History of financial services In the United StatesThe term “financial services” became more prevalent in the United States partly as a result of the Gramm-Leach-Bliley Act of the late 1990s, which enabled different types of companies operating in the U.S. financial services industry at that time to merge.[citation needed] Companies usually have two distinct approaches to this new type of business. One approach would be a bank which simply buys an insurance company or an investment bank, keeps the original brands of the acquired firm, and adds the acquisition to its holding company simply to diversify its earnings. Outside the U.S. (e.g., in Japan), non-financial services companies are permitted within the holding company. In this scenario, each company still looks independent, and has its own customers, etc. In the other style, a bank would simply create its own brokerage division or insurance division and attempt to sell those products to its own existing customers, with incentives for combining all things with one company. BanksMain article: BankA “commercial bank” is what is commonly referred to as simply a “bank”. The term “commercial” is used to distinguish it from an “investment bank”, a type of financial services entity which, instead of lending money directly to a business, helps businesses raise money from other firms in the form of bonds (debt) or stock (equity). Banking servicesThe primary operations of banks include:Keeping money safe while also allowing withdrawals when neededIssuance of checkbooks so that bills can be paid and other kinds of payments can be delivered by postProvide personal loans, commercial loans, and mortgage loans (typically loans to purchase a home, property or business)Issuance of credit cards and processing of credit card transactions and billingIssuance of debit cards for use as a substitute for checksAllow financial transactions at branches or by using Automatic Teller Machines (ATMs)Provide wire transfers of funds and Electronic fund transfers between banksFacilitation of standing orders and direct debits, so payments for bills can be made automaticallyProvide overdraft agreements for the temporary advancement of the Bank’s own money to meet monthly spending commitments of a customer in their current account.Provide Charge card advances of the Bank’s own money for customers wishing to settle credit advances monthly.Provide a check guaranteed by the Bank itself and prepaid by the customer, such as a cashier’s check or certified check.Notary service for financial and other documents Other types of bank servicesPrivate banking – Private banks provide banking services exclusively to high net worth individuals. Many financial services firms require a person or family to have a certain minimum net worth to qualify for private banking services. Private banks often provide more personal services, such as wealth management and tax planning, than normal retail banks.Capital market bank – bank that underwrite debt and equity, assist company deals (advisory services, underwriting and advisory fees), and restructure debt into structured finance products.Bank cards – include both credit cards and debit cards. Bank Of America is the largest issuer of bank cards.[citation needed]Credit card machine services and networks – Companies which provide credit card machine and payment networks call themselves “merchant card providers”. Foreign exchange servicesForeign exchange services are provided by many banks around the world. Foreign exchange services include:Currency Exchange – where clients can purchase and sell foreign currency banknotesWire transfer – where clients can send funds to international banks abroadForeign Currency Banking – banking transactions are done in foreign currency Investment servicesAsset management – the term usually given to describe companies which run collective investment funds.Hedge fund management – Hedge funds often employ the services of “prime brokerage” divisions at major investment banks to execute their trades.Custody services – the safe-keeping and processing of the world’s securities trades and servicing the associated portfolios. Assets under custody in the world are approximately 0 trillion. InsuranceInsurance brokerage – Insurance brokers shop for insurance (generally corporate property and casualty insurance) on behalf of customers. Recently a number of websites have been created to give consumers basic price comparisons for services such as insurance, causing controversy within the industry.Insurance underwriting – Personal lines insurance underwriters actually underwrite insurance for individuals, a service still offered primarily through agents, insurance brokers, and stock brokers. Underwriters may also offer similar commercial lines of coverage for businesses. Activities include insurance and annuities, life insurance, retirement insurance, health insurance, and property & casualty insurance.Reinsurance – Reinsurance is insurance sold to insurers themselves, to protect them from catastrophic losses. Other financial servicesIntermediation or advisory services – These services involve stock brokers (private client services) and discount brokers. Stock brokers assist investors in buying or selling shares. Primarily internet-based companies are often referred to as discount brokerages, although many now have branch offices to assist clients. These brokerages primarily target individual investors. Full service and private client firms primarily assist execute trades for clients with large amounts of capital to invest, such as large companies, wealthy individuals, and investment management funds.Private equity – Private equity funds are typically closed-end funds, which usually take controlling equity stakes in businesses that are either private, or taken private once acquired. Private equity funds often use leveraged buyouts (LBOs) to acquire the firms in which they invest. The most successful private equity funds can generate returns significantly higher than provided by the equity marketsVenture capital is a type of private equity capital typically provided by professional, outside investors to new, high-potential-growth companies in the interest of taking the company to an IPO or trade sale of the business.Angel investment – An angel investor or angel (known as a business angel or informal investor in Europe), is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital.Conglomerates – A financial services conglomerate is a financial services firm that is active in more than one sector of the financial services market e.g. life insurance, general insurance, health insurance, asset management, retail banking, wholesale banking, investment banking, etc. A key rationale for the existence of such businesses is the existence of diversification benefits that are present when different types of businesses are aggregated i.e. bad things don’t always happen at the same time. As a consequence, economic capital for a conglomerate is usually substantially less than economic capital is for the sum of its parts. Financial crime UKFraud within the financial industry costs the UK an estimated 14bn a year and it is believed a further 25bn is laundered by British institutions. Market shareThe financial services industry constitutes the largest group of companies in the world in terms of earnings and equity market cap. However it is not the largest category in terms of revenue or number of employees. It is also a slow growing and extremely fragmented industry, with the largest company (Citigroup), only having a 3 % US market share. In contrast, the largest home improvement store in the US, Home Depot, has a 30 % market share, and the largest coffee house Starbucks has a 32 % market share. See alsoBook:FinanceBooks are collections of articles which can be downloaded or ordered in print.Accounting scandalsBFSIEuropean Financial Services RoundtableFinancial analystFinancial data vendorsFinancial marketsFinancializationFinancial transaction taxGovernment sponsored enterpriseInstitutional customersInternational Monetary FundInvestment managementList of banksList of investment banksMisleading financial analysisThomson Financial League Tables References^ “The Mistakes Of Our Grandparents?”. Contrary Investor.com. February 2004. http://www.contraryinvestor.com/2004archives/mofeb04.htm. Retrieved 2009-02-06. ^ “Private Banking definition”. Investor Words.com. http://www.investorwords.com/5946/private_banking.html. Retrieved 2009-02-06. ^ “How Swiss Bank Accounts Work”. How Stuff Works. http://money.howstuffworks.com/personal-finance/banking/swiss-bank-account.htm. Retrieved 2009-02-06. ^ http://www.globalcustody.net/no_cookie/custody_assets_worldwide/ GlobalCustody.net Asset Table^ “Price comparison sites face probe”. BBC News. 2008-01-22. http://news.bbc.co.uk/1/hi/business/7201345.stm. Retrieved 2009-02-06. ^ “Watchdog warns of criminal gangs inside banks”. The Guardian. http://money.guardian.co.uk/news_/story/0,1456,1643860,00.html. Retrieved 2007-11-30. ^ The Opportunity: Small Global Market Share, Page 11, from the Sanford C. Bernstein & Co. Strategic Decisions Conference – 6/02/04Porteous, Bruce T.; Pradip Tapadar (2005). Economic Capital and Financial Risk Management for Financial Services Firms and Conglomerates. Palgrave Macmillan. ISBN 1-4039-3608-0. Schoppmann, Henning (Edit.); Julien Ernoult, Walburga Hemetsberger, Christoph Wengler (2008). European Banking and Financial Services Law – Third Edition. Larcier. ISBN 2-8044-3180-0.  Categories: Financial markets | Financial services | Service industriesHidden categories: Articles with limited geographic scope | All articles with

Debt elimination programs will help consumers eliminate credit card debt and have become more favorable than ever for consumers who are in debt for ,000 or more. This is a very rare time in our history as the United States economy has never seen such a massive influx of government bailouts and federal stimulus money injected into the markets. Much of this stimulus money went to the large banking institutions which issue the majority of credit cards and as a result they have become much more flexible in negotiating debt settlements. This article will inform consumers on where to find the best debt elimination programs and how they can eliminate credit card debt.

The United States national debt is increasing at an amazing .8 billion per day. This is a result of massive government spending and bailout plans which were initially only thought to have benefited large financial institutions. Well, the effects have finally trickled down to Main Street and consumers who find themselves in ,000 or more in debt can eliminate much of this without really hurting their credit score. The best debt elimination programs will be able to eliminate nearly 60 – 70% of your outstanding balance and there are some cases where they have been able to eliminate credit card debt up to 90% of the owed amount.

While you might be able to negotiate with your creditors, debt elimination programs are significantly advantaged in debt negotiation and should always be used for consumers who are ,000 in debt or more. If you are under ,000 in debt then it might be wise to try and negotiate by yourself. Debt settlement will not be this advantageous for consumers forever and it is strongly recommended that consumers take advantage of this economic market and eliminate credit card debt.

If you want to get out of debt and hire a debt elimination program for debt negotiation on your behalf then I have a important piece of advice. Do not go directly to a particular debt settlement company but rather first go to a debt relief network who is affiliated with several legitimate debt companies. In order to be in the debt relief network, the debt settlement companies must prove a track record of successfully negotiating and eliminating debt. They must also pass an ethical standards test. Going through a debt relief network will ensure that the debt company you are provided with is a legitimate and respected company. This is the most efficient way in finding the best debt companies and increasing your chances of eliminating your debt.

To find a debt settlement company through a debt relief network check out the following link:Free Debt Advice

Republican Scott Brown’s victory over Massachusetts Attorney General Martha Coakley (D) in the January 19 special election to fill the seat of the late Senator Edward Kennedy (D) might prove to be a game-changer for the health care reform debate. The loss of the 60th Democratic vote now robs Senate Democrats of a filibuster-proof majority. Last week, Democrats were rushing to wrap up a House/Senate agreement on the bill, likely due to reports that Coakley’s lead had diminished.

Congressional leaders are still aiming to have the controversial points in the health care reform bill settled as soon as possible, so they can send the compromised bill to the Congressional Budget Office (CBO) for scoring. The CBO will then need 12 days to analyze the legislation.

In addition to Senate Majority Leader Harry Reid (D-NV) and Speaker of the House, Nancy Pelosi (D-CA), lawmakers participating in the White House meetings include: House Majority Leader Steny Hoyer (D-MD), House Majority Whip James Clyburn (D-SC), House Energy and Commerce Committee Chairman Henry Waxman (D-CA), House Ways and Means Committee Chairman Charlie Rangel (D-NY), House Education and Labor Committee Chairman George Miller (D-CA), Assistant Senate Majority Leader Richard Durbin (D-IL), Senate Finance Committee Chairman Max Baucus (D-MT), Senate HELP Committee Chairman Tom Harkin (D-IA), and Senate Banking Committee Chairman Christopher Dodd (D-CT).

A main point of contention between the two houses of Congress pertained to the
40 percent excise tax on high-cost health insurance plans passed by the Senate. Since many labor union members would be affected by the tax on high-cost health insurance plans, the House of Representatives was not supportive of this provision in the Senate bill. Union leaders have also been included in key negotiations on this provision, and on January 14, signaled that they are ready to support the merged legislation with the compromised provision.

The main revenue source for the Senate’s health care reform bill (H.R. 3590) would be from an excise tax – beginning in 2013 – on employer-provided, high-cost health insurance plans costing more than ,500 for individuals and ,000 for a family. The reported compromise on the legislation now makes the tax kick-in on policies costing ,900 for individuals and ,000 for families. The tax threshold would still rise at inflation plus one percentage point, as is currently written in the Senate bill. Additionally, dental and vision benefits would be removed from the calculation of threshold costs, and plans offered by state and local governments, as well as plans covered by collective bargaining agreements, would be exempted from the excise tax until 2018. This would allow current agreements to expire and allow for negotiation of new contracts.

In an effort to make up the lack of revenue from the modification of the excise tax provision, leadership will have to come up with new funding to finance the merged bill. Some reports have mentioned that the pharmaceutical industry has agreed to provide more money than the billion they have already negotiated with the White House. Medical device companies could also face additional fees. Portions of the main revenue source in the House bill – a Medicare payroll tax on wealthy U.S. residents – could be added as well.

On January 14, Richard Trumpka, president of the AFL-CIO, said, “Union leaders approached negotiations with the White House and congressional leaders with one overriding goal in mind – getting a bill signed into law.” Gerald McEntee, president of the American Federation of State, County and Municipal Employees (AFSCME), said, “We do like the way it’s shaping up, but it’s still not finished. We’ve got to see a final product.”

There also has been significant discussion – but no resolution so far – about the question of whether to establish a single national health insurance exchange or allow each state to operate its own exchange. Blue Cross and Blue Shield of Texas continues to support a state-based approach to exchanges.

(MUSHARIKA, MURABIHA, QARDE AL’HASANA, IJAREH, MUDARABA)

Author: EHSAN ZARROKH

ZARROKH2007@YAHOO.COM

2007-04-06

ABSTRACT

Islamic finance is an old concept but a very young discipline in the academic sense. It lacks the required extent and level of theories and models needed for expansion and implementation of the framework provided by Islam. In these circumstances, unawareness and confusion exist as to the form of the Islamic financial system and instruments.

The main difference between the present economic system and the Islamic economic system is that the later is based on keeping in view certain social objectives for the benefit of human beings and society. Islam, through its various principles, guides human life and ensures free enterprise and trade. That is the reason why the conventional banker does not have to be concerned with the moral implications of the business venture for which money is lent.

TABLE OF CONTENTS

1. ABSTRACT

2. The Role of Money

3. Types of Islamic Financial Instruments

4. Risk Mitigating Features

5. Islamic Leasing

7. MUSHARIKA

8. MODARABA

9. CONCLUSIONS

Socio-economic justice is central to the Islamic way of life. Every religion has the same basic aim. In an Islamic environment, an individual not only lives for himself, but his scope of activities and responsibilities extend beyond him to the welfare and interests of society at large. The KORAN is very precise and clear on this issue. There are basically three components of an Islamic economic paradigm:

1. That as vice-regent, man should seek the bounties of the land that God has bestowed on humanity. From the wealth thus obtained, he should enjoy his own share.

2. That he should be magnanimous to others and use a part of the wealth so obtained also for the benefit of his fellow-beings.

3. That his actions should not be willfully damaging to his fellow-beings.

Human society in Islam is based upon the validity of law, of life and the validity of mankind. All these are natural corollaries of the faith. Islamic laws promote the welfare of people by safeguarding their faith, life, intellect, property and their posterity. God nurtures, nourishes, sustains, develops and leads humanity towards perfection. Even though an individual may be making a living because of his efforts, he is not the only one contributing towards that living. There are a number of divine inputs into this effort and therefore, the results of such an effort obviously cannot be construed as entirely proprietary.

Whereas the Islamic banker has a much greater responsibility. This leads us to a very fundamental concept of the Islamic financial system i.e. the relation of investors to the institution is that of partners whereas that of conventional banking is that of creditor-investor.

The Islamic financial system is based on equity whereas the conventional banking system is loan based. Islam is not against the earning of money. In fact, Islam prohibits earning of money through unfair trading practices and other activities that are socially harmful in one way or another. [1]

Those who swallow down usury cannot arise except as one whom SHAITAN (evil) has prostrated by (his) touch does rise. That is because they say, trading is only like usury; and Allah has allowed trading and forbidden usury. To whomsoever then the admonition has come from his Lord, then he desists, he shall have what has already passed, and his affair is in the hands of Allah; and whoever returns (to it) – these are the inmates of the fire; they shall abide in it [SURAH 2:275].

Not that there was any ambiguity in the Command of Allah. Far be it from Him to give any order to His Servants, which they can not comprehend. The fact is that those who had surplus money and wanted to earn profit did so either by lending it through RIBA (usury) or by investing it in trade and hypocrites were not prepared to forgo the first option. Hence, they argued that since both were means of earning profit, they were alike and the prohibition of RIBA did not stand to reason.

The practice of RIBA i.e. usury was so deep-rooted in society and continuance of the practice was so undesirable, that Allah warned the believers that if they did not desist, they should be prepared for a war against Allah and His Apostle. This warning was heeded by the Muslim UMMAH and for more than a thousand years the economies of Muslim states were free from RIBA. With the ascendancy of Western influence and its suzerainty over Muslim states, the position changed and an interest-based economy became acceptable. Efforts in Muslim countries to revert to an interest-free economy were hampered by many obstacles. [2]

The Role of Money

The traditional definition of the time value of money leads one to assume that profit maximization is the objective of investors irrespective of whether or not the earning of profit has made someone else worse off. Some economists have termed the maximization of profit as the sole objective of corporations. This view cannot be supported or defended since the profit maximization process may lead to perverse outcomes. When financial operations are removed of moralistic tone, competitive markets fail to achieve the efficient allocation of a country’s resources.

In Islam money in itself is not considered, as actual capital only exists when money, along with other resources, is sunk into productive activities. Linking the use of money to productive purposes invariably brings into action the factor of labor, a process from which benefits pass on to society.

Types of Islamic Financial Instruments

Demand for monetary instruments is influenced by the variation and level in the market rate what is meant as the market rate of return. The demand for household monetary instruments is mainly for the purpose of circulation of income. Banks need these instruments for:

1. Transaction purposes;

2. Precautionary purposes, in that some unexpected payments have to be made while some expected inflows may not be forthcoming on their due date, and;

3. not only to avoid loss but also to obtain gains in the capital value of financial assets under the expectation that the market rate of return may move in a certain direction.

What differentiates a traditional financial market from others markets is that no tangible good or service is exchanged for any monetary consideration; only a “financial claim” changes hands in the form of a promissory note or a title to any future flow of income adjusted for any capital appreciation. Not all Islamic instruments are purely financial claims. Some of the instruments also represent ownership of the underlying assets together with a claim to underlying cash flows. Basically there are the following four types of Islamic financial instruments:

1. Type “A” is a financial claim of monetary value with recourse to underlying durable assets and related cash flows. This type has a predictable future income stream, is marketable and can be discounted since with the changing of hands, the instrument passes title to the goods and not to the debt. It is basically lease-based.

2. This instrument is partly backed by durable assets and its income is not predictable, but evaluated through an asset valuation process at the end of an agreed and declared duration. The underlying transactions can be a mix of IJARA, MODARABA, MUSHARAKA etc., contracts. This Type may be traded in the secondary market at its fair market price acceptable to the parties involved but not discounted.

3. Type “C” is purely a monetary claim to an expected income stream forthcoming from underlying commercial transactions. Income is evaluated through an asset-valuation process at the end of an agreed and declared period. A transaction of this type may comprise MORABAHA, ISTASNA etc., contracts which are debt claims against third parties in respect to actual commercial transactions. The Type may be traded at its face value declared at the end of each accounting period but cannot be discounted.

4. The Type “D” is purely a financial claim of monetary value but with recourse to certain precious metals such as gold, silver, platinum, etc., or commodities quoted on exchanges. The instrument entitles the holder to take delivery of the underlying asset but does not carry any attached revenue stream except that its price is pegged to the price of the underlying precious metal or commodity quoted at recognized international exchange rates. It can be traded but not discounted. [3]

Risk Mitigating Features

The phenomenon of risk plays a pervasive role in economic life. Without it, financial and capital markets would consist of the exchange of a single instrument each period, the communications industry would cease to exist in so far as this market is concerned and the profession of investment banking would be reduced to that of accounting. Risk is further segregated from uncertainty. A situation is said to involve risk if the randomness facing an economic agent can be expressed in terms of specific numerical probabilities (these probabilities may either be objectively specified, as with lottery tickets or else reflect the

One of the first forms that Banking Lawyers across the nation and California in cities and areas such as San Diego, Orange County, Newport Beach, La Jolla, Anaheim, Los Angeles, Santa Barbara, and Palm Springs (not to mention Wall Street) will be asked to prepare and fill out by banking clients is likely to be called TARP 1, named after the Troubled Asset Relief Program just passed by Congress, so to assist these banking attorneys we have made available these draft forms.

TARP 1, we believe will probably look something like this: 

U.S. Department of the Treasury1500 Pennsylvania Avenue NWWashington, DC 20220Attn: Hank Paulson

We at _____________ Financial Institution, qualify under provision ___ of the Troubled Asset Relief Program (TARP) as being a financial institution in the U.S. with mortgage based securities.

While no person in their right mind would now purchase these mortgage based securities, other than you fine individuals at the U.S. Treasury, and while these assets have a market value of absolutely nada on the open market, we hereby apply for their sale to the U.S. Treasury at the nominal price of $ _____ Billion dollars. We guarantee that this amount of money will return us to financial health and stability and keep us from filing bankruptcy.

Please have the U.S. Treasury wire this amount forthwith to Acct. # ______________________, Routing # _______________________ at our main branch so it does not become necessary for us to be unable to issue Christmas bonuses to the executives of our fine American institution or to cancel our annual retreat to the Cayman Islands.

We guarantee that no foreign government owns more than 70% of our common or preferred stock and we promise to vote Republican in the next election.

Sincerely,

CFO__________ Financial Institution 

We expect TARP 2, for financial institutions who need to ask for more money, to look like this: 

U.S. Department of the Treasury1500 Pennsylvania Avenue NWWashington, DC 20220Attn: Hank Paulson

We at _____________ Financial Institution, qualify under provision ___ of the Troubled Asset Relief Program (TARP) as being a financial institution in the U.S. with mortgage based securities. The former CFO of our company is no longer with us, having been ejected from our Board of Directors.

While no person in their right mind would now purchase these additional mortgage based securities our former CFO failed to tell us about, other than you fine individuals at the U.S. Treasury, and while these assets have a market value of absolutely nada on the open market, we hereby apply for their sale to the U.S. Treasury at the nominal price of $ _____ Billion dollars. Although we were wrong the last time we guaranteed the billions of dollars you gave us would return us to financial health and stability, we guarantee that this amount of money will almost certainly keep us from filing bankruptcy.

Please have the U.S. Treasury wire this amount forthwith to Acct. # ______________________, Routing # _______________________ at our main branch so we can afford to fly our executives back from their annual retreat in the Cayman Islands.We guarantee that no foreign government owns more than 90% of our common or preferred stock and we promise to vote Democrat in the next election.

Sincerely,

New CFO__________ Financial Institution.

If you have a banking, corporate or financial legal issue in Irvine, Orange County, La Jolla, San Diego, in the Inland Empire, Los Angeles, Palm Springs or anywhere in Southern California, we have the knowledge and resources to be your Newport Beach Banking Lawyer and your San Diego Banking Attorney. Be sure to hire a California law firm with banking, corporate and financial lawyers who can serve areas such as Los Angeles, Palm Springs, Palm Desert, Anaheim, Irvine, Newport Beach, Carlsbad, Corona del Mar, Laguna Beach, Huntington Beach, Santa Ana, Rancho Cucamonga, Ontario, Fullerton, Del Mar, San Diego, Orange County, San Luis Obispo, Buena Park, La Jolla, Oxnard, Ventura, La Quinta, and Santa Barbara so you are properly represented and get the compensation you deserve.

If you have a banking, corporate or financial legal issue of any kind, call the Law Offices of R. Sebastian Gibson, or visit our website at http://www.sebastiangibsonlaw.com  and learn how we can assist you. You can also call us to speak directly to Sebastian Gibson on the phone about your legal matter.

According to the borrower, the responsibility of paying service tax is of the service provider which is the foreign branch of the Indian bank and, hence, the Indian bank having a permanent establishment in India, is supposed to pay and not the borrower.

The contention of the service tax authorities is partially correct after coming into effect of section 66A of the Finance Act, 1994 from April 18, 2006.

Until the coming into effect of section 66A, the liability and obligation to pay service tax was that of Indian bank and not that of the borrower. Contrary to the contention of the service tax authorities, even under rule 2(1)(d)(iv) of the said Rules, effective from August 16, 2002 and June 16, 2005 respectively, the borrower cannot be made liable for the payment of service tax.

2. Rule 2(1)(d)(iv) reads as follows :—

‘Person liable for paying the service tax’ means,—

(iv) in relation to any taxable service provided or to be provided by a person, who has established a business or has a fixed establishment from which the service is provided or to be provided, or has his permanent address or usual place of residence, in a country other than India, and such service provider does not have any office in India, the person who receives such service and has his place of business, fixed establishment, permanent address or, as the case may be, usual place of residence, in India.”

From the aforesaid provisions, it would be clear that until April 18, 2006, the requirement under rule 2(1)(d)(iv) was that only in case where the service provider did not have any office in India, the person receiving taxable service was liable for paying service tax involved. In the cited case, the Indian Bank having its registered and head office in India, and a branch in a foreign country cannot be said to be a service provider who did not have an office in India.

After coming into effect of section 66A, rule 2(1)(d)(iv), substituted with effect from April 18, 2006 by the Service Tax (Second Amendment) Rules, 2006, reads as follows :—

“‘Person liable for paying the service tax’ means -

(iv) in relation to any taxable service provided or to be provided by any person from a country other than India and received by any person in India under section 66A of the Act, the recipient of such service;”

As such, until April 17, 2006, the borrower was not a ‘person liable for paying service tax’ within the meaning of the Act and the said Rules, including rule 2(1)(d)(iv) thereof.

It is relevant to note herein that the phrase ‘does not have any office in India’, in rule 2(1)(d)(iv), stands omitted from the substituted rule. As such, with effect from April 18, 2006, in any case where the taxable service is provided or is to be provided by either a person who has established a business in a country other than India or has a fixed establishment from which the service is provided or is to be provided in a country other than India or has his permanent place or usual place of residence in a country other than India, the service recipient in India would be treated as if it has itself provided the service in India and, accordingly, it would be liable to pay the service tax and comply with all procedural and other requirements as specified in the Act and the said Rules. The respective clauses in section 66A (1) (a) are disjunctive and, hence, once any of the three alternatives contained therein are satisfied, the service recipient becomes liable to pay service tax on the taxable service involved.

Applying the aforesaid provision, since the service is being provided by foreign branch of an Indian Bank, the condition precedent laid down in section 66A(1)(a) is satisfied and, in the absence of the phrase ‘does not have any office in India’ in rule 2(1)(d)(iv), as recipient of the services, the borrowers would be liable to make payment of the service tax payable on the ‘Banking and Other Financial Services’.

3. The fees paid or to be paid are liable to service tax under ‘Banking and Other Financial Services’ under the Act with effect from September 10, 2004. The liability to pay service tax for the period prior to April 18, 2006 would be that of Indian Bank and on and from April 18, 2006, would be that of the borrowers.

There are times when you could also consider the feasibility of trading throughout the overlapping hours of both time zones. The only thing that may hinder this possibility is a drastic political or economic news reports. Otherwise, the possibilities of planning and preparing advance strategies in foreign currency exchange trading for your benefits are viable. And if you are an inexperienced trader, you can begin by opening a mini account. The profits that you will make here will not be categorized under the payable taxes because if you trade using larger sums, that will only be the time when you will have to pay taxes.

So, you can be really profitable by opening a mini account if you are knowledgeable on forex trading and the conditions of the foreign currency exchange market. And you will only need your personal computer and an Internet connection to start forex trading. However, you can also trade from your mobile phone if it can access the Internet. Furthermore, even if the transactions in currency trading are abroad, you can still convert your earnings into your country’s currency through international banking. And if your earnings are below your country’s tax level, then there is really a huge chance that you can have it without paying taxes.

Banking with Family and Friends

Although it might have an unconventional connotation, borrowing from friends and family has helped well-known companies fund their growth. Richard Branson borrowed money from his aunt when he founded Virgin Records. Sam Walton, used a ,000 loan from his father-in-law to start Wal-Mart, and Ahmet Ertgeun borrowed ,000 from his family dentist to help him launch Atlantic Records. 

Unlike borrowing from a bank, friends and family may offer lower interest rates, more flexible terms and a much simpler approval process. The lending criteria are mostly based on the personal relationship the lender has with the borrower. With that said, experts warn that it’s important to treat the loan arrangement in a professional manner to avoid damaging personal relationships. This means, much like a business owner would explain his/her borrowing intentions to a bank or an investor, it’s very beneficial for the business owner to put together a short presentation for family and friends. Even if friends and family aren’t interested in the same nitty-gritty details as professional investors, giving them the basics (goals, potential risks and a repayment plan) will squash any investing worries they might have.

Once a family member or friend has agreed to front money for a business venture, experts suggest drawing up the loan’s terms and its repayment plan to avoid potential problems on down the road. Of course, once the formal documents have been created and agreed upon, business owners should stick to the terms indicated within the documents. In the event that the business is unable to make a payment, it’s important to communicate this situation with the party who loaned the money. Because it’s a family member or a long-time friend who loaned the money, he/she might be more forgiving than a traditional bank; therefore, they might be able to work around the cash flow difficulties.

Peer-to-Peer Lending

Similar to borrowing from friends and family, peer-to-peer lending is exactly what it sounds like—people lending other people money. Categorized in the same tier as borrowing from friends and family, peer-to-peer lending is a much more structured financing relationship, because it provides a buffer between the borrower and the lender. Formalizing the process helps create distance between emotions and the business in need, easing what can sometimes be a tense situation for both parties involved. The loan process usually starts in an online social networking site. For example, the owner of a medical transcription service would create a borrower profile, upload a photo, list a requested loan amount and add specific details for why he/she needs the loan. Lenders have the ability to peruse the borrower profiles and select someone to assist. It’s important for business owners to note that some peer-lending sites will not accept borrowers with less-than perfect credit, and other sites have a borrower-rating system in place to help prospective lenders assess the risk involved. Once a lender has chosen a borrower, the website handles the formalities of the arrangement.

Borrowers are asked to provide personal information similar to what a bank would need when signing a loan. Contracts are then drawn up, exchanged and signed. If the borrower is unable to pay back the loan according to the agreed upon terms, he/she will be sent to a collections agency and reported to a credit bureau. 

There are a number of websites dedicated to peer-to-peer lending, most notably Prosper, Lending Club and Virgin Money.

Exchanging Invoices for Cash

If an entrepreneur doesn’t want the hassle of paying back a loan and muddying up his/her balance sheet in the process, there is one more alternative financing option to consider — accounts receivable factoring. Selling invoices to a factoring firm is a very common, yet understated way of keeping a company’s cash flow going throughout an economic downturn.

As opposed to accepting a loan from a bank, a family member or a peer, accounts receivable financing is not a loan at all. In this type of funding arrangement, the factoring firm purchases the rights to an invoice, advances cash immediately on that invoice and then collects on it. Credit decisions are based on the creditworthiness of the company’s customers rather than the business itself, allowing the factor to leverage the higher quality of their customers’ credit in securing funds. In addition, many factoring companies are willing to work with start-up companies, as well as those who are in a rapid growth phase. Many factoring firms are also willing to fund receivables without requiring a personal guarantee of the business owner, allowing the owner to protect his/her personal assets. Accounts receivable factoring agreements also generally provide generous lines of credit because factors are able to increase their funding as their clients’ businesses grow.

For example, let’s say that a company provided services to a doctor’s office and then billed the physician for those services. Also affected by the current economic conditions, the physician tells the business owner that he is not able to pay the bill until next month. If the business owner is working with a factoring company, he/she can sell the invoice to the factor and receive the majority of his/her funds right away. The factor charges a fee for the aged invoice once it receives full payment, releasing the difference back to the company’s owner. As a result, factoring allows the entrepreneur to continue its basic business operations as usual while also maintaining a good vendor-relationship with the physician.

Factoring firms come in all different shapes and sizes, and they are spread out all over the world, and each offers their own twist to the invoice funding model. Therefore, it’s important for entrepreneurs to take the time to research factoring companies and select the best one to meet their company’s financing needs. Some more pertinent qualities to consider when choosing a factoring company is to find one who is a member of the International Factoring Association. The IFA, understands the uniqueness of your business and offers flexibility with its funding.

In a time when more and more banks are saying “no,” business owners can and should take advantage of some or all of the alternative financing options shared within this article. When researching any kind of funding source, it’s important for business owners to remain professional and be upfront about his/her company’s financial needs and goals in order to secure the best funding solution for his/her company.

Create a schedule

The first thing you need to do is to create a payment schedule for the bills that you need to pay each month. If you know exactly when and how much your bills are likely to be then you will be better prepared to pay them when the time comes. If there are bills that can be paid at any time of the month, then schedule a time that is most convenient for you.

Prepare a budget

Once you know when and how much your bills are going to be, then you should create a budget to plan how much money you require each month in order to pay your bills. If there are bills that you are unsure about the exact amount, then it is better to overestimate, as this will keep you safely within agreed monetary limits. Creating a budget will help you to spend only what you can each month so that you avoid overdraft fees.

Agree an overdraft

If you regularly go below the amount of money you have in your account, then try and agree an overdraft with your bank. Although agreed overdrafts still often carry interest rates, the payment amounts are much lower and you will not be charged large fees for an unauthorised overdraft. If your credit history is fairly good then you should be able to agree an overdraft level to suit your needs. If you don’t use it then great, but it will be there if you need it and will help you to avoid expensive fees.

Change bill payments

If you have a lot of bills to pay it can get confusing, especially when bills need to be paid at various times throughout the month. If possible, speak to the companies that you are paying bills with and fix a date or two where you can pay most of your bills. This will make it quicker and easier to pay your bills and mean you are less likely to forget.

Online banking

Another way to pay your bills quickly and avoid late fees is to use online banking. If you have queue at your local branch to pay a bill and you are busy then you might not have the time. With banks shutting over the weekend you might find yourself being a few days late with a payment that will cost you money. To avoid this you should use online banking, as you can make payments whenever you want in just a few clicks. This will help you to make payments on time and save you a lot of money in fees.

Talk to your bank

If you know that there is a chance a payment will be made late, you can always speak to your bank about it. If you let your bank know the payment has been sent then they might be able to waive any late fees. Although this doesn’t always work, banks are generally more lenient if they know in advance that a payment will be late.