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Indian Financial System

Notes The ICICI has come to be recognized as the most resilient and vibrant financial institution which
provides wide variety of financial products and services for the creation, expansion and
modernization of industrial enterprises, encouraging and promoting participation of private
capital, both internal and external, in such enterprises, encouraging and promoting industrial
investment and helping development of capital markets.
The Corporation has served as an important handmaid of the private sector enterprises.
Furthermore, it has endeavoured to foster growth in relatively backward regions by functioning
as a catalytic agent.
While recognizing the need for substantial expansion in the capacity and production of consumer
goods industries and the need for assisting them, the ICICI has helped set up capacity in non-
traditional fields such as fertilizers, petrochemicals, refineries, energy, castings apart from capital
goods and ancillary industries.
In all these, the focus of the Corporation has been on accomplishing a sound and balanced
industrial growth. Thus, the ICICI may take legitimate pride in helping to build a financial
superstructure. In the impressive edifice that has come up, the Corporation may well claim to
have played a significant and seminal role in India's industrial development.

So as to achieve competitive edge over the new players in the liberalized milieu, the ICICI has
diversified in non-fund-based activities with a view to providing excellent need based products
and services to its clients and to improving their operational performance.
Even it is planning to enter into conglomerate business of commodities and courier. However,
the management should avoid going too far for sake of diversification into new business and
enhancing its earnings without ensuring core competencies in these fields.
Very recently, the ICICI has decided to go ahead with merger between ICICI and ICICI Bank and
has already communicated about this to the RBI. In its communication the ICICI informed the
RBI that it would take seven years to fully comply with the present requirements applicable to
a bank.
In a consolidation drive, the ICICI has decided to merge three of its subsidiaries-ICICI Capital
Services, ICICI Web Trade and ICICI Personnel Finance-into a single company.

In sum, the ICICI with its track record of fund-based services is poised to become a globally
competitive player through constant innovation and adoption of cutting edge technology to
provide superior customer solutions.
It is always on the look out of usurping opportunities and prepared to meet the challenges ahead
without, in any way, losing sight of the development objectives for which it was set up.

8.7.3 Industrial Reconstruction Corporation of India

Another addition to the institutional structure of the Indian capital market is the Industrial
Reconstruction Corporation of India (IRCI), which was set-up in April 1971 as a public limited
company under the Companies Act of 1956 to fortify the institutional structure for the provision
of reconstruction and rehabilitation assistance to units which close down, or face the risk of
closure, but have an economic justification for reconstruction, and can be made viable with
suitable assistance.
The need for establishing IRCI, despite the fact that a variety of financial corporations were
already in existence, arose from the depressed industrial climate following the recession,
combined with various adverse factors-mismanagement, misutilisation of financial resources,
unsatisfactory labour-management relations and critical raw material position which led to the
closure or sickness of many industrial units particularly in West Bengal.

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