|
|
|
|
|
Financial sector plays an indispensable role in the overall
development of a country. The most important constituent of this sector is
the financial institutions, which act as a conduit for the transfer of
resources from net savers to net borrowers, that is, from those who spend
less than their earnings to those who spend more than their earnings. The
financial institutions have traditionally been the major source of long-term
funds for the economy. These institutions provide a variety of financial
products and services to fulfill the varied needs of the commercial sector.
Besides, they provide assistance to new enterprises, small and medium firms
as well as to the industries established in backward areas. Thus, they have
helped in reducing regional disparities by inducing widespread industrial
development.
The
Government of India, in order to provide adequate supply of credit to various
sectors of the economy, has evolved a well developed structure of financial
institutions in the country. These financial institutions can be broadly categorized
into All India institutions and State level institutions, depending upon the
geographical coverage of their operations. At the national level, they
provide long and medium term loans at reasonable rates of interest. They
subscribe to the debenture issues of companies, underwrite public issue of
shares, guarantee loans and deferred payments, etc. Though, the State level
institutions are mainly concerned with the development of medium and small
scale enterprises, but they provide the same type of financial assistance as
the national level institutions.
National Level Institutions
A wide
variety of financial institutions have been set up at the national level.
They cater to the diverse financial requirements of the entrepreneurs. They
include all
1. All-India Development
Banks (AIDBs):- Includes those
development banks which provide institutional credit to not only large and
medium enterprises but also help in promotion and development of small scale
industrial units.
§
Industrial Development Bank of
India (IDBI):- was established in July 1964 as an apex
financial institution for industrial development in the country. It caters to
the diversified needs of medium and large scale industries in the form of
financial assistance, both direct and indirect. Direct assistance is provided
by way of project loans, underwriting of and direct subscription to
industrial securities, soft loans, technical refund loans, etc. While,
indirect assistance is in the form of refinance facilities to industrial
concerns.
§
Industrial Finance Corporation
of India Ltd (IFCI Ltd):- was the first development finance
institution set up in 1948 under the IFCI Act in order to pioneer long-term
institutional credit to medium and large industries. It aims to provide
financial assistance to industry by way of rupee and foreign currency loans,
underwrites/subscribes the issue of stocks, shares, bonds and debentures of
industrial concerns, etc. It has also diversified its activities in the field
of merchant banking, syndication of loans, formulation of rehabilitation
programmes, assignments relating to amalgamations and mergers, etc.
§
Small Industries Development
Bank of India (SIDBI):- was set up by the Government of India
in April 1990, as a wholly owned subsidiary of IDBI. It is the principal
financial institution for promotion, financing and development of small scale
industries in the economy. It aims to empower the Micro, Small and Medium
Enterprises (MSME) sector with a view to contributing to the process of
economic growth, employment generation and balanced regional development.
§
Industrial Investment Bank of
India Ltd (IIBI):- was set up in 1985 under the Industrial
reconstruction Bank of India Act, 1984, as the principal credit and
reconstruction agency for sick industrial units. It was converted into IIBI
on March 17, 1997, as a full-fledged development financial institution. It
assists industry mainly in medium and large sector through wide ranging
products and services. Besides project finance, IIBI also provides short
duration non-project asset-backed financing in the form of underwriting/direct
subscription, deferred payment guarantees and working capital/other
short-term loans to companies to meet their fund requirements.
2. Specialized Financial
Institutions (SFIs):- are the institutions
which have been set up to serve the increasing financial needs of commerce
and trade in the area of venture capital, credit rating and leasing, etc.
§
IFCI Venture Capital Funds Ltd
(IVCF):- formerly
known as Risk Capital & Technology Finance Corporation Ltd (RCTC), is a
subsidiary of IFCI Ltd. It was promoted with the objective of broadening
entrepreneurial base in the country by facilitating funding to ventures
involving innovative product/process/technology. Initially, it started
providing financial assistance by way of soft loans to promoters under its 'Risk Capital Scheme'
. Since 1988, it also started providing finance under 'Technology Finance and
Development Scheme' to projects for commercialisation of
indigenous technology for new processes, products, market or services. Over
the years, it has acquired great deal of experience in investing in
technology-oriented projects.
§
ICICI Venture Funds Ltd:-
formerly known as Technology Development & Information Company of India
Limited (TDICI), was founded in 1988 as a joint venture with the Unit Trust
of India. Subsequently, it became a fully owned subsidiary of ICICI. It is a
technology venture finance company, set up to sanction project finance for
new technology ventures. The industrial units assisted by it are in the
fields of computer, chemicals/polymers, drugs, diagnostics and vaccines,
biotechnology, environmental engineering, etc.
§
Tourism Finance
Corporation of India Ltd. (TFCI):- is a specialised financial institution set
up by the Government of India for promotion and growth of tourist industry in
the country. Apart from conventional tourism projects, it provides financial
assistance for non-conventional tourism projects like amusement parks,
ropeways, car rental services, ferries for inland water transport, etc.
3. Investment
Institutions:- are the most popular
form of financial intermediaries, which particularly catering to the needs of
small savers and investors. They deploy their assets largely in marketable
securities.
§
Life Insurance Corporation of
India (LIC):- was established in 1956 as a wholly-owned
corporation of the Government of India. It was formed bythe Life Insurance Corporation
Act,1956 ,
with the objective of spreading life insurance much more widely and in
particular to the rural area. It also extends assistance for development of
infrastructure facilities like housing, rural electrification, water supply,
sewerage, etc. In addition, it extends resource support to other financial
institutions through subscription to their shares and bonds, etc. The Life
Insurance Corporation of
§
Unit Trust of India (UTI):-
was set up as a body corporate under the UTI Act, 1963,
with a view to encourage savings and investment. It mobilizes savings of
small investors through sale of units and channelises them into corporate
investments mainly by way of secondary capital market operations. Thus, its
primary objective is to stimulate and pool the savings of the middle and low
income groups and enable them to share the benefits of the rapidly growing industrialization
in the country. In December 2002, the UTI Act, 1963 was repealed with the
passage of Unit Trust of India (Transfer
of Undertaking and Repeal) Act, 2002, paving the way for the
bifurcation of UTI into 2 entities, UTI-I and UTI-II with effect from 1st
February 2003.
§
General Insurance Corporation
of India (GIC) :-
was formed in pursuance of the General Insurance Business
(Nationalisation) Act, 1972(GIBNA ), for the purpose of
superintending, controlling and carrying on the business of general insurance
or non-life insurance. Initially, GIC had four subsidiary branches, namely, National Insurance Company Ltd ,The New India Assurance
Company Ltd , The Oriental Insurance Company
Ltd and United India Insurance Company
Ltd . But
these branches were delinked from GIC in 2000 to form an association known as
'GIPSA' (General Insurance Public Sector Association).
State
Level InstitutionsSeveral financial institutions have been set up at the State level which supplement the financial assistance provided by the all
24. State Infrastructure
& Industrial Development Corporation of Uttaranchal Ltd. (SIDCUL)
|
Financial Institutions
0 comments :
Post a Comment
Thank you for feedback