IFCI was as set up for the purpose of assisting the medium and long term projects for capital expenditure on projects, expansion, modernization and technological upgradation etc. It plays a promotional and developmental role, particularly in relation to the small and medium scale entrepreneurs.
Government of India set up the Industrial Finance Corporation of India (IFCI) in July 1948 under a special Act. This is the first financial institution set up in India with the main object of making medium and long term credit to industrial needs.
The Industrial Development Bank of India, Scheduled banks, insurance companies, investment trusts and co-operative banks are the shareholders of IFCI. The Union Government has guaranteed the repayment of capital and the payment of a minimum annual dividend.
The corporation is authorised to issue bonds and debentures in the open market, to borrow foreign currency from the World Bank and other organisations, accept deposits from the public and also borrow from the Reserve Bank.
Main functions are:
- Underwriting and guaranteeing facilities to the industrial concerns.
- Term loans or contribute to the debentures or equity
- Rupee loans and foreign currency loans are through foreign credit lines from foreign banks and foreign governments etc.
- Financial assistance to limited companies either in the private, public or joint sectors and cooperative societies engaged in
- manufacturing, preservation and processing of goods
- shipping
- mining
- hotel industry
- electricity generation and distribution etc
It concentrates mostly on medium and large scale projects. By an agreement with other Financial Institutions and IDBI, the IFC specializes in financing of certain industries like jute, cement, sugar etc.
