Business Finance: Lease Finance And Public Deposits

Business Finance: Lease Finance And Public Deposits

Between two parties the agreement is made where one party is giving rent to another party and he takes it over for any particular period and it is called as rent or lease. While renting the property the lease agreement is signed by the landlord and the tenants. To raise the fund’s companies to do this and it is called as lease finance, this post gives the information about the business finance.

Lease finance

An agreement is made between two parties, where one party who is the owner of assets giving permission to use it for a particular period by paying. The asset of the company which is rented for the particular period of time is called a lease. The two terms called lessor and lessee is used where the lessor is an owner and the lessee is a user of that assets. There will be a fixed amount for the specific period called lease rental.

At the end of the lease period, the asset will be returned to the owner. While you are going to take some assets for the lease you take a decision on whether it will be better to take a lease or it costs the same money to own it.

Lessor                                                                                             

1) Companies

Nearly 400 companies are there which has the focus on leasing and they are called as the leasing companies. They are involved in the leasing business and the make profit by means of leasing.

2) Banks and subsidiaries                                 

In February 1994 RBI gave permission to banks for the leasing. Then the subsidiaries came into the activities for leasing.

3) Financial institutions

A number of the financial institutions involved in leasing along with the financial instruments. For example, ICICI bank is the first Indian leasing sector.

4) Manufacturer lessors

They find it the best way to sell their products for lease. Many vendors having a link with the leasing companies and they offer the lease financing for the products.

Lessees

1) Public sector undertakings

There was an increased growth of the public sector where they are involved in the lease financing.

2) Mid-market companies

It has the lower public profile which has selected the lease financing as an alternative to bank financing.

3) Consumers

Fund for the consumer durables, for example, leasing car is prominent in the market today.

Public Deposits

An organization which is involved in receiving the deposits from the public directly is called the public deposits. It has a high interest in comparing to the bank. Both the short and the long-term requirements of finance for the business are provided by the public deposits. Deposits are accepted for the period of three years and regulated by RBI.