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financial inst by RAVIKANTH BRUNDAVANAM

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Title: financial inst by RAVIKANTH BRUNDAVANAM


1
FINANCIAL INSTITUTIONS AND REFORMS.
  • FIs

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  • A financial institution (FI) is a company engaged
    in the business of dealing with monetary
    transactions, such as deposits, loans,
    investments and currency exchange.
  • The financial Institutions are banking
    institutions in the conventional sense, but
    development banks which serve as development
    agencies not only carrying on lending operation,
    but also developmental activities including
    promoting projects and guiding and advising the
    clients in their problems and difficulties.

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  • The establishment of financial institutions is a
    largely a post-war creation, first introduced in
    Europ and Japan., and has now come to be accepted
    by most developing countries.
  • The primary function of a FI is to provide medium
    and long term capital for investments.
  • The basic task of a financial institution is to
    mobilize resources and to deploy them for
    industrial growth. Now the role has come to
    mobilise resources and skills, and to channel
    them into approved sectors of industry consistent
    with the overall industrial policy of the
    country.

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INDUSTRIAL FINANCE CORPORATION OF INDIA (IFCI)
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INDUSTRIAL FINANCE CORPORATION OF INDIA (IFCI)
  • IFCI was established in 1948 to provide and long
    term credit to industry. The IFCI Act specifies
    that the corporation would confine its operations
    to public limited companies and cooperative
    societies.
  • IDBI 50.
  • LIC GIC 20.
  • Scheduled commercial banks 20.
  • Cooperative banks 7.71.
  • Others(Trusts and charitable institutions)
    0.29.

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  • 1.Providing guarantee to loans floated in the
    public market which are repayable within a period
    of 25 years.
  • 2.Underwriting the issue of stocks, share and
    debentures, but to be disposed of within 7 years.
  • 3.Sanctioning loans or advances repayable within
    a period of 25 years.
  • 4.Extending guarantees in respect of differed
    payments by importers who are able to make such
    arrangements with foreign manufacturers. Such
    facilities were subsequently extended to cover
    loans raised from sheduled or cooperative banks
    and differed payments for purchase of capital
    goods within the country.

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INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI)
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INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI)
  • IDBI was set up as a wholly owned subsidiary of
    Reserve Bank of India in 1964 under the IDBI Act.
  • 1. To coordinate the activities of other
    financial institutions.
  • 2. To supplement the resources of those
    institutions.
  • 3. To plan and promote the important key
    industries.
  • 4. to fix up and adopt priorities to promote
    industrial growth.
  • ? In 1976 the ownership of IDBI was transferred
    from RBI to the Government of India.

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THE INDUSTRIAL CREDIT AND INVESTMENT CORPORATION
OF INDIA LIMITED (ICICI)
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INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF
INDIA LIMITED (ICICI)
  • The ICICI was founded by the world bank, the
    government of India and representatives of
    private industry on January 5, 1955 to encourage
    and assist industrial development and investment
    in India. The main objectives of the ICICI were
    the following
  • 1. Providing assistance in the creation,
    expansion and modernization of industrial
    enterprises.
  • 2. Encouraging and promoting the participation of
    private capital, both internal and external in
    such enterprises.
  • 3.Encouraging and promoting industrial investment
    and the expansion of investment markets.

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  • Over the years, ICICI has evolved into a
    diversified financial institution. Its main
    operations include,
  • 1. Medium term and long term project financing
    for the infrastructure and manufacturing sectors,
  • 2. Corporate finance to meet the treasury
    requirements of Indian companies.
  • 3. Lease Finance.
  • 4. A comprehensive range of financial and
    advisory services.

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  • Formed in 1993 when ICICIs merchant Banking
    Division was turned into a new company i-SEC.
  • In march 1995 ICICI brokerage services was setup
    as a 100 subsidiary of i-SEC.
  • During 1998-99, there was a significant shift in
    the company's operations from leasing and hire
    purchase to distribution and serving of all
    retail products for the ICICI group.
  • In view of change in business the name of the
    company was changed from ICICI credit corporation
    limited to ICICI personal Financial Services
    Limited with effect from march 22, 1999.
  • ICICI capital service limited was incorporated in
    the name of SCICI securities ltd. In sept,1994 a
    wholly owned subsidiary of erstwhile SCICI Ltd.
  • ICICI bank was established in 1994.
  • In 2001 and two of its retail finance
    subsidiaries, ICICI PFs and ICICI capital
    services limited, were merged with the ICICI
    bank. It is Indias second largest bank.

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STATE FINANCIAL CORPORATIONS(SFCs)
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STATE FINANCIAL CORPORATIONS(SFCs)
  • The State Financial Corporation Act, 1951, has
    enabled the state governments to set up state
    financial corporations in order to provide loans
    to small and medium industries making a
    significant contribution the industrial
    advancement to their respective states.
  • SFC cannot grant assistance to any party
    exceeding Rs.30 lakhs, Nor it can assist any
    industrial concern with its paid up capital and
    reserves exceeding Rs. 1 crore in the aggregate.
  • The activities, coverage and overall performance
    of SFCs have expanded considerably over the
    years. With the passage of time, their operations
    have thrown up several problems connected with
    the organizations, management, resource
    mobilization, operational efficiency and overall
    financial health.

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INDUSTRIAL INVESTMENT BANK OF INDIA (IIBI)
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INDUSTRIAL INVESTMENT BANK OF INDIA (IIBI)
  • In 1971, the Government of India established an
    institution, namely, Industrial Reconstruction
    corporation of india (IRCI), with main objective
    of reconstruction and rehabilitation of
    industrial units which were in closed down or
    were facing the risk.
  • The need for more powerful institution provokes
    establishment of the Industrial Reconstruction
    Bank of India(IRBI) on march20, 1985.
  • In 1997, IRBI was converted into a company and
    transformed into a full-fledged financial
    institution known as Industrial Investment Bank
    of India Ltd (IIBI). The bank has shifted its
    operations from the revival of sick-units to
    business orientation.
  • August 2001 IIBI has undertaken an asset
    reconstruction exercise to unlock NPAs
    (non-productive assets) for productive purpose.
    For this purpose it has set up departments for
    asset reconstruction and risk management.

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LIFE INSURANCE CORPORATION OF INDIA(LIC)
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LIFE INSURANCE CORPORATION OF INDIA (LIC)
  • The entire share capital of LIC which was set up
    in 1956 after the nationalization of life
    insurance held b y the central Government as a
    wholly owned corporation in order to carry on the
    business of the insurance and deploy the savings
    to the best advantage of the policy holders and
    the community as a whole.
  • LIC provides financial assistance to the
    industrial sector, by granting loans for setting
    up of industrial estates. A large part of the
    funds of LIC is deployed as loans to assist the
    development of social overheads like housing,
    rural electrification and water supply schemes.

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UNIT TRUST OF INDIA(UTI)
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UNIT TRUST OF INDIA(UTI)
  • . The UTI, a public sector mutual fund was
    established in 1964. The share capital of UTI was
    subscribed by the IDBI, LIC, SBI and its
    subsidiaries and other scheduled banks and
    financial institutions.
  • . The main objective of the UTI is to mobilize
    the savings of the community and channelise them
    into productive corporate investments so as to
    provide for growth and diversification of the
    economy.
  • . The management and performance of the UTI for
    some time has been so bad that in by mid 2001 the
    financial crisis of the Trust become public and
    it has millions of investors.

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GENERAL INSURANCE CORPORATION OF INDIA(GIC)
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GENERAL INSURANCE CORPORATION OF INDIA (GIC)
  • The GIC was set up in 1973 after the
    nationalization of general insurance. It is
    wholly owned by the Central Government and has
    four subsidiaries, viz.., National Insurance
    company. The New India Assurance company, The
    Oriental Insurance Company and United India
    Insurance Company.
  • The GIC provides assistance to industries in the
    form of loans, underwriting and direct
    subscriptions to shares and debentures, placement
    of short term deposits with companies etc.
  • Along with LIC and UTI,GIC buys back debentures
    tendered by individual holders back to companies
    for encashment after a stipulated period and thus
    provides liquidity to such long term financial
    assets.

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  • THE END
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