IFCI
Industrial Finance Corporation of India (IFCI) - Detailed Overview
1. Establishment and Evolution:
- Founding:
- Year: 1948
- Purpose: Established to provide long-term financial assistance to the industrial sector, supporting post-independence industrialization in India.
- Role: IFCI aimed to facilitate the growth of industries by offering financial support that was not readily available from other sources.
- Conversion to Public Company:
- Date: 1 July 1993
- Current Name: Industrial Finance Corporation of India Ltd. (IFCI Ltd.)
- Reason for Conversion: The conversion from a statutory corporation to a public company was intended to align IFCI with market-driven practices and enhance its operational flexibility.
- Ownership and Capital:
- Stakeholders: Major stakeholders include the Industrial Development Bank of India (IDBI), scheduled banks, insurance companies, and cooperative banks.
- Authorized Capital: Initially set at ₹250 crores, with the government having the authority to increase it as needed.
2. Functions of IFCI:
- Loan Provision:
- Purpose: Provides medium and long-term loans and advances to industrial and manufacturing concerns.
- Evaluation Criteria: Loans are granted based on an assessment of the project's importance to the national economy, the total project cost, the quality of the product, and the management of the company.
- Impact: Ensures that projects with significant economic benefits receive the necessary financial support.
- Debenture Subscription:
- Role: Subscribes to debentures issued by industrial companies, thereby supporting their capital-raising efforts.
- Purpose: Helps companies acquire long-term funds for various industrial activities.
- Loan Guarantees:
- Function: Provides guarantees for loans taken by industrial companies from other financial institutions.
- Benefit: Enhances the creditworthiness of industrial firms, facilitating easier access to financing.
- Underwriting of Securities:
- Role: Underwrites shares and debentures issued by companies.
- Purpose: Assists companies in raising capital from the market by ensuring that new issues are fully subscribed.
- Deferred Payment Guarantees:
- Function: Guarantees deferred payments for loans obtained from foreign banks in foreign currency.
- Benefit: Assists companies in managing their foreign currency liabilities.
- Merchant Banking & Allied Services:
- Specialized Department: Manages capital restructuring, mergers, amalgamations, and loan syndication.
- Purpose: Provides expert advisory services to improve the financial and operational structure of businesses.
- Subsidiaries:
- Promoted Companies:
- IFCI Financial Services Ltd.: Provides various financial services.
- IFCI Insurance Services Ltd.: Offers insurance products.
- I-Fin: Engages in other financial activities.
- Function: Supports the broader goals of IFCI by managing these specialized subsidiaries.
- Promoted Companies:
3. IFCI as a Business Facilitator:
- Economic Contributions:
- Industrial Growth: Contributed significantly to the development, expansion, and modernization of various industrial sectors.
- Sectoral Support:
- Agricultural-Based Industries: Supported industries such as paper, sugar, and rubber.
- Service Industries: Benefited sectors like restaurants, hospitals, and hotels.
- Basic Industries: Assisted in the growth of steel, cement, and chemicals.
- Capital Goods Industries: Helped in the development of electronics, fibers, and telecom services.
Key Insights:
- Historical Impact: IFCI played a pioneering role in financing industrial development in India, providing essential capital for growth and modernization.
- Adaptation and Growth: The transition from a statutory corporation to a public company reflects IFCI’s adaptability to changing market conditions and its ongoing commitment to supporting industrial progress in India.