Banking and Financial News – 20 May 2014

SKS Microfinance set to raise Rs 400 crore through QIP (Mint) - SKS Microfinance Ltd, India’s only listed microlender, on Tuesday informed stock exchanges that its board, at a meeting held on 19 May, had decided to sell shares to institutional investors to raise Rs.400 crore.

ECGC to offer factoring facility for MSMEs (The Hindu) – The govt owned ECGC (Export Credit Guarantee Corporation of India) would offer direct factoring facility for MSMEs (Micro, Small and Medium Enterprises) in 2014-15 to help meet their working capital requirements.

Important Financial Terms in the News explained.

Micro Finance or Microlending : Micro Finance aims at alleviation of poverty and empowerment of weaker sections in India. In micro finance, very small amounts are given as credit to poor in rural, semi-urban and urban areas to enable the borrowers to raise their income levels and improve living standards.

Listing means formal admission of a security (Equity Shares of a company or bonds / debentures issued by companies / govt. or units issued by a mutual fund) to the trading platform of a stock Exchange. It provides liquidity to investors without compromising the need of the issuer for capital and ensures effective monitoring of conduct of the issuer and trading of the securities in the interest of investors. The issuer wishing to have trading privileges for its securities satisfies listing requirements prescribed in the relevant statutes and in the listing regulations of the Exchange. It also agrees to pay the listing fees and comply with listing requirements on a continuous basis. All the issuers who list their securities have to satisfy the corporate governance requirement framed by regulators.

Factoring : Business of buying at a discount, from the seller of goods / services, his trade debts (dues to him from his customers or the buyers of his goods and services, where he has sold them on credit) and making a profit when debt is realized and also taking over collection of trade debts at agreed prices.

Micro, Small & Medium Enterprises – Two types viz. Manufacturing and Services

Manufacturing Enterprises – Manufacture or Production of goods pertaining to any industry employing P & M in process of value addition to a final product having distinct name or character or use.

Service Enterprise – Engaged in providing or rendering of services. Classification based on Investment in Equipments.

Then, the Classification is based on Investment in Plant & Machinery (P&M)

Short Forms / Acronyms

ECGC – Export Credit Guarantee Corporation of India

MSMEs – Micro, Small and Medium Enterprises

If you can walk you can dance. If you can talk you can sing. - Zimbabwean Proverb

Courtesy : Mint , The Hindu