![]() ![]() ![]() The actual flow of final goods and services from producers (firms) to consumers (households).įurther, it acts as a reward for the productive services offered by the households to the firms.The household sector provides factors of production to the producer sector.In real flow, the household sector being the owners of the inputs supply factor services in the form of raw material, land, labour, capital and enterprise to the firm, and in exchange, the firm provides goods and services to meet the demand of the households. Hence, it is also termed as product flow or physical flow. Real flow is named so because there is the physical transfer of goods and services amidst the two sectors, i.e. ![]() Real flow is when goods and services move from one sector of the economy to another sector. Concurrently, goods and services are purchased from the business sector by the households.Įxchange of goods and services without the use of money.Įxchange of goods and services by using money. Remuneration is provided to households by the firms for factor services. Concurrently, goods and services are supplied by the firms to households. Money flow implies the cycle of payment in the monetary form, from firms to households and a corresponding monetary payment from households to the firm.įactors of production flows from households to firms. Real Flow implies the movement of factors services and a corresponding flow of goods and services amidst the various sectors of the economy. In this post, we will talk about all the important differences between real flow and money flow, using diagram and examples. In one direction, there is the flow of goods and services, while in the opposite direction there is a flow of money, with respect to the payments for availing the goods and services, which results in a circular flow.In the process of exchange, the amount received by the seller is equal to the amount spent by the buyer.The ongoing movement or exchange of goods and services and money across various sectors of the economy is termed as Circular Flow of Income: Principles of Circular Flow of Income the household sector, which represents the consumer group and producer sector which represents firms. So actually it is a very big step of the total credit growth for merchant lending growing much beyond, not just for them but for others also is my personal opinion.ĭon’t miss out on ET Prime stories! Get your daily dose of business updates on WhatsApp.A two-sector economy is one where only two sectors exist, i.e. So actually a large player entering in that would open up big market because of their trade data availability, they would be able to provide credit to millions of new merchant and they will become credit worthy which means that that would expand credit for every other player in the market itself. Having said that, the total credit gap for small businesses in India is staggering $400 billion of which the merchant financing is around $150 odd billion. When you do merchant lending as an independent unit, then it is like an unsecured loan, it becomes a little difficult because you do not know real movement of the cash flow. So obviously they can do this in very big sizes so they will have both focus on consumer as well as merchant. The merchant lending in ecosystem, the company which you are naming have a large ecosystem wherein on the retail chain you have merchants which are selling the material, which are buying the material so they will have the benefit of the trade data and basis that they can provide the credit. You should divide it in two part, merchant lending in an ecosystem and merchant lending as an independent business. Is there space for everybody? Is the economics very lucrative there or only risk is high? So if India's most valued and largest company is looking at that piece as an opportunity, you are working there for long. And so I want to understand how large is this opportunity? You work with all across SMEs, MSMEs, right? This one big lender, which is taking shape from a conglomerate gradually is also looking at that merchant lending opportunity. And in the lending space, what we pick up is that lending to merchants in their ecosystem be it retail etc. One thing I wanted to ask you as an industry participant, not as a representative of U GRO there is a very big kind of a big start-up which is being born in the lending space, perhaps the biggest start-up over one lakh crore in valuation which is being born tomorrow. So real collection efficiency should be seen and what is the resolution rate of that and that we are very good at that so it is more than 97-98%.īut in terms of the net loan origination, the first quarter we have the net loan origination of around 500 odd crore. ![]()
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