- Channel financing
2.1 Multichannel Strategy for the Financial Services Industry
3. Financial instruments
3.1 Floating rate Bonds
3.2 Zero interest bonds
3.3 Deep discount bonds
3.5 Auction rate security
3.6 Secured premium notes
3.7 Non-Convertible Debentures
3.8 Secured Zero Interest Partly Convertible Debentures with detachable
3.9 Separately tradable warrants
3.10 Fully convertible debentures
3.11 Differential shares
3.12 Securitised paper
3.13 Collateralised debt obligations
3.14 Inverse float bonds
3.15 Perpetual bond
3.16 Municipal bonds
Finance is a comprehensive term that defines events and happening associated with banking, leverage or debt, credit, capital markets, money, and investments. Finance also involves the oversight, creation, and study of money, banking, credit, investments, assets, and liabilities that make up economic systems.
A channel in finance and economics means a distribution channel which is a structure of intermediaries between the producers, suppliers, wholesalers, retailers, distributors, consumers and even the Internet for the movement of a good or service. Therefore Channel financing is a structured programme where the bank offers short term working capital facilities to the supply chain stake holders. Moreover the channel financing is different from the conservative lending
Multichannel Strategy for the Financial Services Industry
As companies increase the channels in which they interact with customers also increases. Therefore, those customers expect a reliable experience across those channels. Yet multichannel strategy has largely been considered a technology issue. But many companies have invested in infrastructure to deploy multichannel initiatives, most remarkably in the retail industry which is used for usability and functionality around marketing activity. This approach misses the deeper customer strategy inherent in multichannel, particularly around sales and service. And multichannel activity is often measured from cost perspective, not as a potential revenue generator because of its technical nature. It’s time for businesses to outbuilding their predetermined ideas of multichannel strategy and following are the potential for:
• As long as a constant and positive customer experience
• Producing returns while declining costs
• Serving a variety of industries
The banking sector is ready for true multichannel customer strategy, based on changing customer behaviour and market conditions, banks have invested heavily in multichannel distribution in recent years. Thus in several cases, channels still operate as storage tower so banks can’t offer a seamless experience to their customers.
Financial instruments are monetary contracts between parties. They can be currency, indication of an ownership interest in a contract or a pledged right to receive or deliver. Financial instruments are assets which is traded, or packages of capital that may be traded. These assets can be cash, a contractual right to deliver or receive cash or another type of financial instrument, or evidence of one’s ownership of an entity. Let’s see in details about the type of financial instruments below
Floating rate Bonds are notes that have a variable coupon, equal to a money market rate such as libor or federal funds rate, along with constant quoted spread rate that remains constant.
Zero interest bonds: Face value which is repaid at the maturity period that take on a positive time value of money. There is no periodic interest payments called coupons.
Deep discount bonds sell at a discount of 20% or more to par and produce considerably higher than the usual rates of fixed-income securities with a similar profiles
Underwriting is the process where individual or institution takes on financial risk for a fee and risk taker write their name under the total amount of risk they were willing to accept for a specified premium.
Auction rate security type of variable-rate debt security that is sold through a Dutch auction. This is generally in bond with a long-term maturity of 20 to 30 years
Secured premium notes are distributed with detachable warrants and are redeemable after certain period. It is a kind of non-convertible debenture (NCD) attached with warranty
Non-Convertible Debentures enable the holder to buy a number of shares from the company at a predetermined price for definite time frame. The warrants attached to NCDEs are allotted for full payment of the NCDs value.
Secured Zero Interest Partly Convertible Debentures with detachable is a convertible portion that allows equity shares to be exchanged for debentures at a fixed amount on the date of allotment.
Separately tradable warrants once the price of the underlying increases above the exercise price, the warrant’s holder can exercise the warrant and buy the underlying below the market price or sell the warrant in the market.
Fully convertible debentures is the debt security in which the entire value is convertible into equity shares at the issuer’s notice.
Differential shares are same as ordinary equity shares except such stock does not dilute the promoters voting rights and makes it difficult for hostile takeovers
Securitised paper are the bond or note, which results from a borrower and investor agreeing on an exchange of funds by means of securitization.
Collateralised debt obligations is a type of structured asset-backed security. Originally developed as instruments for the corporate debt markets.
Inverse float bonds imply an inverse floater, with a type of debt instrument used in finance whose coupon rate has an inverse relationship to short-term interest rates.
Perpetual bond is a bond with no maturity date, it may be treated as equity, not as debt. Issuers pay coupons on perpetual bonds forever, and they do not have to redeem the principal.
Municipal bonds is a bond issued by a local government or one of their agencies. And mainly used in public projects such as roads, schools, airports and seaports, and infrastructure-related repairs.