Financing decisions are the decisions regarding the process of raising the funds. This function of finance is concerned with providing the answers to the various questions like:

a.    What should be the amount of funds to be raised? In simple words, the amount of funds to be raised by the organisation should not be more or less than what is required as both the situations involve the adverse consequences.

b.    What are the various sources available to the organisation for raising the required amount of funds? For the purpose of raising the funds, the organisation can go internal sources as well as external sources.

c.    What should be the proportion in which the internal and external sources hould be used by the organisation?

d.    If the organisation, particularly the corporate form of organisation, wants to raise the funds from different sources it is required with various legal and procedural formalities. Earlier these legal and procedural formalities were prescribed and regulated by controller of capital issues (CCI). Since 1992, after the abolition of the office of CCI, these formalities are prescribed and regulated by Securities and Exchange Board of India (SEBI). Though the intention of this subject is not to consider the SEBI regulations and guidelines in details, relevant SEBI guidelines are discussed at the appropriate places.

e.    During the last decade o fthe twentieth century lots of changes have taken place in the capital market, which refers to market available to the companies to raise the long term requirement of funds. The question arises what is the nature of capital market operations? What kinds of changes have taken place recently affecting the capital market in the country?