DEVELOPMENT FINANCIAL

INSTITUTIONS
 A financial agencies that provide medium and
long-term financial assistance and engaged in
promotion and development of industry,
agriculture and other key sectors.

 Ex: International Bank for reconstruction and

Development (IBRD) also known as World
Bank & International Monetary Fund (IMF)
 INTRODUCTION
Industrial finance is a very complicated
problem. It is of vital importance as development
of any country depends on industrial development
of that country „s economy.

Why there is need of finance

1.Long term
2.Medium term
3.Short term
CONTINUE….

 Long term capital is also known as block capital or fixed

capital. it is needed to acquire-fixed and permanent assets

 Medium term capital is required for

repairs, replacements, maintenance of machines and
building etc.

 Short term capital is needed for purchase of raw material

, and to meet day to day expenses
 TYPES OF FINANCIAL INSTITUTIONS IN
INDIA
 Term lending
 Refinance institutions

 Investment institutions

 State level institutions

 TERM LENDING
A term loan is a monetary loan that is repaid in regular payments
over a set period of time. Term loans usually last between one and ten years, but
may last as long as 30 years in some cases. A term loan usually involves an
unfixed interest rate that will add additional balance to be repaid.

 IFCI

 IDBI

 ICICI

 EXIM
IFCI (INDUSTRIAL FINANCE CORPORATION
OF INDIA)
 It was established in 1948
 First development bank of India

 Objective was to make medium and long term

credits more readily available
 Management

- BOD total 12 members(4 by idbi,2 by center govt,

6 by shareholders)
- -full time chairperson
 FUNCTIONS OF IFCI
1) For setting up a new industrial undertaking.
2) For expansion and diversification of existing industrial
undertaking.
3) For renovation and modernization of existing concerns.
4) For meeting the working capital requirements of industrial
concerns in some exceptional cases.
5) Direct financial support (by way of rupee term loans as well as
foreign currency loans) to industrial units for under taking new
projects, expansion, modernization, diversification etc.
6) Subscription and underwriting of public issues of shares and
debentures.
CONTINUE….

Resources of IFCI
 ownership capital

 Issue of shares and bonds

 borrowing from RBI,IDBI AND CENTER
GOVT
 accepting deposits from public, state govt and
local authorities
IDBI (INDUSTRIAL DEVE. BANK OF INDIA)

 Set up in 1964
 It was fully owned subsidiary of RBI but in 1976
delinked from RBI and made as autonomous
body of GOI
 H.O in Mumbai 11 branch offices

 It is managed by a chairman and MD appointed

by central govt, a deputy governor nominated of
RBI, 20 other directors.
FUNCTIONS OF IDBI

 The IDBI has been established to perform the following

functions-
1) To grant loans and advances to IFCI, SFCs or any other
financial institution by way of refinancing of loans granted by
such institutions which are repayable within 25 year.
2) To grant loans and advances to scheduled banks or state co-
operative banks by way of refinancing of loans granted by
such institutions which are repayable in 15 years.
CONTINUE…

3) To discount or re-discount bills of industrial

concerns.

4) To underwrite or to subscribe to shares or debentures

of industrial concerns.

5) To subscribe to or purchase stock, shares, bonds and

debentures of other financial institutions.
CONTINUE..

 With effect from 1 oct,2004 it has renamed as

IDBIL. It has been accepted as a deemed banking co
under banking regulation act. The govt holds the
majority (58.47%) shares of IDBI LTD.
 During last 40 years IDBI has given a qualitative
dimension to the process of industrial development
of the country.
FINANCIAL ASSISTANCE BY IFCI/IDBI

Sanction(crores)
Purpose IFCI IDBI
New projects 15919.6 67498

Expansion /acquisition 6649.2 50627

Rehabilitation 115.7 1415
Modernization 5459.7 12976
Working capital 837 5138
 I.C.I.C.I. (INDUSTRIAL CREDIT & INVESTMENT
CORPORATION OF INDIA)

 Established in 1955 As a public ltd co, at the initiative of

world bank
 Authorized capital of 60 crores and issued capital 22 crores
 The objectives of icici are to encourage establishment of
new industries, to help in expansion and modernization,
technical and managerial aid to increase production and
employment.
CONTINUE…
 In October 2001 .BOD Approved ICICI LTD AND ICICI BANK
LTD. With effect from MAY 2002 IT IS SIMPLY ICICI bank .

 ICICI is now the largest bank with total assets of more than 3000
billions

 More than 700 branches and over 2200 ATM spread all over the
country

 It mainly deals in

 Retail banking, wholesale banking, project finance, international

business and special assets mgt
FUNCTIONS OF ICICI
1)It provides long-term and medium-term loans in
rupees and foreign currencies.
2)It underwrites new issues of shares and debentures.
3)It guarantees loans raised by private concerns from
other sources.
4)It provides technical, managerial and
administrative assistance to industrial concerns.

CONTINUE…
ICICI is known for its many firsts.
 it was first Indian organization to listed in New york stock
exchange.
 Foreign financial investor own around 38% shares .
 Technology, strategy, low cost branches innovations are
key reasons of icici success.
 They are the first to introduce mobile banking, on line
financial information, portals to allow accounts and
information on line.
 It was the first to introduce e-commerce.
 It has the largest no of call centers.
 EXIM

 Established on1st JAN,1982.

 Authorized capital 1000 crores and paid up is 650
crores.
 Exim bank came into existence when
international finance division of idbi was
transferred to exim bank in 1982.
 Exim started its working from march 1982

 The issued capital is wholly subscribed by center

govt
FUNCTIONS OF EXIM

1) Financing of exports and imports of goods and

services, not only of India but also of the third
world countries;
2) Financing of exports and imports of machinery
and equipment on lease basis;
3) Financing of joint ventures in foreign countries;
4) Providing loans to Indian parties to enable them
to contribute to the share capital of joint ventures
in foreign countries;
CONTINUE…
 The main objective of exim is to provide financial assistance to
exporters and importers. It has to coordinate the working of those
institutions which can promote international trade.
 Management is MD+17 other directors representing
govt,RBI,ECGC,public sector banks
 Resources of EXIM
 -GOI
 -RBI
 -any organization approved by GOI
 TYPES OF ASSISTANCE
 -fund based
 -non fund based
 ASSISTANCE BY EXIM
 Fund based  Non fund based
 Pre shipment credit  Guarantees
 Foreign currency
 Post shipment credit
 Deemed exports
 Loans to commercial
banks for bills
discounting
 Finance for consultancy
and technology
 REFINANCING INSTITUITIONS

 Are those which do not give finance directly but

they create such structure by which the funds are
allocated up to the minimum level.
 N.A.B.A.R.D.
 S.I.D.B.I.
 N.H.B
 NABARD-NATIONAL BANK FOR
AGRICULTURE AND RURAL DEVELOPMENT
 Started functioning from 1july 1982
 Set up with an initial capital of 100 crores, now it is 2000
crores fully subscribed by GOI AND RBI.
 H.O IN Mumbai, with 28 regional and 391 district
offices
 It is an apex organization for policies, planning and
operations of agriculture ,SSI ,handicraft and village
industries
 It mainly deals in three types of functions
 credit ,developmental ,regulatory functions
FUNCTIONS OF NABARD
1) Inspection and Supervision of Co-operative Banks and
Regional Rural Banks
2) Development of Women and Children in Rural Area
3) Integrated Rural Development Programme
4) It undertakes monitoring and evaluation of projects
refinanced by it.
4) It promotes research in the fields of rural
banking, agriculture and rural development
 SIDBI (SMALL INDUSTRIES DEVLOPMENT
BANK OF INDIA)

 Set up in oct 1989

 Wholly owned subsidiary of IDBI

 It is the principal financial institution for promotion

,financing and development of small scale industries

 In sep 2000 IDBI transferred 51% in favor of banks

and other institutions in the first phase.
 FUNCTIONS OF SIDBI

1) It refinances loans and advances provided by the existing

lending institutions to the small-scale units.
2) It discounts and rediscounts bills arising from sale of
machinery to and manufactured by small-scale industrial
units.
3) It grants direct assistance and refinance loans extended by
primary lending institutions for financing exports of
products manufactured by small-scale units.
4) It provides services like factoring, leasing, etc. to small
units.
 NHB (NATIONAL HOUSING BANK)

 Set up in July 1988

 A principal agency to promote housing finance

 Wholly owned subsidiary of RBI

 Registered With capital of 350 crore which can be

increased to 2000 crores. The board is authorized
to issue increased capital to RBI, center govt.
FUNCTIONS OF NHB
 Extending refinance to different primary lenders in respect of

 Eligible housing loans extended by them to individual beneficiaries,

 for project loans extended by them to various implementing agencies.

1) Lending directly in respect of projects undertaken by public housing agencies

for housing construction and development
of housing related infrastructure.

2) Guaranteeing the repayment of principal and payment of interest on bonds

issued by Housing Finance Companies.

3) Acting as Special Purpose Vehicle for securitising the housing loan receivables.
INVESTMENT INSTITUITIONS
 Are those who invest the money collected in further
securities and investments outside .LIKE

 LIC

 GIC
 LIC (LIFE INSURANCE CORPORATION
 Set up in 1956
 LIC was formed by nationalizing 245 life
insurance companies.
 The main aim was to

 spread insurance

 Mobilize savings
 Investing funds
 Act as trustees
CONTINUE…..

 promoting a sense of pride and job satisfaction

among agents and employees
 Diversification by LIC

 LIC HOUSING FINANCE

 LIC MUTUAL FUNDS

 Jeevan bima sahyog assets mgt co(JBSAMC)

 LIC International EC
VISION & MISSION
 Mission
"Explore and enhance the quality of life of people
through financial security by providing products and
services of aspired attributes with competitive
returns, and by rendering resources for economic
development."
 Vision
"A trans-nationally competitive financial
conglomerate of significance to societies and Pride
of India."
 G.I.C. (GENERAL INSURANCE
CORPORATION)
 It was incorporated on 22 November 1972.
 The Government of India (GOI), through
Nationalisation took over the shares of 55 Indian
insurance companies and the undertakings of 52
insurers carrying on general insurance business.
Main objective:-
 GIC was formed for the purpose of superintending,
controlling and carrying on the business of general
insurance.
VISION & MISSION

Vision
“To be a leading global reinsurance and risk solution provider”

Mission:-
 Building long-term mutually beneficial relationship with
business partners
 Practicing fair business ethics and values
 Applying “state-of-art” technology, processes including
enterprise risk management and innovative solutions.
 Developing and retaining highly motivated professional team of
employees
 Enhancing profitability and financial strength befitting the
global position
 STATE FINANCIAL CORPORATION’S
(SFCS)
 State Financial Corporations (SFCs) To meet the
financial needs of small and medium enterprises, the
government of India passed the State Financial
Corporation Act in 1951
 Under the Act, SFCs have been established by State
governments to meet the financial requirements of
medium and small sized enterprises. There are 18
SFCs at present.
 OBJECTIVES OF SFC’S
1) Provide financial assistance to small and medium industrial
concerns.
2) Provide long and medium-term loan repayable ordinarily within
a period not exceeding 20 years.
3) Grant financial assistance to any single industrial concern
under corporate or co-operative sector with an aggregate
upper limit of rupees Sixty lakhs.
4) To lay special emphasis on the development of backward
areas and small scale industries
 FUNCTIONS OF STATE FINANCIAL
CORPORATION
1) Grant of loans and advances to or subscribe to debentures of industrial
concerns repayable within a period not exceeding 20 years.
2) Underwriting of the issue of stock, shares, bonds or debentures by
industrial concerns.
3) Subscribing to, or purchasing of, the stock, shares, bonds or debentures
of an industrial concern subject to a maximum of 30 percent of the
subscribed capital, or 30 percent of paid up share capital and free
reserve, whichever is less.
4) Planning and assisting in the promotion and development of industries.