In channel financing, the dealer approaches the bank indirectly through TATA Motors and TATA Motors, due to its reputation and understanding with the banks, arranges their financing with the respective banks. In this way the dealers easily find a source of financing. But the problem with Channel Funding is that it is a more rigid type of financing, i.e. the funds arranged through Channel Funding cannot be used for personal matters and therefore flexibility is lost, unlike in the case of cash credits. The main features of Channel Funding are: The amount of capital available in case of Channel Funding is comparatively larger and is less limiting. The turnover period of money is often comparatively larger in case of Channel Funding. The risk in Channel Funding is actually taken by the bank which is compensated by the interest payment and on the dealership side, the capital risk is limited to the interest payment and principal repayment to the banks. Credit history is a very important factor that plays a role in case of channel financing. This is due to the fact that banks usually refrain from giving funds to those traders who have a bad credit rating in the market. In some cases, TATA Motors pleads the dealership's case before the bankers and somehow gets the funds allocated for the dealership.  Banks always require some sort of security against