FINANCIALFINANCIALINSTITUTIONSINSTITUTIONS

MEANINGMEANING

Financial institutions provide means and mechanism of transferring resources from those who have an excess of income over

expenditure to those who can make productive use for the same.

ROLE :ROLE :

Providing FundsInfrastructural FacilitiesPromotional ActivitiesDevelopment of Backward AreasPlanned DevelopmentAccelerating IndustrializationEmployment Generation

TYPES :TYPES :Financial Institutions

BanksBanks Non-Banking Financial InstitutionsNon-Banking Financial Institutions

OrganizedOrganized UnorganizedUnorganized

Commercial BanksCommercial BanksCooperative BanksCooperative Banks

Indigenous BanksIndigenous BanksMoney LendersMoney LendersSeths, SahukarsSeths, Sahukars

OrganizedOrganized UnorganisedUnorganised

Non-BankingNon-BankingFinancial CompaniesFinancial Companies

Development BanksDevelopment Banks Specialized Financial Specialized Financial InstitutionsInstitutions

Investment InstitutionsInvestment InstitutionsLIC, GIC,LIC, GIC, UTIUTI

Exim Bank, NABARDExim Bank, NABARD1.All India Development Banks1.All India Development Banks IDBI, IFCI, ICICI, IDFC,IDBI, IFCI, ICICI, IDFC, SIDBI, IRCI (IIBL)SIDBI, IRCI (IIBL)2. State Level Development Banks2. State Level Development Banks SFC’s, SIDC’sSFC’s, SIDC’s

INDUSTRIALINDUSTRIALFINANCE CORPORATIONFINANCE CORPORATION

OF INDIA(IFCI)OF INDIA(IFCI)

IFCI :IFCI :

Government of India came forward to set up the Industrial Finance Corporation of India. (IFCI) in July 1948 under a Special Act. The Industrial Development Bank of India, scheduled banks, insurance companies, investment trusts and co-operative banks are the shareholders of IFCI. The Government of India guaranteed the repayment of capital and the payment of a minimum annual dividend

MANAGEMENT :MANAGEMENT :

The Corporation has 13 member Board of Directors.

Chairman : Appointed by Govt. of India after consulting IDBI.12 Directors : Four are nominated by IDBI Two by scheduled Banks Two by Cooperative Banks Two by other financial Institutions Two outside persons as Directors (Expert in the Fields of Industry, Labour and Economics)

Financial Resources :Financial Resources :

1.Share Capital : The IFCI was set up with an authorised capital of Rs.10 crores consisting of 20,000 shares of Rs. 5,000 each. In March 2003 it was Rs. 1068 crores.

2.Bonds & Debentures : The bonds and debentures stood at figure of Rs. 57.69 crores in 1971 and rose to Rs. 15366.5 crores as on March 31,2003.

3. Borrowings : Borrowings from IDBI and Govt. of India were Rs. 975.6 crore and total assets Rs.22866 crore on March 31,2003

Criterion for Investments :Criterion for Investments :

Considerations while selecting a Financial Proposal :

Importance of project for national economy. Employment-oriented and labour-intensive nature Export potential of a unit Projects located in backward areas Projects initiated by new entrepreneurs Projects which will help rural areas Projects which help in conserving energy

Projects to be set up in a co-operative sector.

Industries Eligible Under Direct Industries Eligible Under Direct Financing :Financing :

1. Limited companies incorporated in India, in private, public or joint sector

2. Co-operative societies registered in India, engaged in the activities related to:

i) Manufacture, preservation ii) Shipping iii) Mining iv) Hotel Industry v) Generation of Electricity vi) Transport of Passengers or goods vii) Maintenance, repair of machinery or vehicles viii) Assembling, repairing or packing of articles ix) Fishing x) Providing special or technical knowledge xi) Research and Development

Purpose of Direct Assistance :Purpose of Direct Assistance :

Setting up of new industrial projects

Expansion of existing units or for diversification

For renovation and modernisation

FUNCTIONS :FUNCTIONS :

FINANCIAL ASSISTANCE

PROMOTIONAL ACTIVITIES

Financial Assistance :Financial Assistance :

i. Granting Loans

ii. Underwriting the issue of industrial securities

iii. Subscribing shares of public ltd. Companies

iv. Guaranteeing of deferred payments

v. Guaranteeing of loans

vi. Act as agent of the Central Bank

Promotional Activities :Promotional Activities :

i. Development of Backward Areasii. Promotional Schemesiii. Subsidy for Adopting Indigenous Technologyiv. Meeting Cost of Market Studiesv. Meeting Cost of Feasibility Studiesvi. Promoting Small Scale and Ancillary

Industries.vii. Revival of Sick Unitsviii. Self-development and Self-employment

Scheme

IFCI & Industrial Finance :IFCI & Industrial Finance :

1. Financial Assistance :

1970-71 : Rs. 32.3 crores

1995-96 : Rs. 6579.7 crores

2001-02 : Rs. 778.0 crores

2002-03 : Rs. 2035.1 crores (161.6% Increase)

Upto Mar 03 :-

Total Assistance Sanctioned : 45426.7 crores

Total disbursements : 44169.2 crores

2. 2. Product-Wise AssistanceProduct-Wise Assistance : : 1. Direct Finance1. Direct Finance A.A. Project Finance Project Finance i) Loans : Rupee Loans, Foreign Currencyi) Loans : Rupee Loans, Foreign Currency ii) Underwriting : Shares, Debentures ii) Underwriting : Shares, Debentures iii) Deferred payment guarantees iii) Deferred payment guarantees

B. B. Non-Project FinanceNon-Project Finance

i) Equipment Financei) Equipment Finance ii) Corporate Loans ii) Corporate Loans iii) Working Capital/short-term loans iii) Working Capital/short-term loans iv) Equipment leasing iv) Equipment leasing

2. Direct Discounting2. Direct Discounting3. Loans to and investments in shares/bonds of FIs3. Loans to and investments in shares/bonds of FIs

3.3.Purpose-Wise AssistancePurpose-Wise Assistance : :

1.1. NewNew2.2. Expansion/diversification/acquisitionExpansion/diversification/acquisition3.3. RehabilitationRehabilitation4.4. Modernisation /balancing equipmentModernisation /balancing equipment5.5. Working CapitalWorking Capital6.6. OthersOthers TOTAL TOTAL

S.No. Purpose Sanctions Disbursements S.No. Purpose Sanctions Disbursements

Sector-Wise Assistance :Sector-Wise Assistance :

Sr. No Sector Sanctions Disbursements Sr. No Sector Sanctions Disbursements

1. Public1. Public2. Joint2. Joint3. Co-operative3. Co-operative4. Private4. Private

TOTALTOTAL