Page 318 - DMGT207_MANAGEMENT_OF_FINANCES

Unit 14: Capital Market and Financial Institutions

higher investment, generating greater employment and widening the ownership base of Notes
industries. They have also started providing assistance to newer types of business activities like
floriculture, tissue culture, poultry farming, commercial complexes and services related to
engineering, marketing, etc.

Did u know? IFCI was established to cater to the financial needs of industrial concerns in
large scale corporate and co-operative sectors. Small and medium sized enterprises were
outside the purview of IFCI. To meet the financial needs of small and medium enterprises,
the government of India passed the State Financial Corporation Act in 1951, empowering
the State governments to establish development banks for their respective regions.
Under the Act, SFCs have been established by State governments to meet the financial
requirements of medium and small sized enterprises. There are 18 SFCs at present.

State Industrial Development Corporations (SIDC)

Without Industrial Development there cannot be any higher standard of living for our people.
— Jawaharlal Nehru
State Industrial Development Corporations (SIDCs) have been established under the Companies
Act, 1956, as wholly-owned undertakings of State Governments. They have been set up with the
aim of promoting industrial development in the respective States and providing financial
assistance to small entrepreneurs.
They are also involved in setting up of medium and large industrial projects in the joint sector/
assisted sector in collaboration with private entrepreneurs or wholly-owned subsidiaries. They
are undertaking a variety of promotional activities such as preparation of feasibility reports;
conducting industrial potential surveys; entrepreneurship training and development
programmes; as well as developing industrial areas/estates.

Mutual Funds

A mutual fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money, thus, collected is then invested in capital market instruments such as
shares, debentures and other securities. The income earned through these investments and the
capital appreciation realised are shared by its unit holders in proportion to the number of units
owned by them. Thus, a mutual fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost.

Types of Mutual Funds

There are two major categories of mutual funds which are as follows:
1. Closed-end mutual funds.

2. Open-end mutual funds.
Closed-end mutual funds: These are the mutual funds where Investment Company cannot sell
share units after its initial offering. The key characteristics of closed-end mutual funds are:

 Closed-end mutual fund investment company cannot sell share after its initial offering
 It growth in terms of the number of share is limited

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