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Industrial Finance Corporation of India (Ifci)

The Industrial Finance Corporation of India (IFCI) was established in 1948 by the Government of India to provide long-term financial assistance to industrial sectors. IFCI considers factors like employment generation, export potential, and location in backward areas when evaluating financial proposals. It provides loans, underwrites share and debenture issues, and guarantees funding from other sources. IFCI has sanctioned over Rs. 454,000 crore to industrial projects over the years, contributing significantly to the development of key sectors in the Indian economy.

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Abhishek Gupta
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119 views18 pages

Industrial Finance Corporation of India (Ifci)

The Industrial Finance Corporation of India (IFCI) was established in 1948 by the Government of India to provide long-term financial assistance to industrial sectors. IFCI considers factors like employment generation, export potential, and location in backward areas when evaluating financial proposals. It provides loans, underwrites share and debenture issues, and guarantees funding from other sources. IFCI has sanctioned over Rs. 454,000 crore to industrial projects over the years, contributing significantly to the development of key sectors in the Indian economy.

Uploaded by

Abhishek Gupta
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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INDUSTRIAL

FINANCE
CORPORATION
OF INDIA(IFCI)
Introduction

• The Government of India set up the IFCI


under IFCI Act in July 1948.
• It is the first development financial institution
in the county to cater to the long-term finance
needs of the industrial sectors.
• The main objective of IFCI is to making
medium & long term credits more readily
available for industrial concerns in India.
 The main focus of The Industrial Finance
Corporation was to provide long-term
financial benefits to various sectors in Indian
industry and it has fulfilled it quite efficiently.
IFCI has also been quite subservient in
implementing the number of things that the
Government of India planned up to ensure
financial benefits into services. IFCI carried
out all the responsibilities regarding
Government's industrial policy initiatives till
the establishment of ICICI in 1955 and IDBI
in 1964. 
IFCI:

 Government of India came forward to set up


the Industrial Finance Corporation of India.
(IFCI) in July 1948 under a Special Act. The
Industrial Development Bank of India,
scheduled banks, insurance companies,
investment trusts and co-operative banks are
the shareholders of IFCI. The Government of
India guaranteed the repayment of capital and
the payment of a minimum annual dividend
MANAGEMENT :
The Corporation has 13 member Board of Directors.

Chairman : Appointed by Govt. of India after consulting


IDBI.
12 Directors : Four are nominated by IDBI
Two by scheduled Banks
Two by Cooperative Banks
Two by other financial
Institutions
Two outside persons as Directors
(Expert in the Fields of Industry, Labour and
Economics)
Financial Resources :
1.Share Capital : The IFCI was set up with an authorised
capital of Rs.10 crores consisting of 20,000 shares of
Rs. 5,000 each. In March 2003 it was Rs. 1068 crores.

2.Bonds & Debentures : The bonds and debentures stood


at figure of Rs. 57.69 crores in 1971 and rose to Rs.
15366.5 crores as on March 31,2003.

3. Borrowings : Borrowings from IDBI and Govt. of


India were Rs. 975.6 crore and total assets Rs.22866
crore on March 31,2003
Criterion for Investments :

Considerations while selecting a Financial Proposal :

 Importance of project for national economy.


 Employment-oriented and labour-intensive nature
 Export potential of a unit
 Projects located in backward areas
 Projects initiated by new entrepreneurs
 Projects which will help rural areas
 Projects which help in conserving energy
 Projects to be set up in a co-operative sector
Industries Eligible Under Direct
Financing :
1. Limited companies incorporated in India, in private, public or
joint sector
2. Co-operative societies registered in India, engaged in the
activities related to:
i) Manufacture, preservation
ii) Shipping
iii) Mining
iv) Hotel Industry
v) Generation of Electricity
vi) Transport of Passengers or goods
vii) Maintenance, repair of machinery or vehicles
viii) Assembling, repairing or packing of articles
ix) Fishing
x) Providing special or technical knowledge
xi) Research and Development
Purpose of Direct Assistance

IFCI provides direct financial assistance for the


following causes:
 Setting up of new industrial projects

 Expansion of existing units or for diversification


in to new lines of activity

 For renovation and modernisation of existing


units.
Financial Assistance :
 Granting loans and advances to or subscribing to
debentures of industrial concerns repayable
within 25 years .
 Underwriting the issue of industrial securities i.e.
shares, stock, bonds to be disposed off within 7
years.
 Subscribing directly to the shares and debentures
of public limited companies.
 Guaranteeing of deferred payments for the
purchase of capital goods from abroad or within.
 Guaranteeing of loans raised by industrial
concerns from scheduled banks or state co-
operative banks.
 Acting as an agent of world bank or central Govt
in respect of loans sanctioned by industrial
concerns.
Promotional Activities :

i. Development of Backward Areas


ii. Promotional Schemes
iii. Subsidy for Adopting Indigenous Technology
iv. Meeting Cost of Market Studies
v. Meeting Cost of Feasibility Studies
vi. Promoting Small Scale and Ancillary Industries.
vii. Revival of Sick Units
viii. Self-development and Self-employment Scheme
IFCI & Industrial Finance :

1. Financial Assistance :

1970-71 : Rs. 32.3 crores


1995-96 : Rs. 6579.7 crores
2001-02 : Rs. 778.0 crores
2002-03 : Rs. 2035.1 crores (161.6% Increase)
Upto Mar 03 :-
Total Assistance Sanctioned : 45426.7 crores
Total disbursements : 44169.2 crores
 2. Product-Wise Assistance :

1. Direct Finance
A. Project Finance
i) Loans : Rupee Loans, Foreign Currency
ii) Underwriting : Shares, Debentures
iii) Deferred payment guarantees
B. Non-Project Finance
i) Equipment Finance
ii) Corporate Loans
iii) Working Capital/short-term loans
iv) Equipment leasing

2. Direct Discounting
3. Loans to and investments in shares/bonds of FIs
CONTRIBUTIONS OF IFCI FOR
THE IMPROVEMENT OF INDIAN
INDUSTRY
 The Industrial Finance Corporation of India had made a
wide range of contributions in various sectors in Indian
industry. Some of the noteworthy contributions of IFCI
include improvement of Indian industry, export
promotion, import permutation, development in
business, pollution control measures, energy
preservation, and rendering direct and indirect
employment. There are a number of industrial sectors
that have been massively benefited from The Industrial
Finance Corporation of India Limited. They are as
follows:
• Capital & intermediate goods industry that includes
products such as electronics, synthetic plastics,
synthetic fibers, and miscellaneous chemicals
• Service industries that include hotels and hospitals
• Consumer goods industry such as textiles, paper, and
sugar
• Infrastructure sector which involves power generation
and telecom services
• Basic industries involving products such as cement,
iron & steel, fertilizers, basic chemicals
THE ECONOMIC CONTRIBUTIONS

 The economic contributions of The Industrial Finance


Corporation of India Limited has been quite large-scale
since its establishment. IFCI has sanctioned funds of an
amount of Rs. 462 billion to 5707 companies and has
paid out Rs. 444 billion in totality. The business
entrepreneurs have got immense help from IFCI as well
when they started off with any new business or even on
their way to expand the already existing business. IFCI
has been a great helping hand to the entire industrial
sector in India and most importantly it was the only
support at the time of scarcity. 
THANKYOU 

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