The capital market has influenced by increasing of call money rates that come mainly from supply and demand for liquidity in the money market. The periodic change in liquidity reserve may cause to demand the call money rates that influence the capital market. The money market rate can also be impacted from which Bangladesh Bank conducts the open money market operations. The call money rate is determined by the participants and it depends according to present and future liquidity condition in the market. For instance, the inter-bank call money borrowing rate was reached peaks at 50% in January 2004, and after that 65.67% in February 2005. So that there is no doubt that the call money rate influences the capital market.
69. Agricultural Finance: Definition, Nature and Scope A field of
work
in which
people aim to improve the access
of the agriculture industry, including farmers and all related enterprises, to efficient, sustainable financial services.
AGRICULTURAL
FINANCE
Meaning: Agricultural finance generally means studying, examining and analyzing the financial aspects pertaining to farm business, which is the core sector
of Pakistan. The financial aspects include money matters
relating to production of agricultural products and their disposal.
Definition of Agricultural finance: Murray (1953) defined agricultural. Finance as
―an economic study of
borrowing funds by farmers, the organization and operation of
farm lending agencies and of society‘s
interest in credit for
agriculture.‖ Tandon and Dhondyal (1962) defined agricultural. Finance ―as a branch of
agricultural economics, which deals with and financial resources
related to individual farm units.‖
Nature and Scope: Agricultural finance can be dealt at both micro level and macro level. Macro-
finance deals with different sources of
raising funds
for agriculture as a whole in the economy. It is also concerned with the lending
procedure, rules, regulations, monitoring and controlling of different agricultural
credit institutions. Hence macro-finance is related to financing of agriculture at aggregate level.
Micro-finance
refers to financial management of the individual farm
business units. And it is concerned with the study as
to
how the individual farmer considers
various sources
of credit, quantum of credit to be borrowed from
each source and how he allocates
the same among the alternative uses
with in the farm. It is
also concerned with the future use of funds. Therefore, macro-finance
deals
with the aspects relating to total credit needs of
the agricultural sector, the
terms and conditions under
which the credit is available and the method of
use
of total credit for the development of agriculture, while micro-finance refers to the
financial management of
individual farm business.
10. Explain different sources of financing working capital. The sources of finance of financing working capital may be four categories. They are- 1. Trade
Credit: It is the primary sources that trade credit make up the important source
for
a sum of the total working capital. 2. Bank Credit:
The banks determine the maximum credit based on the margin requirements of the security. The forms of
bank credit are Loan and overdraft arrangement, cash credit, bills purchase and
bills discounted. 3. Non-bank Short Term Borrowing: These types of loan are found from relatives, friends, head office or project office etc. 4. Long-term Sources:
It
comprises equity capital and long-term borrowings.
11. Define permanent working capital and variable working capital. Permanent
Working Capital is
to
carry on business
a certain minimum level of working
capital is necessary on a continuous and uninterrupted basis. For all practical purposes, this
requirement will have to be met permanently as with other fixed assets. This
requirement is
referred to as permanent working capital.
Temporary Working Capital is
refers to any amount over and above the permanent level of working capital is temporary, fluctuating or variable working capital. This portion of the required working capital is needed to meet
fluctuations in demand consequent upon changes in production and sales as
result of seasonal changes.
12. Explain the difference between variable working capital and permanent working capital. Particulars
Permanent Working Capital Temporary Working Capital 1)
Required level of amount A certain minimum level of working capital
is
necessary to carry the business
Any amount over and above the permanent
level of working capital is needed 2) Level of necessity It is necessary on a continuous and uninterrupted basis Temporarily required in case of increase of
production and sales 3) Pattern of necessity This
requirement will have to be
met permanently The necessity in on fluctuating or variable position 4) Nature of
working capital The working capital cost and investment is constant The working capital cost and investment is variable 5) Outcome level of firm It make the minimum outcome as well as growth of the firm It make a extra ordinary production outcome of the firm
14. Distinguish between mortgage & pledge? The differences between a mortgage and a pledge: Sl. Particulars Mortgage Pledge 1 Property type in Security Mortgaged is an immovable property Pledged is a movable property 2
Property ownership The property is
transferred to lender
The property remains to pledgor 3 Property custody Possession of property will be with borrower
Goods delivered by the pledgor will be in lender 4 Legal authority to sell property Mortgagee can sell only with the permission of the Court Lender can
sell without the intervention of the Court 5 Rights to foreclosure A mortgagee has
the right of foreclosure that restrict the borrower from taking back the property
under certain circumstances A pledgee does not have the right of foreclosure that cannot restrict the pledgor from
taking back the property