Indian Financial Institutions
In response to the varied and growing demands of industry in the context of its special needs in a fast developing economy, several specialized financial institutions have been set up in India, both at all India level and at the states level. Today, there are more than 60 financial institutions each performing a specific task. These financial institutions carry out their assigned functions, which are far beyond the conventional function of providing term finance to eligible entrepreneurs and mobilizing resources for their lending operations.
Specialized financial institutions apart from being money lending agencies, also assess market potential, offer technical and managerial advice, identify and encourage new entrepreneurs, give preference to the development of backward regions and provide underwriting facilities. Therefore, these institutions by virtue of their multifarious activities relating to development are called development banks.
A development bank may be defined as a multipurpose financial institution which shares entrepreneurial risk, shapes its approach in tune with a view to bringing about speedier economic growth. As development banks in a developing county, these financial institutions have responsibilities and commitments far beyond their raison d’ être, as profit-making commercial institutions. They have to contribute to national development.
The concept of development banking is based on the premise that mere provision of funds may not bring about entrepreneurial development. That is why development banks offer a package of financial and non-financial assistance. Their activities focus on discovery of new projects, preparation of project reports, technical assistance, managerial advice and provision of funds. These institutions do not supplant the conventional institutions but supplement them. That is the reason why development banks are called ‘gap fillers’. They serve as catalysts of industrial development and provide channels of capital, enterprise and management.
The salient features of a development bank are as follows:
- It offers medium-term and long-term finance to entrepreneurs;
- Its assistance is ‘project oriented’ rather than ‘security oriented’;
- It acts as ‘partner in progress,’ guides supervises and advises the entrepreneurs; and
- It offers both equity capital and debt capital.
India, being a developing country, need special financial institutions such as development banks because of shyness of capital, lack of adequate financial institutions that perform functions of development banks, low rate of capital formation, unorganized capital market, and other requirements of planned economic development.
The Need for Financial Institutions
After the Second World War, several Western countries went about setting up specialized financial institutions to rebuild their war-shattered economies. In 1951, when the Government of India adopted the policy of planned economic development through rapid industrialization, it called for long-term and medium-term funds generally not available with the traditional sources of finance. Commercial banks catered only to the short-term working capital needs of business and industry. It became imperative to instil the investment habit among people and to build up the capital market in order to purvey funds for industrial development. To develop the capital market and to meet the financial requirements of industrialization, many industry-specific financial institutions were organized in the country mainly in the public sector. These institutions have been set up at both the national and regional levels. These specialized financial institutions provided financial assistance to industrial enterprises for setting up new plants to make investment in expansion and modernization of plants.
Development banks have been set up with a view to (i) assisting entrepreneurs develop new industries so as to promote all-round industrial development of the country; (ii) meeting growing long-term financial needs of industry; (iii) helping in the production of new enterprises by (a) identifying and preparing projects, (b) training and developing entrepreneurs and (c) streamlining the management of assisted industrial units; (iv) providing merchant banking facilities such as issue of houses and underwriting to assist industrial concerns in raising long-term finance from the capital market; (v) mobilizing public savings and to accelerate the rate of capital formation in the country; (vi) ensuring balanced regional growth by encouraging industrialization of backward regions; (vii) developing a healthy and strong capital market; (viii) assisting in the modernization, expansion and diversification of existing industries; (ix) encouraging the growth of small-scale industries; (x) providing training and development to new and technical entrepreneurs and (xi) optimizing the use of scarce resources.
In India, government has established various financial institutions since we attained independence to help the growth, modernization and upgradation of Indian industries, both in the private and public sectors. Some of these notable financial institutions include the Industrial Finance Corporation of India (IFCI), the Industrial Credit and Investment Corporation of India (ICICI), the Industrial Development Bank of India (IDBI), the Industrial Investment Bank of India (IIBI), Small Industries Development Bank of India (SIDBI), State Financial Corporations (SFCs), State Industrial Development Corporations (SIDCs), National Small Industries Corporation (NSIC) and State Small Industries Development Corporations (SSIDCs). In the following pages, we will study them in greater details:
The Industrial Finance Corporation of India (IFCI)
The IFCI, the first of the term-financing institutions to be set up jointly by the Government of India, RBI, and other financial institutions, was established on 1 July 1948 by a Special Act of the Parliament. With effect from 1 July 1993, the IFCI has been converted into a public limited company to enable it reshape its business strategies with greater authority, tap the capital market for funds, expand its equity base and provide better customer services. It is now known as ‘IFCI Ltd’.
In 1993, the Government of India took the decision of transferring IFCI from statutory company to a company that would come under the Indian Companies Act, 1956.1
The IFCI has made a wide range of contributions in various sectors in the Indian industry. Some of the noteworthy contributions of the IFCI include improvement of Indian industry, export promotion, import substitution, development in business, pollution control measures, energy preservation and providing direct and indirect employment. The following are some of the industrial sectors that have been greatly benefited from the IFCI:
- Capital and intermediate goods industry that would encompass electronics, synthetic plastics, synthetic fibres and miscellaneous chemicals.
- Services industries such as hotels and hospitals.
- Consumer goods industry such as textiles, paper and sugar.
- Infrastructure sector involving power generation and telecom services.
- • Basic industries involving products such as cement, iron and steel, fertilizers and basic chemicals.
Further, IFCI’s economic contribution can be easily assessed from the following: Since its inception, the IFCI has sanctioned financial assistance of INR 462 billion to 5707 concerns and disbursed INR 444 billion. The magnitude of IFCIs financial assistance can be gauged from the following data:
It has catalysed investments worth INR 2526 billion in the industrial and infrastructure sectors. By way of illustration, IFCI’s assistance has helped create production capacities of
- 6.5 million spindles in the textile industry
- 7.2 million tonnes per annum (tpa) of sugar production
- 1.7 million tpa of paper and paper products
- 18.5 million tpa of fertilizers
- 59.3 million tpa of cement
- 30.2 million tpa of iron and steel
- 32.8 million tpa of petroleum refining
- 14,953 MW of electricity
- 22,106 hotel rooms
- 5544 hospital beds
- 8 port projects, 66 telecom projects and
- one bridge project.2
Objectives of the IFCI
The IFCI has been established with a view to making the medium-term and long-term credits more easily available to the industrial organizations in India, ‘especially in situations where normal banking facilities are unavailable or recourse to capital issue methods is unworkable’. The IFCI aims at helping industrial companies that have thought of schemes either for production or for modernization and expansion of a plant so as to increase their productive efficiency and capacity. The IFCI also provides assistance to public sector undertakings.
The IFCI provides project finance, merchant banking, suppliers’ credit, equipment leasing, finance to leasing and hire-purchase concerns, etc., and promotional services. Even while assisting all eligible industrial undertakings, the corporation gives priority to development of backward areas, new entrepreneurs and technocrats, indigenous technology, ancillary industries, cooperative sector, import substitution and export promotion. Of special relevance regarding the functions of the IFCI is the fact that its focus is on providing financial assistance to public limited companies and cooperative societies engaged in manufacturing, mining, shipping, hotel business, etc.
Functions, Scope and Types of Assistance to Industry
Major activities of the IFCI are condensed below:
- It grants loans and advances to or subscribes to debentures of industrial organizations.
- It guarantees loans raised by industrial organizations from the capital market, scheduled banks or state cooperative banks.
- It gives guarantees with regard to deferred payments for imports of capital goods manufactured in India.
- It guarantees loans raised from or credit arrangements made by industrial organizations with any bank or financial institution outside India with the approval of the central government.
- It underwrites the issue of shares and debentures by industrial organizations.
- It subscribes directly to the shares and debentures of industrial organizations.
- It acts as an agent of the central government and World Bank relating to loans sanctioned by them to industrial organizations in India.
- It participates in the administration of the soft loan scheme for modernization and rehabilitation of sick industries along with other all India term lending institutions.
- It provides financial assistance for setting up industrial projects in backward areas notified by the central government on concessional terms.
- It provides guidance in project planning and implementation through specialized agencies such as technical consultancy organizations (TCOs).
The financial assistance provided by the IFCI is available for setting up of new projects, and also for the expansion, diversification, and modernization of existing units. The IFCI Ltd also gives financial assistance to industrial concerns not tied to any project, if they are otherwise eligible. Some of the schemes of assistance introduced for this purpose include: (i) equipment leasing, (ii) suppliers’ credit and (iii) buyers’ credit. Indirect finance is provided as assistance to leasing companies. The IFCI also provides short-term loans for working capital purposes.
The main focus of the IFCI was to provide long-term financial benefits to various sectors in the Indian industry which it has fulfilled quite efficiently. The IFCI has also been quite faithful in implementing the number of schemes that the Government of India planned to ensure financial benefits into services. The IFCI carried out all the responsibilities regarding government’s industrial policy initiatives till the establishment of the ICICI in 1956 and the IDBI in 1964.
The Management of the IFCI
The IFCI is a joint stock company owned and managed by the Government of India, which has been vested with wide powers over the financial institutions. The IFCI is expected to carry out the policy set out by the government. The routine management of the corporation is carried out by a board of directors comprising a whole time chairman and 12 directors. The chairman is appointed by the central government in consultation with the IDBI, two directors are nominated by the central government, four by the IDBI and the remaining six are elected by the shareholders belonging to institutions other than the IDBI. The board of directors will act on business principles with due regard to the interests of trade, industry and the general public. There is also a central committee comprising the chairman and four directors.
As of 31 March 2003, the principal holders of the total paid-up capital of the IFPCI Ltd. (along with their shares given in brackets) were: (i) Nationalized banks (19.89%); (ii) IDBI (18.96%); (iii) SBI and its subsidiaries (9.69%); (iv) LIC (5.02%) and (v) GIC and its subsidiaries (5.97%) and so on.
The Working of the IFCI
The IFCI has completed more than six decades of operations. During this period, the activities of the corporation have progressively expanded both in scope and magnitude. It has emerged as a leading institution providing financial and other assistance to industry in diverse forms and areas.
Before sanctioning assistance to any company, the IFCI evaluates the proposal in terms of the following criteria:
- Importance of the concerned industry in the national economy
- Feasibility and the cost of the project
- Expense of the management
- Nature of the collateral offered
- Sufficiency in the supply of technical personnel and raw materials
- Country’s need for the product produced and its quality
Institutions Promoted by the IFCI
With a view to supplementing its primary function of assisting industrialization of the country, IFCI has promoted and participated in the establishment of the following institutions, among others:
- Tourism Finance Corporation of India (TFCI) Ltd
- Management Development Institute (MDI)
- Investment Information and Credit Rating Agency of India (ICRA) Ltd
- Institute of Labour Development (ILD)
- Tourism Advisory and Financial Services Corporation of India Ltd (TAFSCI)
- Over-the-Counter Exchange of India Ltd (OTCEI)
- IFCI Venture Capital Funds Ltd
- Securities Trading Corporation of India (STCI)
- Discount and Finance House of India Ltd (DFHI)
- Stock Holding Corporation of India Ltd (SIICI)
- LIC Housing Finance Ltd
- GIC Grih Vitta Ltd
- National Stock Exchange (NSE) of India Ltd
Subsidiary Companies of the IFCI
The IFCI has established the following three subsidiaries: (i) The IFCI financial Services Ltd; (ii) IFCI Investor Services Ltd and (iii) I-Fin.
Critical Evaluation of the Performance of the IFCI
The IFCI has been criticized due to the following reasons:
- The amounts sanctioned for new projects have been totally inadequate, being only about 20 per cent of the total assistance required.
- Equity finance has been very small compared to debt finance.
- Adequate attention has not been given to backward regions and the small-scale sector.
- Percentage share of infrastructure projects in the total loans outstanding is just about 13 per cent.
- There has been a sharp fall in the assistance provided in foreign currency.
- The IFCI’s income has fallen sharply though the country has a lot of forex resources.
- The non-performing assets (NPAs) of the IFCI represent a very high proportion of the total net assets. Its capital adequacy ratio has fallen to less than 1 per cent.
In spite of recapitalization and restricting of liabilities, the financial position of the IFCI has deteriorated much in recent years.
In January 2004, IFCI’s ratio of NPAs stood at 21.10 per cent and by March 2012, its capital adequacy ratio was precariously close to unsatisfactory. The share of NPAs in IFCI’s net loans as at end March 2000 was 9.1 per cent. The capital to risk weighted per cent, though it improved substantially to 14 per cent by 2007. There were other adverse performance parameters indicating the growing irrelevance of the IFCI in the present Indian capital market. According to the D. Basu Committee, change in the external environment for commodity companies, a depressed capital market and change in the operating environment of DFIs were the factors responsible for the downslide.
Case 37.1: The Latest on IFCI
It was reported in the media that the Industrial Finance Corporation of India (IFCI), the country’s oldest development finance institution, may form a holding company through which it will apply for banking license. The IFCI is looking for a suitable partner for entering the banking business.
Preliminary consensus evolved in internal consultations appears that the IFCI will remain a non-deposit-taking finance company, while the new holding company will be formed to run the banking business. The company is expected to speed-track the formation of the holding company so that it can apply for the banking licence shortly.
IFCI’s MD and CEO, Atul Kumar Rai, while confirming the development, said that it is too early to comment on it. After 10 years, the institution has expanded its loan portfolio by around INR 30 billion in 2008–09. It is also planning to expand its asset base by around 20 per cent from the present level of INR 150 billion. The IFCI has been making profit for the past 3 consecutive years. The 60-year-old institution with a capital adequacy ratio of more than 20 per cent and almost no net NPAs is looking at raising more money towards the end of the year. Since the IFCI has secured good credit ratings, it will be easier to raise resources.
Source: Anto Antony (2009), ‘IFCI Mulls Banking Foray, Looks Out for Partners, Mulls Holding Co, To Seek Licence in Next Fiscal’, The Economic Times, 2 July.
Table 37.1 Audited Financial Results for the Year Ended 31 March 2009 (INR billion)
In early 2004, the authorities have put into effect, as a sort of crisis management, a restructuring package with a view to arresting further decline of its deteriorating health. In future, the IFCI Ltd would cater to the needs of small and medium enterprises and to serve as a mid-corporate specialist. It would mainly focus on asset financing, IPO management, loan syndication, project finance, receivables financing, mergers and acquisitions, and corporate and project advisory services. The IFCI is also planning to set up a clearing house for securities and has applied to RBI to set up a commercial bank. It has also ambitious plans to venture into insurance, asset management and stock broking.
The Industrial Credit and Investment Corporation of India (ICICI)
The IFCI and its counterparts in states were originally designed to provide only loan capital and were not positioned to meet all the requirements of development finance. To fill the void, it was found necessary to create an institution to develop the capital market by stimulating the supply of risk capital through subscriptions and underwriting issues of joint stock companies. Accordingly, the ICICI, a private sector development bank, was established as a public limited company on 5 January 1955. It was sponsored by industrialists in India, England and the United States of America, the World Bank and the Government of India. As a joint stock company, ICICI had greater flexibility in operations. The ICICI-promoted Shipping Credit and Investment Corporation of India (SCICI) was merged with ICICI in April 1996. The ICICI acquired ITC Classics in 1997 and Anagram Finance in 1998.
In early 2002, the ICICI established the ICICI Bank and on 30 March 2002, the ICICI Ltd. was merged with its subsidiary, the ICICI Bank Ltd. The ICICI Bank which has now assumed the role of a universal bank is the second largest commercial bank in India next to the SBI and the largest bank in the private sector. It offers a wide range of financial products and services in the areas of commercial banking, investment banking, non-banking finance, investor services, broking, venture capital financing, mutual funds, etc.
Objectives of the ICICI
The main objective of the ICICI was to promote industrial development in the private sector by providing financial, technical, administrative and related services. The ICICI was established with a view to (a) helping in the promotion, expansion and modernization of industrial enterprises in the private sector; (b) encouraging and promoting the participation of private capital, both Indian and foreign, in such enterprises and (c) stimulating the growth of private ownership of industrial investments and expansion of investment markets.
Functions of the ICICI
The kind of assistance rendered by the ICICI and scope of its activities were more or less similar to those of the IFCI. Its main business was to provide medium-term and long-term project financing, leasing and related kind of financial and advisory services to private industry in India. Till recently, it was the only financial institution in the private sector that provided foreign currency loans. Even today, its foreign currency loans business is much greater than that of other financial institutions.
To sum up, the ICICI provides assistance to industrial enterprises by (i) providing medium-term and long-term rupee loans to industrial concerns; (ii) giving loans in foreign currencies towards the cost of imported capital equipment; (iii) offering guarantees to the loans raised by companies in the open market; (iv) promoting and underwriting new issues of industrial securities; (v) contributing directly to shares and debentures of companies; (vi) offering funds available for reinvestment by revolving investments as rapidly as prudence demanded; (vii) providing technical and managerial know-how to industries; (viii) helping industrial concerns in obtaining technical and administrative services from internal and external sources; and (ix) sponsoring the participation of both internal and external private capital in industrial concerns.
Resources of the ICICI
The resources of ICICI came from (i) share capital; (ii) initial interest free loan given by the Government of India; (iii) advance in foreign currency by the World Bank; (iv) rupee loans by IDBI; (v) borrowings from the RBI; (vi) lines of credit from the World Bank; (vii) bond issues in India and foreign capital markets; (viii) issues of shares to Indian public: and (ix) reserves.
The Management of the ICICI
The management of the ICICI is vested in a board of directors comprising a full-time CMD and 11 directors. The central government nominates one director, seven directors are elected by the Indian shareholders and three by foreign shareholders. There are a few committees to assist the board of directors.
The ICICI Bank provides project finance, corporate finance and retail finance. It also undertakes fee-based services and capital market operations. The organizational structure of the ICICI Bank consists of five principal groups: (a) Retail banking; (b) Wholesale-banking; (c) Project finance and special assets management; (d) International business; and (e) Corporate Centre.
The merger of the ICICI with the ICICI Bank in 2002 has strengthened the financial position of the combined entity. However, with this merger, ICICI does not exist anymore as a development financial institution.
Subsidiaries of the ICICI Bank Ltd
As per the Annual Report for FY 2009, ICICI has the following subsidiaries:
- ICICI Securities Primary Dealership Limited
- ICICI Securities Limited
- ICICI Securities Holdings Inc.
- ICICI Securities Inc.
- ICICI Venture Funds Management Company Limited
- ICICI International Limited
- ICICI Prudential Life Insurance Company Limited
- (viii) ICICI Lombard General Insurance Company Limited
- (ix) ICICI Home Finance Company Limited
- (x) ICICI Investment Management Company Limited
- ICICI Trusteeship Services Limited
- (xii) ICICI Bank UK PLC
- ICICI Bank Canada Limited
- (xiv) ICICI Wealth Management Inc.
- (xv) ICICI Bank Eurasia LLC
- (xvi) ICICI Prudential Asset Management Company Limited
- ICICI Prudential Trust Limited3
Besides these subsidiaries, the ICICI has diversified its own activities into several fee and commission-based services including custodial services to cater to the needs of the foreign and domestic institutional investors.
Working of the ICICI
The ICICI has played a vital role in the development of industries in the private sector and in strengthening the capital market in the country. With a considerable reservoir of foreign currencies, the ICICI became the largest supplier of foreign currency to private sector industries. It has taken many valuable initiatives in promoting investments in computerization, information technology, agro-based industries, energy conservation, pollution control and export orientation. For this purpose, it has been engaged in leasing operations. The ICICI has also set up the Housing Development and Finance Corporation (HDFC) Ltd. for financing housing schemes. In the field of education and research, ICICI has sponsored the Institute of Financial Management and Research (IFMR) in Chennai for training and research in the field of financial management. Besides these initiatives, ICICI has played a leading role in areas of venture capital. It launched a Programme for Acceleration of Commercial Energy Research (PACER). It promoted Technology Development and Information Company of India (TDICI) Ltd to widen technology development in the country. ICICI made its contribution to establish the Credit Rating and Information Services of India Ltd (CRISIL). It also administers the Programme for the Advancement of Commercial Technology (PACT).
The ICICI has instituted the Indian Investment Centre (IIC) with a view to encouraging the participation of foreign capital in Indian industries. It is the pioneer in the field of underwriting by developing consortium underwriting in cooperation with other financial institutions. ICICI has set up a merchant banking division to promote a healthy capital market. It has a project promotion department for developing backward regions. It is also providing soft loans for the modernization and rehabilitation of sick industries. It provides deferred credit, leasing credit, asset credit and venture capital, apart from technical consultancy and managerial know-how to private sector industries in India. It encourages flow of private and foreign investments in the country.
The ICICI’s Achievements
The ICICI Bank as the largest private sector and the second biggest amongst all Indian commercial banks, next only to SBI has 540 branches with more than 1000 ATM centres. The bank has been recognized for many achievements. It was the first Indian company to be listed on the New York Stock Exchange (NYSE) in September 1999, and has successfully floated ADINR and GDINR. It launched Infinity the first internet banking service in India. ICICI Bank is also the largest issuer of credit cards in India.4 The ICICI Bank is rapidly expanding markets abroad and has the largest international balance sheet among Indian banks. ICICI Bank now has wholly owned subsidiaries, branches and representatives offices in 18 countries, including an offshore unit in Mumbai. The bank’s wholly owned subsidiaries are in Canada, Russia and the UK, offshore banking units in Bahrain and Singapore and elsewhere. If we look at the financial position of the company, as of 30 June 2008, ICICI Bank and its subsidiaries had consolidated total assets of INR 4846.43 billion. They have a capital adequacy ratio of 13.4 per cent on 30 June 2008, as against the regulatory requirement of 9.0 per cent. ICICI Bank UK PLC had total assets of about USD 8.7 billion at that date. ICICI Bank PLC’s investment of Euro 57 million (approximately USD 80 million) in senior bonds of Lehman Brothers Inc. constitutes less than 1 per cent of ICICI Bank UK PLC’s total assets and less than 0.1 per cent of the consolidated total assets of the ICICI Group. ICICI Bank UK PLC already holds a provision of about USD 12 million against investment in these bonds. Considering a 50 per cent recovery estimate, the additional provision required would be about USD 28 million. They have also been increasing profits year on year basis. There were rumours that ICICI’s exposure to Lehman Brothers that went bust in the USA in 2008 would seriously affect the ICICI and there were heavy withdrawals by the bank’s customers. However, ICICI claimed that there was no material impact on ICICI Bank or ICICI Bank UK PLC on account of exposure to Lehman Brothers. RBI has also backed the claims.
ICIC’S profit before tax of INR 51.17 billion for the year ended 31 March 2009 compared to INR 50.56 billion for the year ended 31 March 2008.5
Its growth and success is based on a strategy that focuses on technology, strong and decisive management and low cost branches. ICICI’s use of technology has been a trend-setter among financial institutions in the country. The bank provides mobile/telephone banking, online financial information, retail financial products over the internet and has developed e-commerce.
The Other Side of the ICICI Bank
However, there is a perception amongst its innumerable customers that the bank in its ambitious programme of fast-track and diversified growth has trampled on their legitimate banking needs and used strong-arm methods to achieve its ends. For instance, The Delhi Consumer Commission imposed INR 5.5 million penalty on ICICI Bank for hiring goons, who beat up a youth with iron rods to recover a loan.6 ICICI was again fined more than USD 130,000 after its loan collectors beat a man with iron rods and dragged him from a car before seizing the vehicle.7
The IDBI was set up as an apex development finance institution. It was set up as a statutory corporation under Industrial Development Bank of India Act, 1964. It started its operations with effect from 1 July 1964. IDBI was initially established as a wholly owned subsidiary of the RBI, but in 1976 the ownership of IDBI was transferred to the central government. The imperatives of rapid industrialization, long-term financial requirements of heavy industry beyond the resources of the then existing institutions, absence of a nodal agency to coordinate the activities of other financial institutions and gaps in the financial and promotional services were the main factors that prompted the establishment of IDBI. IDBI represents an initiative to place together in a single institution the wherewithal for an expanding economy as well as the rationale for a coordinated approach to industrial financing. The setting up of IDBI is thus an important landmark in the history of institutional financing in the country. In March 1994, the IDBI Act was amended to permit the Bank issue equity shares in the capital market. However, the majority of its shares are still owned by the Government of India.
The Management of the IDBI
Since originally IDBI was a wholly owned subsidiary of the RBI, it was managed by the central bank. As such, the general direction, management and superintendence of IDBI were vested in a board of directors. This was the same as the central board of directors of the RBI. The governor and the deputy governor of the RBI were the chairman and vice chairman, respectively, of IDBI. Ultimately, the Finance Ministry of the Government of India wanted to secure direct control and direction of IDBI. Accordingly, in 1976, IDBI was taken over by the Government of India from the RBI.
The IDBI is now managed by a board of directors consisting 22 directors including the chairman. The directors are elected by the shareholders of IDBI. The IDBI, in addition to the head office, has four regional offices in Mumbai, Kolkata, Chennai and Delhi.
Objectives of the IDBI
The objectives of IDBI are to (a) bring together, regulate and supervise the activities of all financial institutions providing term loans to industry; (b) widen the utility of these institutions by providing additional resources and by broadening the scope of their assistance; (c) bridge the gap between demand and supply of long-and medium-term finance to industrial units in both public and private sectors by offering direct finance; (d) identify and fill up gaps in the industrial structure of the country; and (c) prioritize a system so as to diversify and speed up the process of industrial growth. Having been conceived as a development agency, IDBI was expected that it is ultimately to be concerned with all issues relating to industrial finance in the country.
Functions of the IDBI
The main function of the IDBI, as its name itself suggests, is to finance industrial units engaged in manufacturing, mining, processing, shipping and other transport industries and hotel industry. The following are IDBI’s major functions:
- Contributing to the shares and bonds of financial institutions and guaranteeing their underwriting obligations;
- Refinancing term loans and export credits extended by other financial institutions;
- Giving loans and advances directly to industrial concerns;
- Offering guarantees for deferred payments due from and loans raised by industrial units;
- Subscribing to and underwriting shares and debentures of industrial concerns;
- Providing financial intermediation services such as accepting, discounting and rediscounting bona fide commercial bills or promissory notes of industrial concerns including bills arising out of sale of indigenous machinery on deferred payment basis;
- Funding turnkey projects by Indians abroad and extending credit to foreigners for buying capital goods from India;
- Filling the gaps in the industrial structure of the country by planning, promoting and developing industries. The Bank may undertake promotional activities such as marketing and investment research, techno-economic surveys, etc.
- Giving technical and managerial assistance for promotion and expansion of industrial undertakings; and
- Coordinating and regulating the activities of other financial institutions.
Apart from providing assistance to industry directly, IDBI also arranges assistance to industries from other financial institutions and banks. IDBI provides project finance for new projects and for expansion, and caters to the diversification and modernization of existing projects. IDBI also offers equipment finance, asset credit, corporate loans, working capital loans, refinance, rediscounting and fee-based services in respect of merchant banking, mortgage, trusteeship and forex services.
Thus, IDBI performs financial, promotional and coordinating functions. IDBI supplements and coordinates the activities of various national and state level financial institutions in the country as an apex institution in the field of development banking.
IDBI has been vested with wide powers and it enjoys full operational autonomy. The Bank can provide financial assistance directly as well as through other institutions to all types of industrial units irrespective of their size or pattern of ownership. No maximum or minimum limits have been fixed on the amount of assistance or security. The Bank is empowered to deal with problems relating to industrial finance or for that matter industrial development. The IDBI has created a corpus known as Development Assistance Fund to offer financial assistance to industrial units which are unable to get assistance from normal sources. It also makes available foreign currencies to industrial units that need them.
The Working of the IDBI
In the 1960s, IDBI provided financial assistance to capital intensive industries. During the next two decades, the focus shifted to the upgrade of technology, import substitution and export promotion, and venture capital funding. During the 1990s, IDBI started offering new services such as asset credit, equipment leasing and bridge loans for pollution control and energy conservation in response to the liberalized environment. The Bank also focused on non-fund-based activities such as merchant banking, debenture trusteeship and foreign exchange services. IDBI has been assisting backward regions, small-scale industries and sick units.
With the view to promoting the objectives for which it was established, IDBI has sponsored/co-sponsored, among others, the following institutions:
- Credit Analysis and Research (CARE) Ltd.
- Investor Services of India Ltd. (ISIL)
- National Stock Exchange (NSE)
- EXIM Bank
- Securities and Exchange Board of India (SEBI)
- IDBI Trusteeship Services Ltd. (ITSL)
- National Securities Depository Ltd.
- Entrepreneurship Development Institute of India (EDII)
The IDBI’s Subsidiaries
Apart from the above-mentioned institutions, IDBI subsidiaries include
- IDBI Bank Ltd.
- IDBI Mutual Fund
- IDBI Capital Market Services Ltd. (ICMS)
- SIDBI, and
- IDBI Intech Ltd. (IIL).
Restructuring of the IDBI
As per the amendment to the IDBI Act in 1994, IDBI has been granted functional autonomy in the matter of granting loans, accepting deposits, and having exposure to foreign currency borrowing in international financial markets to meet foreign currency needs of the industry since 1982.
IDBI went public in June 1995 by making a public issue of equity. As a result of going public, its board of directors will now include representatives of the shareholding public. IDBI can now have public ownership up to 49 per cent of its issued capital. Shareholding of the Government of India stood at about 58 per cent in 2003.
Other Developments Relating to the IDBI
The Parliament enacted, on 30 December 2003, IDBI (Transfer of Undertaking and Repeal) Act, 2003 with a view to converting IDBI into a banking company under the Companies Act. On 1 October 2004 IDBI Bank Ltd. was merged into IDBI. With this merger, IDBI as a development bank ceased to exist.
IDBI’s performance as a development has been satisfactory till the year 2000. The Bank’s loan sanctions had increased several folds from INR 12.80 billion in 1980–81 to INR 26,830 in 2000– 01, while its disbursements had increased from INR 10.10 billion to INR 174.80 billion during the corresponding period. This growth was a reflection of the rapid industrial and business growth of the country on one side and the increasing mobilization of resources by the development banks on the other. As the apex financial institution of the country, IDBI played a leading role in the growth process registered by business and industry during the two decades between 1980 and 2000.
However, IDBI registered a steep decline in both loans sanctioned and funds disbursed since 2000–01. Likewise, disbursements by IDBI declined to INR 48.20 billion in 2004–05. Paucity of funds and heavy accumulation of NPAs contributed to this sorry state of affairs. As a result, the IDBI, like other public development financial institutions managed by the Ministry of Finance of the Government of India, had almost collapsed.
The Industrial Investment Bank of India (IIBI)
In April 1971, Industrial Reconstruction Corporation of India (IRCI) was set up at the instance of IDBI as a joint stock company to revive and rehabilitate sick and weak industrial units. The IFCI, ICICI, LIC and public sector banks had contributed to its share capital. IRCI was reconstituted and rechristened as Industrial Reconstruction Bank of India (IRB1) on 26 March 1985 as a statutory corporation, the principal credit and reconstruction agency for industrial revival, modernization, expansion rehabilitation, expansion, reorganization, diversification and rationalization in the country. It was primarily entrusted with the task of reviving the sick industrial concerns. The Industrial Reconstruction Bank of India Act empowers it to grant loans and advances, underwrite stocks and shares of banks and guarantee loans, performance and deferred payments. It also provides loans to capital expenditure, additions to balancing equipment, for correcting imbalances in working capital of sick, weak and closed units and those units facing imminent closure. The IRBI was converted into a government company with effect from 27 March 1997 and was renamed the IIBI. It was registered as a limited company under the Companies Act, 1956. The restructuring was done to provide adequate operational flexibility and functional autonomy. At present, government owns the entire share capital. But the IIBI is permitted to access the capital market for additional equity.
Functions of the IIBI
As a full-fledged development bank, the IIBI now undertakes the functions such as: (i) granting medium- and long-term loans; (ii) providing hire-purchase of equipment, leasing finance and finance for the purpose of buying assets; (iii) underwriting shares and debentures; (iv) subscribing directly to shares and debentures; (v) guaranteeing deferred payments; and (vi) granting short-term working capital loans.
The IIBI lays emphasis on the technology upgrade and improvement of productive capacity, so essential for the long-term viability of the assisted units. For the sick/weak industrial units, help is provided for capital expenditure, acquisition of balancing equipment, etc. For non-sick units or units which are in their incipient stage of sickness, assistance is also provided to prevent sickness. The IIBI also provides assistance for acquiring pollution control equipment. It provides loans to individuals also for housing, professional and personal needs. IIBI has diversified into ancillary activities such as consultancy services, merchant banking and equipment leasing.
Presently, the IIBI is facing a difficult financial position due to mounting NPAs and low capital adequacy ratio. From all indications the IIBI cannot survive alone and it is likely it will merge with the IDBI.
The SIDBI was set up under the Indian Companies Act, 1956 on 2 April 1990 under a Special Act of Parliament, as a wholly owned subsidiary of the IDBI. SIDBI took over the outstanding portfolio of IDBI relating to the small-scale sector worth over INR 40 billion. The authorized capital of SIDBI is INR 2.50 billion which could be increased to INR 100 billion. It has taken over the responsibility of administering Small Industries Development Fund and National Equity Fund which was earlier administered by IDBI. SIDBI was de-linked from the IDBI through the SIDBI (Amendment) Act, 2000 with effect from 27 March 2000. Its management vests with an elected board of directors.
The SIDBI’s Objectives
SIDBI was envisaged as ‘the principal financial institution for the promotion, financing and development of industry in the small scale sector and to coordinate the functions of other institutions engaged in the promotion, financing and developing industry in the small scale sector and for matters connected therewith or incidental thereto’.8 SIDBI coordinates the functions of existing institutions engaged in promoting, funding and developing industrial units coming lender the small-scale sector. Thus, financing, promotion, development, and coordination small scale industries are the basic objectives of SIDBI.
The SIDBI’s Functions
SIDBIs main functions are as follows: (i) SIDBI refinances loans and advances extended by primary lending institutions to small-scale industrial units; (ii) It discounts and rediscounts bills arising from sale of machinery to or manufactured by industrial units in the small-scale sector; (iii) It extends need capital/soft loan assistance under National Equity Fund, Mahila Udyam Nidhi, Mahila Vikas Nidhi and through specified agencies; (iv) It grants direct assistance and refinance for financing exports of products manufactured in the small-scale sector; (v) It extends support to SSIDCs for providing scarce raw materials to and marketing the end products of industrial units in the small-scale sector; (vi) It gives financial support to NSIC for offering leasing, hire-purchase and marketing support to industrial units in the small-scale sector; and (vii) It provides services such as leasing, factoring, etc., to industrial concerns in the small-scale sector.
In establishing SIDBI, the objective of the Government of India was to ensure larger and continuous flow of funds to the small-scale sector. SIDBI has already taken steps towards technological upgrade and modernization of existing small-scale industrial units. It has also started opening new and expanding the marketing channels for SSI products in domestic and international markets. With the view to generating more employment opportunities, and thereby checking the migration of rural population to urban conglomerations, SIDBI is in a big way and concerted manner promoting employment-oriented industries especially in semi-urban areas.
The SIDBI’s Working
The intention of the government in establishing SIDBI was to ensure larger and uninterrupted flow of funds to small-scale industries. True to this desire of the government, the SIDBI provides both term loans and working capital loans and also equity finance. It assists new projects, and also helps the expansion, diversification and modernization of existing units, for ensuring quality improvement, marketing and rehabilitation of sick units in the small-scale sector. The SIDBI makes effective use of the network of banks and state-level financial institutions to ensure the flow of finance to small-scale sector.
SIDBI also provides development and support services under its Promotional and Developmental (P&D) schemes apart from financing. Through such efforts, it seeks to ensure enterprise promotion, technology upgrade, market promotion, human resource development, dissemination of information and quality management. The SIDBI Foundation for Micro Credit, Rural Industries Programme, Mahila Vikas Nidhi, entrepreneurship development programmes, management development programmes, and environment management are the thrust areas of SIDBI’s P&D activities. Under refinance assistance, the SIDBI operates special schemes such as single window scheme, composite loan scheme and equipment refinance scheme. It also provides venture capital assistance and scheme for ex- servicemen. There is a credit guarantee fund scheme also. By 2008–09, financial assistance disbursed by SIDBI was INR 280.00 billion of which refinance exceeded INR 202.00 billion and direct finance was INR 78.00 billion.9 Within a short span of less than two decades, the SIDBI has emerged as a significant player in providing financial support to the small-scale sector. A London-based journal Banker in its May 2001 issue ranked SIDBI 25th in terms of capital and assets among development banks of the world.
State Financial Corporations
Apart from several all India level institutions, there are 18 state level financial institutions. SFCs, SIDCs and SSIDCs are examples of state level institutions.
The need for state level financial institutions was felt to meet the financial needs of local, medium- and small-sized industries as the IFCI provides finance to large public companies and cooperative societies. On 28 September 1951, the Parliament passed the State Financial Corporations Act, which empowered the state governments to establish financial institutions for their local units. Accordingly, 17 SFCs were set up under the Act by the respective state governments as regional institutions. Additionally, the renamed The Tamil Nadu Industrial Investment Corporation Ltd, established by the Tamil Nadu government in 1949 under the Companies Act as Madras Industrial Investment Corporation also functions as the SFC.
Objective of the SFCs
The main aim of the SFCs is to provide finance to medium- and small-scale industries and other enterprises within the respective state and which are outside the purview of the IFCI. Proprietary and partnership firms and joint stock companies and cooperative societies are authorized to borrow funds from these corporations. The SFCs seek to supplement the operations of the IFCI and IDBI.
The SFCs play an effective role in the development of small and medium units and help in bringing about regionally balanced economic growth. Moreover, they also help at wider dispersion of small and medium enterprises within each state. They primarily cater to term credit needs of such units.
Prior to 1990, the activities of the SFCs were under the control and supervision of the IDBI and RBI. Since 1990, the RBI and SIDBI have been overseeing SFCs.
The SFCs draw their capital from (a) share capital reserves, bond issues, loans from the RBI, IDBI and state governments; (b) refinance from the RBI and IDBI; (c) fixed deposits from state governments, local authorities, and the public and (d) assistance from International Development Association (IDA) of the World Bank group and foreign currency line of credit from the IDBI.
Functions of the SFCs
The SFCs function as regional development banks in respective states. They are authorized to provide financial assistance in the following forms:
- Providing loans or advances and subscribing to the debentures of industrial units
- Giving guarantee to loans raised by industrial units on such terms and conditions as may be agreed upon mutually
- Underwriting shares, debentures and other industrial securities
- Providing guarantee to deferred payments for the purchase of capital goods within India
- Acting as the agent on behalf of central and state governments in respect of disbursing loans to small-scale units
- SFCs act as channels to route the International Development Association (IDA) credit to assist small and medium industrial units and
- Rediscounting bills of small-scale units
The Management of the SFCs
Each SFC is managed by a board of directors comprising a managing director and nine other directors. Four directors (including the Managing Director) are nominated by state governments and one each by the RBI and IDBI. The remaining four directors are elected by the external shareholders. There is also an Executive Committee selected by the board of directors.
Working of the SFCs
In most of the states, SFCs provide concessional finance to small-scale industries on behalf of the state governments. The bulk of the assistance is granted by SFCs to small-scale industries including road transport operators. SFCs have granted liberal financial assistance on concessional terms to industrial units in the specified backward areas and to technician entrepreneurs. SFCs sanction and disburse seed capital assistance of IDBI to women and other entrepreneurs.
SFCs face several problems and difficulties in practice. More often, they find it difficult to evaluate correctly the financial position and credit worthiness of applicants in the absence of systematic, up-to-date and audited accounts. Many applicants are not able to provide adequate collaterals and about 27 per cent of the outstanding loans are overdue.
There is an urgent need to improve the financial resources of SFCs. An efficient organizational and managerial structure is to be built to make them efficient. Assistance granted by the SFCs is inadequate for the growing needs of industry. SFCs should cut down procedural delays and cost involved in providing assistance. Proper arrangements should be made for training and development of executives of the SFCs. New industries and backward areas need more focus.
Most SFCs are bankrupt. A committee headed by G. P. Gupta, former IOB chairman, had estimated that 12 out of 18 SFCs had their net worth wiped out by early 2001. The committee recommended recapitalization of SFCs, subject to restructuring. The SFCs have to be kept going in good health to maintain the flow of funds to small and medium enterprises, particularly new ventures. Merger of SFCs into SIDCs may avoid duplication of efforts and may help in achieving greater efficiency.
The Government of India amended the State Financial Corporations Act with effect from 12 September 2000, with a view to equipping the SFCs meet international competition. This is to be realized by enlarging the shareholder base and providing operational flexibility and granting greater functional autonomy to SFCs.
The Working Group on Development Financial Institutions appointed by the RBI concluded in its report dated 10 May 2004 that the SFCs have outlived their utility in the present context and should be phased out within a time frame.
State Industrial Development Corporations (SIDCs)
Mainly with a view to accelerating the pace of industrial development in their states, many state governments have established SIDCs. SIDCs were set up under the Companies Act, 1956 during 1960s and 1970s as wholly owned state government undertakings for promotion and development of medium and large industries at the state level. Andhra Pradesh and Bihar were the first group of states to set up SIDCs in 1960 followed by other states. Gradually, their number grew to 28 out of which 11 of them are functioning also as SFCs. All these SIDCs are wholly owned financial institutions owned by the respective state governments. They undertake a wide range of functions, the important ones being ‘(a) grant of financial assistance; (b) provision of industrial sheds/plots; (c) promotion and management of industrial concerns; (d) promotional activities such as identification of project ideas, selection and training of entrepreneurs, provision of technical assistance during project implementation etc., and (e) providing risk capital to entrepreneurs by way of equity participation and seed capital assistance’.10 SIDCs provide financial assistance in the form of direct investment loans, extension of guarantee for loans and deferred payment, underwriting and subscription to the issue of shares, bonds and debentures. SIDCs act as catalysts for industrial development and provide impetus to investment in their respective states.
The SIDCs provide financial assistance to industrial concerns by way of loans, guarantees, underwriting and direction subscription to shares and debentures. In addition, SIDCs undertake promotional activities such as techno-economic surveys, project identification, feasibility studies, and selection and training of entrepreneurs. They also promote joint sector projects in association with private sector entrepreneurs. SIDCs undertake the development of industrial areas by providing all infrastructural facilities. They administer various incentive schemes of central and state governments. They pay special attention to industrial development of backward areas.
The National Small Industries Corporation (NSIC)
The NSIC was instituted in 1955 as a fully government owned company, mainly with the view to helping small-scale units through promotional, marketing, financing and other activities. The main functions of NSIC are as follows: (i) procurement of machinery, both indigenous and imported, on hire-purchase basis for establishing new units and for modernizing existing units; (ii) creating prototypes for transfer along with know-how to production units for commercial production; (iii) giving training in various engineering trades; (iv) arranging for indigenous and imported raw materials on continuing basis; (v) marketing of products of small-scale units both within the country and abroad; (vi) establishing showrooms for routine display of products of small-scale units and;(vii) taking up small industries projects on turnkey basis and offering total services from feasibility studies for the installation and commissioning of plants.
State Small Industries Development Corporations
SSIDCs were the latter-day additions catering to the financial needs of small-scale industries in the states. They were set up under the Companies Act 1956 to serve the needs of small-scale industries in the respective states and union territories. They were expected to undertake a variety of activities for the benefit of small-scale industries.
SSIDCs perform the following functions: (i) arranging for and distribution of raw materials; (ii) making available machinery on hire-purchase basis; (iii) managing seed capital scheme on behalf of state governments; (iv) operating of a scheme of assistance to production units; (v) building and managing industrial estates; (vi) taking up marketing activities; and (vii) collaborating with other institutions to establish TCOs.
Apart from these activities, SSIDCs are engaged in providing infrastructural facilities such as sheds, go downs, and common production facilities, technical and consultancy services, particularly to the unemployed, such as preparation of feasibility reports, formulation of project reports, planning for modernization/expansion of product range and implementation of projects. Some SSIDCs have also sponsored industrial feasibility surveys to identify viable small projects to be based mainly on local raw materials and local demand conditions. SSIDCs also help in disposing of finished products of small-scale units in domestic and export markets. Many SSIDCs have helped in setting up emporia and showrooms for the products of small-scale units. They also organize and participate in exhibitions in various markets.
There are several other development-cum-financial institutions that provide promotional, financial and marketing assistance to enterprises. These are Khadi and Village Industries Commission (KVIC), Export–Import Bank of India (EXIM Bank), National Bank for Agriculture and Rural Development (NABARD), and Infrastructure Development Finance Company Limited (IDFC). All of them act as financial and developmental institutions in their respective fields of activities.
Recent trends in financial sector reforms as early as April 2012, the Government of India was set to give up its long-drawn plans for financial sector reforms, ‘includes are increase in voting rights for foreign investors in private banks and a hike is the foreign investment ceiling for insurance.
Evaluation of the Role of Financial Institutions
The above-mentioned financial institutions that have been set up after independence have been anticipated to not merely serve as providers of finance but also act as catalytic agents in the industrialization of the country. These institutions have accomplished their objectives to a large extent.
On the positive side, it can be said that: (i) No viable project has been denied assistance solely due to paucity of funds; (ii) Long-term finance has been given at fixed interest rates, thus avoiding uncertainty of cash flows; (iii) A considerable portion of the equity of new projects has been contributed by these institutions: and (iv) These institutions have sponsored/promoted special agencies for venture capital funding, leasing, and factoring.
On the negative side, the following criticisms have been levelled against them:
- Most institutions have laid emphasis on projects promoted by existing entrepreneurs and companies. Thus, new entrepreneurs have not been helped to establish new enterprises and make a mark.
- Most institutions have mainly assisted large and medium projects thereby contributing to concentration of economic power in the country.
- Over the time, the gap between sanctions and disbursements has been raising indicating delay in mobilization of funds.
- Sufficient attention has not been paid on reduction of regional disparities in industrial development.
- These institutions have not been able to arrest to any appreciable degree the growing sickness in Indian small-scale industry.
- They have been indifferent towards the management of assisted companies.
- The NPA of most of the financial institutions have been rising fast, reflecting poor recovery of loans and advances.
- There is a considerable degree of overlapping in the functions of these institutions with the result that more than one institution caters to identical purposes leading to duplication and wastage. Effective collaboration and coordination between various financial institutions have been found wanting.
On the recommendations of M. Narasimham Committee (1991 and 1998) and S. H. Khan Working Group that examined the working of financial institutions in the country, the Government of India has put in place the following policy reforms in connection with the financial institutions: (i) too much reliance on SLR has been reduced; (ii) prudential norms have been prescribed; (iii) management of various institutions have been diversified; (iv) interest regime has been more liberalized; and (v) bigger and viable institutions such as the ICICI and the IDBI are being converted into universal banks.
An objective and balanced analysis of the role of financial institutions in providing adequate and timely finance to industry gives a mixed picture. Purely from the quantitative point of view, these financial institutions have provided substantial amount of finance to thousands of industrial units and almost all of them owe their existence and growth to the general help rendered by these financial institutions. However, on the qualitative side, many of them have failed to deliver tangible results. The objectives for which the financial institutions were established were to provide assistance to new enterprises, small and medium firms and industries established in backward regions with a view to promoting widespread industrial development while reducing regional disparities. But in reality, the financial institutions have offered a substantial part of the funding to large industrial houses and that too to those in the developed states. Developed states such as Maharashtra, Gujarat and Tamil Nadu accounted for a lion’s share of the total assistance developed by these institutions. Moreover, while they were prompt in granting loans, they were falling behind in collecting the money due to them from the borrowers resulting in rising NPAs. Another flaw pointed out by a working group in RBI headed by N. Sadasivan was that in a purely market-driven situation, the DFIs cannot afford to raise long-term resources at market rate of interest and extend product finance for long period and hope to succeed. However, taking all factors into account, we can agree with G. N. Bajpai, when he said ‘The DFIs have spurred balanced industrialization and economic growth in the country over the past half a century and have substantially fulfilled their initial mandate.’
Companies Act 491, 502-505, 508-509
Development banks 490, 503
Entrepreneurial development 490
Hire-purchase basis 509
ICICI Ltd 496
Industrial houses 511
Medium and long term 503
Mobilization of funds 510
New entrepreneurs 489
Rehabilitation 498, 503, 505
Underwriting facilities 489
37.1. Evaluate the role of various financial institutions set up by the government for providing industrial finance.
37.2. How are the long-term capital requirements of large-scale industries met in India?
37.3. What is the role of capital market in India as a source of finance to private sector? Discuss the major policy initiatives taken in recent years for strengthening the capital market.
37.4. What are development banks? Evaluate their performance in India in terms of their role as a specialized institution of industrial finance.
37.5. What are the institutions created in India after 1951 for financing large-scale industries? Critically comment on their functions.
37.6. Evaluate the performance of all-India development banks in fulfilling the objectives of industrial policy and planning.
37.7. Examine the role of commercial banks in providing industrial credit to Indian industry.
37.8. Do you think that the bourgeoning Indian capital market in the wake of economic reforms can dispense with public financial institutions as a source of financial industries? Substantiate your answer with the help of recent experience.
37.9. Give a brief account of the ways in which savings have been mobilized for industrialization in India. Examine, in this context, the role of development banks and the hurdles in developing an efficient capital market.
37.10. Discuss the reasons behind the establishment of ICICI Ltd. Explain the factors responsible for its spectacular growth.
37.1. Bajpai, G. N. (2004), ‘Development Financing in a Changing Environment’, Economic and Political Weekly, 29 May, p. 2213.
37.2. Bhatt, V. V. (1974), ‘A Decade of Performance of Industrial Development Bank of India’, Commerce, Annual Number, p. 151.
37.3. Government of India (2009), ‘Economic Survey 2008–09’ (New Delhi: Government of India).
37.4. Karunagaran, A. (2005), ‘Should DFIs be revived?’ Economic and Political Weekly, 19 March, p. 1247.
37.5. Mohan, R. (2005), ‘Financial Sector Reforms in India—Policies and Performance Analysis’, Economic and Political Weekly, 19 March, p. 1117.
37.7. http://www.ifciltd.com/tabid/82/Default.aspx. http://thecomforts.com/thccomforts_directory.asp? Spc = 695. http://www. india stat.com/banksandfinancialinstitutions/3/financialin-stitutions/99/statefinancialcor porationssfcs/252/stits.aspx.
37.9. http://www.indiastat.com/ banksandfinan cia/institutions/3/financia-linstitutions/99/ stateindustrialdevelopmentcorporationssidcs/256/stats.aspx.
1 The Industrial Finance Corporation of India Limited, http://business.Mapsofmida.com/sectors/public/the-industrial-fiance-corporation-limited.html.
2 Indian Economy and IFCI, http://www.ifciltd.com/tabid/82/Default.aspx.
3 Annual Report FY 2009 Subsidiaries ICICI Bank Annual Report, WWW. ICICI bank.com
4 ICICI Bank, http.//in.travel.yahoo.com/page/icici+bank.
5 ICICI Bank Performance Review—Year ended 31 March 2009, available online at www.encylopedia.com/doc/1G1-198457317.html
6 Correspondent Reporter, ‘Taming Recovery Agents’, Tribune, 7 November 2007.
7 ‘Small Industries Development Bank of India (SIDBI)’, Micro-finance Gateway, http://www.microfinanecgateway.org/p/site/m/template.rc/1.11.47823/
8 SIDBI, http://www.sidbi.in/.
9 Kuchhal, S.C. (1987), The Industrial Economy of India (Allahabad, India: Chaitanya Publishing House).
10 Bajpai, G. N. (2004), ‘Development Financing in a Changing Environment’. Economic and Political Weekly, 29 May, p. 2213.