Sources of Business Finance Test - 46

Unit Trust of India was established by the Government of India in 1964 under the Unit Trust of India Act, 1963.

A commercial bank is a type of financial institution that provides services such as accepting deposits, making business loans and offering basic investment products.

Some examples of commercial bank are as follow: Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, Punjab National Bank, State Bank of India

Preference shares typically offer holders fixed dividend payments at a predetermined rate. Unlike equity shares, preference shares usually do not carry voting rights, and they may have a higher priority in capital repayment compared to equity shares in case of liquidation.

The capital obtained by issue of shares is known as share capital. The capital of a company is divided into small units called shares.

A type of preference shares, the capitals of which are to be paid back to the preference shareholders after expiry of some specified period known as redeemable preference shares.

The local currency shares of a company are delivered to the depository bank. The depository bank issues depository receipts against these shares. Such depository receipts denominated in US dollars are known as Global Depository Receipts (GDR).

Lease financing refers to an arrangement where one party, known as the lessor, grants another party, known as the lessee, the right to use an asset for a specified period in exchange for periodic payments. The lessor retains ownership of the asset while the lessee enjoys the benefits of its use. Lease financing is commonly used for acquiring assets such as equipment, machinery, vehicles, or real estate. The lessee pays lease rentals to the lessor over the lease term, and at the end of the lease period, they may have the option to purchase the asset or renew the lease agreement. This form of financing provides the lessee with access to assets without the need for large upfront payments and can offer tax benefits depending on the lease structure.

Commercial banks primarily offer loans to businesses for meeting their working capital requirements. These loans help businesses manage their day-to-day operational expenses, such as purchasing inventory, paying salaries, and covering overhead costs.

Public deposits refer to funds raised by companies directly from individual investors and depositors. These deposits are unsecured borrowings and are typically offered by non-banking financial companies (NBFCs) and certain government institutions to fund their operations.

GDR: Global Depository Receipts

GDR is issued in more than one country for raising shares globally through various stock exchanges.