Long Term Sources of Finance
LONG TERM SOURCES OF FINANCE WITH REFERENCE TO INDIA
Long term sources of finance are the institutions or agencies or institutions from which finance/ funds can be raised for a long period of time. In case of sole-proprietary concerns and partnership firms long term funds are generally provided by the owners themselves or by their retained profits. But in case of Companies whose financial requirements are rather large, the following are the sources from which funds are raised: (1.) Capital Market (2.) Special Financial Institutions (3.) Mutual Funds (4.) Leasing Companies (5.) Foreign Sources (6.) Retained Earnings
CAPITAL MARKET
Capital markets refer to the organization and the mechanism through which the companies, other institutions and the government raise long-term funds. So it constitutes all long-term borrowings from banks and financial institutions, borrowings from foreign markets and raising of capital by issuing various securities such as shares, debentures, bonds etc. for trading of securities there are two different segments in capital market. One is primary market and the other is secondary market. The primary market deals with new/ fresh issue of securities and is. Therefore, known as new issue market. the secondary market on the other hand, provides a place for purchase and sale of existing securities and is known as stock market or stock exchange.
Individuals and institutions which contribute to the share capital of the company become its shareholders. They are also known as members of the company. Before shares are issued, the directors of the company have to decide on the following matters:- * The amount of capital which is to be raised by issue of shares.
* The types of shares which will be issued.
* The time of issuing shares.
SPECIAL FINANCIAL INSTITUTIONS a number of special financial institutions have been set up by the central and state governments to provide long-term finance to
Long term sources of finance are the institutions or agencies or institutions from which finance/ funds can be raised for a long period of time. In case of sole-proprietary concerns and partnership firms long term funds are generally provided by the owners themselves or by their retained profits. But in case of Companies whose financial requirements are rather large, the following are the sources from which funds are raised: (1.) Capital Market (2.) Special Financial Institutions (3.) Mutual Funds (4.) Leasing Companies (5.) Foreign Sources (6.) Retained Earnings
CAPITAL MARKET
Capital markets refer to the organization and the mechanism through which the companies, other institutions and the government raise long-term funds. So it constitutes all long-term borrowings from banks and financial institutions, borrowings from foreign markets and raising of capital by issuing various securities such as shares, debentures, bonds etc. for trading of securities there are two different segments in capital market. One is primary market and the other is secondary market. The primary market deals with new/ fresh issue of securities and is. Therefore, known as new issue market. the secondary market on the other hand, provides a place for purchase and sale of existing securities and is known as stock market or stock exchange.
Individuals and institutions which contribute to the share capital of the company become its shareholders. They are also known as members of the company. Before shares are issued, the directors of the company have to decide on the following matters:- * The amount of capital which is to be raised by issue of shares.
* The types of shares which will be issued.
* The time of issuing shares.
SPECIAL FINANCIAL INSTITUTIONS a number of special financial institutions have been set up by the central and state governments to provide long-term finance to