financial inst by RAVIKANTH BRUNDAVANAM

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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