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Development of financial Institution

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Development of financial Institution

  1. 1. DEVELOPMENT FINANCIAL INSTITUTIONS  A financial agencies that provide medium and long-term financial assistance and engaged in promotion and development of industry, agriculture and other key sectors.  Ex: International Bank for reconstruction and Development (IBRD) also known as World Bank & International Monetary Fund (IMF)
  2. 2. INTRODUCTION Industrial finance is a very complicated problem. It is of vital importance as development of any country depends on industrial development of that country „s economy. Why there is need of finance 1.Long term 2.Medium term 3.Short term
  3. 3. CONTINUE….  Long term capital is also known as block capital or fixed capital. it is needed to acquire-fixed and permanent assets  Medium term capital is required for repairs, replacements, maintenance of machines and building etc.  Short term capital is needed for purchase of raw material , and to meet day to day expenses
  4. 4. TYPES OF FINANCIAL INSTITUTIONS IN INDIA Term lending  Refinance institutions  Investment institutions  State level institutions 
  5. 5. TERM LENDING A term loan is a monetary loan that is repaid in regular payments over a set period of time. Term loans usually last between one and ten years, but may last as long as 30 years in some cases. A term loan usually involves an unfixed interest rate that will add additional balance to be repaid.  IFCI  IDBI  ICICI  EXIM
  6. 6. IFCI (INDUSTRIAL FINANCE CORPORATION OF INDIA) It was established in 1948  First development bank of India  Objective was to make medium and long term credits more readily available  Management - BOD total 12 members(4 by idbi,2 by center govt, 6 by shareholders) - -full time chairperson 
  7. 7. FUNCTIONS OF IFCI 1) For setting up a new industrial undertaking. 2) For expansion and diversification of existing industrial undertaking. 3) For renovation and modernization of existing concerns. 4) For meeting the working capital requirements of industrial concerns in some exceptional cases. 5) Direct financial support (by way of rupee term loans as well as foreign currency loans) to industrial units for under taking new projects, expansion, modernization, diversification etc. 6) Subscription and underwriting of public issues of shares and debentures.
  8. 8. CONTINUE…. Resources of IFCI  ownership capital  Issue of shares and bonds  borrowing from RBI,IDBI AND CENTER GOVT  accepting deposits from public, state govt and local authorities
  9. 9. IDBI (INDUSTRIAL DEVE. BANK OF INDIA) Set up in 1964  It was fully owned subsidiary of RBI but in 1976 delinked from RBI and made as autonomous body of GOI  H.O in Mumbai 11 branch offices  It is managed by a chairman and MD appointed by central govt, a deputy governor nominated of RBI, 20 other directors. 
  10. 10. FUNCTIONS OF IDBI  The IDBI has been established to perform the following functions1) To grant loans and advances to IFCI, SFCs or any other financial institution by way of refinancing of loans granted by such institutions which are repayable within 25 year. 2) To grant loans and advances to scheduled banks or state cooperative banks by way of refinancing of loans granted by such institutions which are repayable in 15 years.
  11. 11. CONTINUE… 3) To discount or re-discount bills of industrial concerns. 4) To underwrite or to subscribe to shares or debentures of industrial concerns. 5) To subscribe to or purchase stock, shares, bonds and debentures of other financial institutions.
  12. 12. CONTINUE..  With effect from 1 oct,2004 it has renamed as IDBIL. It has been accepted as a deemed banking co under banking regulation act. The govt holds the majority (58.47%) shares of IDBI LTD.  During last 40 years IDBI has given a qualitative dimension to the process of industrial development of the country.
  13. 13. FINANCIAL ASSISTANCE BY IFCI/IDBI Purpose New projects Expansion /acquisition Rehabilitation Modernization Working capital Sanction(crores) IFCI IDBI 15919.6 67498 6649.2 115.7 5459.7 837 50627 1415 12976 5138
  14. 14. I.C.I.C.I. (INDUSTRIAL CREDIT & INVESTMENT CORPORATION OF INDIA)  Established in 1955 As a public ltd co, at the initiative of world bank  Authorized capital of 60 crores and issued capital 22 crores  The objectives of icici are to encourage establishment of new industries, to help in expansion and modernization, technical and managerial aid to increase production and employment.
  15. 15. CONTINUE…  In October 2001 .BOD Approved ICICI LTD AND ICICI BANK LTD. With effect from MAY 2002 IT IS SIMPLY ICICI bank .  ICICI is now the largest bank with total assets of more than 3000 billions  More than 700 branches and over 2200 ATM spread all over the country  It mainly deals in  Retail banking, wholesale banking, project finance, international business and special assets mgt
  16. 16. FUNCTIONS OF ICICI 1)It provides long-term and medium-term loans in rupees and foreign currencies. 2)It underwrites new issues of shares and debentures. 3)It guarantees loans raised by private concerns from other sources. 4)It provides technical, managerial and administrative assistance to industrial concerns. 
  17. 17. CONTINUE… ICICI is known for its many firsts.       it was first Indian organization to listed in New york stock exchange. Foreign financial investor own around 38% shares . Technology, strategy, low cost branches innovations are key reasons of icici success. They are the first to introduce mobile banking, on line financial information, portals to allow accounts and information on line. It was the first to introduce e-commerce. It has the largest no of call centers.
  18. 18. EXIM Established on1st JAN,1982.  Authorized capital 1000 crores and paid up is 650 crores.  Exim bank came into existence when international finance division of idbi was transferred to exim bank in 1982.  Exim started its working from march 1982  The issued capital is wholly subscribed by center govt 
  19. 19. FUNCTIONS OF EXIM 1) Financing of exports and imports of goods and services, not only of India but also of the third world countries; 2) Financing of exports and imports of machinery and equipment on lease basis; 3) Financing of joint ventures in foreign countries; 4) Providing loans to Indian parties to enable them to contribute to the share capital of joint ventures in foreign countries;
  20. 20. CONTINUE…          The main objective of exim is to provide financial assistance to exporters and importers. It has to coordinate the working of those institutions which can promote international trade. Management is MD+17 other directors representing govt,RBI,ECGC,public sector banks Resources of EXIM -GOI -RBI -any organization approved by GOI TYPES OF ASSISTANCE -fund based -non fund based
  21. 21. ASSISTANCE BY EXIM        Fund based Pre shipment credit Foreign currency Post shipment credit Deemed exports Loans to commercial banks for bills discounting Finance for consultancy and technology   Non fund based Guarantees
  22. 22. REFINANCING INSTITUITIONS  Are those which do not give finance directly but they create such structure by which the funds are allocated up to the minimum level.  N.A.B.A.R.D.  S.I.D.B.I.  N.H.B
  23. 23. NABARD-NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT       Started functioning from 1july 1982 Set up with an initial capital of 100 crores, now it is 2000 crores fully subscribed by GOI AND RBI. H.O IN Mumbai, with 28 regional and 391 district offices It is an apex organization for policies, planning and operations of agriculture ,SSI ,handicraft and village industries It mainly deals in three types of functions credit ,developmental ,regulatory functions
  24. 24. FUNCTIONS OF NABARD 1) Inspection and Supervision of Co-operative Banks and Regional Rural Banks 2) Development of Women and Children in Rural Area 3) Integrated Rural Development Programme 4) It undertakes monitoring and evaluation of projects refinanced by it. 4) It promotes research in the fields of rural banking, agriculture and rural development
  25. 25. SIDBI (SMALL INDUSTRIES DEVLOPMENT BANK OF INDIA)  Set up in oct 1989  Wholly owned subsidiary of IDBI  It is the principal financial institution for promotion ,financing and development of small scale industries  In sep 2000 IDBI transferred 51% in favor of banks and other institutions in the first phase.
  26. 26.  FUNCTIONS OF SIDBI 1) It refinances loans and advances provided by the existing lending institutions to the small-scale units. 2) It discounts and rediscounts bills arising from sale of machinery to and manufactured by small-scale industrial units. 3) It grants direct assistance and refinance loans extended by primary lending institutions for financing exports of products manufactured by small-scale units. 4) It provides services like factoring, leasing, etc. to small units.
  27. 27. NHB (NATIONAL HOUSING BANK)  Set up in July 1988  A principal agency to promote housing finance  Wholly owned subsidiary of RBI  Registered With capital of 350 crore which can be increased to 2000 crores. The board is authorized to issue increased capital to RBI, center govt.
  28. 28. FUNCTIONS OF NHB  Extending refinance to different primary lenders in respect of  Eligible housing loans extended by them to individual beneficiaries,  for project loans extended by them to various implementing agencies. 1) Lending directly in respect of projects undertaken by public housing agencies for housing construction and development of housing related infrastructure. 2) Guaranteeing the repayment of principal and payment of interest on bonds issued by Housing Finance Companies. 3) Acting as Special Purpose Vehicle for securitising the housing loan receivables.
  29. 29. INVESTMENT INSTITUITIONS  Are those who invest the money collected in further securities and investments outside .LIKE  LIC  GIC
  30. 30. LIC (LIFE INSURANCE CORPORATION Set up in 1956  LIC was formed by nationalizing 245 life insurance companies.  The main aim was to  spread insurance   Mobilize savings  Investing funds  Act as trustees
  31. 31. CONTINUE….. promoting a sense of pride and job satisfaction among agents and employees  Diversification by LIC  LIC HOUSING FINANCE  LIC MUTUAL FUNDS  Jeevan bima sahyog assets mgt co(JBSAMC)  LIC International EC 
  32. 32. VISION & MISSION Mission "Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, and by rendering resources for economic development."  Vision "A trans-nationally competitive financial conglomerate of significance to societies and Pride of India." 
  33. 33. G.I.C. (GENERAL INSURANCE CORPORATION) It was incorporated on 22 November 1972.  The Government of India (GOI), through Nationalisation took over the shares of 55 Indian insurance companies and the undertakings of 52 insurers carrying on general insurance business. Main objective: GIC was formed for the purpose of superintending, controlling and carrying on the business of general insurance. 
  34. 34. VISION & MISSION Vision “To be a leading global reinsurance and risk solution provider” Mission:     Building long-term mutually beneficial relationship with business partners Practicing fair business ethics and values Applying “state-of-art” technology, processes including enterprise risk management and innovative solutions. Developing and retaining highly motivated professional team of employees Enhancing profitability and financial strength befitting the global position
  35. 35. STATE FINANCIAL CORPORATION’S (SFCS)  State Financial Corporations (SFCs) To meet the financial needs of small and medium enterprises, the government of India passed the State Financial Corporation Act in 1951  Under the Act, SFCs have been established by State governments to meet the financial requirements of medium and small sized enterprises. There are 18 SFCs at present.
  36. 36. OBJECTIVES OF SFC’S 1) Provide financial assistance to small and medium industrial concerns. 2) Provide long and medium-term loan repayable ordinarily within a period not exceeding 20 years. 3) Grant financial assistance to any single industrial concern under corporate or co-operative sector with an aggregate upper limit of rupees Sixty lakhs. 4) To lay special emphasis on the development of backward areas and small scale industries
  37. 37. FUNCTIONS OF STATE FINANCIAL CORPORATION 1) Grant of loans and advances to or subscribe to debentures of industrial concerns repayable within a period not exceeding 20 years. 2) Underwriting of the issue of stock, shares, bonds or debentures by industrial concerns. 3) Subscribing to, or purchasing of, the stock, shares, bonds or debentures of an industrial concern subject to a maximum of 30 percent of the subscribed capital, or 30 percent of paid up share capital and free reserve, whichever is less. 4) Planning and assisting in the promotion and development of industries.