IFCI Role and Functions6th February 2021
Industrial Finance Corporation of India (IFCI) is actually the first financial institute the government established after independence. The main aim of the incorporation of IFCI was to provide long-term finance to the manufacturing and industrial sector of the country.
Functions of the IFCI
- First, the main function of the IFCI is to provide medium and long-term loans and advances to industrial and manufacturing concerns. It looks into a few factors before granting any loans. They study the importance of the industry in our national economy, the overall cost of the project, and finally the quality of the product and the management of the company. If the above factors have satisfactory results the IFCI will grant the loan.
- The Industrial Finance Corporation of India can also subscribe to the debentures that these companies issue in the market.
- The IFCI also provides guarantees to the loans taken by such industrial companies.
- When a company is issuing shares or debentures the Industrial Finance Corporation of India can choose to underwrite such securities.
- It also guarantees deferred payments in case of loans taken from foreign banks in foreign currency.
- There is a special department the Merchant Banking & Allied Services Department. They look after matters such as capital restructuring, mergers, amalgamations, loan syndication, etc.
- It the process of promoting industrialization the Industrial Finance Corporation of India has also promoted three subsidiaries of its own, namely the IFCI Financial Services Ltd, IFCI Insurance Services Ltd and I-Fin. It looks after the functioning and regulation of these three companies.
- The corporation grants loans and advances to industrial concerns.
- Granting of loans both in rupees and foreign currencies.
- The corporation underwrites the issue of stocks, bonds, shares etc.
- The corporation can grant loans only to public limited companies and co-operatives but not to private limited companies or partnership firms.
Soft Loan Assistance:
This scheme provides soft loan assistance to existing industries in small and medium sector for developing technology through in-house research and development.
IFCI provides financial support to EDPs (Entrepreneur Development Programmes) conducted by several agencies all-over India. In co-operation with Entrepreneurship Development Institute of India.
Industrial Development in Backward Areas:
IFCI also take measures to promote industrial development in backward areas through a scheme of concessional finance.
The IFCI gives subsidised consultancy for,
(i) Small Entrepreneurs for Meeting the Cost of Project.
(ii) Promoting Ancillary Industries
(iii) To do the Market Research.
(iv) Reviving Sick Units.
(v) Implementing Modernisation.
(vi) Controlling Pollution in Factories.
To improve the professional management the IFCI sponsored the Management Development Institute in 1973. It established the Development Banking Centre to develop managerial, manpower in industrial concern, commercial and development banks.