Page 97 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Financial Institutions and Services

Notes 7.4.1 Objectives of State Financial Corporations

The objectives of state financial corporations are as under:
1. Provide financial assistance to small and medium industrial concerns. These may be from
corporate or co-operative sectors as in case of IFCI or may be partnership, individual or
joint Hindu family business. Under SFCs Act, "industrial concern" means any concern
engaged not only in the manufacture, preservation or processing of goods, but also mining,
hotel industry, transport undertakings, generation or distribution of electricity, repairs
and maintenance of machinery, setting up or development of an industrial area or industrial
estate, etc.
2. Provide long and medium-term loan repayable ordinarily within a period not exceeding
20 years.
3. Grant financial assistance to any single industrial concern under corporate or co-operative
sector with an aggregate upper limit of Rupees Sixty lakhs. In any other case (partnership,
sole proprietorship or joint Hindu family) the upper limit is Rupees 30 lakhs.
4. Provide financial assistance generally to those industrial concerns whose paid up share
capital and free reserves do not exceed 3 crores.
5. To lay special emphasis on the development of backward areas and small scale industries.

7.4.2 Functions of State Financial Corporations

The functions of SFCs include

1. Grant of loans and advances to or subscribe to debentures of, industrial concerns repayable
within a period not exceeding 20 years, with option of conversion into shares or stock of
the industrial concern.

2. Guaranteeing loans raised by industrial concerns which are repayable within a period not
exceeding 20 years.
3. Guaranteeing deferred payments due from an industrial concern for purchase of capital
goods in India.
4. Underwriting of the issue of stock, shares, bonds or debentures by industrial concerns.
5. Subscribing to, or purchasing of, the stock, shares, bonds or debentures of an industrial
concern subject to a maximum of 30 percent of the subscribed capital, or 30 percent of paid
up share capital and free reserve, whichever is less.
6. Act as agent of the Central Government, State Government, IDBI, IFCI or any other financial
institution in the matter of grant of loan or business of IDBI, IFCI or financial institution.

7. Providing technical and administrative assistance to any industrial concern or any person
for the promotion, management or expansion of any industry.
8. Planning and assisting in the promotion and development of industries.

7.5 State Industrial Development Corporations (SIDCs)

Without Industrial Development there cannot be any higher standard of living for our people.
Jawaharlal Nehru

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