Merchant Banking

 A Merchant Bank is a financial institution that provides capital to companies in the form of share ownership instead of loans. A merchant bank also provides advisory on  corporate matters to  provide guidance and  service in  term of financial, marketing, managerial and legal aspect. Both commercial banks and investment bank may engage in merchant banking activities. Modern merchant  banking activities refers to issue management, portfolio management, credit syndication, acceptance credit, advice on merger and acquisitions, insurance, etc.

 

Loan Portfolio

 The loan portfolio is refers to loans that have been made or bought and are being  held  for  repayment. Loan  portfolios  are  the  major  asset  of  lending

institutions. The value of a loan portfolio depends not only on the interest rates

earned on the loans, but also on their quality, that is, the likelihood that interest and principal will be paid.

It is listed as an asset on the balance sheet. The value of a loan portfolio

depends on both the principal and interest owed and the average creditworthiness.

Loan Documentation

 Loan documentation is the documents that record the loan agreement between a borrower and a lender. It refers to a loan where all income, assets and liabilities are documented. A list of the various types of loans can be found at loan documentation. Some of the common documents when applying a loan are proof of earning, profit and loss statements, bank statements, liquid cash, stocks, investments, land, building, machinery, furniture; any credit facility like loan, credit card etc and personal information of borrower.

Liquidity Management

 Liquidity management is refers to activities to ensure that holdings of liquid assets like cash, bank deposits and other financial assets are sufficient to meet its obligations. It measures the ability to honor all cash payment as can be met either by drawing from a stock of cash holdings, by using current cash inflows, by borrowing cash or by converting liquid assets into cash. The basic objectives are to honor all cash outflow, satisfy minimum reserve requirements, avoid additional cost of emergency borrowing and forced liquidation of assets. 

Economic Rate of Return

 In general, Economic Rate of Return is the net benefits to all members of society, as a percentage of cost and like market imperfection. It is refers to interest rate at which the cost and benefits of a project, discounted over its life are equal. Economic rate of return differs from the financial rate of return in that it consider the effects of factors such as price controls, subsidies, and tax breaks to computing the actual cost of the project.

Discrepant L/C

 Discrepant L/C is a kind of letter of credit that does not comply with the terms and conditions under which it was established that is without a required item of information, or the information provided is inconsistent with the associated documents. The issuing bank of a discrepancy L/C is not obliged to pay its beneficiary and (if it is a confirmed L/C) nor is the confirming bank. Such L/Cs are normally referred back to the buyer or importer for instructions