Sources of Corporate Finance — Secretarial Practice STD 12 Commerce / Arts — Question

• The Government has established special financial institutions for providing industrial finance.
• These institutions provide medium and long-term finance.
• They provide assistance to new companies as well as ongoing companies in the form of term loans, subscribing for shares and debentures, underwriting securities, and guaranteeing loans raised by cost.

(i) Development Banks:
They provide risk capital for economic development projects on a non-commercial basis. They play a crucial role in providing credit in the form of high-risk loans, equity positions, and risk guarantee instruments.
They include:

• Industrial Development Bank of India (IDBI)
• Industrial Finance Corporation of India Ltd. (IFCI)
• Industrial Credit and Investment Corporation of India Ltd. (ICICI)
• Small Industries Development Bank of India (SIDBI)
• Industrial Reconstruction Bank of India (IRBI)

(ii) Financial Institutions:
They are institutions engaged in business dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange.
They include:

• Risk Capital and Technology Finance Company Ltd. (RCTC)
• Technology Development and Information Company of India Limited (TDICI)
• Tourism Finance Corporation of India Limited (TFCI)

(iii) Investment Institutions:
Institutional investors are organisations that pool together on behalf of others and invest those funds in a variety of different financial instruments and asset classes.

They may be investment funds like Mutual funds, ETFs, (Exchange Traded Funds) Insurance Funds, Pension plans as well as investment banks and hedge Funds (alternative investment designed to protect investment portfolios from market uncertainty) They include:

• Life Insurance Corporation of India (LIC)
• Unit Trust of India (UTI)
• General Insurance Corporation of India (GIC)

(iv) State Level Institutions:

• They are financial agencies at the state level for the development of medium and small-scale industries. They include:
• State Financial Corporations (SFC)
• State Industrial Development Corporation (SIDC)