Student Name : XXXXX XXXXX

Roll No : XXXX

MFM :2018

Semester :5

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 Index

Sr No. Particular Page #

A Introduction of the Financial Industry 4
a. Financial Industry in India 4
b. History of Financial Industry in India 5
B Non-Banking Financial Company (NBFC) 5
a. Financial activity as “principal business” mean. 5
b. difference between Banks & NBFCs. 6
c. systemically Important of NBFCs. 6
d. Functions of NBFC. (Products & services) 6,7,8
C Introduction of Edelweiss Group 9
a. Edelweiss Business from Two Decades 9
b. Phase of Edelweiss 10,11
c. Products & Services of Edelweiss Finance 11, 12 ,13
D Comparison Industry Services Vs. Edelweiss Finance 14
E Conclusion & Recommendations 14

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 A. Introduction of the Financial Industry
The financial services industry encompasses many types of businesses involved in managing
money, and it plays a vital intermediary role in the world economy.

Globally, the financial services industry leads the world in terms of earnings and equity market
capitalization. Large conglomerates dominate this sector, but it also includes a diverse range of
smaller companies.

The industry as a whole is vast and includes companies engaged in activities such as investing,
lending, insuring, securities trading and issuance, asset management, advising, accounting,
foreign exchange, and more.

a. Financial Industry in India

India has a diversified financial sector undergoing rapid expansion, both in terms of strong growth
of existing financial services firms and new entities entering the market. The sector comprises
commercial banks, insurance companies, non-banking financial companies, cooperatives,
pension funds, mutual funds and other smaller financial entities. The banking regulator has
allowed new entities such as payments banks to be created recently thereby adding to the types
of entities operating in the sector. However, the financial sector in India is predominantly a
banking sector with commercial banks accounting for more than 64 per cent of the total assets
held by the financial system.

The Government of India has introduced several reforms to liberalize, regulate and enhance this
industry. The Government and Reserve Bank of India (RBI) have taken various measures to
facilitate easy access to finance for Micro, Small and Medium Enterprises (MSMEs). These
measures include launching Credit Guarantee Fund Scheme for Micro and Small Enterprises,
issuing guideline to banks regarding collateral requirements and setting up a Micro Units
Development and Refinance Agency (MUDRA). With a combined push by both government and
private sector, India is undoubtedly one of the world's most vibrant capital markets. In 2017, a
new portal named 'Udyami Mitra' has been launched by the Small Industries Development Bank
of India (SIDBI) with the aim of improving credit availability to Micro, Small and Medium
Enterprises' (MSMEs) in the country. India has scored a perfect 10 in protecting shareholders'
rights on the back of reforms implemented by Securities and Exchange Board of India (SEBI).

b. History of Financial Industry in India

The financial sector India dates back with the establishment of British rule in India. The first stock
exchange was established in Mumbai in 1875, then in Ahmedabad in 1894, Calcutta 1908 and
then in Madras in 1937.

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Britishers established a financial system which had “clearly defined rules governing listing,
trading and settlements, a well-developed equity culture if only among the urban rich, a banking
system with clear lending norms and recovery procedures, and better corporate laws than most
other erstwhile colonies. The 1956 Indian Companies Act, as well as other corporate laws and
laws protecting the investors’ rights, were built on this foundation

To keep a check on the functioning of the stock market in 1992 SEBI (Securities Exchange Board
of India) was established. Though it was established in 1988 but in 1992 it became a separate
body.

B. Non-Banking Financial Company (NBFC)

A company registered under the Companies Act, 1956 engaged in the business of loans and
advances, acquisition of shares / stocks / bonds / debentures / securities issued by Government
or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance
business, chit business but does not include any institution whose principal business is that of
agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or
providing any services and sale / purchase / construction of immovable property. A non-banking
institution which is a company and has principal business of receiving deposits under any scheme
or arrangement in one lump sum or in installments by way of contributions or in any other
manner, is also a non-banking financial company (Residuary non-banking company).

a. Financial activity as “principal business”

mean.
Financial activity as principal business is when a company’s financial assets constitute more than
50 per cent of the total assets and income from financial assets constitute more than 50 per cent
of the gross income. A company which fulfils both these criteria will be registered as NBFC by RBI.
The term 'principal business' is not defined by the Reserve Bank of India Act. The Reserve Bank
has defined it so as to ensure that only companies predominantly engaged in financial activity
get registered with it and are regulated and supervised by it. Hence if there are companies
engaged in agricultural operations, industrial activity, purchase and sale of goods, providing
services or purchase, sale or construction of immovable property as their principal business and
are doing some financial business in a small way, they will not be regulated by the Reserve Bank.
Interestingly, this test is popularly known as 50-50 test and is applied to determine whether or
not a company is into financial business.

b. Difference between Banks & NBFCs.

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 NBFCs lend and make investments and hence their activities are akin to that of banks; however,
there are a few differences as given below:

i. NBFC cannot accept demand deposits.

ii. NBFCs do not form part of the payment and settlement system and cannot issue cheques
drawn on itself.

iii. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not
available to depositors of NBFCs, unlike in case of banks.

c. Systemically Important of NBFCs.

NBFCs whose asset size is of ₹ 500 crore or more as per last audited balance sheet are considered
as systemically important NBFCs. The rationale for such classification is that the activities of such
NBFCs will have a bearing on the financial stability of the overall economy.

d. Functions of NBFC.
All NBFCs are either deposit taking or Non-deposit taking. If they are non-deposit taking, ND is
suffixed to their name (NBFC-ND). The NBFCs which have asset size of Rs.100 Crore or more are
known as Systematically Important NBFC. They have been classified so because they can have
bearing on financial stability of the country. The Non-deposit taking NBFCs are denoted as NBFC-
NDSI. Under these two broad categories, the different NBFCs are as follows:

 Asset Finance Company (AFC)

 Investment Company (IC)
 Loan Companies (LC)
 Infrastructure Finance Company (IFC)
 Systemically Important Core Investment Company (CIC-ND-SI)
 Infrastructure Debt Fund (IDF-NBFC)
 Non-Banking Financial Company – Micro Finance Institution (NBFC-MFI)
 Non-Banking Financial Company – Factors (NBFC-Factors)

Asset Finance Company (AFC)

The main business of these companies is to finance the assets such as machines, automobiles,
generators, material equipment, industrial machines etc.

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Investment Company (IC)
The main business of these companies is to deal in securities.

Loan Companies (LC)

The main business of such companies is to make loans and advances (not for assets but for other
purposes such as working capital finance etc.)

Infrastructure Finance Company (IFC)

A company which has net owned funds of at least Rs. 300 Crore and has deployed 75% of its total
assets in Infrastructure loans is called IFC provided it has credit rating of A or above and has a
CRAR of 15%.

Systemically Important Core Investment Company (CIC-ND-SI)

A systematically important NBFC (assets Rs. 100 crore and above) which has deployed at least
90% of its assets in the form of investment in shares or debt instruments or loans in group
companies is called CIC-ND-SI. Out of the 90%, 60% should be invested in equity shares or those
instruments which can be compulsorily converted into equity shares. Such companies do accept
public funds.

Infrastructure Debt Fund (IDF-NBFC)

A debt fund means an investment pool in which core holdings are fixed income investments. The
Infrastructure Debt Funds are meant to infuse funds into the infrastructure sector. The
importance of these funds lies in the fact that the infrastructure funding is not only different but
also difficult in comparison to other types of funding because of its huge requirement, long
gestation period and long-term requirements.

In India, an IDF can be set up either as a trust or as a company. If the IDF is set up as a trust, it
would be a mutual fund, regulated by SEBI. Such funds would be called IDF-MF. The mutual fund
would issue rupee-denominated units of five years’ maturity to raise funds for the infrastructure
projects.

If the IDF is set up as a company, it would be an NBFC; it will be regulated by the RBI. The IDF
guidelines of the RBI came in September 2011. According to these guidelines, such companies
would be called IDF-NBFC.

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An IDF-NBFC is a non-deposit taking NBFC that has Net Owned Fund of Rs 300 crores or more and
which invests only in Public Private Partnerships (PPP) and post commencement operations date
(COD) infrastructure projects which have completed at least one year of satisfactory commercial
operation and becomes a party to a Tripartite Agreement.

Non-Banking Financial Company – Micro Finance Institution (NBFC-

MFI)
NBFC-MFI is a non-deposit taking NBFC which has at least 85% of its assets in the form of
microfinance. Such microfinance should be in the form of loan given to those who have annual
income of Rs. 60,000 in rural areas and Rs. 120,000 in urban areas. Such loans should not exceed
Rs. 50000 and its tenure should not be less than 24 months. Further, the loan has to be given
without collateral. Loan repayment is done on weekly, fortnightly or monthly installments at the
choice of the borrower.
Non-Banking Financial Company – Factors (NBFC-Factors)
Factoring business refers to the acquisition of receivables by way of assignment of such
receivables or financing, there against either by way of loans or advances or by creation of
security interest over such receivables but does not include normal lending by a bank against the
security of receivables etc.

An NBFC-Factoring company should have a minimum Net Owned Fund (NOF) of Rs. 5 Crore and
its financial assets in the factoring business should constitute at least 75 percent of its total assets
and its income derived from factoring business should not be less than 75 percent of its gross
income.

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 NBFC Selected Edelweiss Retail Finance

C. Introduction of Edelweiss Group

Edelweiss Group is one of India's leading diversified financial services company providing a broad
range of financial products and services to a substantial and diversified client base that includes
corporations, institutions and individuals. Edelweiss's products and services span multiple asset
classes and consumer segments across domestic and global geographies.

The group has sizeable presence in large retail segment through its businesses such as Life
Insurance, Housing Finance, Mutual Fund and Retail Financial Markets including Stock Broking

This diversified business model reflects edelweiss experience across India's multiple consuming
facets, from industrial behemoths and large companies to small business as well as the average
Indian urban and rural household.

Edelweiss has 1,200,000+ strong client base is serviced through a network of over 450 offices,
with over 10000 employees. Together with a strong network of Sub-Brokers and Authorized
Persons, the Group has a presence across all major cities in India.

Edelweiss Business from Two Decades

NOV-1995 Founded Edelweiss Capital Ltd.
MAR-2002 Started Stock Broking Business for Private & Institutional clients
OCT-2005 Raised equity from Greater Pacific Capital got listed on stock exchange
MAR-2008 Started Commodities Business Crossed Rev 10,889 mn
MAR-2011 Acquired Anagram Capital
AUG-2011 Started Retail Finance and Insurance Business
MAR-2015 Acquired Forefront Employees Strength 5,555
MAR-2016 Acquired JP Morgan AMC (India)
MAR-2018 Employees Strength 10,052 Crossed Profit after Tax ex-Insurance Rs.1,000 cr

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 Phase of Edelweiss

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 Book
PAT
Revenue Value No Of
Phase Year Stage Details in
in mn Per Employee
mn
share
Phase 1996- Foundation of Edelweiss
1 2000 Birth Panges as an Investment Bank. 39 85 0.4 12
Expanded into Capital
Phase 2000- Markets and Broking
2 2004 Baby Steps business. 78 281 0.9 95
Phase 2004- Joyful Set up our Corporate
3 2008 Hypergrowth credit business. 273 10,888 24.7 1,621
Built our Retail platform
– Retail Mortgage, Life
Insurance, Asset
Phase 2008- Painful Management, Wealth
4 2012 Consolidation Management. 1,277 16,707 34.8 3,108
Mature and
Phase 2012- Balance Diversification benefits
5 2016 Growth start to kick in. 4,144 53,157 45.1 6,227
Poised to scale with help
Phase 2016- from macro - economic
6 2020 Gaining Scale tailwinds. 8,901 86,225 72.89 10,000 +

Products & Services of Edelweiss Finance

I. SEME Loans
II. Loan Against Properties
III. Salary Advance
IV. Loan against securities

I. SME Loans
a. SME Business Loans
b. SME Equipment Loans
c. SME Secured Loans

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Edelweiss SME Lending recognise that SMEs play a crucial role in the Indian economy. We also
understand the importance of financing for SME growth.
Edelweiss SME Lending offers a speedy response to your application. We assure you to provide
Best in Industry TAT & to provide Quick & Hassle Free Loan.

a. SME Business Loans

SME Business Loans helps you with immediate funding to address the peak seasons, funds for
executing large orders at hand, temporary fund-flow mismatch and any other immediate fund
requirement for business.
Need for Finance
Working Capital Gap
Business Expansion
Sudden Work Orders

b. SME Equipment Loans

The Equipment Loan helps you finance the purchase of new machinery as well as refinance your
existing machineries that your business requires in order to continue its operations.

c. SME Secured Loans

We help you unlock the maximum potential of your Residential, Commercial and Industrial
property through our SME Secured Loan. We also provide flexibility of collateral for secured
loans- Property or Machinery or a combination of both.

II. Loans against Property

a. Loans against Property - Residential
b. Loans against Property - Commercial
c. Loans against Property –(LRD)

This is a product which is ideal for individuals / companies who have a real estate asset which is
free from encumbrance. Loan against property enables you to put your asset to a productive use
by mortgaging it with Edelweiss and raising the funds up to a maximum of 70% of the market
value of your asset. The purpose of taking the loan can be varied from utilizing the funds to buy

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a new property, business expansion, consolidation of existing loans, education /wedding of
children among others.

This product is a great way to raise funds quickly to meet your needs with the added flexibility of
choosing your loan tenure up to a maximum of 15 years for easy repayment.

a. Loans against Property – Residential

This product lets you mortgage your self occupied or rented residential property to avail
a loan for purposes mentioned above.

b. Loans against Property - Commercial

This product lets you mortgage your self occupied or rented commercial property to avail a loan
for purposes mentioned above.

c. Loans against Property –(LRD)

Lease Rental Discounting helps to raise funds against the future expected rentals of self owned
commercial property. To avail this loan the property should be occupied by the Lessee and the
Leave & License agreement should be registered. Just like Loan against Property, LRD can be
provided for any of the purposes mentioned above

III. Salary Advance

Edelweiss introduces Salary Advance: A unique product designed exclusively to meet the short-
term needs of salaried employees.

IV. Loan against securities

We arrange for loans offered against listed securities such as Stocks, Debentures and Mutual
Funds. This enables you to borrow funds against your existing investment portfolios in order to
meet investment and liquidity requirements. Loan against securities are available in multiple
variants depending on your profile and needs

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D. Comparison Industry Services Vs. Edelweiss Finance

Industry Services Edelweiss Finance

1. Merchant Banking Edelweiss Provide the Portfolio Management services,
Loan against securities and are listed on exchange.

2. Hire Purchase Edelweiss does not operate in this segment

3. Leasing Edelweiss does not operate in this segment
4. Discounting Edelweiss does not operate in this segment
5. Factoring Edelweiss does not operate in this segment
6. Forfaiting Edelweiss does not operate in this segment
7. Securitization of Debts Edelweiss does not operate in this segment
8. Mutual Funds Edelweiss Provides Mutual Fund Investments in
different type of funds

9. Credit Cards Edelweiss does not operate in this segment

10. Credit Rating Agency Edelweiss does not operate in this segment
11. Venture Capital Edelweiss Provides the Finance to SMEs
12. Credit Derivatives Edelweiss does not operate in this segment
13. Insurance Edelweiss Provides Insurance advisory services

E. Conclusion & Recommendations

Edelweiss doing their business in industry from more than last two decades, and having a
good growth. However, they are doing in some of the areas of financial sector. they have
the capacity and experience to expand their business vertical in Factoring and forfeiting.

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