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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 Pre shipment credit Foreign currency Post shipment credit Deemed exports Loans to commercial
banks for bills discounting
Finance for consultancy and technology
Non fund based Guarantees
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.
THANK YOU