Data Recovery Centurion
FINANCIAL INSTITUTIONS INVOLVED IN CONSTRUCTION EQUIPMENTS FUNDING – OVER VIEW
FINANCIAL INSTITUTIONS INVOLVED IN
CONSTRUCTION EQUIPMENTS FUNDING – OVER VIEW
* K.Logeshwari
** V.Ramadevi
ABSTRACT
The banking system in India is significantly different from that of other Asian nations because of the country’s unique geographical, social, and economic characteristics. The financial system comprises of financial institutions, financial instruments and financial markets that provide an effective payment and credit system and thereby facilitate channels of funds from savers to the investors of the economy. The project is the result of the study on financial institutions involved in construction equipments funding. The main objective of the study is to analyze the role of financial institutions in the promotion of construction equipment funding.
The primary data was collected from various branches of financial institutions viz., Centurion, Citi Corp, HDFC, ICICI, IndusInd, Kotak, Shriram, Sundaram Finance and Tata Motor Finance in various parts of Tamilnadu, Pondicherry, Bangalore and Kerala with a structured interview schedule. For this study, the interview schedule was employed to find out the financing schemes, methodology & effectiveness in recovery of dues and the key players in the field along with their plan of investment.
INTRODUCTION
The banking system in India is significantly different from that of other Asian nations because of the country’s unique geographical, social, and economic characteristics. The financial system comprises of financial institutions, financial instruments and financial markets that provide an effective payment and credit system and thereby facilitate channels of funds from savers to the investors of the economy.
“Non-Banking Financial Company” means a non-banking institution that is a loan company or an investment company or hire purchase finance company or equipment leasing company or a mutual benefit financial company. The role of an NBFC is not different from that of a bank mobilizing money from people with the promise of replaying more.
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* Lecturer, Department of management studies and Research, Karpagam University , Coimbatore – 641021 ,Tamilnadu
* * Lecturer, Department of management studies and Research, Karpagam University , Coimbatore – 641021, Tamilnadu
No wonder, that nearly 40,000 NBFC‘s set up establishments to mobilize money with a promise of high interest. Unfortunately many of them were fly-by night operators.
Finally, the Apex bank has woken-up announcing a string of guidelines to regulate the industry. The RBI has issued a new set of directories known as the Non-banking company’s Prudential Norms or directives 2006, which came into force in January 2006. These regulations aim at protecting public deposits and ensuring that only stronger players service.
Our country’s development greatly depends upon infrastructure facilities. Currently available infrastructure facilities are inadequate. The main objective of our government is to develop all the required infrastructure facilities. It is essential to understand the present situation of infrastructure projects, contractors, manufacturers of infrastructure equipment and other financial institutions. Over the last three decades, roads have emerged as the principal mover of people and goods – almost 65 per cent of India’s freight movement and 85 per cent of India’s passenger movement (Source: www.nhai.org/roadnetwork.htm). With a total length of approximately 3.3 million kilometers, India has the second largest road network in the world. Roads have played a vital role in transportation and also enhancing trade. The government has taken initiatives to improve and strengthen the network of National Highways, State Highways and roads in major districts and rural areas.
Indian road network of 33 lakh kilometers (km) is second largest in the world. The bulk of this outlay is meant for the development of National Highways and related programmers. An expenditure of Rs. 20,505 crore is likely to be incurred in the first three years of the Plan Period. The road transport sector in India has expanded manifold in fifty years after independence, both in terms of spread and capacity. The growth in the importance of road transport within the transport sector is borne out by its growing share
in GDP. The share of road transport in GDP is presently 3.69% that accounts for a major share of all transport modes, which contribute 5.5% to GDP. The composition of road traffic has grown from 12 per cent freight and 31.6 per cent passenger traffic in 1950-51 to an estimated 65 per cent freight and 87 per cent passenger traffic during the Tenth Five
Year Plan period. Traffic on the roads is growing at the rate of 7-10 per cent per annum while the growth in vehicles has been to the tune of 12 per cent per annum for the past few years.
India has a very long road network which carries 80% of the total freight traffic. Hence road sector assumes significant importance in on-going development process. The new commercial vehicles sales will lead to more demand for finance for used vehicles as the vehicles sold now will enter into refinance market in 3 to 5 years tenure. The entry of new players from abroad, especially NBFCs owned by multinational finance companies into refinance segment can be perceived as a threat to existing players.
The present study attempts to examine the relative financial performance of different financial institutions involved in funding construction equipments, for the period 2008-09. The reasons of selecting this period for the purpose of study are:
a) During this period the numbers of NBFCs have flourished by leaps and b
About the Author
Synopsis of CRS 01-09 Budget Report