The Industrial Finance Corporation of India (IFCI) was established in 1948 as India's first development financial institution to provide long-term financing to industries, filling a gap when merchant bankers, underwriters, and commercial banks were not adequately meeting industrial financing needs. IFCI was given access to low-cost funds through the central bank to lend to corporations at concessional rates. IFCI fulfilled its role of providing long-term financial support to various industry sectors efficiently until the establishment of ICICI in 1956 and IDBI in 1964, contributing to the modernization, export promotion, and import substitution of Indian industry.

1. Introduction :- At the time of independence in 1947, India's capital market was relatively under-
developed. Although there was significant demand for new capital, there was a dearth of providers.
Merchant bankers and underwriting firms were almost non-existent and commercial banks were not
equipped to provide long-term industrial finance in any significant manner.
It is against this backdrop that the government established The Industrial Finance Corporation of India
(IFCI) on July 1, 1948, as the first Development Financial Institution in the country to cater to the long-
term finance needs of the industrial sector. The newly-established DFI was provided access to low-cost
funds through the central bank's Statutory Liquidity Ratio or SLR which in turn enabled it to provide
loans and advances to corporate borrowers at concessional rates.
The main focus of The Industrial Finance Corporation was to provide long-term financial benefits to
various sectors in Indian industry and it has fulfilled it quite efficiently. IFCI has also been quite
subservient in implementing the number of things that the Government of India planned up to ensure
financial benefits into services. IFCI carried out all the responsibilities regarding Government's industrial
policy initiatives till the establishment of ICICI in 1956 and IDBI in 1964.
Contribution:- Until the establishment of ICICI in 1956 and IDBI in 1964, IFCI remained solely
responsible for implementation of the government’s industrial policy initiatives. It made a significant
contribution to the modernization of Indian industry, export promotion, import substitution, pollution
control, energy conservation and generation through commercially viable and market- friendly
initiatives. Some sectors that have directly benefited from IFCI include:-