What is the difference between fund based and fee based services?

What is the difference between fund based and fee based services?

— A bank or NBFC offers two types of products: fee-based and fund-based. — Fund-based products are also subject to capital adequacy norms and tighter regulation for non-performing loans. — The profit margins in fee-based products may be lower, but since they do not require high capital investment, they are profitable.

What is a fee based service?

Fee-based means our compensation is based on a set percentage of a client’s invested assets, as opposed to receiving a commission. We believe this offers a number of benefits to our clients, including: Regular, Personalized Communication. Fee-based services rely on an ongoing relationship.

What is the meaning of fund based services?

Fund Based Services – It refers to services that are used to acquire assets or funds for a customer. It consists of – – Primary market activities. – Secondary market activities.

What are fund based services examples?

 Following are some of the examples of financial services:  Leasing, credit card services, factoring, portfolio management, financial consultancy services, Underwriting, discounting and rediscounting of bills, Depository services, housing finance, Hire purchases, Mutual Fund management.

Is referred as both fund based and fee based financial service?

Indian Financial System consists of financial market,…………….. and Financial intimidation. ………………

Q. ——- is referred as both fund based and fee based financial service.
B. Leasing
C. Factoring
D. Underwriting
Answer» d. Underwriting

What are the fee based banking services?

However, banks can also generate earnings from other sources wherein they do not have to lend money or collect interest. Such sources are called fee based banking services and form an important part of any banks profit and loss statement.

How does a fee based account work?

In a fee-based account, you pay a percentage of your account balance, often 1% or more, which will typically cover brokerage services and investment advice. Big brokerage firms are seeking to boost assets in their fee-based accounts because they generate more stable, predictable revenue than commission-based accounts.

What is non fund based?

The Non-Fund based Credit Facilities are nature of promises made by Banks in favour of a third party to provide monetary compensation on behalf of their clients, where the lending bank does not commit any physical outflow of funds. In other words, if the debtor fails to settle a debt, the bank covers it.

What are fund based and non fund based advances?

Non-fund based lending versus fund based lending In banking language, the non-funding advances are called Contingent Liability of the banks. The Fund based lending is direct form of loans on which actual cash is given to the borrower by the bank. Such loan is backed by primary and / or a collateral security.

What are the types of fund based services?

Important fund based services include:

  • Leasing.
  • Hire purchase.
  • Factoring.
  • Forfeiting.
  • Mutual funds.
  • Bill discounting.
  • Credit Financing.
  • Housing Finance.

What are the services included under fund based facilities?

The facilities like Overdrafts,Cash Credit A/c, Bills Finance, Demand Loans, Term Loans etc, wherein immediate flow of funds available to borrowers, are called funds based facility.

What’s the difference between fund based and non fund based financial services?

The Difference between fund based and non fund based financial services are tabulated below. A financial service focused on a fund includes loans that banks provide in the form of loans, overdrafts as well as other money transfers. A bank does not deal with funds or cash transactions in a non-fund-based financial service.

How are fee based products different from fund based products?

— Fund-based products are also subject to capital adequacy norms and tighter regulation for non-performing loans. — The profit margins in fee-based products may be lower, but since they do not require high capital investment, they are profitable. Existing infrastructure is usually extended to offer them.

How does a mutual fund earn a fee?

To make a loan, a bank or NBFC has to borrow money and ensure that the cost of borrowing is less than the cost of lending. When it sells a mutual fund or insurance product, it earns a fee or commission for doing so. These are third-party products, which do not require the bank to fund them.