The industrial finance corporation of India is the first financial institution established in the country on 1st July 1948, under a special Act of parliament.
The purpose of the corporation is to make medium and long term credits more readily available to industrial concerns in India, particularly in circumstances where normal banking accommodation is inappropriate or recourse to capital issue channels is impracticable.
IFCI has been converted into a public limited company with effect from July 1, 1993, and is now known as the industrial finance corporation of India limited.
It is a subsidiary of the IDBI which holds 50% of its share capital and the remaining 50% is held by commercial banks, insurance companies, and co-operative banks.
Objectives of Industrial Finance Corporation of India:
IFCI’s main objective is to make medium and long term credit to industrial concerns in the private, public, joint and co-operative sectors in India.
It engaged in the manufacture, preservation, processing shipping, mining or hotel industry or in generation and distribution of electricity or any other form of power.
Functions of Industrial Finance Corporation of India:
The IFCI performs the following major functions:
1. As a Financer: IFCIs functions as a financier are outlined below:
a) Granting loans or advances to industrial concerns repayable within a period of 25 years.
b) Subscribing directly to the shares of industrial concerns.
c) Underwriting the issues of shares, bonds or debentures by industrial concerns but to be disposed of within seven years.
d) Guarantee of loans raised by industrial concerns from the capital market, scheduled banks or state co-operative banks, which are repayable within a period of 25 years.
e) Extending guarantee in respect of deferred payments by importers of capital goods and by purchases of capital goods manufactured in India.
f) As a part of its financial services, it provides equipment financing, equipment leasing, equipment procurement, suppliers credit, buyers credit, merchant banking and hire purchase services to industrial concerns.
2. As a promoter: IFCIs functions as a promoter are the following:
A) It sanctions assistance to industrial units to backward areas for balanced regional development.
B) IFCIs assistance is available to first-generation entrepreneurs, particularly technocrats and professionals who have proposals for technology-oriented ventures.
C) It has promoted subsidiary companies like IFCI custodial services limited, IFCI financial services limited, etc.
D) The promotional activities of IFCI cover funds supplied for risk capital, venture capital, tourism, housing, etc.