EDP (LECTURE 5)

                           MARWARI COLLEGE,RANCHI
                (UNDER RANCHI UNIVERSITY,RANCHI)
NAME : RAJU MANJHI,PRAKASH KUMAR 
SUB: EDP SEM: VI(CA/IT/CM)
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Financial Institution

(Exclusively for the promotion of small-scale industries or business enterprise)

In order to meet the financial needs of entrepreneur a network of financial institutions has been created in India. The network consists of All India Institutions & State level institutions, which are as follows:

 Industrial Finance Corporation of India (IFCI)  This was set up as a statutory corporation in1948 with the objective of providing medium & long term credit t eligible

1.) IFCI:- this institution shown as industrial finance corporation of India . This was set up in 1948 with the objective of providing medium and long term credit. It has now been converted into joint stock.

NOTE: Long term is 15 years or more & Short term is 5 years or less

Financial activities of IFCI

a)       Providing rupee loan & foreign currency loan.

b)       Guaranteeing such loans.

c)       Under sighting (accepting the risks of insuring; this risk could be coming due to shares & debentures) & subscribing to shares & debentures of public limited companies.                               
Under sighting: Accepting the risks of ensuring; this risk could be coming due to shares & debentures.

d)       Promotional ( job oriented) activities of IFCI                                                                                       
The objectives of IFCI has been -

i)                     Fill in depths in the institutional infrastructure for promotion & growth of industries.

ii)                   To provide much needed guidance in project identification, formulation, implementation, operation etc. to the new tiny, small or medium scale enterprise.

iii)                  To improve the productivity of human & material resources, giving at the same time a better deal to the weaker & underprivileged section of the society. In consonance with the social economic objective laid down by the govt. of India.

iv)                 Undertaking research & surveys for evaluating or dealing with marketing of investments & undertaking & carrying on techno-economic studies in connection with the development of industries.

v)                   Providing technical & administrative assistance to any industrial concern for promotion management & expansion of any industry.

vi)                 IFCI provides assistance both for setting up new units as well as modernization & expansion of existing units.

2)                   Industrial Credit & Investment Corporation of India (ICICI) Set up in 1955 to encourage & assist investment and industrial development in India. The idea of establishing the ICICI was first crystallized as a result of certain deliberation among the government of India, World Bank and certain American finance companies. Unlike other development banks the ICICI was organized as a wholly owned private institution.

Objective:

1.       To meet the needs of the industries for permanent and long term funds in the private sectors.

2.       To assist in the creation, expansion and modernization of industrial enterprises in the private sector.

3.       To encourage and promote the participation of private capital, both internal and external in such enterprises.

4.       To encourage, promote private ownership of industrial investment and expansion market.

Forms of financial assistance:. In pursuit of first objectives of promoting industrial development ICICI provides financial assistance to enterprises in different forms such as:

1.          Under lighting of public and private issues and offers of sale of industrial security such as ordinary shares, performance shares, bonds and debentures.

2.          Direct subscription to such securities.

3.          Providing loans in rupees payable over periods upto 15 years.

4.          Providing similar loans in foreign currencies for payment of imported capital requirement and technical services.

5.          Guaranteeing payments for credit given by Indian and foreign sources.

6.          Providing credit facilities to indigenous manufacturers for promoting sale of industrial equipment.

7.          Leasing of equipment.

Promotional activities: ICICI has set up a project promotional department in order to provide promotional services and assistance to industrial projects on selective basis. It also participates in the coordinated efforts of all Indian financial institutions, state level financial and promotional agencies and nationalized banks in identifying and developing projects and entrepreneurs in backward regions, in providing techno-economic surveys for backward states, conducting feasibility study and implementing identified projects