Financial Products and services  

• Factoring 
  • Financing and collecting of account receivables in domestic and international trade. 
  • The factor is responsible for credit control, sales ledger administration and collection activities. 
  • This is in fact financing to the company against its invoices raised on the buyers. 
• Venture Capital 
  • It is like risk capital given as equity in the projects at early stage to make up the capital requirements by the enterprise. 
  • These are long term investments in the business which has potential for significant growth and financial returns. 
  • Regulated by SEBI. 
• Forfaiting 
  • Defined as financing exports by discounting export receivables evidenced by Bills of exchange or promissory notes carrying medium to long term maturities.  

• Leasing and finance 
  • High cost equipment and machinery etc are financed through the route of leasing and finance . Till the lease is continued its ownership remains with lessor. After expiry of lease, it can be taken back by the lesser or purchased by the lessee at written down value. 
• Hire Purchase

- This akin to leasing but difference is that rental during the predetermined  period is considered as interest or EMI and on maturity asset is transferred to the buyer. 

• Credit Rating Agencies 
  • Credit rating agencies are private companies that look into the creditworthiness of the large scale enterprises from the view point of investors confidence. 
  • They also assign the risk based rating to the companies. 
  • There are four RBI accredited Rating agencies  viz: CRISIL, ICRA, CARE and Brickwork. 
  • These companies also rate the financial instruments before their placement in the market for subscription. The rating depicts the riskiness in the financial instrument. 
• Mutual funds 
  • These are the schemes where investors’ funds are pooled by the mutual fund company and the corpus is managed for deployment in money market for returns. The investors are allotted units which get value depending on the returns of the investments by the company. 
  • Mutual fund may be equity mutual funds, debt funds or hybrid mutual funds.   
• Para Banking services
  • These are the services or activities rendered by the banks other than their normal activities of borrowing and lending. 
  • These services are commission based activities and done as an agency business. e.g: Investment advisory services, broking services, merchant banking, underwriting etc. 
  • Normally such activities are done by creating a separate business arms e.g SBI Caps etc. 
• Pension services/ schemes
  • Various pension services or facilities are there which act as financial support to the people in old age. 
  • Employee Pension Fund Organisation (EPFO)- scheme for employees 
  • Public provident fund – PPF account is a type of recurring deposit account which can be opened by any citizen in designated banks and money is available at maturity of 15 years with higher interest. The interest earned is tax free. But there is annual limit for depositing money in the account. 
  • Annuity schemes: where the accumulated invested amount upto certain period/age is reinvested to create annuity which acts as pension.   
• National Pension Scheme (NPS) :

it is a voluntary retirement saving scheme that allows individuals to contribute to the pension funds. The scheme was launched by GOI to provide social security. Regulated by PFRDA Act 2013. 

• Atal Pension Yojna

This is a pension scheme launched by GOI for unorganized sector where the monthly incomes are very low. This scheme is for the workers from 18-40 years of age and they can contribute to the insurance scheme where premium is very small and with in their range. At the attainment of age of 60 years, monthly pension of Rs 1000-5000 (depending upon the premia ) is available.  

• Real Estate Investment Trust (REIT) 

Real Estate Investment Trusts can be described as a company that owns and operate real estates to generate income. REITs are corporations that mange the portfolios of high value real estate properties and mortgages. For instance they lease properties and collect rents thereon. The rents thus collected is distributed among the shareholders /investors as income or dividends. 

• The benefits are steady dividend income and capital appreciation
• Option to diversify since most REITs are traded frequently on the stock exchange. 
• Since regulated by SEBI, more transparency is there in the dealings. 
• Investments are liquid and give high returns at nominal risk. 
• Bancassurance 

This is a partnership between a bank and an insurance company that allows the insurance company to sell its products to the bank’s customers . 

It is a combination of banking and insurance services that is beneficial for all parties involved. 

Customers can access and scout different insurance policies through their bank. 

Banks earn non-interest income by way of commission.