FINANCIAL INSTITUTIONS AND REFORMS

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FINANCIAL INSTITUTIONS AND REFORMS.:

FINANCIAL INSTITUTIONS AND REFORMS. FIs

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A  financial institution  (FI) is a company engaged in the business of dealing with monetary transactions, such as deposits, loans, investments and currency exchange . The financial Institutions are banking institutions in the conventional sense, but development banks which serve as development agencies not only carrying on lending operation, but also developmental activities including promoting projects and guiding and advising the clients in their problems and difficulties.

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The establishment of financial institutions is a largely a post-war creation, first introduced in Europ and Japan., and has now come to be accepted by most developing countries. The primary function of a FI is to provide medium and long term capital for investments. The basic task of a financial institution is to mobilize resources and to deploy them for industrial growth. Now the role has come to mobilise resources and skills, and to channel them into approved sectors of industry consistent with the overall industrial policy of the country.

INDUSTRIAL FINANCE CORPORATION OF INDIA (IFCI):

INDUSTRIAL FINANCE CORPORATION OF INDIA (IFCI)

INDUSTRIAL FINANCE CORPORATION OF INDIA (IFCI):

INDUSTRIAL FINANCE CORPORATION OF INDIA (IFCI) IFCI was established in 1948 to provide and long term credit to industry. The IFCI Act specifies that the corporation would confine its operations to public limited companies and cooperative societies. IDBI – 50%. LIC & GIC – 20%. Scheduled commercial banks – 20%. Cooperative banks – 7.71%. Others(Trusts and charitable institutions) – 0.29%.

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1.Providing guarantee to loans floated in the public market which are repayable within a period of 25 years. 2.Underwriting the issue of stocks, share and debentures, but to be disposed of within 7 years. 3.Sanctioning loans or advances repayable within a period of 25 years. 4.Extending guarantees in respect of differed payments by importers who are able to make such arrangements with foreign manufacturers. Such facilities were subsequently extended to cover loans raised from sheduled or cooperative banks and differed payments for purchase of capital goods within the country.

INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI):

INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI)

INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI):

INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI) IDBI was set up as a wholly owned subsidiary of Reserve Bank of India in 1964 under the IDBI Act. 1. To coordinate the activities of other financial institutions. 2. To supplement the resources of those institutions. 3. To plan and promote the important key industries. 4. to fix up and adopt priorities to promote industrial growth.  In 1976 the ownership of IDBI was transferred from RBI to the Government of India.

THE INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LIMITED (ICICI) :

THE INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LIMITED (ICICI)

INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LIMITED (ICICI):

INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LIMITED (ICICI) The ICICI was founded by the world bank, the government of India and representatives of private industry on January 5, 1955 to encourage and assist industrial development and investment in India. The main objectives of the ICICI were the following: 1. Providing assistance in the creation, expansion and modernization of industrial enterprises. 2. Encouraging and promoting the participation of private capital, both internal and external in such enterprises. 3.Encouraging and promoting industrial investment and the expansion of investment markets.

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Over the years, ICICI has evolved into a diversified financial institution. Its main operations include, 1. Medium term and long term project financing for the infrastructure and manufacturing sectors, 2. Corporate finance to meet the treasury requirements of Indian companies. 3. Lease Finance. 4. A comprehensive range of financial and advisory services.

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Formed in 1993 when ICICI’s merchant Banking Division was turned into a new company i -SEC. In march 1995 ICICI brokerage services was setup as a 100% subsidiary of i -SEC. During 1998-99, there was a significant shift in the company's operations from leasing and hire purchase to distribution and serving of all retail products for the ICICI group. In view of change in business the name of the company was changed from ICICI credit corporation limited to ICICI personal Financial Services Limited with effect from march 22, 1999. ICICI capital service limited was incorporated in the name of SCICI securities ltd. In sept,1994 a wholly owned subsidiary of erstwhile SCICI Ltd. ICICI bank was established in 1994. In 2001 and two of its retail finance subsidiaries, ICICI PF’s and ICICI capital services limited, were merged with the ICICI bank. It is India’s second largest bank.

STATE FINANCIAL CORPORATIONS(SFCs):

STATE FINANCIAL CORPORATIONS(SFCs)

STATE FINANCIAL CORPORATIONS(SFCs) :

STATE FINANCIAL CORPORATIONS(SFCs) The State Financial Corporation Act, 1951, has enabled the state governments to set up state financial corporations in order to provide loans to small and medium industries making a significant contribution the industrial advancement to their respective states. SFC cannot grant assistance to any party exceeding Rs.30 lakhs , Nor it can assist any industrial concern with its paid up capital and reserves exceeding Rs. 1 crore in the aggregate. The activities, coverage and overall performance of SFCs have expanded considerably over the years. With the passage of time, their operations have thrown up several problems connected with the organizations, management, resource mobilization, operational efficiency and overall financial health.

INDUSTRIAL INVESTMENT BANK OF INDIA (IIBI):

INDUSTRIAL INVESTMENT BANK OF INDIA (IIBI)

INDUSTRIAL INVESTMENT BANK OF INDIA (IIBI):

INDUSTRIAL INVESTMENT BANK OF INDIA (IIBI) In 1971, the Government of India established an institution, namely, Industrial Reconstruction corporation of india (IRCI), with main objective of reconstruction and r ehabilitation of industrial units which were in closed down or were facing the risk. The need for more powerful institution provokes establishment of the Industrial R econstruction B ank of India(IRBI) on march20, 1985. In 1997, IRBI was converted into a company and transformed into a full-fledged financial institution known as Industrial Investment Bank of India Ltd (IIBI). The bank has shifted its operations from the revival of sick-units to business orientation. August 2001 IIBI has undertaken an asset reconstruction exercise to unlock NPAs (non-productive assets) for productive purpose. For this purpose it has set up departments for asset reconstruction and risk management.

LIFE INSURANCE CORPORATION OF INDIA(LIC):

LIFE INSURANCE CORPORATION OF INDIA(LIC)

LIFE INSURANCE CORPORATION OF INDIA (LIC) :

LIFE INSURANCE CORPORATION OF INDIA (LIC) The entire share capital of LIC which was set up in 1956 after the nationalization of life insurance held b y the central Government as a wholly owned corporation in order to carry on the business of the insurance and deploy the savings to the best advantage of the policy holders and the community as a whole. LIC provides financial assistance to the industrial sector, by granting loans for setting up of industrial estates. A large part of the funds of LIC is deployed as loans to assist the development of social o verheads like housing, rural electrification and water supply schemes.

UNIT TRUST OF INDIA(UTI):

UNIT TRUST OF INDIA(UTI)

UNIT TRUST OF INDIA(UTI):

UNIT TRUST OF INDIA(UTI) . The UTI, a public sector mutual fund was established in 1964. The share capital of UTI was subscribed by the IDBI, LIC, SBI and its subsidiaries and other scheduled banks and financial institutions. . The main objective of the UTI is to mobilize the savings of the community and channelise them into productive corporate investments so as to provide for growth and diversification of the economy. . The management and performance of the UTI for some time has been so bad that in by mid 2001 the financial crisis of the Trust become public and it has millions of investors.

GENERAL INSURANCE CORPORATION OF INDIA(GIC):

GENERAL INSURANCE CORPORATION OF INDIA(GIC)

GENERAL INSURANCE CORPORATION OF INDIA (GIC):

GENERAL INSURANCE CORPORATION OF INDIA (GIC) The GIC was set up in 1973 after the nationalization of general insurance. It is wholly owned by the Central Government and has four subsidiaries, viz.., National Insurance company. The New India Assurance company, The Oriental Insurance Company and United India Insurance Company. The GIC provides assistance to industries in the form of loans, underwriting and direct subscriptions to shares and debentures, placement of short term deposits with companies etc. Along with LIC and UTI,GIC buys back debentures tendered by individual holders back to companies for encashment after a stipulated period and thus provides liquidity to such long term financial assets.

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THE END

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