Financial institution

Revathy Rajasekaran
Coordinator, Edc
V.V.Vanniaperumal College for Women
Virudhunagar
V.V.Vanniaperumal College For Women

 TIIC was established in 1949 and function as
full fledged SFC.
 It provides financial assistance to tiny, small,
medium industrial units for acquiring fixed
asset.
 The assistance is given for expansion,
diversification and modernization.

 1.General scheme: This scheme is for
financial assistance for new projects or
expand existing projects.
 The loan is for purchase of land, construction
of building and purchase of machinery.
 Interest rate is 15%p.a –loan upto 25 lakh
 Interest rate is 15.25 %p.a –loan above 25
lakh
 Repayable before 7 years
 Initial Moratorium – 2 years

2.Soft loans- meant for qualified entrepreneurs who
are unable to bring promoters contribution.
 The assistance will be maximum 20% of project cost
to a maximum of Rs.4 lakh
 The repayment period is 5 years
 Interest is 1% p.a.
3.Single window scheme- This scheme is a composite
of fixed capital & working capital
 Maximum loan-200 lakhs
 Repayment period-5 yrs(working capital), 5-7
yrs(term loans)
 Repayment holiday-1 yrs(working capital), 6 months
-2 yrs(term loans)

4.Assistance for acquiring ISO 9000- this is to
promote quality management system and
strengthening export potentials.
 Company with good financial records are eligible.
 Expenses on consultancy, audit, certification fees
are considered for loan determination.
5.Marketing assistance scheme- to assist SSI in
marketing products.
 Company with profit of 3 yrs are eligible to
undertake loan for expense on marketing
research, advertising, branding, participating in
trade fair etc…
 Loan repayment period- 8 quarterly installments
with 1 year holiday period.

6.Generator Scheme- for purchase of generator
sets to enable industrial units to meet power
shortage.
 The loan amount is need based with promoter
contribution of 22.5%.
 Repayable in 7 years, holiday period is 6 months.
 Government gives subsidy of 15%.
7.Leasing Scheme- to provide assistance to
purchase machine on lease rentals.
 The assistance is from 5 lakhs to 80 lakhs

8.Factoring scheme-To solve the working capital
problem of SSI by discounting bills raised by units
on suppliers
 The assistance is from 5 lakh to 100 lakhs
 Interest rate -10%; Maximum credit period-90 days
9.National Equity Fund- to provide equity support
to small entrepreneurs in establishing new
projects or expanding existing projects
 Promoter contribution is 10% of the project cost
 The maximum loan amount is 50 lakh
 Repayment period: 7 to 9 yrs including holiday
period 2 yrs

10. Mahila Udayama Nidhi: to provide equity
assistance to women entrepreneur for setting up/
expanding projects with cost of 10lakhs.
 Promotor contribution is 10%
 Soft loan maximum of 25%
 Repayment period- 9 yrs; Initial moratorium -2 yrs
11. Technology development & modernization of
SSI- for units to undertake technology improvement
 Maximum assistance is 100 lakh
 Interest rate-13%
 Repayment period- 5 yrs; Initial moratorium-6
months

12. Working capital Assistance- to provide
working capital assistance for SSI promoted
by TIIC/SIPCOT with good track record of
profit.
 Minimum of 10 lakhs and maximum of 100
lakhs
 Interest rate-15.5 p.a%
 Repayment period is 1 year

 In tamilnadu SIDCO was setup in 1970 for
promotion of small scale industries in the
state.
1.Formation of Industrial estate- SIDCO is
constructing industrial worksheds with all
infrastructural facility including roads, lights,
water supply, drainage, power supply etc.
 SIDCO constructed 1841 tiny sheds in 108
location for rural artisans and unemployed
youth
 It also counseling, aiding and assisting the
formation of private industrial estate

2.Marketing Assistance: SIDCO participate in
the government tenders on behalf of SSI and
obtain order for them.
 It arranges buyer-seller meet to make
government aware of SSI product
3.Hire purchase & equipment leasing
scheme- SIDCO assist for SSI for supply of
machinery under hire purchase and lease.

4.Export House- SIDCO identifies potential SSI
supplying export worthy products & prospective
buyers of the product abroad.
 It participates in industrial fairs and exhibits the
products of SSI
5.Industrial Developments in backward areas:
 To promote industries in backward areas and
provide employment to rural educated
unemployment youths SIDCO constructs industrial
estate in rural areas
 It also constructs exclusive estate for women also

 DIC was started in the year in 1978 for
development of small & cottage industries in
India.
 DIC is set up in headquarters of each district
 DIC provides under single roof all services of
assistance, financing, training, technical
advice to small & village entrepreneurs.
 There are 422 DIC operating in country

 DIC consist of
 One general manager
 Four functional managers
 Economic & Investigation
 Credit
 Village Industries
 Raw material/Marketing/Training
 Three project manager- to provide technical
services

1. Motivation Campaigns: Motivates and
identify potential entrepreneur through
campaigns.
2. Surveys: Conducts surveys to assess industrial
potential in availability of raw materials,
human skills, infrastructure & demand. It
prepares techno economic studies & provides
investment advice to entrepreneurs.
3. Action plans: DIC prepares action plan for
industrial developments. It coordinates with
lead bank & District credit plans

4.Registration: DIC provides provisional & permanent
registration to new entrepreneur.
Provisional registration: This is done to bring new unit
into existence. It is awarded for 2 years and
renewed every year and renewal limited to 2 years
only.
It enables
 Apply to municipality to construct buildings
 Apply plot in industrial estate
 Apply power connection
 Apply financial assistance
 Apply for buying machines
 Apply for sales tax registration

Permanent Registration: Permanent
registration is done for only one time
 It enables the company to
 Apply for scarce raw material on
concessional rates
 Apply for marketing through government
agencies

5.Help to obtain Credit: DIC recommends loan
application to banks & financial institution
and help SSI to obtain credit
6.Guidance: provides guidance to
entrepreneurs in identifing appropriate
machinery and its supply, raw material
requirements source & supply, purchase of
scarce raw materials.
7.Recommending application to organization:
DIC helps the entrepreneurs in getting
power connection

8.Marketing Assistance: DIC collects
marketing information, give export
information, liaison with govt. procurement
agencies and suggest marketing agencies
9.Training: It conduct training programmes for
entrepreneurs and indentifies
opportunities.
10Entrepreneur Development programme:
DIC conduct EDP in association with SISI and
TCO to develop entrepreneurial skills
11.Fairs & Exhibition: DIC encourages SSI to
participate in International trade fair

 The SISI is setup to provide consultancy &
training to small entrepreneur. There are 28
SISI in India.
 Functions of SISI:
1. Technical Advisory Service:
 Technical advice for setting up SSI, choice of
machinery design, layout.
 Preparation of design and drawings for
production equipment to increase production
 Technical guidance on efficient use of raw
material, utilization of substitute, waste and
scrap
 Development of new product

2.Workshop & Laboratory Service: SISI has
workshop, lab, showrooms attached to them.
 They provide common service & tool room
facility.
 Carry experiments and lab analysis on new raw
materials
 Assist in testing raw materials & new products
3.Management consultant service: SISI guide
in proper industrial management, including
cost reduction, production & marketing.
4.Training Workers, foreman & Managers:
They train workers from SSI in machine shop
practice, tool and die making, welding,
electroplating and wood working.

5.Promotion of Entrepreneurship in rural &
underdeveloped area: SISI organizes training
programme for engineers, graduates, students,
ex-servicemen and people from backward,
tribal, rural.
6.Economic Service:
 Conducting surveys of particular industries and
areas & recommendations for development
programmes.
 Supplying market information
 Undertaking industrial survey

 NSIC is set up in 1955 to promote growth of
SSI in the country.
Function of NSIC
1. To develop small scale units as amcillary
unit of large scale industries.
2. To Supply of machines on hire purchase
3. To assist SSI in marketing facility
4. To assist small enterprise in participate in
stores purchase program of central govt.
5. To distribute raw materials through depot

6. To import & distribute components & parts
to SSI
7. To construct industrial estate and establish
training centres
8. To develop SSI in other countries like
turnkey projects.
9. They organize various domestic/
international industrial fair, buyer-seller
meets
10. Creating awareness about performance &
credit rating scheme for small industries

 SIPCOT was setup in 1971 as a public limited
company owned by tamilnadu.
 The objective of promoting & developing
medium & major industries in backward &
underdeveloped areas.
 It activity includes
 Provision of finacancial assistance on liberal
terms to medium & major industries
 Implement a package scheme of incentives for
entrepreneurs
 Develop of potential growth centre & provide
land at reasonable cost on easy payment.

 SIPCOT Financial assistance:
 Term loans under IDBI refinance scheme
 IDBI seed capital scheme
 Underwriting the capital issue
 Guarantee loans from commercial banks
 Arrangements between TIIC & SIPCOT in
lending loans
 All SSI units comes under TIIC
 For medium and major scale units
 Approach TIIC if loan < 30 lakh for limited company
and loan <15 lakh for proprietary firm.
 SIPCOT sanction balance loan amount>30 lakh for
limited company and loan >15 lakh for proprietary
firm.
 If paid-up capital is more than 1crore apply only to
SIPCOT

 Project identification & supply of project
profile: It recognize & identify of profitable
project ; prepares project profiles; sells
profitable project profile at nominal cost to
entrepreneurs.
 Entrepreneurial guidance: It provides
procedural guidance to entrepreneur. It built
a data bank containing classified information
on procedures to go.
 It helps in assessing the merits of alternative
locations for proposed projects with
rawmaterials, market potential & facilities

 IIC is a non profit service organization financed
& supported by Government of India
 It promotes rewarding between joint ventures
between India & foreign entrepreneurs.
 It provides advice to foreign company in
investment condition in priority industry sectors
in India
 It finds suitable Indian partner for foreign
companies.
 It acts a link between Indian companies, Indian
government & foreign investors.

 The IIC has set up EGB to guide entrepreneurs
in identifying investment opportunities, in
selecting location for projects, prepare project
profile & get finance.
 They supply information relating to product,
demand, capacity production, source of raw
material, equipment, investment involved &
source of finance.
 Information relating to procedures are also
assisted to entrepreneurs.

 In recent years the commercial banks have
involved in promoting entrepreneurship
through EDP.T hey organize EDP in
collaboration with DIC,SISI and TCO.
State Bank of India (SBI)
 SBI launch EDP in 1978 to promote
entrepreneurship in backward area
 The EDP is one month training programme in
behavioral science, management aspect,
field training
 The EDP consist of three phases

 Initial phase Creates awareness about
entrepreneurship opportunity
 Development phase of training programme
 Support phase of counseling and
infrastructure support
 It provides financial assistance to qualified
technical entrepreneur to the extent of 100%
 SBI has set up a research and development
fund of Rs 5 crore

Punjab National Bank(PNB)
 The bank study the economic viability and
technical feasibility of projects
 They help in obtaining government consent
required for industrial projects
 They help in raising finance in the form of
debentures loans from financial institution
 They assist in raising foreign exchange resource
required for import of machineries and raw
materials
 They determine capital structure
 They suggest strengthening of capital base of SSI

INDIAN BANK(IB)
 The bank provides consultancy services for
identification of projects to implementation
and marketing by experts
 The service was started in 1973
BANK OF BARODA
 It started entrepreneurial banking to assist
technical entrepreneur to set up their own
units.
 It also assist in project feasibility study
acquisition of fixed assert and marketing

BANK OF INDIA- entrepreneurial clinic come
guidance service. This scheme offers
assistance in selection of industry, preparation of
project report and implementation of project
 It provides training, assistance in government
clearance, purchase of machines and marketing
of products
CANARA BANK- The bank has set up industrial
information and guidance service to provide
information and advice to its client on technical
, marketing , tax, export, accounting and
management

GRINDLAYS BANK
 The small scale consultancy service prepares
project feasibility report, conduct industry
studies
 The merchant banking division manages
public issue for raising capital, helps in
raising capital from lending bodies
SYNDICATE BANK
 The bank apprises the viability of credit
proposals from SSI and offers counseling to
the entrepreneurs

UNION BANK OF INDIA –GENERAL SERVICES
CELL
 General services cell provides services like
selection of machinery, accounting
procedure, financial planning and other
matters.
UNITED BANK OF INDIA
 The banks technical cell provides assistance
to persons about feasibility of their projects
and technical as well as non technical
guidance

UNITED COMMERCIAL BANK
 The bank provide technical assistance or
guidance to self employed persons about
feasibility of their projects and availability of
raw materials and marketing of their
products.
INDIAN OVERSEAS BANK- Bank’s Small
business Aid agency- It provides assistance
to small business & offers guidance to person
who wish to start the same.

 It was established in the year 1984 with the
objective of providing medium & long term
credit to industrial concerns
 It is the first development bank in India.
Main Activities:
1.Direct Financing:
 Financing to industries the form of
 Rupee loan
 Sub-loans in foreign currency
 Underwriting & direct subscription to shares &
debentures of public limited company

 Guaranteeing of
 Deferred payment for machinery imported
from abroad or purchased with the country
 Foreign currency loans raised by industrial
units from foreign financial institution.
 Rupee loans raised by industrial concern from
Indian bank.
2.Incidental Activities.
 Undertake research and survey for evaluating &
dealing with investment
 Provide technical assistance to industrial
concerns
 Undertaking merchant banking operations

3. Promotional Activities
 To develop infrastructural facilities
 To guide in project identification, formulation,
implementation
 To improve the productivity in human & material
resource
Eligibility for assistance
 Limited company
 Co-operative societies
Purpose of financial assistance
 Setting up new industrial projects
 Expansion of existing units for diversification
 Moderation of existing units
 Not for working capital & existing liabilities

 ICICI was set up in the year 1955. It was started
by govt. of India, world bank & American
financiers.
 ICICI is organized as wholly private owned
institution.
Objectives:
 To assist in the creation, expansion and
modernization of industrial enterprise in private
sector
 To encourage the private ownership of industrial
investment,
 To promote the participation of private capital
both internal & external

Forms of Financial assistance:
 Underwriting of public & private issues
 Direct subscription to securities
 Provide loans in foreign currencies
 Leasing of equipment
 Guaranteeing payment for credit
Eligibility criteria
 Limited company
 Sole & partnership firms, co-operative
society

 The minimum loan amount is 10 lakhs and the
maximum amount can be of any extent
 The applicant can start business in any part of
India. The enterprise should have experienced
& qualified personnel.
 Special consideration is given to new
entrepreneurs & enterprise in backward areas.
 ICICI bank also takes the promotional activities
of developing projects & conducting feasibility
study.
 ICICI has merchant banking division,
technology development & credit rating
services in India

 IDBI was set up in 1964 as apex term lending
financial institute in India.
 It act as the coordinating institution of all
financial institution.
Resources:
 Paid-up capital, reserves, National Industrial
credit fund of RBI, market borrowings, world
bank.
Schemes of assistance
 Provides direct assistance in form of loans,
underwriting of shares & debentures and
guarantees.

 It provides soft loans for modernization
 It refinance industrial loans granted by banks
 It rediscounts bills arising out of sales
 It finances exports & guarantees to export
 It engages in promotional activities
Eligible institution for assistance
 It extend financial assistance to large &
complicated projects and project located in
less developed areas or promoted by
technocrats.

Terms of lending:
 The lending rate is 14%
 A commitment charge of 1% is payable on
undrawn amount of loan for first year.
 The loan is repayable in 16 half yearly
installment after 2 year grace period.
Backward Area development: IDBI provides
concessional assistance in backward areas.
The concession are lower interest rate,
longer grace period, extended repayment
period, reduced commitment fee.

 Soft loan Scheme: This scheme provides loan
for reduced interest rate. This scheme
provides finance to units for modernization,
replacement, renovation of plant for higher
productivity & improve competitiveness.
 Refinancing scheme: The IDBI refinance the
loans provided by commercial banks & SFC
for small & medium units.
 Bills Rediscounting bill: This scheme helps
the industrial units in buying capital
equipment on a deferred payment basis

 Originally it was called Industrial Reconstruction
Corporation of India (IRCI).
 It is set up for rehabilitation of sick industrial
units.
Functions:
 The IIBI grant loan and advances
 It underwrites stocks, bonds & debentures
 Guarantee loan/deferred payment
 Provide development activities like infrastructure
facilities, raw materials, consultancy, hire
purchase of machinery.

 Resource: It consist of paid up capital,
interest free loan from govt. of India, debt
capital, resource from IDBI & RBI.
 Special Fund: “Reconstruction Assistance
fund” for industrial reconstruction, revival,
rehabilitation or development for which
banking and other financial institution are
not likely to grant loans

 It was started in the year 1954for balanced and
integrated development of industries both in
private & public industry.
Objects:
 To promote, establish industries & projects
 To aid & finance industrial undertaking
 To provide capital for purchase of machines &
plants
Functions: To put emphasis upon the manufacturing
of capital goods, machine. To promote industries
which contribute for economic growth

 The forms of assistance from NIDC are:
 Loans & advances
 Subscription to shares & debentures
 Underwriting and guarantee of securities
 Management, control or supervision of
industrial units
 Supply machines & technical advice

 SIDC is owned by state govt. to promote
rapid industrialization in the respective state
 Provide risk capital in the way of equity &
seed capital to the entrepreneurs.
 Granting financial assistance to industrial
units by way of loans, guarantee.
 Developing industrial areas/ estate with
infrastructure facility.
 Identify project ideas, prepare feasibility
report, training entrepreneurs.

 SFC was set up in the year 1951 which render
assistance to medium & small scale
industries in respective states.
 There are 18 SFC including TIIC.
 Resource: The financial resource of SFC are
paid-up capital, reserve funds, bonds,
refinance from IDBI and borrowings from RBI.

 Forms of assistance:
 Granting of loans & subscribing to debentures.
 Guaranteeing loans
 Guaranteeing deferred payments for purchase
of capital goods
 Subscribing to stocks, bonds or debentures of
the industry
 Provide soft loan & seed capital to technical
entrepreneur up to 2 lakhs with 1% interest

 Eligible for assistance- The SFC render
assistance to proprietary, partnership,
companies, cooperatives which renders
manufacturing or services.
 Lending Rates- The lending rates vary
between 12.5% to 14.5%. A concession rate is
charged on units in backward areas & for
technical entrepreneur.
 Term of Assistance- The maximum financial
assistance is 30 lakh. The Loan period is up
to 10 or 12 years

1.Application form
2.Filling up of Application form
3.Follow up of the application
4.Disposal of application
5.Sanction Documentation & Disbursement

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