Financing and Lending: Two important pillars of Investment Banks in Asset Reconstruction Company

Financing and Lending are very common commercial terms. But to a layman, its meanings can be hard to differentiate. Everyone associates Financing and Lending activities with Loan against Shares, Loan against Securities and Loan against Mutual Funds for an Asset Reconstruction Company. However there is a mere difference between the two.

Financing refers to a Non Banking Financial Company or an Investment Bank often taking part in the growth of a company, firm or individual business. It is often needed by a business firm to take external financial help to run their business due to shortage of capitals. Financing helps in that. In return the Asset reconstruction company may have benefits like using the particular goods and services of the company free of cost. Financing gives a two way benefit

Lending however, means taking loans and advances from financial companies or share holder, or individuals. It means lending an amount of money against some capital or asset at a fixed percentage or over a fixed period of time. Financing a company may lead to losses for the financer but lending of loan against shares, securities or mutual funds lead to making sure that whether the party incurs losses or profit the same amount (principal and interest) will be provided to the loan giver after the specific period. Upon the breach of which they can forfeit the shares, securities or funds against which the loan is taken.

JM Financial view their investors, share holders and potential stake holders of the firm with utmost importance. They communicate efficiently with their investors, sharing information, and adopting the best measures to provide transparent assessment of the company’s values. Results of analysis and annual reports of company can be easily accessed at JM Financial.

Summary: 

Financing and lending by NBFC and helping in Asset Reconstruction Company often help the Company, firm or individual to regain their financial losses through loans on their existing assets and capital. In India, most small scale Companies take these benefits from Investment Banks to ascertain a steady financial balance sheet and growth in the financial year to come as well as to make sure their assets are not undervalued because of losses incurred. In short, Financing involves more risk than lending. They are the two important pillars of Investment Banking System and Non Banking Finance by the process of Loan against Shares, Loan against Securities and Loan against Mutual Funds for an Asset Reconstruction Company.