Export Financing by Commercial Banks

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Questions and Answers

What is the purpose of packing credit provided by banks to an exporter?

  • To finance buying, manufacturing, processing, packing, and shipping goods for export (correct)
  • To support research and development activities
  • To finance domestic sales of the exporter
  • To invest in real estate projects

When should an advance taken by an exporter as packing credit be liquidated?

  • There is no specific timeframe mentioned
  • Within 180 days from the date of commencement (correct)
  • Within 90 days from the date of commencement
  • Within 365 days from the date of commencement

What does post-shipment finance refer to in the context of export financing?

  • A loan provided for domestic projects
  • A loan provided before the goods are shipped
  • A long-term investment in a foreign market
  • A loan provided after the shipment of goods has already been made (correct)

Against what does post-shipment finance usually get provided?

<p>Evidence of shipment of goods made to the importer or seller (B)</p> Signup and view all the answers

What is the typical duration for inter-corporate deposits?

<p>6 months (B)</p> Signup and view all the answers

In what manner is a post-shipment finance different from a pre-shipment finance?

<p>Post-shipment finance is provided after goods have been shipped, while pre-shipment finance is provided before shipment. (D)</p> Signup and view all the answers

What is the primary characteristic of venture capital financing?

<p>Equity finance in new companies (C)</p> Signup and view all the answers

What is one advantage of debentures compared to equity or preferred investment?

<p>Debentures require a lower return as they are considered safer investments. (A)</p> Signup and view all the answers

Why do venture capitalists provide support beyond just funds to entrepreneurs?

<p>To enhance the growth and success of the entrepreneur (A)</p> Signup and view all the answers

How is venture capital financing different from traditional loans?

<p>It includes long-term equity investment and support (D)</p> Signup and view all the answers

What is a key disadvantage of debentures?

<p>Debenture repayment is an obligatory payment. (D)</p> Signup and view all the answers

What percentage of the total equity capital does a venture capital firm typically contribute?

<p>49% (A)</p> Signup and view all the answers

How do debentures compare to preference or equity capital in terms of cost?

<p>Debentures have lower costs as their interest is tax deductible. (B)</p> Signup and view all the answers

In which stage of a business does venture capital financing play a significant role?

<p>Early-stage growth-oriented firms (C)</p> Signup and view all the answers

What is a characteristic of partly convertible debentures (PCD)?

<p>PCDs allow conversion of only a portion into equity shares. (A)</p> Signup and view all the answers

What do bonds represent?

<p>Loans made by investors to borrowers. (A)</p> Signup and view all the answers

What additional support do venture capitalists typically provide to entrepreneurs besides funding?

<p>Sales strategy and management expertise (D)</p> Signup and view all the answers

Why do governments and corporations commonly use bonds?

<p>To fund various projects such as infrastructure development. (C)</p> Signup and view all the answers

What does FII stand for?

<p>Foreign Institutional Investor (B)</p> Signup and view all the answers

In which country is the term 'foreign institutional investor' commonly used?

<p>India (B)</p> Signup and view all the answers

What is the main concept of crowdfunding?

<p>Raising money from a group of people for a project (B)</p> Signup and view all the answers

What is Equity Funding in crowdfunding?

<p>Investing money in an organization in return for securities (C)</p> Signup and view all the answers

How do Foreign Institutional Investors typically comply with investment regulations?

<p>By registering with regulatory authorities and complying with relevant regulations (A)</p> Signup and view all the answers

What is the benefit of crowdfunding for startups according to the text?

<p>It substantiates demand for their product before production (A)</p> Signup and view all the answers

What is the maximum amount of public deposits a company can accept as per Reserve Bank of India stipulations?

<p>35% of its paid up capital and reserves (A)</p> Signup and view all the answers

What is the typical period for which public deposits can be accepted?

<p>6 months to 3 years (A)</p> Signup and view all the answers

What are the securities that can be used for obtaining short-term loans?

<p>Shares, government securities, life insurance policies, fixed deposit receipts (D)</p> Signup and view all the answers

In what way are overdraft facilities different from term loans?

<p>Overdrafts allow customers to withdraw in excess of credit balance, while term loans disburse the entire amount at once. (B)</p> Signup and view all the answers

What is the main purpose of public deposits for companies?

<p>To finance working capital requirements (A)</p> Signup and view all the answers

How are repayment terms different between loans and overdrafts?

<p>Loans may have a schedule of repayments agreed upon, while overdrafts are repayable on demand. (C)</p> Signup and view all the answers

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