Corporate Finance institutions
IFCI was set up by Industrial Finance Corporation Act, 1948 as a statutory corporation.
For imparting greater operational flexibility and ability to respond to its greater needs of the financial system after the liberalization of the economy it was incorporated as a company in 1993.
Functions:-
Project financing;
Financial services;
Corporate Advisory Services.
The financial assistance is provided by way of rupee and foreign currency loans, underwriting or direct subscription to shares and debentures, guarantees, equipment finance, equipment leaving, supplier's-buyer's credit,
Finance to leasing and hire-purchase companies corporate loans;
Short-term loans and working capital loans;
The subsidiary companies of IFCI, the IFCI custodial services and IFCI Investors Services Ltd. were amalgamated with IFCI Financial Services Ltd. on Feb. 2000.
IFCI also set-up Investment information and credit Rating Agency (ICRA) for Credit Rating Services.
Another subsidiary of IFCI, Risk Capital Technology Finance Corporation Ltd. Concentrates on managing venture capital funds and its name has been changed to IFCI Venture Capital Funds Ltd. (IVCF).
The financial assistance can be availed by any limited company, public or private or joint sector or a co-operative society incorporated in India.
Financial assistance can be availed for setting up of new industrial projects and also for expansion diversification, renovation or modernization of existing ones.
Its Corporate Services covers funds support for technical consultancy, risk capital, venture capital, technology development, tourism development and finance, entrepreneurship development, development of Science and technology, etc.
ICICI was set up as a joint stock company in 1955 with the main objective to channelise the World Bank funds to industry in India and to build up a Capital market in India.
Initially the entire share capital was held by commercial banks,
insurance companies and individuals.
After the nationalization of insurance companies and commercial banks a major portion was held by these nationalized institutions.
After the first public issue of shares in 1991 the number of shareholders has increased to around 4 lakhs.
Term lending to industry has been the main form of financial assistance granted by ICICI.
Under non-project financing ICICI undertakes leasing of industrial equipment, asset credit and deferred payment financing of sale of Industrial equipment.
Another characteristic feature of ICICI was foreign currency loans.
It acquired foreign currency mainly by world Bond credit.
Recently it granted assistance for technology upgradation and modernization of equipments.
It also raised foreign currency from the international and capital market.
Its capital market activities include under writing, direct subscription to shares and debentures of companies.
As a merchant banker, it helps corporate sector to raise resources from the capital market.
Recently ICICI Ltd. merged with ICICI Bank Ltd.
The Industrial Credit and Investment Corporation was sponsored by a mission from the World Bank for the purpose of developing small and medium industries in the private sector. It was registered in January, 1955 under the Indian Companies Act. Its issued capital has been subscribed by Indian banks, insurance companies and individuals and corporations of the United States, the British eastern exchange banks and other companies and the public in India.
The aim of ICICI is to stimulate the promotion of new industries, to assist the expansion and modernization of existing industries and to furnish technical and managerial aid so as to increase production and afford employment opportunities. The Corporation grants:
(i) Long-term or medium-term loans, both rupee loans and foreign currency loans;
(ii) Participates in equity capital and in debentures and underwrites new issues of shares and debentures.
(iii) Guarantees loans from other private investment sources.
(iv) Apart from the above direct assistance, ICICI provides financial services such as deferred credit, leasing credit, instalment sale, asset credit and venture capital.
ICICI has assisted industries manufacturing paper, chemicals and pharmaceuticals, electrical equipment, textiles, sugar, metal ore, lime and cement works, glass manufacture, etc. ICICI assists all sectors, that is, the private sector, the joint sector, the public sector and the cooperative sector but the major beneficiary is the private sector. In 1998-99, sanctions and disbursements by ICICI amounted to Rs. 34,220 crore and Rs. 19,230 crore respectively. ICICI's assistance comprised of foreign currency loans, rupee loans, guarantees, and subscription of shares and debentures. In recent years, the Corporation has shown increasing interest in the development of new industries in backward regions.
There has been a remarkably significant increase in financial assistance by ICICI in recent years:
Table 2:
(Rs. crores)
|
|
1980-81 |
1990-91 |
1998-99 |
|
Loans sanctioned |
310 |
3740 |
34,220 |
|
Disbursements |
180 |
1970 |
19230 |
In a matter of 10 years, loans sanctioned by ICICI had increased from Rs. 310 crore to over Rs. 34,220 crore and loans disbursed had increased had increased from Rs. 180 crore to Rs. 19,230 crore. The figures for sanctions and disbursement for the year 1997-98 include the figures of SCICI, which was merged with ICICI in 1998.
The Corporation assists industrial concerns with loans and guarantees for loans either in rupees or in any foreign currency. Besides, it underwrites ordinary and preference shares and debentures and it also subscribes directly to ordinary and preference shares issues. A significant function performed by the Corporation is the provision of foreign currency loans and advances to enable Indian Industrial concerns to secure essential capital goods from foreign countries.
ICICI commenced leasing operation in 1983. It provides leasing assistance for computerization, modernization/replacement, equipment of energy conservation, export orientation, pollution control etc. The industries helped under leasing included textiles, engineering, chemical fertilizers, cement, sugar, etc. ICICI has so far, sanctioned nearly Rs. 2,000 crore as leasing assistance.
ICICI has set up a Merchant Banking Division which is working very creditably, ICICI has joined with J.P. Morgan & Co. to set up ICICI Securities and Finance Co. Ltd. (I-SEC) to offer services in areas relating to issue management and credit syndication services. ICICI has also set up ICICI Asset Management Co. Ltd. in June, 1993 to operate the schemes of the ICICI Mutual Fund. Yet another subsidiary called ICICI Investors Services Ltd. (March, 1994) and Banking Corporation Ltd. (January, 1994) has started operations.
Apart from these, ICICI has promoted the following companies and institutions in recent years:
(i) Credit Rating Information Services of India Ltd., (CRISIL), set up by ICICI in association with Unit Trust of India (UTI) to provide credit rating services to the corporate sector;
(ii) Technology Development and Information Company of India Ltd. (TDICI), promoted by ICICI to finance the transfer and upgradation of technology and provide technology information;
(iii) Programme for the Advancement of Commercial Technology (PACT), set up with a grant of US $ 10 million provided by USAID to assist market-oriented R&D activity, jointly undertaken by Indian and U.S. companies; ICICI has been entrusted with the administration and management of PACT; and
(iv) Programme for Acceleration of Commercial Energy Research (PACER), funded by USAID with a grant of US $ 20 million to support selected research and technology development proposals in Indian energy sector, was launched by ICICI;
(v) During 1992-93, ICICI introduced two projects with the help of USAID, i.e., (i) Agricultural Commercialization and Enterprise project with a grant of $ 20 million and, (ii) Trade in Environmental Sciences and Technologies programme (TEST) with a grant of $ 25 million.
The SCICI Ltd. (formerly Shipping Ltd.) used to specialize in giving loans for acquisition of ships. It had diversified its operations to cover all sectors of the economy with focus on sectors of special significance to exports and infrastructure. As a result of this diversification of activities, SCICI Ltd., lends to a variety of industries beside shipping and fishing industries such as automobiles and its ancillaries, chemicals and petrochemicals, electronics, information technology, power generation, and distribution, steel and steel products, other metals, textiles and food processing. However, shipping and fishery industries continue to be the priorities for the SCICI Ltd. Till the end of March, 1996, SCICI had sanctioned a total assistance of Rs. 12,750 crore and had disbursed Rs. 6,160 crore. SCICI was merged with ICICI in April, 1996.
The Industrial Development Bank of India is another one in the series of specialized institutions set up since 1947 to provide long-term finance in industry. IFCI, the State Finance Corporation, ICICI, NIDC and the Refinance Corporation of India have been functioning for several years with the object of providing direct plans, subscribing to shares and bonds and guaranteeing of loans and deferred payments. The volume of long-term finance provided by these institutions has been substantial and steadily increasing too, but it was found inadequate to meet the requirements of new and growing industrial enterprises. On one side, the needs of rapid industrialization necessitated the establishment of a new institution with large financial resources. On the other side, there was the need for co-ordination of activities of all agencies, which are conceded, with the provision of finance for industrial development. It was to fulfil this two-fold objective that the Government decided to establish the Industrial Development Bank of India which formally came into existence in July, 1964.
The Industrial Development Bank of India which is now the apex institution providing term finance was a wholly-owned subsidiary of the Reserve Bank of India till 1976. The general direction, management and superintendence of the Industrial Development Bank were vested in a Board of Directors, which was the same as the Central Board of Directors of the Reserve Bank of India. The Governor and Deputy-Governor of the Reserve Bank were the Chairman and Vice-Chairman of the Development Bank. In 1976, IDBI was delinked from the Reserve Bank of India and was taken over by the Government of India.
The main function of the Industrial Development Bank, as its name suggests, is to finance industrial enterprises such as manufacturing, mining, processing, shipping, and other transport industries and hotel industry.
(i) Direct Assistance.
The Development Bank grants direct assistance by way of project loans, underwriting of and direct subscription to industrial securities, soft loans, technical refund loans and equipment finance loans. It subscribes to purchase and underwrites the issue of stocks, shares and bonds or debentures. The loans and advances, which the Industrial Development Bank makes to any industrial concern, may be converted into equity stocks and shares at the option of the Development Bank. The Bank is also empowered to guarantee loans raised by industrial concerns in the open market from scheduled banks, the State Cooperative Banks, IFCI, and other "notified" financial institutions. The Bank can also accept, discount or re-discount bona fide commercial bills or promissory notes of industrial concerns and in direct lending the Bank resembles IFCI and ICICI.
(ii) Indirect Assistance.
The Industrial Development Bank can assist industrial concerns in an indirect manner also, that is, through other institutions. First of all, it can refinance term loans to industrial concerns, repayable within 3 to 25 years given by the I.F.C.I., the State Financial Corporation and other financial institutions. Secondly, it can refinance term loans repayable between 3 and 10 years given by scheduled banks or State co-operative banks. Thirdly, it can refinance export credit given by the scheduled banks and State co-operative banks. Thus, the Development Bank finances those banks and financial institutions, which are lending to industrial concerns. Further, the Bank can subscribe to stocks, shares bonds, or debentures of the IFCI, the State Financial Corporations or any other "notified" financial institutions and thus increase their financial resources and enable them to provide larger assistance to industry.
(iii) Special Assistance.
The Industrial Development Bank of India Act, 1964, has provided for the creation of a special fund known as the Development Assistance Fund. This fund is to be used by the Development Bank to assist those industrial concerns, which are not able to secure funds in the normal course because of low rate of return.
(iv) Foreign Currency requirements.
IDBI raises foreign funds from international money markets and funding organization and makes them available to those industrial units, which need them.
It is interesting to note that unlike the other existing statutory financial corporations, the Development Bank has no restrictions imposed regarding the nature and type of security, which it should accept.
The Industrial Development Bank provides direct loans to industrial concerns, refinance of industrial loans and export credits, rediscounting of bills, underwriting of and direct subscription to shares and debentures of industrial units and direct loans for exports. IDBI has become the most important institution assisting industrial units. During 1998-99 alone, IDBI had sanctioned Rs. 25,555 crore of financial assistance and disbursed Rs. 14,400 crore.
IDBI has introduced new services with a view to provide wide range of services under direct finance. For instance IDBI has introduced Venture Capital Fund and Technology upgradation, Equipment Finance, Asset Credit and Equipment Leasing.
With a view to promote industrial development in backward areas, the IDBI announced in July, 1969 a scheme for assistance to small and medium projects in such areas on softer terms, such as concessional rates of interest, longer grace and repayment periods. IDBI adopted several measures to encourage flow of institutional finance to the small-scale sector.
The scheme was revised and liberalized later. Under the liberalized scheme, IDBI in participation with IFCI and ICICI gives concessional rupee assistance up to Rs. 2 crore and underwriting assistance up to Rs. 1 crore. The IDBI's concessional assistance and refinance of loans for backward areas have been steadily increasing in terms of the number of applications and the amounts sanctioned and utilized.
The Development Bank took over the Refinance Corporation of India in November 1964 and is providing refinance facilities to industrial units through member banks. As an apex institution, the IDBI assists State Financial Corporations, the IFCI Leasing Companies and others working in the field of industrial finance by subscribing to their shares and bonds. Since April, 1966, the IDBI introduced a scheme for participation in loans and guarantees to supplement the refinance operations as a measure of risk sharing with other institutions. Refinance of industrial loans sanctioned by IDBI, since its inception up to March 1996, came to over Rs. 20,000 crore.
IDBI is providing resource support to financial intermediaries. IFCI, SFCs, leasing companies and other financial intermediaries were assisted by IDBI with loans and investment in their shares and bonds. Total amount sanctioned under this head came to Rs. 3,930 crore.
The IDBI extends assistance to the small-scale industries and small road transport operators indirectly through State level institutions and commercial banks by way of refinance of industrial loans. The IDBI has also introduced a scheme to cover promissory notes arising out of sales of new trucks and jeeps to road transport operators in the private sector. The IDBI's assistance to small-scale industries and small road transport operators is picking up very fast.
IDBI launched the National Equity Fund Scheme in 1988 for providing support, in the nature of equity to tiny and small scale industrial units engaged in manufacturing cost not exceeding Rs. 5 lakh. The scheme was administered by IDBI through nationalized banks; IDBI introduced the single window scheme for grant of term loans and working capital assistance to new tiny and small-scale units. Finally, IDBI set up a Voluntary Executive Corps Cell (VECC) to utilize the services of experienced professionals for counselling small units, tiny and cottage units and for providing consultancy support in specific areas.
The Government of India set up the Small Industries Development Bank of India (SIDBI) under SIDBI Act, 1989 as a wholly owned subsidiary of IDBI. SIDBI started functioning from April, 1990 and has taken over the responsibility of administering Small Industries Development Fund and National Equity Fund, which were formerly administered by IDBI. SIDBI has become the principal financial institution for promotion, financing and development of small-scale industries. SIDBI is described elaborately in the next section.
Since 1970 IDBI had initiated certain promotional and developmental activities to meet the twin objectives of balanced regional development and accelerated industrial growth. In cooperation with other term-lending institutions, IDBI has completed industrial potential surveys in all States and Union Territories. The Joint Institutional Study Teams identified 389 projects involving an aggregate investment of Rs. 2,645 crore. Out of these, 74 projects involving capital investment of Rs. 280 crore were implemented.
IDBI introduced in 1976 the soft loan scheme to provide financial assistance to productive units in selected industries, viz., cement, cotton textiles, jute, sugar and certain engineering industries on concessional terms to enable them to overcome the backlog in modernization, replacement and renovation of their plant and equipment so as to achieve higher and more economic levels of production. The scheme is administered by IDBI with financial participation by IFCI and ICICI. The basic criterion for assistance under the scheme is the weakness of the units on account of obsolescence of machinery. The rate of interest is 7.5 per cent and the period of loan is 15 years. The pace of disbursement was very slow till 1978. The soft loan scheme was not attractive to the private sector units because of the convertibility clause.
From January, 1984, the soft loan scheme was modified-now called Soft Loan Scheme for Modernization-so as to cover deserving units in all industries. Under this scheme, assistance is available to production units for financing modernization, primarily aimed at upgradation of process, technology and product, export orientation, import substitution, energy saving, prevention of pollution, recycling of wastes and by products, etc. Other changes and relaxations were also made to make the scheme attractive and popular.
IDBI has been permitted by SEBI to carry out merchant banking activities which cover professional advice and services to industry for raising capital from the market, acquisition of assets on lease, mergers/take-over of existing units etc. The Merchant Banking Division of IDBI, in the first 2 years of its existence had lead managed 118 issues and had helped to mobilize Rs. 12,340 crore from the market.
From the very beginning, IDBI demonstrated its usefulness as the apex institution in the country in the sphere of medium and long-term finance. The Government of India, however, felt that IDBI had failed to serve as an effective development bank and had not sufficiently accelerated the process of industrialization in the country. The basic cause for the ineffectiveness of IDBI was due to:
(i) Its close association with RBI both having a common board of directors;
(ii) The Government and the Deputy-Governors were incapable of shouldering the responsibility cast on them; and
(iii) The management of RBI had made IDBI a slave of procedures.
The Government of India delinked IDBI from RBI and made it an autonomous corporation from February, 1976. IDBI has recorded an impressive performance in its operations after it has become autonomous.
The IDBI, as the institution in the field of industrial finance, has been playing a dominant role since its inception, and specially since 1976 when it was taken over by the Government. The IDBI's sanctions and disbursements constitute about 36 per cent of the total sanctions and 40 per cent. of all disbursements, of all term-lending institutions.
A major recommendation of the Narasimham Committee is that there should be competitive efficiency among banks and DFIs. For instance, all the term lending institutions like IFCI, ICICI, IDBI, etc., should compete in the market for funds and in providing lending facilities to the corporate borrower. A precondition for bringing about such competitive efficiency is the restoration of "a level playing field" between different DFIs. To facilitate this process, the Narasimham Committee would like to bring about certain changes in the role and functions of IDBI.
At present IDBI performs two functions: direct financing like other DFIs and indirect financing through the system of refinance. This is the basic difference between IDBI and other DFIs. The Narasimham Committee proposes that the IDBI should give up its direct financing function and perform only promotional apex and refinancing role in respect of other institutions like SFCs, SIDBI, etc. The direct lending function should be entrusted to a separate finance company, specially set up for this purpose.
The Government of India has not accepted Narasimham Committee's recommendation. The Government, however, amended IDBI Act, with a view to restructure IDBI's share capital and empower IDBI to raise equity from the capital market.
As in the case of other term lending institutions, IDBI has registered a small increase in loans sanctioned and disbursed in recent years:
|
|
1980-81 |
1998-99 |
|
Loans sanctioned |
1,280 |
25,555 |
|
Disbursements |
1,010 |
14,400 |
It is clear the IDBI's loan sanctions had increased from Rs. 1280 crore in 1980-81 to Rs. 25,555 crore in 1998-99; and during the same period disbursements had increased from Rs. 1,010 crore to Rs. 14,400 crore, reflecting the rapid industrial and business growth of the country on the one side and the corresponding increase in the mobilization of resources by the development financial institutions on the other. In this, IDBI had a leading role, as it has been the apex financial institution of the country.
In recent years, several industrial units, particularly in the Eastern Region, were in severe difficulties and were on the verge of closing down. Lack of adequate demand, managerial imprudence, labour troubles, shortage of raw material and import restrictions were some of the reasons responsible for this state of affairs. In view of their importance to the national economy and the needs of employment of a large work force, these units had to be assisted financially. The Government of India set-up the Industrial Reconstruction Corporation of India (IRCI) in April, 1871 under the Indian Companies Act mainly to look after special problems of "sick" units and provide assistance for their speedy reconstruction and rehabilitation; if necessary, by undertaking the management of the units and developing infrastructure facilities like those of transport, marketing etc.
The management of IRCI was entrusted to a Board of Directors, while a Managing Director appointed by IDBI looked after its day-to-day administration. Since its inception in 1971 till the end of March 1984, IRCI had sanctioned reconstruction assistance of Rs. 266 crore to 242 sick or closed industrial units and had disbursed Rs. 185 crore. Textiles, engineering, mining and foundry industries were assisted by IRCI which had paid special attention to the units located in the classified backward areas as also to those in the small scale sector, The Corporation had also charged concessional rate of interest.
In August 1984, the Government of India passed an Act converting the IRCI into the Industrial Reconstruction Bank of India (IRBI). IRBI was established in March, 1985 to take over IRCI. Now, IRBI has to function as the principal all India credit and reconstruction agency for industrial revival, assisting and promoting industrial development and rehabilitating industrial concerns. It has also to coordinate similar works of other institutions engaged in this field.
IRBI assistance is mainly in the form of term loans, for modernization, diversification, expansion, renovation, etc. Formerly IRCI had extended assistance to sick and closed industrial units in textiles, engineering, in mining and foundry industries. Now IRBI extends assistance to sick small-scale units also. While extending financial assistance, IRBI emphasizes the need for continuing modernization, improving productive capacity and upgrading of technology of industrial units for their survival. The contribution of IRBI to industrial revival is quite significant.
IRBI had diversified its activities into ancillary lines such as consultancy services, merchant banking and equipment leasing-all these activities were incidental and allied to its task of rehabilitation of sick industrial units. Through its consultancy services, IRBI attempted to help banks and financial institutions to assess intrinsic worth of sick units, which were seeking assistance for revival. Through its merchant banking services, IRBI enabled units in the process of amalgamation, merger, and reconstruction. Equipment leasing was in fact, an extension of the IRBI hire-purchase scheme.
During March, 1997 the Government of India converted the Industrial Reconstruction Bank of India into a company and renamed it as Industrial Investment Bank of India Ltd. (IIBI). During 1998-99 IIBI sanctioned loans worth Rs. 2,175 crore and disbursed Rs. 1,688 crore.
UTI is a statutory public Sector investment institution set up in 1964 by Unit Trust of India Act, 1965.
It mobilises the savings of the Community and invests them in various types of Securities like shares and debentures of various Companies.
To pool the savings, the Unit Trust sells to the Public Units.
By buying units, people can invest their money stately and derive professional management of their funds.
The risk of investment is always with the UTI and not on the investor.
Its object is to afford the small investor means of acquiring a share with minimum risk and a reasonable return.
By mobilising resources and channelling into investment it increases the overall productivity of capital and facilitates growth of the economy.
It was started with an initial capital of Rs. 5 crore.
The management and business of the Trust is invested in the Board of Trustees. The Board consist of a Chairman appointed by RBI from amongst persons of special knowledge and experience in commerce, industry, banking, Finance or investment. One trustee is nominated by the LIC.
UTI Act provides for significant tax
concessions to the Trust and unit holders, under Section 80L of Income tax
Act, if it does not exceed
Rs. 1000.
In January, 2001 RBI issued Guidelines for licensing of new banks in the Private Sector.
Under the Guidelines the Non-Banking Finance Companies (nbfcs) will be allowed to convert themselves into banks, subject to following regulations.
Minimum net is Rs. 200 crore.
Capital adequacy has been raised to Rs. 300 crore in 3 years.
The new Bank can have head office any where in India.
Corporates have been allowed to invest up to a maximum of 10%.
Promoters will have to dilute their holdings above 40% within one year.
Preference would be given to promoters in financing priority and financing of rural and agro-based industries.
NRIs can invest up to 40% equity stock in new banks.
If any foreign bank or finance Company plans of participation will be restricted to 20% which will be within the ceiling of 40% allowed to NRIs.
Those Banks who can satisfy the following conditions can set up a joint venture company for undertaking insurance business.
The net worth of the bank should not be less than Rs. 500 crore.
The Capital adequacy Ratio of the Bank should not be less than 10%.
The Bank should have net profit for the last 3 continuous years.
The performance of the subsidiaries should be satisfactory.
The maximum equity contribution of the Bank in the joint venture will normally be 50% of the paid up capital.
A subsidiary of the bank or of another bank will not normally be allowed to join the insurance company.
The Banks which are not eligible for as joint venture participants can make investments up to 10% of the net worth of the Bank or Rs. 50 crore whichever is lower.
Any scheduled commercial bank is permitted to undertake insurance business as agent of insurance company on fee basis.
The subsidiaries of banks would also be allowed to undertake distribution of insurance product on agency basis.
All banks entering into insurance business will require prior approval of the RBI
The risk in insurance business should not be transferred to the bank.
RBI Act, 1934:Central Bank of India.
Under Section 38 of RBI Act Government puts into circulation, counts meter through RBI, sole authority to issue Bank notes number of India.
Issue of notes and general Banking Business and undertaking by different departments.
1. Issue Department Responsible for issue of new notes. It keeps assets, separate from banking deptartment.
2. Banking Deptartment holds stocks of currency.
Banker to Central and State Governments.
Under Section 20 of the RBI Act it is obligatory for bank to transact government treasures and the management of public departments.
Section 21 requires the Central Government to deposit all money with the RBI. Section 21A makes similar provision with respect to the State Governments.
Section 45 stipulate RBI to afford SBI as its sole agents at a places where no branch or office of the RBI is there.
RBI is authorised to make advances to the State and Central Government.
It acts as exclusion to Government on import and export matters.
It controls banking and credit system through its position as bankers bank.
It holds cash balances of commercial banks.
RBI is empowered to remove any scheduled bank from Schedule II of the RBI Act.
By charging the statutory amount regarding maintenance of liquid assets as stated in Section 24 of the Banking Regulation Act, 1949.
At present all scheduled commercial banks are registered to maintain statutory liquidity ratio (SLR).
By issuing directions under Section 21 of Banking
Regulation
Act, 1949 with relation to:
1. The purposes for which advances may or may not be made.
2. The margins to be maintained.
3. The maximum amount of advance.
1. Re-discounting of bills under Section 17(2) and (3).
Commercial bill arising out of the bona fide commercial or trade transaction.
Bill for financing e.g., operation bill for financing cottage industries.
A foreign bill.
2. Loans, Advances, against securities.
Stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money.
Gold or silver or documents of title to the same.
Bills of exchange and Promissory notes.
Q.
Under Section 18, commercial banks and co-operative banks may be granted emergency advance by RBI on special occasions when the Reserve Bank is satisfied that the grant of such loan is necessary for the purpose of regulating credit in the interest of Indian trade, commerce, industry and agriculture. Such emergency advances may be given notwithstanding any limitation contained in Section 17.
Nearly 1/5th of paid-up capital of industrial finance corporation was subscribed by RBI.
The bank has subscribed about 20% of share capital of State Finance Corporation.
The bank has representatives in the board of directors of IFCI and FCs and thus takes part in management of instruction.
IDBI was established as wholly owned subsidiary of the RBI in 1964.
RBI contributed to the establishment of UTI, 50% of share capital.
Maintains a separate agriculture credit department since 1955 to finance agriculture sector.
Industrial and finance departments look after credit needs of industry and industrial finance corporation.
Obligation to honour cheques subject to the credit balance.
Cheque must be presented within time.
There should not be on court order.
1. Nominal damages.
2. Exemplary/special damages.
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