ASST PROF. JONLEN ASST PROF. JONLEN DESADESA

INSTITUTIONAL INSTITUTIONAL FINANCINGFINANCING

SPECIALIZED FINANCIAL SPECIALIZED FINANCIAL INSTITUTIONSINSTITUTIONS

Specialized financial institutions were established soon Specialized financial institutions were established soon

after India’s independence. This move helped in rapid after India’s independence. This move helped in rapid

industrial growth.industrial growth. They provide large amount of financial assistance to They provide large amount of financial assistance to

corporate sector/private sector industries.corporate sector/private sector industries. They were specially established for the purpose of They were specially established for the purpose of

providing financial assistance to industries.providing financial assistance to industries.

LIST OF SPECALIZED FINANCIAL LIST OF SPECALIZED FINANCIAL INSTITUTIONSINSTITUTIONS

Industrial Finance Corporation of India, 1948 (IFCI)Industrial Finance Corporation of India, 1948 (IFCI) State Finance Corporations (SFCs), established after 1951 State Finance Corporations (SFCs), established after 1951

by state governmentsby state governments Industrial Credit & Investment Corporation of India, 1955 Industrial Credit & Investment Corporation of India, 1955

(ICICI)(ICICI) Industrial Development Bank of India, 1964 (IDBI)Industrial Development Bank of India, 1964 (IDBI) Industrial Reconstruction Bank of India, 1985 (IRBI), later Industrial Reconstruction Bank of India, 1985 (IRBI), later

reconstructed to Industrial Investment Bank of India (IIBI) reconstructed to Industrial Investment Bank of India (IIBI)

in 1997.in 1997.

Life Insurance Corporation of India, 1965 (LIC) & Life Insurance Corporation of India, 1965 (LIC) & General Insurance Corporation of India (GIC).General Insurance Corporation of India (GIC).

Unit Trust of India, 1964 (UTI)Unit Trust of India, 1964 (UTI) State Industrial Development Corporations (SIDCs) State Industrial Development Corporations (SIDCs)

which includes corporations like Economic which includes corporations like Economic Development Corporation (EDC) of Goa.Development Corporation (EDC) of Goa.

Export and Import Bank of India (EXIM Bank), 1982.Export and Import Bank of India (EXIM Bank), 1982. Risk Capital & Technology Corporation Ltd. (RCTC)Risk Capital & Technology Corporation Ltd. (RCTC) Tourism Finance Corporation of India, Ltd. (TFCI)Tourism Finance Corporation of India, Ltd. (TFCI)

FEATURES OF FEATURES OF SPECIALIZED SPECIALIZED FINANCIAL FINANCIAL INSTITUTIONSINSTITUTIONS1.1. Started by Central or State GovernmentsStarted by Central or State Governments2.2. Capital Collection from different resourcesCapital Collection from different resources3.3. Provide long term loans repayable by Provide long term loans repayable by

installmentsinstallments4.4. Loans offered are secured loans with a high Loans offered are secured loans with a high

interest burdeninterest burden5.5. Loans provided to varied types of Loans provided to varied types of

companies from different industriescompanies from different industries

SERVICES OFFERED/ACTIVITIESSERVICES OFFERED/ACTIVITIES

Financial Assistance( Loans) Promotional Activities Consultancy Services- Technical, Managerial,

Marketing, Financing. Sponsorship Underwriting of shares

They play an important role in removing regional imbalances.

They now participate in the management of the industrial units financed by them.

INDUSTRIAL DEVELOPMENT BANK INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI)OF INDIA (IDBI)

IDBI is an apex financial institution established in 1964, that

provides finance to industrial enterprises & refinancing facilities

to other financial institutions. It is the principal financial institution for providing credit & other

facilities for the development of Indian industry. IDBI was established to accelerate the pace of industrialization

and also to provide a reservoir from where existing financial

institutions can draw required finance. IDBI is an Indian Government owned financial service company.

IDBIIDBI It was a wholly owned subsidiary of RBI till 15.2.1976. It was delinked from RBI and made an autonomous institution

fully owned by RBI from 16.2.1976 onwards. Its headquarters are situated in Mumbai and it is one of the

leading government banks in India. It is currently 10th largest development bank in the world in

terms of reach, with 3000 ATMs, 1746 branches, including one overseas branch at Dubai, and 1285 centers, including two overseas centers at Singapore & Beijing.

IDBI’s equity shares are listed on BSE & NSE. It plays an important role as a financial, promotional &

development agency in the industrial field.

THE INDUSTRIES DEVELOPMENT THE INDUSTRIES DEVELOPMENT BANK OF INDIA (IDBI)BANK OF INDIA (IDBI)

1.1. Assist all types of industrial concerns of different Assist all types of industrial concerns of different sectors.sectors.

2.2. Permitted to offer assistance to private & public Permitted to offer assistance to private & public sector enterprisessector enterprises

3.3. Provides direct or indirect finance, special assistance Provides direct or indirect finance, special assistance & foreign currencies to finance the requirements of & foreign currencies to finance the requirements of industrial enterprises.industrial enterprises.

4.4. Undertake market & investment research & surveysUndertake market & investment research & surveys5.5. Provides technical & administrative assistance for Provides technical & administrative assistance for

promotion, management or expansion of industries.promotion, management or expansion of industries.

FUNCTIONS OF IDBI FUNCTIONS OF IDBI

I. DEVELOPMENT FUNCTIONSI. DEVELOPMENT FUNCTIONS

Direct assistance by way of project loans, equipment finance loans, underwriting of securities, subscription to industrial securities.

Indirect assistance to financial institutions i.e. refinancing. It refinances banks that lend to financial institutions. It provides financial support by subscribing to their shares, bonds & debentures.

Special assistance through its special funds called Development Association Fund. It helps industrial concerns that are not able to ensure funds because of low rate of return.

Foreign currency assistance”- It raises foreign funds from foreign international markets and makes them available to Indian firms for importing machinery, technology etc from abroad.

II. FINANCIAL FUNCTIONS II. FINANCIAL FUNCTIONS

1.1. Granting loansGranting loans2.2. Guaranteeing & underwriting of loans & issues of Guaranteeing & underwriting of loans & issues of

shares & debenturesshares & debentures3.3. Refinancing of term loans and export creditRefinancing of term loans and export credit4.4. Accepting, discounting or rediscounting of Accepting, discounting or rediscounting of

bonafide commercial papers or promissory notesbonafide commercial papers or promissory notes5.5. Conducting of promotional activitiesConducting of promotional activities6.6. Investing funds in other financial institutionsInvesting funds in other financial institutions

LIFE INSURANCE LIFE INSURANCE CORPORATION (LIC)CORPORATION (LIC)

LIC came into existence on 1st September, 1956 as a statutory

institution under LIC Act 1956. It is a public sector insurance company & investment firm. The establishment of LIC is the result of nationalization of life

insurance business in India. LIC took over 245 private insurers engaged in the life insurance

business in India. It made rapid progress in life insurance business. It collects large amounts of funds in the form of premium

payments by policy holders.

OPERATIONSOPERATIONS Headquarters in Mumbai. 8 zonal offices, 109 divisional offices, 2048 branch offices, 992

corporate and satellite offices, It is the largest insurance company in India with an estimated

asset value of 1560482 crores. It has around 11.98 lakhs agents all over India 242 Corporate Agents, 89 Referral Agents, 98 Brokers It has overseas branches in Fiji, Bahrain, Oman, Kuwait, Qatar,

Kenya, Saudi Arabia, Nepal & UK. It also has 54 customer zones and 25 metro-area service hubs

located in different cities and towns of India. LIC has also promoted LIC Housing Finance Ltd on 19.6.1989.

LIC offers a variety of insurance products to its customers such as insurance plans, pension plans, unit-linked plans, special plans and group schemes.

Different Plans offered by LIC.Insurance PlansPension PlansHealth PlansChild PlansGroup PlansSpecial PlansSocial Security Group SchemesMicro Insurance PlansRetirement PlansULIPs.

OBJECTIVES OF LICOBJECTIVES OF LIC

FUNCTIONS OF LICFUNCTIONS OF LIC1. Collects large amounts of funds from the general public with

which it provides loans to the corporate sector and to acquire

industrial securities from the market.

2. It issues individual as well as group insurance policies.

3. LIC has introduced Social Security Group Insurance schemes

for the weaker sections of society.

4. It conducts life insurance business in India and abroad also and

is associated with joint ventures abroad.

FUNCTIONS OF LICFUNCTIONS OF LIC It functions as a powerful agency in the stock exchange &

Indian capital market. It is the largest institutional investor in India. It invests in shares of promising industrial enterprises. It grants loans on mortgage of fixed assets. LIC also participates in underwriting activities.

LIC is required to invest 25% of its funds in government securities and another 25% in approved securities.

Almost 80% of its funds are diverted to the public sector undertakings and the balance goes to the private and cooperative sectors.

LOAN OPERATIONS OF LIC

LIC provides financial support to corporate sector through different methods:

LIC purchases the securities of companies LIC as underwriting agency LIC provides loans to public & private sector enterprises LIC purchases shares of specialized financial institutions.

ECONOMIC DEVELOPMENT CORPORATION ECONOMIC DEVELOPMENT CORPORATION (EDC) OF GOA(EDC) OF GOA

Every state in India has started their own State Financial Corporations

(SFCs) or Small Industrial Development Corporations (SIDCs), to

promote industrial development in their own state. There are 28 SIDCs & 18 SFCs in India. Goa has its own financial corporation called Economic Development

Corporation of Goa. Formerly known as Economic Development Corporation (EDC) of Goa,

Daman & Diu Limited, was incorporated on 12th March, 1975 as a

development bank. It enjoyed the twin status of an SFC and an Industrial Development

Institution.

ECONOMIC DEVELOPMENT ECONOMIC DEVELOPMENT CORPORATION OF GOACORPORATION OF GOA

It is a state level financial institution providing financial & promotional facilities to enterprises operating in Goa.

It was set up by the government of Goa to promote industrial development in Goa.

It is a government company, controlled by Board of Directors appointed by the Govt of Goa, having Government representatives, industrial representatives, social workers, elected members of the public & other professionals.

EDC has been very successful in its 40 years of its operations. It has extended financial assistance of over Rs 800 crores by

way of term loans to over 5000 industrial & service sector units.

At present, the staff strength is 88, which includes professionals from different fields.

EDC LTD, EDC HOUSE, DR. ATMARAM BORKAR EDC LTD, EDC HOUSE, DR. ATMARAM BORKAR ROAD, PANAJI GOA.ROAD, PANAJI GOA.

OBJECTIVES OF EDC1. To carry on the business of an investment company by providing financial

assistance to entrepreneurs for starting , expanding and modernizing the

activities in small and medium entrepreneurs in the industrial sector, tourism

sector, service sector, medical infrastructure & infrastructural development.

2. To extend financial assistance by means of various financial products.

3. To participate in other development works, projects, schemes as mandated

by the Government.

4. To encourage & promote participation of capital in various forms like equity,

preference shares & debentures of industrial enterprises.

OBJECTIVES OF EDCOBJECTIVES OF EDC5. To identify & motivate entrepreneurs to set up industries & assist

them by conducting various training programs.

6. To offer and act as an agent for disbursement of various

schemes, incentives, concessions & benefits on behalf of the

state and central Government.

7. EDC has launched an initiative titled “ Centre for Empowerment

& Excellence” aimed at training and empowering individuals to

strive for excellence.

FUNCTIONS OF EDCFUNCTIONS OF EDC1. Offering term loan & equity assistance for industrial projects.

2. Selection & grooming growth locations in the state.

3. Identifying industries, best suited for the state.

4. Motivating industrialists to set up industries.

5. Assisting entrepreneurs in setting up businesses.

6. Monitoring the progress of industries already set up &

troubleshooting for their smooth operation.

7. Collaboration or joint sector promotion of industrial ventures.

Financial assistance offered by EDC include project for: Up gradation of process, technology & product, export

orientation, import substitution, energy saving, anti pollution measures, improvement in material handling, lease financing, short term loans and conservation of scarce resources.

EDC grants term loan assistance for concerns engaged in manufacture, preservation & processing of food, mining, hotel industry, road transport vehicles, maintenance & repairs of machinery etc.

EDC has introduced and also offers a variety of loan schemes to different industries and for different purposes.

SCHEMES OF EDCSCHEMES OF EDC1. Normal term loan schemes for acquisition of fixed assets & other

movable assets. It also includes loans for acquisition of diesel generator sets, pollution control equipments, computers, systems for energy saving etc.

2. Equipment Finance Scheme. (Established units, 2 years profits & good repayment record).

3. Extended Credit Scheme. (Considered for Land & Building, plant & machinery along with other fixed assets for entrepreneurs with good track record.)

4. Scheme for tourism related activitiesa. Hotels/ Restaurant Projectsb. Amusement parks, entertainment facilities, travel agencies & other

related activities.5. Scheme for medical professiona. Hospitals/Nursing Homes, b. For acquisition of electro medical and other equipments.

SCHEMES OF EDCSCHEMES OF EDC6. Scheme for Professionals like Architects, Engineers, C.As,

Lawyers, Management Consultants etc.7. Schemes for Construction Projects.8. Scheme for loan assistance to units under auction.9. Equity type assistance:a. SEMFEX Scheme for ex-servicemanb. Mahila Udyam Nidhi Scheme10. Scheme for self- employment to educated unemployed

youth (CMRY).

CHANGING ROLE OF FINANCIAL CHANGING ROLE OF FINANCIAL INSTITUTIONSINSTITUTIONS

1. Increase in the volume of financial assistance

2. Provision of finance to private as well as public sector

3. Provision of services by financial institutions

4. Attention to industrially backward states

5. Special attention to regional disparities

6. Attention to entrepreneurship development

7. Entry in the field of merchant banking

8. Special interest in promotional activities

9. Special attention to small scale industries

10. Promotion of new organizations..