Development Finance Institutions: IFCI, ICICI, SIDBI, IDBI, UTI, LIC, GIC

Development Finance Institutions

The Need of DFIs

Classification of DFIs

All India DFIs Special DFIs Investment Institutions Refinance Institutions State Level DFIs
IFCI

IDBI

SIDBI

ICICI

ICICI ceased to be a DFI and converted into a Bank on 30 March 2002.

IDBI was converted into a Bank on 11 October 2004.

EXIM Bank

IFCI Venture Capitalist Fund

Tourism Finance Corporation of India.

IDFC.

LIC

Union Trust of India.

General Insurance Corporation.

National Housing Board.

NABARD.

State Financial Corporation.

State Industrial Development Corporations.

 

All India Development Finance Institutions

IFCI ICICI IDBI SIDBI
IFCI was the first DFI to be setup in 1948. It was setup in January 1995. The IDBI was initially set up as a Subsidiary of the RBI. In February 1976, IDBI was made fully autonomous. SIDBI was setup as a subsidiary of IDBI in 1989.
With Effect from 1 July 1993, IFCI has been converted into Public Limited Company. With effect from April 2002, ICICI has been converted into a Bank. The IDBI was designated as apex organisation in the field of Development Financing. However, it was converted in a bank wef Oct 2004. The SIDBI was designated as apex organisation in the field of Small Scale Finance.

The Union Budget of 1998-99 proposed the delinking of SIDBI from IDBI.

The key function of IFCI was; granting long-term loans(25 years and above); Guaranteeing rupee loans floated in open markets by industries; Underwriting of shares and debentures; Providing guarantees for industries. The key functions of ICICI were; to provide long term or medium term loans or equity participation; Guaranteeing loans from other private sources; providing consultancy services to industry. The key functions of IDBI were; it provides refinance against loans granted to industries; it subscribed to the share capital and bond issues of other DFIs; it also acted as the coordinator of DFIs at all India level. The key function of SIDBI was; to provide assistance to small scale units; initiating steps for technological up gradation and modernization of SSIs; expanding the marketing channel for the Small Scale Industries product; promotion of employment creating SSIs.
IFCI was a public sector DFI. The ICICI differed from IFCI and IDBI with respect to ownership, management and lending operation. ICICI was a Private sector DFI. It was a Public sector DFI.

 

Investment Institutions

UTI LIC GIC
The UTI was setup on Nov 1963 after Parliament passed the UTI Act. LIC was setup in 1956 after the insurance business was nationalised. The GIC was formed by the central government in 1971.
The objective of UTI was to channel the savings of people into equities and corporate debts. The flagship scheme of the UTI was called Unit Scheme 64. The objective of LIC is to provide assistance in the form of term loans; subscription of shares and debentures;resource support to financial institutions and Life insurance coverages. The GIC had four subsidiaries; National Insurance Co; New India Assurance; Oriental Insurance; and United India Insurance.
In 2002, the Union Cabinet had decided to split UTI into UTI 1 and UTI 2 as a result of the prolonged crisis in UTI. The General Insurance Nationalisation Amendment Act, 2002, has delinked the GIC from its four subsidiaries.

 

By
Himanshu Arora
Doctoral Scholar in Economics & Senior Research Fellow, CDS, Jawaharlal Nehru University

CategoriesUncategorized
  • Subscribe

    Do not miss important study material

Leave a Reply

Please Login to comment
  Subscribe  
Notify of