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Development Financial Insistution

  2. DEVELOPMENTFINANCIALINSISTUTION? • These are the institutions who involved in financing of industrial and infrastructure projects that usually have long gestation period. • A DFI is defined as "an institution promoted or assisted by Government mainly to provide development finance to one or more sectors or sub-sectors of the economy. • A DFI is on long-term finance and on assistance for activities or sectors of the economy where the risks may be higher than that the ordinary financial system is willing to bear.
  3. HISTORYOFDFI • Developing countries set up DFIs to resolve market failures, especially in regard to financing of long-term investments. • The DFIs played a very significant role in rapid industrialization of the Continental Europe. Many of the DFIs were sponsored by national governments and international agencies.
  4. • The first government sponsored DFI was created in Netherlands in 1822. • In France, significant developments in long-term financing took place after establishment of DFIs, such as, Credit Financier and Credit Mobiliser, over the period 1848-1852. • In Asia, establishment of Japan Development Bank and other term-lending institution fostered rapid industrialization of Japan. • The success of these institutions provided strong impetus for creation of DFIs in India after independence.
  5. WhyDFIrequiredinIndia? • India is a growing country. • For making funds available for entrepreneurial activity. • To eliminate poverty both directly and indirectly. • To maintain the availability of long-term finance for infrastructure and industry, finance for agriculture and Small and Medium Enterprises (SME) development and financial products for certain sections of the people.
  6. ObjectivesofDFIs • Lay Foundations for Industrialization. • Meet capital Needs. • Need for promotional Activities. • Help MSMEs Sectors.
  7. FUNCTIONS:- • Financial gap fillers. • Joint finance. • Refinance facility. • Credit guarantee. • Underwriting Securities. • Take entrepreneurial Development Initiatives.
  8. ROLEOFDFIsINFINANCIALSYSTEM • Providing funds for long-term Development. • Accelerating Industrialisation. • Development of backward areas. • Infrastructural financing. • Planned Development.
  9. FunctionsofDFIs • Increase loans and equity investments to its developing associate countries (DMCs) for their monetary and social development. • Provides technical help for the planning and implementation of development projects and programs and for advisory services. • Promotes and facilitates speculation of public and private capital for growth and development.
  10. DFIs Types:- A group composed of Development Finance Institutions (DFI) and Investment Institutions forms. All India Financial Institutions (AIFI) . 1. National Level. 2. State Level
  11. NATIONALLEVELINSISTUTE • National Bank For Agriculture And Rural Development (NBARD). • Industrial Finance Corporation of India. • Small Industries Development Bank Of India [SIDBI]. • Industrial Development Bank of India. • ICICI • EXIM Bank. • NHB.
  12. NABARD • National Bank for Agriculture and Rural Development (NBARD) was approved by the Parliament through Act 61 of 1981. • NABARD came into existence on 12 July 1982 by transferring the agricultural credit functions of RBI and refinance functions of the then Agricultural Refinance and Development Corporation (ARDC).
  13. • It was dedicated to the service of the nation by the late Prime Minister Smt. Indira Gandhi on 05 November 1982. • It was set up with an initial capital of Rs.100 crore. • Its’ paid up capital stood at Rs. 5,000 crore as on 31 March 2016. • The Government of India holds Rs. 4,980 crore (99.60%) while Reserve Bank of India holds Rs. 20.00 crore (0.40%). • Headquarter:- Mumbai, India. • Chairman:- Harsh Kumar Bhanwala.
  14. ROLEOFNBARD • Serves as an apex financing agency for the institutions providing investment and production credit for promoting the various developmental activities in rural areas. • Takes measures towards institution building for improving absorptive capacity of the credit delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, training of personnel, etc.
  15. Cont. • Co-ordinates the rural financing activities of all institutions engaged in developmental work at the field level and maintains liaison with GOI, SG and RBI. • Undertakes monitoring and evaluation of projects refinanced by it. • NABARD refinances the financial institutions which finances the rural sector. • NABARD partakes in development of institutions which help the rural economy. • NABARD also keeps a check on its client institutes. • It regulates the institutions which provide financial help to the rural economy. • It provides training facilities to the institutions working in the field of rural upliftment.
  16. IFCI(IndustrialFINANCIALCORPORATIONOFINDIA) • The Industrial Finance Corporation of India established on July 1, 1948,(Headquarter-New Delhi). • It is the first Development Financial Institution in the country to cater to the long-term finance needs of the industrial sector. • Earlier it was known as Industrial Finance Corporation of India and Ltd. Has been added. • Until the establishment of ICICI Bank, IFCI remained solely responsible for implementation of the government's industrial policy initiatives.
  18. IDBI(INDUSTRIAL DEVELOPMENT BANK OF INDIA) • It was established in 1964 by an Act of Parliament IDBI Act-1964. • Earlier it was wholly owned subsidiary of the Reserve Bank of India. • In 1976, the ownership is transferred to IDBI. • Headquarter:- Mumbai, India. • On October 1,2004 it was converted in a banking company.
  19. FUNCTIONS:- • To provide financial assistance to industrial enterprises. • To promote institutions engaged in industrial development. • To provide technical and administrative assistance for promotion management or expansion of industry.
  20. ICICI(IndustrialCreditInvestmentCorporationofIndia) • ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. • The principal objective was to create a development financial institution for providing medium-term and long- term project financing to Indian businesses. • In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank, (But officially It happened in 1994).
  21. Objectives • Expansion of enterprises. • Modernisation of enterprises • Encouraging and promoting the participation of private capital • Encouraging and promoting private ownership
  23. SIDBI • SIDBI set up on April 2, 1990 under an Act of Indian Parliament. • Objective: Promotion, Financing &Development of MSMEs and Co-ordinating Functions of institutions engaged in similar activities. • Ownership : Public sector banks/FIs/Insurance Cos owned or controlled by the Government of India. • Structural Linkage: With Ministry of Finance . • Headquarter in Lucknow, UP.
  24. EXPORT&IMPORTBANK • It was founded on 1 Jan. 1982. • It was established under Export-Import Bank of India Act-1981. • Its key player in promotion of cross-border trade and promotion. • Headquarter:- Mumbai, India. • Managing Director:-David Rasquinha.
  25. Functions:- • Financing of export and import of goods and service both out of India and outside of India. • Provide finance for joint-ventures in foreign countries. • Undertaking merchant banking functions of companies engaged in foreign trade. • Providing technical & administrative assistance to clients. • Provide advance information and advisory service to Indian exporters.
  26. NHB • It was established on 9 July 1988. • It was established under NHB Act-1987. • It is an apex financial institution in Housing Development. • Its headquarted in New Delhi, India. • CEO:- Shriram Kalyanaraman.
  27. StateLevelInstitutions • State Financial Corporations (SFCs) • State Industrial Development Corporations (SIDCs).
  28. State Industrial Development Corporations • These institutions are established for industrial finance with in a state and controlled by state Government.