Securitisation

Securitisation is the process of getting cash on the basis of different security notes and papers .Even some company
issues shares or debenture for getting fixed assets , this is also securitisation . In simple english securitisation create the relationship of company with outer world in which company gets fund for doing work .

Benefit of Securitisation
1.Increase the rate of return
2.Raise of fund or finance through securitisation when other source are not supported .
3.I take one example explaining the third benefit
suppose a person want to purchase a building for giving it rent , if he purchases with his cash then all risk of fund
is his own . But if he takes loan to make building then he becomes issuer of finance so from earning of building , he
can pay the debt of building .

Factors to provide Loans:
1st Financial factors
a) Rate of Return
It is the duty of account manager to find the rate of return. Select all those party which want to give us high rate on our investment in the form of loan.
b) Risk Factor
Before giving credit to company, we also see our risk factor. i) personal risk- dishonesty , corruption ii) trade risk
– see previous profit and loss account iii) Debt equity ratio iv) Income interest ratio
c) Security
Before giving credit or loan account manager have to see what asset of business , businessman want to give as security for getting loan .
d) Marginal of requirement
Before giving loan or credit , it is the duty of bank's account manager under govt. policies that he must see difference between security and loan Suppose Security $ 10000 – Loan $ 8000 = Marginal requirement $2000 If our
providing loan is less than the value of asset which we have received in the form of security , then this is good .
 2nd Non- financial factors
1. Social factors
Through social responsibility accounting, account manager is also check, whether providing of loan at low rate is benefited for social popularity or not.
2. Political factors
Account manager also check political and tax policies regarding providing of loan.