L8 Development Financial Institution in India - Unit 3.pptx

L8 Development Financial Institution in India - Unit 3.pptx

• 1.
  Development Financial Institutions inIndia Ms. Sonam Srivastava
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  Financial Institutions: DevelopmentFinancial Institution • While banks have traditionally met short-term working capital requirements of industry, development finance institutions (DFIs) have mainly catered to the medium to long-term financing requirements. • Industrial Finance Corporation of India (IFCI) was the first DFI which was established to extend long-term finance to industry. This was followed by the establishment of several DFIs, both in public and private sector. • DFIs can be classified as i) term lending institutions such as Industrial Investment Bank of India (IIBI) Ltd, Export-Import Bank of India (EXIM) and Tourism Finance Corporation of India (TFCI) Ltd., which provide long-term finance to various sectors ii) refinance institutions such as National Bank for Agriculture and Rural Development (NABARD), Small Industries Development Bank of India (SIDBI) and National Housing Bank (NHB) which provide finance to banking as well as non-banking financial intermediaries.
• 3.
  Objectives of DevelopmentFinancial Institutions • To serve as an agent of development in various sectors namely industry, agriculture and international trade. • To accelerate the growth of the economy • To allocate resources to higher priority • To develop entreprenial skills • To promote the development of rural ares • To finance housing, small scale industries , infrastructure and social utilities.
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  Industrial Finance Corporationof India (IFCI) • The industrial finance corporation of India was established on July 1, 1948. • It was setup to provide institutional credit to medium and large industries. • It was the first institution in financial sector to be converted into a public limited company on July 1 1993. • IFCI is the board run company and its directors are elected by shareholders.
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  Financing Activities ofIFCI • Project Financing • Financial Services • Corporate Advisory services • Corporate Advisory services to foreign investors
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  Promotional Activities ofIFCI • IFCI has been instrumental in translating the governments development priorities into a reality by contributing to the development of industry exports infrastructure and generation of employment. • It has played a pivotal role in removing the regional imbalances by sanctioning 47% of its total assistance to 2172 units located in backward areas. • It has played a key role in the development of cooperatives in the sugar and textiles sectors. • It has promoted technical consultancy organisations, primarily in less developed states.
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  Small Industries DevelopmentBank Of India (SIDBI) • Small Industries Development Bank of India (SIDBI), set up on April 2, 1990 under an Act of Indian Parliament, is the Principal Financial Institution for the Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector and for Co- ordination of the functions of the institutions engaged in similar activities. • It was incorporated initially as a wholly owned subsidiary of Industrial Development Bank of India.
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  • SIDBI offersa chain of financial products covering micro finance, business, incubation, venture capital, project finance, assistance for technology development and marketing of small scale industries products, exports finance, bills finance, factoring and guarantees for loans • SIDBI also provides support services such as training market information, and advice for enhancing the inherent strength of small scale units.
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  Industrial Development Bankof India (IDBI) • Industrial Development Bank of India was established in 1964 by parliament as a wholly owned subsidiary of the RBI • In 1976, the bank’s ownership was transferred to the Government of India • It was accorded the status of the principal financial institution of coordinating the working of institutions at national and state levels engaged in financing, promoting, and developing industries • IDBI was merged with its private banking arm IDBI Bank in 2003-04
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  Infrastructure Development Finance Companylimited (IDFC) • It was set up on recommendation of Expert Group on commercialisation of infrastructure product. • It was set up to facilitate the flow of private finance to commercially viable infrastructure projects. • Initially it was focused on road power ports and telecommunications. Now it has broadened this focus to the frame work of energy telecommunications and information technology integrated transportations, Urban infrastructure and food and agri business infrastructure.
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  Export Import Bankof India (EXIM) • Export Import Bank of India is wholly owned by the Government of India and was set up for the purpose of financing, facilitating, and promoting foreign trade in India. • EXIM bank is the principal financial institution in the country for coordinating working of institutions engaged in financing exports and imports.
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  National Bank forAgriculture and Rural Development (NABARD) • NABARD , a development bank, came into existence on July 12 1982 under an act of parliament with an initial capital of Rs.100 Crore. • It is an apex institution set up for providing and regulating credit and other facilities for the promotion and development of agriculture small scale industries, cottage and village industries, handicrafts, and other rural crafts and other allied economic activities in rural areas. • The functions of NABARD are to facilitate credit flow for Agriculture and rural development promote and support policies, practices and innovations conducive to rural development, strengthen rural credit delivery system through institutional development and supervise rural banks.
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  • NABARD extendsrefinance for both farm and non farm sector. • To provide loans to state governments for the creation of rural infrastructure at reasonable rates. • NABARD promoted the idea of organising thrift and credit groups among the NGOSs as an add on activities and linking them with Banks.
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  ICICI • Industrial Creditand Investment Corporation of India (ICICI) Limited was an initiative of the World Bank and was established in the year 1955. • ICICI Bank, the subsidiary company of ICICI Limited was established in 1994. • In 2002, ICICI Limited got merged into ICICI Bank Limited and became the first universal bank of India. • This became a Financial institution that performed dual function both of a Commercial Bank as well as Development Financial Institute. • It still remains the only DFI in the private sector.