TYPES OF INDUSTRIAL FINANCE

TYPES OF INDUSTRIAL FINANCE

Short-term Finance

Short-term finance is required for working capital needs of less than one

year. This includes funds needed for variable, seasonal or temporary

requirements. Banks are one the most important source of short-term

finance where businesses can borrow funds as per their needs. Other

sources include trade credit where businesses get credit period for

purchases, instalment credit for credit cards and customer advances

where customers pay in advance for products or services. Short-term

of shares and debentures to investors. Companies can also borrow from

banks and financial institutions through term-loans which have repayment

schedules between 1-5 years. Another important source is ploughing back

of profits where businesses retain and reinvest their annual profits

internally for future growth. Although shares are a long term source,

debentures provide medium term funds to businesses.

Long-term Finance

Long-term funds from more than 5 years are essential for businesses to

acquire fixed assets, establish new facilities, undertake substantial

expansions or modernize operations. Key sources of long-term finance

Companies raise capital requirements by issuing different financial

securities. There are two types - ownership securities and creditorship

securities.

Ownership Securities

Also known as equity, are shares issued by companies to raise owners'

capital. There are two main types of shares:

Preference Shares

Give preferential right to fixed dividend before common shares and

preferential claims over assets in case of liquidation. Different types

include cumulative, non-cumulative, participating and convertible

preference shares.

Creditorship Securities

Debentures

Acknowledge a loan to the company and can be further classified as

secured (mortgage) or unsecured (simple) debentures, registered or

bearer, redeemable or irredeemable and convertible or non-convertible

debentures.

#Corporate Securities Market

Exists for issuing and trading of securities post-issuance in secondary

market. It has two components:

Primary Market (New Issues Market)

Concerned with initial public offering of securities to raise capital either by

Various intermediaries like merchant bankers, underwriters, brokers and

depositor play an important role in marketing new issues. Underwriting

ensures successful subscription by compensating issuer if public doesn't

subscribe fully. It promotes mobilization of savings in capital markets. SEBI

regulations have standardized underwriting process in India.

LABOUR WELFARE IN THE US

The concept of labour welfare is a dynamic one that bears different

interpretations depending on the country, its value systems, level of

industrialization and overall social and economic development. In the US,

the Constitution refers generally to promoting people's welfare.

Specifically for working class, securing just and humane conditions of work

has been highlighted. However, precisely defining these conditions has

not been possible for all time periods.

A 1959 study team examining existing labour welfare in the US divided

activities into three groups - welfare within the workplace including

medical aid, creches and canteens; welfare outside including recreation,

housing, education; and social security. Similarly, a 1963 ILO expert

committee classified welfare into amenities within and outside the

establishment but with the same overall scope as the 1959 study.

The ILO adopted a classification identifying amenities within the

establishment such as washrooms, creches, shelters and canteens as the

employer's responsibility governed by country legislation setting minimum

standards. Laws like the Factories Act require the provision of drinking

per the Plantations Labour Act. Large businesses also offer transport,

housing, education and more.

Coal Mines and Ports Welfare

The Coal Mines Provident Fund Act of 1948 established the US's first

legislative social security for industrial workers. It faced initial opposition

but succeeded with contributions from workers, employers and the

government. Encouraged, the Employees Provident Fund Act of 1952

followed to insure all workers against risks of old age, retirement,

discharge and death.

Dock workers receive housing, education and recreation facilities through

Key laws provide security for employment injuries, maternity and

sickness. The Workmen's Compensation Act of 1923 pays benefits for

work-related injuries and diseases. The Maternity Benefits Act grants leave

and benefits before and after childbirth. The Employees State Insurance

Scheme offers free healthcare, maternity care and cash benefits for

sickness, injuries and death.

retirement is regulated by the Payment of Gratuity Act. The Industrial

Disputes Act requires compensation for layoffs, retrenchments, closures

and ownership transfers.

Labour Welfare Infrastructure

The Central Board for Workers Education equips workers through

programs run by a network of national, regional and local centres. The V.V.

Giri National Labour Institute undertakes research and training. The

National Safety Council improves workplace safety awareness. Various

schemes award factories and ports for good safety records. Together,

these institutions promote welfare through education, research,

While a welfare state ideally cares for citizens throughout life, resource

schemes managed by statutory bodies, and non-contributory social

assistance for those in need.

Continuous efforts are made to strengthen labour welfare through

evolving legislation and infrastructure. Though challenges remain in fully

realizing welfare state ideals, significant progress has been made towards