EDP(LECTURE 6)

       

                                            MARWARI COLLEGE,RANCHI

                                              (UNDER RANCHI UNIVERSITY RANCHI)

NAME : RAJU MANJHI,PRAKASH KUMAR 

SUB: EDP

SEM : IT /CA/BCM VI
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    Industrial Development Bank Of India (IDBI):  It was established in July 1964 as an apex lending financial institution in our country which was restructured and designed as the principal financial institution of the country in 1975 for coordinating the activities of other institutions including banks engaged in financing; prompting and developing industries in conformity with the national priorities.

Objectives:

I.        Lending money.

II.      Promotion of (new) industries in India.

III.   Development (upkeeping) of existing industries in India.

Schemes of assistance in India:

1)       IDBI provides direct assistance to industrial concerns in the form of loans, underwriting of and subscribing to shares and debentures and guarantees.

2)       It provides soft loan for modernizing and renovation and replacement.

3)       It refinances industrial loans grunted by banks and other financial institutions.

4)       It finances exports in the form of direct loans and guarantees to exporters in participation with commercial banks and refinances medium term export credit provided by commercial banks and overseas creditors.

5)       It assists other financial institutions by way of subscriptions to their shares and bonds.

6)       It engages in promotional activities for bringing about industrial development.

7)       It coordinates the activities of other financial institutions set up to provide assistance to industries.

              Industrial Reconstruction Bank Of India:  This institution was set up as a primary industry for rehabilitation of sick industrial units, which has been reconstructed and renamed as the IRBI by an Act of Parliament with effect from 20th March 1985. This institution has been set up with a view to enable it to function as principal credit and reconstruction agency for industrial revival by undertaking modernization, expansion, reorganization, diversification or rationalization of industry and to coordinate similar work of other institutions engaged therein and to assist and rehabilitate industrial concerns.

Functions: The IRBI is empowered to grant loans and advances to industrial concerns, underweight stocks, shares, debentures, bonds, guarantee loans, differed payments and performance obligation of any contract undertaken by industrial concerns and act as an agent of central and state government, IRBI, State Banks, Schedule Commercial Banks, State Cooperative Banks, Public Financial Institutions, State Financial Corporations and such other government institutions as and when need arises.

        Small scale Industries Development Bank of India (SIDBI) :  Set up as a subsidiary of IDBI by a special Act in 1989 to act as the principal financial institution for the promotion, development and financing of industries in small-scale sectors and for coordinating the functions of institutions engaged in similar activities. It has taken over the onus (responsibility) for administering small-scale industries development fund that was earlier administered by IDBI. It has begun functioning from 2nd April 1990. The initial authorized capital of SIDBI is 250 crore which can be increased by IDBI upto 10000 crores as when required.

Function:   SIDBI has outlined 7 activities as its functions. These are:-

1)       Refinancing of loans and advances extended by primary lending institutions.

2)       Discounting and re discounting bills.

3)       Extension of seed capital/soft loan
Seed capital: The amount of capital required at the initial stage of manufacturing by an industry.
Soft Loan: Loan, which is given to carry on activities till major amounts are received.

4)       Granting direct assistance and refinance for financing exports of SSI (Small Scale Industries) sectors.

5)       Providing of factory and leasing services.

6)       Extending financial support to SSIDC (State Small Industries Development Corporation).

7)       Extending financial support to national small industries development corporation).

Thrust area: The important thrust areas of SIDBI are technological upgradation and modernization. Extending the channel of marketing for the products of SSI sectors and promotion of employment oriented industries specially in semi-urban areas.

               State Finance Corporation (SFC):  Set up under state financial corporation act 1951 to render assistance to medium and SSIs in their respective states. There are at present 18 SFCs including the Tamil Nadu Industries Investment Corporation, which was set up in 1949 before passing of SFC’s Act.

1)             Granting of loans and subscribing to the debentures of industrial  difficult  to bring in enough funds as their contributions SFCs assist them with a unique scheme known as seed capital / soft loan scheme. Under this assistance upto Rs 2 lakh is given at the interest rate of 1% per annum. SFCs also assume the role of promotional agencies rather than being a financial institution only, by diversifying their activities to fill in the role of full-fledged development bank. Few SFCs have already set up entrepreneurial guidance cum assistance bureau to help the entrepreneur particularly the first generation entrepreneurs.

Small Industrial Development Corporation (SIDCs):. These are wholly owned by state government & have set up under the Companies Act

NOTE:- Few Page missing

1)                   election & training of entrepreneurs.

2)                   Developing industrial area / estate by providing infrastructure facilities.

Possible question type--

1)                   Critical understanding of practicle aspects.

2)                   On any one institution.

3)                   Comparative study of state & all India institution.

The most suitable agency for assistance  This is another area that has be carefully watched by the entrepreneur as there are many agencies. An existing or prospective entrepreneur needs to keep the following factors in view to decide the financial institution for assistance:

1)                   Amounts of term loans & various types of working capital required.

2)                   Terms & condition of various institutions for the grant of loan & more importantly the time taken for sanction & disperesement of loan.

How to approach an institution for assistance i.e. the formalities:  After choosing the suitable agency & estimating ones needs the next course is to approach the respective institution in order to obtain required credit facility.

This action includes the following--

1)                   Application form: The 1st task is to obtain as application form. This is not always and everywhere available in National small-scale industries corporation (NSSIC) and also state small-scale industries corporation (SSSIC).

a)                   Filling and submitting the form: Filling is not an easy task because for certain information`s  it sometimes requires expert’s advice to rough branch Eoffice of Corporation.

2)                   Disposal of applications: After the application is processed & considered by the competent authority the loan is

a)                  sanctioned as applied for or

b)                  reduced facilities are granted  or

c)                   the case is rejected. Normally a proposal for financial assistance is rejected when its not feasible economically, technically or otherwise if the application is rejected then the course of rejection is intimated to the concerned party.

3)                   Sanctions, documentations and dispersement : It means once the application is sanctioned, the credit institution informs the applicant of the grant of assistance and the terms and conditions of grant. After acceptance of terms and conditions of prospective borrower, documentation is executed or done from him and then the required amount is dispersed