Introduction
IFCI is Non-Banking Finance Company in the public sector. Established in 1948 as a statutory corporation, IFCI
is currently a company listed on BSE and NSE. IFCI has 6 subsidiaries and one associate under its fold. IFCI has
played a pivotal role in setting up various market intermediaries of repute in several niche areas like stock
exchanges, rating Agency, entrepreneurship development organizations, consultancy organizations, educational
and skill development institutes across the length and breadth of the country. IFCI, provides financial support for
the diversified growth of Industries across the spectrum. The financing activities cover various kind of projects
such as airports, roads, telecom, power, real estate, manufacturing, services sector and such other allied industries.
During its 70 years of existence, mega projects like Adani Mundra Ports, GMR Goa International Airport, Salasar
Highways, NRSS Transmission, Raichur Power Corporation, to name a few, have been setup with financial
assistance of IFCI.
IFCI’s full form is Industrial Finance Corporation of India, founded as a Statutory Corporation in 1948 to offer
medium- and lengthy finance to industries. IFCI became a Public Limited Company under the Companies Act of
1956 when the IFC Act was repealed in the year of1993. IFCI is currently a government-owned corporation, with
the Indian government owning 61.02 % of the company’s paid-up capital. IFCI is also a recognised Public
Financial Institution under Section 2(72) of the Companies Act in 2013 and is registered as a Systemically
Important Non-Deposit Taking Non-Banking Finance Company with the Reserve Bank of India (RBI).
History of IFCI Bank
Indian capital markets were somewhat underdeveloped at the time of independence in 1947. The need for capital
was fast increasing, yet capital sources were scarce. The commercial banks that existed at the time were not well-
positioned to meet long-term capital demands in any substantial way. The Industrial Finance Corporation of India
(IFCI) was created on July 1, 1948, by adopting the IFC Act 1948 in response to this backdrop and to bridge the
demand-supply gap for capital needs in the sector.
IFCI’s full form is the Industrial Finance Corporation of India, India’s first Development Financial Institution,
established to promote economic growth through infrastructure and industry development. Since then, IFCI has
made substantial contributions to the economy through its unwavering support for initiatives in manufacturing,
infrastructure, services, and agriculture-related industries. The Indian Capital Markets and Financial System saw
considerable changes after the Indian economy was liberalised in 1991. The constitution of IFCI was converted
from a statutory corporation to a company under the Indian Companies Act, 1956, to facilitate raising funds
directly through capital markets. The company’s name was subsequently changed to ‘IFCI Limited’ in October
1999.
Functions
• The IFCI bank’s main goal is to provide medium-fast loans and advances to industrial and manufacturing
enterprises
• Before making any loans, it considers several variables
• They research the significance of the industry in our country’s economy, the project’s overall cost, and,
eventually, the service performance and administration
• If the results of the above factors are satisfactory, the IFCI will approve the loan
• The IFCI bank can also invest in these companies’ debentures on the market
• The IFCI bank also backs up these industrial enterprises’ loans
• The Industrial Finance Corporation of India might choose to underwrite securities when a company issues
shares or debentures
• It also ensures deferred payments on loans taken out in foreign currency from foreign banks
• The Allied Services and Merchant Banking Department is a separate division. They handle issues
including capital restructuring, loan syndication, mergers and acquisitions
• The Industrial Finance Corporation of India has promoted three subsidiaries to boost industrial growth:
IFCI Financial Services Ltd, IFCI Insurance and Services Ltd
• It is responsible for the operation and regulation of these three companies
Financial Products of IFCI
Products Related to Loans
The Industrial Finance Corporation of India was the country’s first financial institution aimed at growth, created
on July 1, 1948, to meet the abiding financing needs of the industrial sector. IFCI bank has been a driving force
behind the restructuring of Indian industry, trade facilitation, trade liberalisation, and the fostering of
breakthrough industries, among other commercially viable and market-friendly operations, since its inception.
Projects related to Finance
IFCI bank experts can provide personalised banking solutions to address the rising and diverse demand for various
levels of projects – greenfield, formerly industrial, diversification, and modernisation of existing infrastructure
and manufacturing projects – thanks to their deep understanding of sectoral dynamics.
Highways, Power, including renewable power, Oil & Gas, Ports, telecommunications, Aircraft, Basic
Metallurgy, Real Estate, Pharmaceuticals, Electronics, Textiles, Smart Cities & Urban Infrastructure, and others
are among the sectors covered by Project Finance.
Projects on Corporate Finance
IFCI bank serves many customers, including small, mid-sized, and big corporations. Through Loan Against
Shares, Balance Sheet Funding, Lease Rental Discounting, Long Term Working Capital requirements, Promoter
Funding, Capital Expenditure, and recurring Maintenance Capex, IFCI provides financial solutions in corporate
finance.
Structured Finance
IFCI bank also offers Structured Debt products to its clients, assisting in providing effective financial solutions
for various needs, including acquisition financing, pre-IPO financing, sponsor financing and Off-Balance Sheet
Structured Solutions, among others.
PROBLEMS OF THE STATE CORPORATIONS
1) The default in repayment of loans is very high with the result that the ability to roll over the funds is
considerably restricted.
2) Most of the small business units which get loan from the Corporations do not follow accepted principles and
practices of accountancy. Thus it becomes difficult to keep watch over the expenditure.
3) While granting loans to small scale industries, peculiar problem faced is that in these industries individuals
very much count. An industry which might be running quite efficiently under one man might become inefficient
after the death of the same man. Thus continuity of efficient management can hardly be assured. This enhances
the difficulties of the Corporations.
4) While granting loans proper securities should be available, but in many cases there are not with the result that
Corporation and it difficult to safely advance loans.
5) In order to ensure the return of loan, the Corporation is required to observe certain rules and regulations, but
the difficulty is that the industries which approach for getting loans do not appreciate these difficulties and create
many problems for the management.
6) The Corporations have no adequately trained staff to provide advisory service to the industry, when a request
for financial assistance is received. In case permanent staff is maintained for processing each type of request that
will be too costly for the Corporation and ad hoc staff cannot be depended upon.
7) The Corporation lack self-sufficient organizational set up and also specialized trained staff, thus there is no
continuity in policy formulation and execution.
8) The Corporations have very limited financial resources, keeping in view the fact that new industries are coming
up and more and more requests are being received from these industries for financial assistance.
9) The Corporation has no adequate provision, resources and arrangements to survey backward areas, which have
potentialities for growth with the result that their growth suffers.
10) There is overlapping in the activities of state financial Corporations and commercial banks resulting in
competition rather than cooperation. The competition creates many complex problems.