L-6.IBFS.Cons..Fin

L-6.IBFS.Cons..Fin - CA(IBFS) L-6: Consumer Finance This...

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CA(IBFS) L-6: Consumer Finance This lesson deals with: - 1. Meaning of Consumer Finance (Credit) 2. Role of Consumer Credit in Financial System 3. Features of Consumer Credit Transactions 4. Mathematics for Consumer Credit 5. Legal Framework for Consumer Credit 6. Portfolio Management and Credit Evaluation 7. Credit Screening Methods 8. Consumer Protection Act, 1986 1. Meaning of Consumer Finance (Credit): Consumer Finance or Consumer Credit (CC) includes all asset-based financing plans offered primarily to the individuals to acquire durable consumer goods. In this the ownership is transferred immediately after the financing transaction takes place and is generally between the finance company and the consumer directly. The consumer finance company provides finance to the consumer for the purpose of buying a product from the manufacturing company (which will be paid to the manufacturing company). Subsequently, the manufacturing company sells the product to the consumer, for which the consumer pays back the money financed with interest to the finance company. 2. Role of Consumer Credit in Financial System : CC helps in growth and development of consumable durables and automobile industry which helps the economy grow rapidly. The growing strength of the upwardly mobile Indian middle class and the rapid increase in the disposable income can be channelized for improving their living standards besides industrialization. 3. Features of Consumer Credit Transactions: Typically in a CC transaction, the individual consumer – the buyer – pays a fraction of the cash purchase price at the time of the delivery of the asset and pays the balance with interest over a specified period of time. From a modest beginning in the early ‘80s, the CC has emerged as an important asset-based financial service in India. The main suppliers of CC are foreign/multinational banks, commercial banks and finance companies and cover mainly items such as: - Cars Scooters VCRs,VCPs, TVs 1
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Refrigerators Washing Machines Home Appliances PCs/Lap-Tops Cooking Ranges Food Processors Mini Generators/Air-Conditioners Some of the Consumer Finance Companies include: Seat Finance, Apple Credit, Sundaram Finance, Kotak Mahindra Finance, Cholamandalam Finance, various banks like Citi Bank and other multinational banks, SBI, ICICI and other public/private sector banks. Salient Features of CC are:
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This note was uploaded on 01/28/2011 for the course FIN 315 taught by Professor Welker during the Spring '09 term at IUP.

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L-6.IBFS.Cons..Fin - CA(IBFS) L-6: Consumer Finance This...

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