.2005. You will be registered with effect from 01.10.2005.This is the date from which you are liable to charge and pay VAT. For the earlier period i.e., before 1.10.2005, you are liable for TOT.
<< BACKHOW DO I CALCULATE MY TAXABLE TURNOVER?Your taxable turnover is calculated on an ongoing basis. You should calculate at the end of each month the total value of taxable goods sold for the preceding three months. Where the total exceeds Rs.10 lakhs you are required to apply for VAT registration. You should also see whether your taxable turnover for the preceding twelve months exceeds Rs.40 lakhs. If it exceeds Rs.40 lakhs you are required to apply for VAT registration. WHAT FACTORS DO I HAVE TO CONSIDER IN DECIDING WHETHER TO APPLY FOR VOLUNTARY VAT REGISTRATION?In considering whether you should register voluntarily for VAT, you should ask yourself these questions:a. Do I make taxable sales to other VAT dealers ?If you are not registered for VAT you cannot issue tax invoices on which your customer VAT dealer can claim credit for the tax. Your customer will therefore have to charge a higher price for his sales if he cannot claim a credit for the VAT. In this case he might choose to trade with another VAT dealer and you would lose business. b. Do I trade, principally with non-VAT dealers/consumers ?In this case it is likely to be in your interest not to register for VAT. c. What are the obligations of VAT registration ?Once registered, you will have to account for output tax that is attributable to your taxable sales. You will also have to submit VAT returns monthly to the Commercial Taxes Department and keep proper books of accounts.If you decide to register voluntarily, the Law requires that you must remain registered for VAT for a period of 24 months regardless of your taxable turnover. d. Is my input tax credit likely to exceed the tax on the sales I make?In this case you will benefit from VAT registration.
<< BACK IF I WANT TO REGISTER VOLUNTARILY, CAN THE COMMERCIAL TAXES DEPARTMENT REFUSE TO REGISTER ME?Voluntary registration can be refused for one or more of the following reasons when an applicant:
Has no taxable sales;
Has no fixed place of business;
Does not keep proper accounting records;
Has not provided details of a bank account with any bank;
Has arrears outstanding under APGST Act 1957 or CST Act 1956 or AP VAT Act 2005;
Is not able to establish his identity.
Where the Commercial Taxes Department refuses an application for voluntary registration, the applicant has the right to raise an objection and to pursue the issue to a formal appeal. WHEN I REGISTER FOR VAT CAN I CLAIM A CREDIT FOR VAT I HAVE PAID ON MY GOODS IN STOCK AT THE TIME OF REGISTRATION ?Yes. However to obtain this credit you must comply with the following conditions:
The goods, including capital goods must be on hand on the date of effective registration notified on your VAT Certificate of Registration.The goods must have been purchased within the three months preceding the date of effective registration.The goods must have been purchased from a VAT dealer and you must have an invoice (not a tax invoice) from a VAT dealer with his TIN on the invoice.You must take inventory within 7 days of the date of effective registration.
YOU CANNOT CLAIM A CREDIT FOR TOT OR CST INCURRED BEFORE VAT REGISTRATION.
<< BACKHOW DO I REGISTER FOR VAT?
1 Click here to Download VAT 1002 Fill up Form VAT 100: Important Guidelines
a Sl. No. 1 to 5: Self explanatoryb Sl. No. 6: Indicate major business activities – not exceeding 5c Sl.No.7: Indicate major commodities to be traded – not exceeding 5d Sl. No. 8 and 9: Self explanatorye Sl. No. 10: Use Form VAT 100A for giving address of additional place of business if neededf Sl. No.11: Use Form VAT 100B for giving details of owners, Partners, Directors if neededg Sl. No. 12 to 13: Self explanatoryh Sl. No. 14: Indicate likely date of first sale transactioni Sl. No. 15 to 23: Self explanatoryj Sl. No. 24: Indicate here any other information which is not covered up to Sl. No. 23.
3 Click here to download VAT Form 100A if needed a. Sl. No. 1 to 3: Self explanatory4 Click here to download VAT Form 100B if needed a. Sl. No. 1 to 9 : Self Explanatory5 Paste Photo at assigned places6 Sign the applications7 Enclose following Documents
a Evidence of ownership over business premises orb Self attested copy of Rent/lease agreement (Registered) if property is taken on Rent/lease. In
case of unregistered agreement, you can pay Document Registration Fee at CTO office also through Challan.
c Self attested copy of latest Electricity Bill of Business premises in support of Electricity connection to business premises.
d At least One Evidence of proof of residence of Sole Proprietor, Person responsible, Directors, Partners: Self attested.
e EPIC Card, Passport, Driving License, Bank Statement, Telephone Bill, Electricity Bill, Photo Identity Card issued by Government, Public Sector, Recognized Educational Institution, Public Ltd Company,
f Copy of Bye Laws of Company, Partnership Firm, Society, Trust if applicable,g Bank Statement for proof of Bank Account Numberh Photo Copy of PAN card
HOW DO I REGISTER FOR CST?For getting registered under CST ACT prior registration under VAT is mandatory. The dealers who are registered under VAT can apply for CST registration in form CST A (“Application for CST registration”), which is obtainable from your Tax Office. The form to apply for Registration CST A is also available on the wesite of the CTD. You must fill in this form and submit it to the Tax Office. WHEN DO I START TO CHARGE VAT?You should start keeping VAT records and charging VAT to your customers from the date notified to you by the Commercial Taxes Department. This will be the date shown as the effective date of your registration on your Certificate of Registration. You will have to account for VAT from that date.
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Forms of financial assistance from various funding institutions
Financial institutions can be broadly classified into national financial institutions and state level institutions. Some schemes of the national institutions are administered through the state level institutions. National financial institutions cater mostly to large and medium industries. Small-scale industries get assistance, largely from state level institutions.
All India Institutions
Industrial Finance Corporation of India (IFCI) Industrial Credit and Investment Corporation of India (ICICI) Industrial Development Bank of India (IDBI) Life Insurance Corporation of India (LIC) General Insurance Corporation of India (GIC)
Unit Trust of India (UTI) Industrial Investment Bank of India (IIBI) (formerly known as Industrial Reconstruction Bank of
India (IRBI)) The Export-Import Bank of India (EXIM Bank)
State level Institutions
State Financial Corporations (SFCs) State Industrial Development Corporations (SIDCs)
Forms of Assistance
The forms of assistance can be broadly classified into direct assistance and indirect assistance. The basic feature of direct assistance is that financial institutions provide funds directly to the project, whereas, in indirect assistance, the financial institutions provide guarantees on behalf of the promoter(s) of the project.
Direct assistance
Fund based assistance
In this kind of assistance, term loans are provided in both rupees and in foreign currency. Apart from this, funds are provided by subscription to the equity shares of the company.
Rupee term loans
Rupee term loans are extended for site, construction, factory and other buildings; purchase of plant and machinery, as well as, for technical know how, preliminary and pre-operative expenses, and margin money for working capital. Generally, the repayment period is five to fifteen years with an initial moratorium of six months.
Foreign currency term loans
Institutions provide term loans in foreign currency to fund the acquisition of fixed assets like plant and machinery, as well as to acquire technical know how from foreign suppliers. Institutions generally ask for a first charge on the assets financed by them, and on all other fixed assets of the borrower, to secure the loans.
Subscription to Equity Shares
This form of assistance is available to the project only when institutions are sure that the project is not able to take any more debt, although the proposed venture is worthwhile. It is often a very small part of the project cost.
Seed Capital Assistance
This form of assistance is provided by national financial institutions through the State Finance Corporations (SFCs) and the State Industrial Development Corporations (SIDCs). All borrowers have to submit their proposals, through their respective SFCs and SIDCs. This assistance carries interest as low as one percent, and can be payable on easy terms, subject to the applicability of certain conditions.
Risk capital assistance
Risk capital assistance is almost the same as seed capital assistance. It is offered by the IFCI through a society formed under the Society Registration Act. Loans under this scheme are generally interest free and range between Rs. 15-40 lakhs, depending on the number of the promoters and the cost of the
project.
Indirect Assistance
Deferred Payment Guarantee
Financial institutions provide this deferred credit facility to the equipment suppliers on behalf of their clients and charge guarantee commission to the client. Guarantee is provided for the purchase of both indigenous and imported equipment. Most scheduled banks and co-operative banks provide this facility.
Guarantee for Foreign Currency Loans
This kind of guarantee is provided to the client as raised term loans from overseas market, directly. Institutions stand guarantee to the borrower, who is yet to establish him in the overseas market or does not have high credit standing.
Underwriting
Institutions usually underwrite the public issue of those clients, who have invested in the project cost, through term loans.
Bill Rediscounting Scheme
This scheme has been introduced by IDBI to help domestic producers and dealers of capital goods. Under this scheme, deferred payment facility is available for the purchase of machinery in all categories forms of businesses such as proprietary concerns, partnerships, private and public companies, co-operative societies and corporations.
Suppliers Line of Credit
This scheme has been floated by ICICI to enable domestic manufacturers and dealers increase their sales by offering deferred credit to their buyers. This scheme is similar to the Bill Rediscounting Scheme of IDBI.
Equipment Finance Scheme
This scheme has been offered by the two institutions- IDBI and IFCI. They provide assistance to existing units to acquire indigenous/imported equipment.
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Forms of financial assistance from various funding institutions
Financial institutions can be broadly classified into national financial institutions and state level institutions. Some schemes of the national institutions are administered through the state level institutions. National financial institutions cater mostly to large and medium industries. Small-scale industries get assistance, largely from state level institutions.
All India Institutions
Industrial Finance Corporation of India (IFCI) Industrial Credit and Investment Corporation of India (ICICI) Industrial Development Bank of India (IDBI) Life Insurance Corporation of India (LIC) General Insurance Corporation of India (GIC) Unit Trust of India (UTI) Industrial Investment Bank of India (IIBI) (formerly known as Industrial Reconstruction Bank of India
(IRBI)) The Export-Import Bank of India (EXIM Bank)
State level Institutions
State Financial Corporations (SFCs) State Industrial Development Corporations (SIDCs)
Forms of Assistance
The forms of assistance can be broadly classified into direct assistance and indirect assistance. The basic feature of direct assistance is that financial institutions provide funds directly to the project, whereas, in indirect assistance, the financial institutions provide guarantees on behalf of the promoter(s) of the project.
Direct assistance
Fund based assistance
In this kind of assistance, term loans are provided in both rupees and in foreign currency. Apart from this, funds are provided by subscription to the equity shares of the company.
Rupee term loans
Rupee term loans are extended for site, construction, factory and other buildings; purchase of plant and machinery, as well as, for technical know how, preliminary and pre-operative expenses, and margin money for working capital. Generally, the repayment period is five to fifteen years with an initial moratorium of six months.
Foreign currency term loans
Institutions provide term loans in foreign currency to fund the acquisition of fixed assets like plant and machinery, as well as to acquire technical know how from foreign suppliers. Institutions generally ask for a first charge on the assets financed by them, and on all other fixed assets of the borrower, to secure the loans.
Subscription to Equity Shares
This form of assistance is available to the project only when institutions are sure that the project is not able to take any more debt, although the proposed venture is worthwhile. It is often a very small part of the project cost.
Seed Capital Assistance
This form of assistance is provided by national financial institutions through the State Finance Corporations (SFCs) and the State Industrial Development Corporations (SIDCs). All borrowers have to submit their proposals, through their respective SFCs and SIDCs. This assistance carries interest as low as one percent, and can be payable on easy terms, subject to the applicability of certain conditions.
Risk capital assistance
Risk capital assistance is almost the same as seed capital assistance. It is offered by the IFCI through a society formed under the Society Registration Act. Loans under this scheme are generally interest free and range between Rs. 15-40 lakhs, depending on the number of the promoters and the cost of the project.
Indirect Assistance
Deferred Payment Guarantee
Financial institutions provide this deferred credit facility to the equipment suppliers on behalf of their clients and charge guarantee commission to the client. Guarantee is provided for the purchase of both indigenous and imported equipment. Most scheduled banks and co-operative banks provide this facility.
Guarantee for Foreign Currency Loans
This kind of guarantee is provided to the client as raised term loans from overseas market, directly. Institutions stand guarantee to the borrower, who is yet to establish him in the overseas market or does not have high credit standing.
Underwriting
Institutions usually underwrite the public issue of those clients, who have invested in the project cost, through term loans.
Bill Rediscounting Scheme
This scheme has been introduced by IDBI to help domestic producers and dealers of capital goods. Under this scheme, deferred payment facility is available for the purchase of machinery in all categories forms of businesses such as proprietary concerns, partnerships, private and public companies, co-operative societies and corporations.
Suppliers Line of Credit
This scheme has been floated by ICICI to enable domestic manufacturers and dealers increase their sales by offering deferred credit to their buyers. This scheme is similar to the Bill Rediscounting Scheme of IDBI.
Equipment Finance Scheme
This scheme has been offered by the two institutions- IDBI and IFCI. They provide assistance to existing units to acquire indigenous/imported equipment.
Financial institutionFrom Wikipedia, the free encyclopedia
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Financial InstituionsPublicSector
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NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (NABARD)
NABARD, an apex development bank, was set up on the recommendations of CRAFICARD Committee on July 12, 1982 under NABARD Act 1981 with a capital of Rs.100 crore contributed by Central Govt. and RBI, with its main office in Mumbai, by merging the Agriculture Credit Deptt and Rural Planning and Credit Cell of RBI and took over the entire functions of Agriculture Refinance and Development Corporation (ARDC).
NABARD is managed by Board of Directors consisting of Chairman, Managing Director other directors.
NABARD raises funds through National Rural Credit - Long Term operations, National Rural Credit-Establishment fund, through bonds and debentures guaranteed by Central Govt, borrowing from RBI, Central Govt. or any other organisation approved by Central Govt and funds from external sources.
It credit functions include providing credit to agriculture, small and village and cottage industries through banks by way of refinance facilities to commercial banks, RRBs, Coop Banks, Land Development Banks and other Financial Institutions like KVIC. Its developmental functions are co-ordination of various institutions, acting as agent of Govt. and RBI, providing training and research facilities. The regulatory functions include inspection of RRBs and Coop Banks, receipt of returns and making of recommendations for opening new branches.
It is apex institution for co-ordinating the working of institutions in India engaged in financing exports and import of goods and services. With initial authorized capital of Rs. 200 crore (increased to Rs.500 and then to Rs.2000 crore) Exim Bank was established on Jan 01, 1982 (and started functioning wef March 01, 1982) under Export Import Bank of India Act 1982, which took over the export finance activities of IDBI. It raises funds by way of bonds and debentures, borrowing from RBI or other institutions, raising foreign deposits.
It undertakes following kind of functions:
-direct finance to exporter of goods. -direct finance to software exports and consultancy services. -finance for overseas joint ventures and turnkey construction project -finance for import and export of machinery and equipment on lease basis -finance for deferred payment facility -issue of guarantees -multi-currency financing facility to project exporters. -export bills re-discounting -refinance to commercial banks in India -guaranteeing the obligations.
SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)
SIDBI was established under SIDBI Act 1988 and commenced its operations wef April 02, 1990 with head quarters in Lucknow and branches all over the country, as a subsidiary of IDBI. It took over the IDBI business relating to small scale industries including National Equity Scheme and Small Inds Development fund. The objective of establishment of SIDBI, in particular, is to strengthen and broad-base the existing institutional arrangement to meet the requirement of SSI and tiny industries.
Its functions include: -administration of SIDF and NEF for development and equity support to small and tiny industry. -providing working capital through single window scheme -providing refinance support to banks/development finance institutions. -undertaking direct financing of SSI units. -coordination of functions of various institutions engaged in finance to SSI and tiny units.
NATIONAL HOUSING BANK (NHB)
NHB, the apex bank for Housing, was established on July 09, 1988 under NHB Act 1987, as a wholly owned subsidiary of RBI with head quarters in New Delhi. The bank was set up with the main purpose of setting up of an institution to operate as a principal agency to promote housing finance institutions and to provide financial and other support to these institutions. NHB can raise sources by issue of bonds and debentures, borrowing from RBI under short term loans and long term operations, borrowing from Central govt and other approved institutions. Its functions are: -promotion and development of housing finance institutions. -refinance to banks and other housing finance institutions for credit facilities granted by them for housing. -inspection of books of accounts of housing finance institutions -technical, administrative and advisory assistance to housing finance institutions. -providing underwriting and guarantee facilities to housing finance institutions. -arranging financing and resources for institutions engaged in housing facilities. -advising Central and other govt. in the matter of housing and housing finance. -collection and publication of information and data relating to housing finance.
-maintaining control over corporate housing finance institutions.
INDUSTRIAL INVESTMENT BANK OF INDIA (formerly IRBI)
IIBI was initially set up as Industrial Reconstruction Corporation Limited during 1971 when it was renamed Indl Reconstruction bank of India wef Mar 20, 1985 under IRBI Act 1984 to take over the function of IRC. During 1997 the bank was converted to a joint stock company by naming it Industrial Investment Bank of India. Its earlier functions were to provide finance for industrial rehabilitation and revival of sick industrial units by way of rationalisation, expansion, diversification and modernisation and also to co-ordinate the work of other institutions for this purpose. agricultural and rural requirements.
INDUSTRIAL FINANCE CORPORATION OF INDIA Ltd (IFCI)
IFCI was established under IFCI Act 1948 during July 1948 as India’s first development bank. The main objective for which IFCI was established, are to make medium and long term credit available to the industrial undertakings and to assist them in creation of industrial facilities. Its functions include: -direct financial support (by way of rupee term loans as well as foreign currency loans) to industrial units for undertaking new projects, expansion, modernisation, diversification etc. -subscription and underwriting of public issues of shares and debentures. -guaranteeing of foreign currency loans and also deferred payment guarantees. -merchant banking, leasing and equipment finance
During 1994, IFCI was converted into a joint-stock company and came out with a public issue of shares. It is managed by a Board of Directors. It floated institutions such as TFCI, ICRA etc.
INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA (ICICI)
ICICI was set up during 1955 as a private company with a view to provide support to industry in India by way of rupee and foreign currency loans, particularly the private international investment and World Bank funds to assist the industry in the country in private sector. It functions include: -assistance to industrial undertakings for new projects, expansion, modernisation, diversification etc. in the shape of rupee loans or foreign currency loans. -subscription and underwriting of capital issues -guaranteeing the payment for credits. -merchant banking, equipment leasing and project counselling.
It floated a number of institutions successfully which include credit rating agency CRISIL, ICICI Banking Corporation, SCICI (since merged with it) a Mutual Fund etc. During Sept 1998 it changed its name to ICICI Ltd.
Of late, it has started providing working capital support to industrial undertakings.
INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI)
IDBI is the apex institution in the area of long term industrial finance. It was established under the IDBI Act 1964 as a wholly owned subsidiary of RBI and started functioning on July 01, 1964. Under Public Financial Institutions Laws (Amendment) Act 1976, it was delinked from RBI. IDBI is engaged in direct financing of the industrial activities as well as in re-finance and re-discounting of bills against finance made available by commercial banks under their various schemes.
The objectives of this institution are to create a principal institution for long term finance, to coordinate the institutions working in this field for planned development of industrial sector, to provide technical and administrative support to the industries and to conduct research and
development activities for the benefit of industrial sector.
It raises funds by way of market borrowing by way of bonds and deposits, borrowing from Govt. and RBI, borrowing abroad in foreign currency and lines of credit.
Its functions include: -direct loans (rupee as well as foreign currency) to industrial undertakings as defined in the Act to finance their new projects, expansion, modernisation etc. -soft loans for various purposes including modernisation and under equipment finance scheme -underwriting and direct subscription to shares/debentures of the industrial companies. -sanction of foreign currency loans for import of equipment or capital goods. -short term working capital loans to the corporates for meeting their working capital requirements. -refinance to banks and other institutions against loans granted by them.
Of late, with the reforms in the financial sector, IDBI has taken steps to re-shape its role from a development finance institution to a commercial institution. It has floated its own bank IDBI Bank as also a Mutual Fund.
During the financial year 1999-2000 IDBI’s total sanctions were Rs.28308 cr (19.2% increase), the total assets were Rs.72169 cr, net worth at Rs.9025 cr, capital adequacy ratio of 14.5%, DER 6.8:1 and PBT Rs.1027 cr (1301 cr previous years). To meet emerging challanges, it has been introducing new products, setting up Mergers & Acquistions Divn, increasing fee based business such as corporate advisory services, credit syndication, debenture-trushtee ship etc., setting up of IT sector subsidiary-IDBI Intech Ltd, venture capital fund, joint ventures and transfer of not less than 51% of IDBI’s share capital in SIDBI to PSBs as a result of SIDBI (Amendment) Act 2000 effective from 27.03.2000.
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Credit analysisFrom Wikipedia, the free encyclopedia
This article relies largely or entirely upon a single source. Relevant discussion may be found on the talk page. Please help improve this article by introducing citations to additional sources. (January 2014)
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Credit analysis is the method by which one calculates the creditworthiness of a business or organization. In
other words, It is the evaluation of the ability of a company to honor its financial obligations. The audited
financial statements of a large company might be analyzed when it issues or has issued bonds. Or, a bank may
analyze the financial statements of a small business before making or renewing a commercial loan. The term
refers to either case, whether the business is large or small.
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Definition of 'Credit Analysis'
A type of analysis an investor or bond portfolio manager performs on companies or other debt issuing entities encompassing the entity's ability to meet its debt obligations. The credit analysis seeks to identify the appropriate level of default risk associated with investing in that particular entity.
By identifying companies that are about to experience a change in debt rating, an investor or manager can speculate on that change and possibly make a profit. For example, assume a manager is considering buying junk bonds in a company, if the manager believes that the company's debt rating is about to improve, which is a signal of relatively lower default risk, then the manager can purchase the bond before the rating change takes place, and then sell the bond after the change in rating at a higher price.