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.

Providing Funds  Infrastructural Facilities  Promotional Activities  Development of Backward Areas  Planned Development  Accelerating Industrialization  Employment Generation

Financial Institutions
Banks Organized Unorganized NonNon-Banking Financial Institutions
Organized Unorganised NonNon-Banking Financial Companies

Commercial Banks Indigenous Banks Cooperative Banks Money Lenders Seths, Sahukars

Development Banks

Specialized Financial Institutions

Investment Institutions LIC, GIC, UTI

1.All India Development Banks Exim Bank, NABARD IDBI, IFCI, ICICI, IDFC, SIDBI, IRCI (IIBL) 2. State Level Development Banks SFC¶s, SIDC¶s


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 cooperative banks are the shareholders of IFCI. The Government of India guaranteed the repayment of capital and the payment of a minimum annual dividend

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 :
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 :
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 Financing :
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 1.

Purpose of Direct Assistance : 
Setting up of new industrial projects  Expansion of existing units or for diversification  For renovation and modernisation


Financial Assistance :
i. ii. iii. iv. v. vi. Granting Loans Underwriting the issue of industrial securities Subscribing shares of public ltd. Companies Guaranteeing of deferred payments Guaranteeing of loans Act as agent of the Central Bank

Promotional Activities :
Development of Backward Areas Promotional Schemes Subsidy for Adopting Indigenous Technology Meeting Cost of Market Studies Meeting Cost of Feasibility Studies Promoting Small Scale and Ancillary Industries. vii. Revival of Sick Units viii. Self-development and Self-employment Scheme i. ii. iii. iv. v. vi.

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. Product-Wise Assistance : Product1. Direct Finance A. Project Finance
i) Loans : Rupee Loans, Foreign Currency ii) Underwriting : Shares, Debentures iii) Deferred payment guarantees

B. Non-Project Finance Noni) Equipment Finance ii) Corporate Loans iii) Working Capital/short-term loans Capital/shortiv) Equipment leasing

2. Direct Discounting 3. Loans to and investments in shares/bonds of FIs

3.Purpose3.Purpose-Wise Assistance :

S.No. Purpose 1. 2. 3. 4. 5. 6.

Sanctions Disbursements

New Expansion/diversification/acquisition Rehabilitation Modernisation /balancing equipment Working Capital Others TOTAL

SectorSector-Wise Assistance :
Sr. No Sector Sanctions Disbursements

1. 2. 3. 4.

Public Joint CoCo-operative Private TOTAL

Sign up to vote on this title
UsefulNot useful