1

1. INTRODUCTION
BUSINESS FINANACE
Business finance refers to money and credit employed in business. It involves
procurement and utilization of funds so that business firms may be able to carry out
their operations effectively and efficiently. The following characteristics of business
finance will make its meaning clearer:-
(i) Business finance includes all types of funds used in business.
(ii) Business finance is needed in all types of organisations large or small,
manufacturing or trading.
(iii) The amount of business finance differs from one business firm to another
depending upon its nature and size. It also varies from time to time.
(iv) Business finance involves estimation of funds. It is concerned with raising funds
from different sources as well as investment of funds for different purposes.

Need and Importance
Business finance is required for the establishment of every business organisation.
With the growth in activities, financial needs also grow. Funds are required for the
purchase of land and building, machinery and other fixed assets. Besides this, money
is also needed to meet day-today expenses e.g. purchase of raw material, payment of
wages and salaries, electricity bills, telephone bills etc. You are aware that production
Continues in anticipation of demand. Expenses continue to be incurred until the goods
are sold and money is recovered. Money is required to bridge the time gap between
production and sales. Besides producers, may be necessary to change the office set up
in order to install computers. Renovation of facilities can be taken up only when
Adequate funds are available

1.2 SIGNIFICANCE OF THE STUDY
NON BANKING FINANCIAL INSTITUTIONS
The financial sector in any economy consists of several intermediaries. Apart from
banking entities, there are investment intermediaries (such as mutual funds, hedge
funds, pension funds, and so on), risk transfer entities (such as insurance companies),
2
information and analysis providers (such as rating agencies, financial advisers, etc),
investment banks, portfolio managers and son.
All such entities that offer financial services other than banking, may be broadly
called non-banking financial institution. What is banking? banking is commonly
understood to mean taking the deposits withdrawable on demand or notice that is ,
banks can hold peoples deposits and promise to pay them on demand . There are
variety of other entities that may accept deposit hence ,acceptance of deposits is not
the essence of banking
In India, the term non banking financial companies acquires a new meaning , and
huge significance .The meaning of the term is such entities which are not banks ,and
yet carry lending activities almost at par with banks. They may also accept deposit
however , these deposit are term deposit and not call deposit.
The significance of non banking financial companies in India lies in the massive
capabilities of NFBSs short of acceptance of call deposit and remittance function
,NFBCs can virtually do everything that a bank can . compared to this disability , the
ease of entry and lightness of regulation applicable to NFBCs makes its tremendous
focus of interest , particularly for foreign investors wanting to enter Indias financial
sector
For instance , it is possible to hold 100% foreign ownership of NFBCs ,while in the
case of banks ,there are serious caps
It is possible to either start an NFBC or buy on of the 17000-odd companies many of
which are formed for sale . On the other hand ,getting a banking license requires a real
penance
1.3 STATEMENT OF THE PROBLEM
Financial sector plays an indispensable role in the overall development of a country.
The most important constituent of this sector is the financial institutions, which act as
a conduit for the transfer of resources from net savers to net borrowers, that is, from
those who spend less than their earnings to those who spend more than their earnings.
The financial institutions have traditionally been the major source of long-term funds
for the economy. These institutions provide a variety of financial products and
services to fulfil the varied needs of the commercial sector. Besides, they provide
assistance to new enterprises, small and medium firms as well as to the industries
3
established in backward areas. Thus, they have helped in reducing regional disparities
by inducing widespread industrial development.
The Government of India, in order to provide adequate supply of credit to various
sectors of the economy, has evolved a well developed structure of financial
institutions in the country. These financial institutions can be broadly categorised into
All India institutions and State level institutions, depending upon the geographical
coverage of their operations. At the national level, they provide long and medium
term loans at reasonable rates of interest. They subscribe to the debenture issues of
companies, underwrite public issue of shares, guarantee loans and deferred payments,
etc. Though, the State level institutions are mainly concerned with the development of
medium and small scale enterprises, but they provide the same type of financial
assistance as the national level institutions.

1.4 OBJECTIVES OF THE STUDY
1. Study on credit management system in the organisation
2. Critical aspect of the present receivables management system employed by the
company.
3. Study in the inconsistency in the profitability of the organisation
4. Suggestion and recommendations so as to accommodate a better credit
management system in the organisation
1.5 RESEARCH METHODOLOGY
RESEARCH
Research could be defined as the careful investigation or inquiry especially through
the search of new facts in any branch of knowledge.
1.5.1 Nature of Research
The research is of descriptive in nature as we are going deep into the
entrusted topic credit management in Kerala Financial Corporation.


4

1.5.2. Data is collected mainly from two sources.
A)Primary data
Data which is primarily collected or fresh hand data is called so. Here we are
collecting data through direct contact with the respondents i.e; customers by enquiring
them on various related facts.
B)Secondary data:
It refers to already published data. The collected from KFC annual report,
financial magazines, viz: investor India, Outlook, journals as well as e-data (google).
1.5.3. Sample Design & Population
Population consists of the last 5 year data regarding credit
management in Kerala Financial Corporation
1.5.4. Tools for Analysis
Ratio analysis , percentage analysis, cash flow are used as the main
tool for analysis.

1.6 LIMITATIONS OF THE STUDY
The major limitation of the study is that only one organisation
is taken in to consideration , comparison with other
organization is not done
Historical aspects is given much importance
Only last five years data are taken in to consideration
The limitation of time constraint existed



5

1.7 CHAPTERISATION
The report deals with chapters as follows.
`CHAPTER.1 - Introduction to the study: - Objectives, Scope,
Research methodology, statement of the problem , limitation
of the study, chapterisation.

CHAPTER. 2 - Review of Literature: - Deals with reviewed
literature by the researcher.


CHAPTER.3 Industry profile and company profile :- deals
with details about company profile and industry profile

CHAPTER. 4- theoretical frame work :- deals with subject
details
`
CHAPTER.5 - Analysis and Interpretation: - Analysis and
interpretation of the data collected.

CHAPTER.6 - Findings , Discussions , Suggestion and
Conclusion of the study.