1.
INDUSTRIAL DEVELOPMENT
1.INDUSTRIAL BANK
DEVELOPMENT BANK OF INDIA(IDBI)
OF INDIA (IDBI)
Its objective is to strengthen the resources of financial institutions including banks. It is engaged in re-financing
industrial loans granted by eligible financial institutions like banks, IFC, SFCs, LIC, etc. It also re-discounts machinery
bills and subscribe to the shares and bonds of IFC, ICICI and SFCs.
The IDBI follows a flexible approach in
its financing pattern. Being a
development agency it is not interested
in receiving high profits on amounts it
loans to industrial units. Also, it prefers
to assist industrial organization
indirectly through other institutions.
It has set up a special ‘Development It also offers concession finance in backward
Assistance Fund’ for assisting deserving areas. It provides facilities for joint industrial
projects which other fi.nancial surveys to identify growth potential in backward
institutions are not likely to finance. areas.
IDBI’s role in industry takes various forms. It
helps industry directly through underwriting
operations and provisions of loans. It also
undertakes guarantees for repayment of loan.
2.INDUSTRIAL FINANCE CORPORATION OF INDIA (IFCI)
IFC was set up in 1948. It is a pioneer development bank in India. Its main objective is to provide long and medium-
term requirements of capital to industry. It does not give assistance for short-term purposes, i.e., for working capital
or for repayment of existing liabilities but the IFC encourages loans for setting up new industrial projects and also
loans for expansions of existing units’ diversification, modernization and renovation.
The IFC assist schemes in industrial areas in more than
one way:
(a) It grants loans both in rupees and in foreign currencies,
(b) It underwrites issues both ‘initial’ and ‘further’ in the NIM.
(c) It makes direct subscriptions to shares and debentures of public
limited companies,
(d) It guarantees deferred payments for imported machinery.
IFC’s assistance has been especially noteworthy to sugar
and jute industries. It has been a ‘Lead Institution’ for
providing funds on a priority basis for revival of their sick
units. Assistance under this scheme was based on the need
of each individual organization and there was no ceiling
for individual loans.
3.INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA (ICICI)
Foreign Credit:
The ICICI has provided a major share of assistance in foreign
currency. The industries to which it has given credit have generally
been those which require foreign credit. Non-traditional and The objectives of the ICICI were:
growth-oriented industries like chemicals, metal products, (a) To create, expand and modernize enterprises,
machinery manufacturers have received a major share of finance. (b) To encourage private capital both external
Its assistance to these industries has been concentrated in and internal to grow,
Maharashtra, Gujarat, Tamil Nadu and West Bengal. The ICICI (c) To provide finance for long and medium-term
has also given assistance to backward and less developed regions needs,
in the country. It has provided concession finance for their (d) To underwrite new issues,
promotion. (e) To guarantee loans,
Modernization credit: (f) To provide guidance in managerial, technical
The ICICI has also participated in the consortium of IDBI, IFC and administrative matters.
and other financial institutions to provide assistance on ‘soft’
terms for modernization of industries like cotton textiles, jute,
sugar, cement and engineering industry. The ICICI is the first
financial institution to have a Merchant Banking Division in
1974. It assists new entrepreneurs through this division by giving
them sound advice on the nature of the project.
It also promotes their venture through the NIM. It also
supervises and follows up the progress of these concerns.
4.STATE FINANCIAL CORPORATIONS(SFCs)
Many State level institutions have been set up to provide assistance to State level industrial units but the SFCs
were established as far back as 1951 under the State Financial Corporation Act with the specific purpose of
being development banks for promotion and balanced development of each state.
The first SFC was formed in 1953 in Punjab. SFCs are confined to one State and also cover those neighbouring
states or territories which do not have their own SFC.
The objectives of the SFCs are to
confine themselves to small and
medium enterprises. It was set up
initially to grant loans to any industry
whose paid up capital and free
reserves together not exceeding Rs. 1 The SFCs provide assistance through loans or advances not
crore. Further, the maximum loan it exceeding 20 years. They also subscribe to debentures
sanctioned was Rs. 90 lakhs to repayable within 20 years. They guarantee loans for
companies and co-operative societies industrial purposes. They provide assistance by
and Rs. 15 lakhs to other borrowers. underwriting issues of shares, bonds or debentures and they
subscribe to shares and bonds of special financial
institutions.
