The Industrial Finance Corporation of India Limited

The Industrial Finance Corporation of India Limited was incorporated on July 1, 1948 by the Government of India as a tool to overcome the scarcity of long-term finance plans in the industrial sector. IFCI is the first Development Financial Institution in India.

During the period of independence in 1947, the capital market scenario was horrendous. In spite of the major requirement of capital market in India, there were no providers for it. To add to the woes, there were no merchant bankers and underwriting firms. The commercial banks were not well-accoutered to render long-term financial plans in the industrial sector. Indian finance market were drowning into a well of failure when the Government of India decided to launch the IFCI with the aim to provide long-term financial plans to all the sectors of Indian industry. The Development Financial Institution in India (DFI) was incorporated with the aim to make access to inexpensive funds easy enough for the industrial sector through Central Bank's Statutory Liquidity Ratio or SLR. This Statutory Liquidity Ratio enabled the corporate borrowers to take loans and overtures at a much concessional rates.

During the early 1990s, the Government of India realized that the financial system of the country needs more flexibility. The Government also felt that The Industrial Finance Corporation of India Limited needed to access directly to the capital market for any kinds of funds or other financial issues. At this point of time, that is in 1993, the Government of India took the decision of transferring IFCI from Statutory Liquidity Ratio to a company that would come under the Indian Companies Act, 1956.

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.

The Industrial Finance Corporation of India had made a wide range of contributions in various sectors in Indian industry. Some of the noteworthy contributions of IFCI include improvement of Indian industry, export promotion, import permutation, development in business, pollution control measures, energy preservation, and rendering direct and indirect employment. There are a number of industrial sectors that have been massively benefited from The Industrial Finance Corporation of India Limited. They are as follows:

• Capital & intermediate goods industry that includes products such as electronics, synthetic plastics, synthetic fibers, and miscellaneous chemicals
• Service industries that include hotels and hospitals
• Consumer goods industry such as textiles, paper, and sugar
• Infrastructure sector which involves power generation and telecom services
• Basic industries involving products such as cement, iron & steel, fertilizers, basic chemicals

The economic contributions of The Industrial Finance Corporation of India Limited has been quite large-scale since its establishment. IFCI has sanctioned funds of an amount of ` 462 billion to 5707 companies and has paid out ` 444 billion in totality. The business entrepreneurs have got immense help from IFCI as well when they started off with any new business or even on their way to expand the already existing business. IFCI has been a great helping hand to the entire industrial sector in India and most importantly it was the only support at the time of scarcity.