ASSIGNMENT

ON
INSTITUTIONAL REFINANCING

Submitted by :-
Sudhansu kumar
PGDM BFM
Roll no-56

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“Is institutional refinancing really what Indian bank need or it is just a formality”.before
discussing this first we should know what is refinancing and its need.

What is refinancing?
Refinancing refers to the replacement of an existing debt obligation with a debt obligation under
different terms.

What is institutional refinancing?

Institutional financing is not provided from individual investors, but is provided through an
institution

Why refinancing and its importence in present time?

The primary function of banks are to accepting deposits and granting loan and advances.
Suppose bank have deposits 100 Rs in this 100 Rs they need to keep 30% as SLR and CRR
balance 70% bank can lend as loan and advances this 70% funds are not enough for banks to
fulfill the lending requirement so the need finance to meet this requirement. Following are the
various institutions:-
• SIDBI
• NABARD
• NHB
• IDBI
• EXIM

Traditionally, the role of commercial banks in providing long-term finance to industries in India
has been very negligible. So, the Government of India has set up a number of special finance
institutions to provide long-term finance to industry with the object of stimulating industrial
development of the country by cheapening and widening the channels of industrial finance.
These include the Industrial Finance Corporation, the Industrial finance. These include the
Industrial Finance Corporation, the Industrial Credit and Investment Corporation, State Financial
Corporations, the Industrial Development Bank of India and the Industrial Reconstruction Bank
of India.
These institutions provide long-term finance to new as well as existing companies. These
institutions do not provide only finance to industrial concerns but provide promotional, technical
and managerial services. They take initiative in locating and filing the gaps in the industrial
structure of the country. Assistance, direct subscription to company securities underwriting of
new security issues, grant of loans, guaranteeing of deferred payments against imports of capital
goods. They sanction long-term loans at low rate of interest.

In the modern money - using economy, the importance of finance has increased manifold due to
large scale operations and use of capital intensive techniques of production and distribution. Also
it is necessary for the development of priority sector. So, INSTITUTIONAL REFINANCING is
not just a formality but it’s the necessity for the banks.

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