Thursday, July 27, 2017

Financial Institutional service concept Financial Institutions

Industrial credit and investment corporation of India(ICICI):
ICICI was founded on January 5th 1955 as a public limited company with government supported and under the sponsorship of the World Bank. ICICI established at the head quarters of the Bombay with a specific purpose of assisting the industries in private sector. It started its operations as a wholly privately owned institutions but with nationalization of life insurance business. The LIC of India became its major share holder
 Objectives and functions of ICICI:-
            Encouraging and promoting ownership:-
                        The corporation aim is to encourage to come forward to establish industries and promote the private ownership.
            Underwriting issues of shares and Debentures:-
                        There is dynamo of getting shares to such fail companies it giving the underwriting commission to issue of shares and Debentures.
            Granting required loans in rupees repayable over a period of 15 years:-
                        Granting term loans to  capital assets by purchase of land, machinery. If grants the money or  cash to the companies.
            Making foreign currency for payments:-
                        Making similar forms of foreign currency for payments of imported capital equipment and technical service.
      Furnishing technical and administrative assistance to industries
      Expansion and modernization of such enterprises.

Features of ICICI:-

    ICICI were more or less similar to those of the IFCI.
    Its principle business was to provide medium and long term project financing, leasing and other types of financial and advisory services to private industry in India
    A few years back it was the only institution which was providing foreign currency loans, and even now its foreign currency loans business is much greater than that of other financial institutions.
    It  was one of the earliest organizations to start merchant banking services in India through its merchant banking division.
    It has developed the field of lease finance and installment sales.
MD,CEO: chanda kochar.
 Diversification:-
            It has now diversified into a wide range of financial services such as investment banking, commercial banking, asset management, Investor services. They include in ICICI banking corporation ltd, ICICI securities and finance company ltd, ICICI asset management company ltd, ICICI brokerage services ltd, etc...
Services of ICICI:-
            Today , ICICI bank is the largest bank in the private sector in India. It has approximately 540 branches and over 1000 ATM machines. It offers diversified financial services at both the corporate and retail level. It has specialized subsidiaries that offer non-life insurance, venture capital, asset management investment and information technology services.
Financial resources:-
ICICI started with initial resources above 17.5 crores, this amount consisted of 5 crores of share capital, 7.50 crores govt advance and 5 crores of foreign currency as world bank loan at the end of march 1996. Paid up capital amounted rupees 376.3 crores. Reserves and surplus amount  to rupees 10,743.5 crores.
Working of  ICICI:-
            Ever since its inspection at January 1955 to 31st march 2002. Accumulated and cumulative sanctions and disbursements crores respectively.
            ICICI consistently revising and updating its business, strategy, its excellent performance is a result of its increased client focus and ability  to restructure financial solution that meet clients specific needs. New products, new services, new organization structures, new business models have been the hallmarks of ICICI business strategy
            In the context of the emerging competitive scenario in the financial sector ICICI ltd have merged with ICICIC rankled with affect from 3rd may 2002.                                                                                                                                                    
Industrial Development Bank of India(IDBI):-
            The IDBI bank was introduced on 1st July 1964 to development of industries they established IDBI. Its a subsidiary company of RBI. The ownership transfer to central Govt. The year 1976 onwards. The main objective of establishing IDBI was an apex institution to co-ordinate the activities of other financial institutions. IDBI provides direct financial assistance to industrial units also bridge the gap between the supply and demand of medium and long term finance. Later it has been converted into limited company through enactment of the IDBI. Act  in 2003.
            As a result of the IDBI a statutory corporation became an IDBI a company under the companies act and banking company under RBI act with affect form October 1st 2004. Later on IDBI bank ltd subsidiary of former. IDBI also merged with IDBI ltd, which effects the 1st October 2004.

Financial resources of IDBI:-
            An IDBI was formed with an authorized capital of 50 crores which was raised to 200 crores in October 1994. The major financial sources of IDBI
a.       IDBI issue an share capital.
b.       Borrowings from Govt and RBI.
c.        Markets borrowings by way of issuing bonds to the general public also.
d.       Foreign currency borrowings.

At the end of March 2004, the IDBI equity capital was rupees 652.8 crores and results and funds aggregated to 6651.9 crores.
Management:-
IDBI as the board of directors appointed as follows.
    A chairman and management director appointed by the central govt.
    A whole time director appointed by the central govt on the recommendations of both.
    Two directors who shall be officials nominated by the central Govt.
    The directors nominated by the central Govt. having special knowledge and professional experience on banking, economic, industries, industrial co-operatives industrial finance, marketing or any other matter useful to IDBI.
Election:-
1.       A person who having less than 10% shares or less total issued equity capital elected two directors.
2.        More than 10% but less than 25% of the total issued capital elected 3 directors.
3.       More than 25% or more of the total issued capital elected 4 directors.
Functions and objectives:-
1.       Planning, promoting and developing industries to fill the gap the industrial structure in India.
2.       Co- ordinates the working of institutions engaged in financing, promoting or developing industries and assisting in development of such institutions.
3.       Providing technical and administration assistance.
4.       Undertaking market and investment research and survey and also techno economic study in connection with development of industry.
Working of IDBI:-
            The cumulative sanctions by the IDBI up to first March 2004 . under its various schemes. Since its beginning amount at 223524 crores. While the disbursements amount at 175572 crores.


Schemes of assistance:-
Direct assistance schemes:
Project finance scheme
     Modernization and assistance scheme.
Technical development scheme.
Textile modernization fund scheme.
Equipment finance scheme.
Indirect assistance scheme:
            Re finance of industrial loans schemes.
            bills rediscounting schemes.
            seed capital assistance scheme.
            Resources support scheme.
Working activities:-
            In September 2003the IDBI diversified its business. Do may further by acquiring the entire share holding of total home finance ltd.
            Signaling IDBI into retail finance sector, the fully owned housing finance subsidiary has renamed as IDBI home finance ltd.
            The IDBI transformation into commercial banks would provide a  gate way to low costs deposits like current and savings banks deposits this would have a positive impact on the banks overall cost of funds and facilities landing at more competitive rates to its clients.
Industrial financial corporation of India(IFCI):
            This is the first term financing institution and was set up in July 1948. By the Govt of India (GOI) under the IFCI act, 1948 with the objectives of providing medium and long term loans to large industrial concerns in the private sector. It provides direct rupee and foreign currency loans for setting up new industrial projects and for expansion, diversification, Re-innovation and modernization of existing units. It also under writes and directly subscribes to industrial securities. Provides financial guaranties, merchant banking services and lease finance.
            IFCI was changed in 1993 from a statutory corporation to a company under the companies act to ensure grater flexibility to respond to the needs of rapidly changing financial system and to have an access to the capital market.
In October 1993 its name has been changed to IFCI ltd. Every share holder i\of IFCI debit of share holder of IFCI ltd. In 1993. As an end of March 2003 the principle holders of the total paid up capital of the IFCI ltd along with their shares were IDBI 18.96%, nationalized banks 19.89%, SBI and its subsidiaries 9.69%, LIC  5.02%, GIC and its subsidies’ 5.97% and so on.
Resources of IFCI:-
            Loans from RBI, share capital, retained earnings, repayment of loans, issue of bonds, loans from the Govt., lines of credit from foreign lending agencies and commercial borrowings in international capital markets.

Management of IFCI:-
            The board of directors appointed as follows.
       Nominated by central govt 3 members and nominated by RBI 3 directors.
      Allocate by banks ,insurance companies and investment trusts 6 members.
      The board of directors have delegated their powers to a committee of directors consisting of 5 members ,one of whom is M.D.
Functions of IFCI:-
 Granting loans raised by industrial concerns which are repayable with a period of not exceeding 25 years.
Undertaking of the issue of stock, bonds and debentures shares issued by industrial concerns. However they must be disposed by the corporation with in 7 years of their acquisition.
Acting as the agent of central Govt or world bank IBRD (International Bank for Reconstruction and Development ) in respect of the loans sanction to the industrial concerns.
State financial corporations (SFC’S):-
There are 18 SFC’s at present. 17 of them have been set up understate financial corporations act 1951, the act was applicable to all states except J&k. By the respective state Govt.s  as regional institutions. The tamilnadu industrial investment corporations also functions as SFC’s. Hey play in effective roll in the development of small and medium enterprises and bringing about reasonably balanced economic growth. The meet term credit needs of such units the types of assistance provided by them is generally similar to those of IFCI, IDBI and so on.
            The activities of SFC’s were under the overall control and supervision of the IDBI and RBI till about 1990 after which the SIDBI, and RBI have been performing the overseeing function.
Resources of SFC’s:-
1.       Share capital, reserves, bond issues, loans from the RBI,IDBI and state Govt.
2.       Re finance from the RBI and IDBI.
3.       Fixed deposits from the state Govt.,local and authorities and the public.
4.       Assistance from foreign currency line up credit from bank
The SFC’s operate as regional development banks in respective states. They have assisted small scale units per their modernization and technology up gradation by providing soft loans, restructuring the sick small scale units through re-habilitation schemes the provide financial assistance to industrial units by way of term loans, guaranties, direct subscription to equity.
Life insurance corporation of india (LIC):-
Life insurance business started in India since 1818. Till 1956, the insurance business was mixed and decentralized. There were a large no. of companies of different ages, sizes and patterns of organization which conducted only life insurance business and there were some companies whose main business was general business, but they did life assurance also.
 In India since 1818 when the first life insurance company namely oriented life insurance company was established in Calcutta. After independence in 1956, 245 Indian and foreign life insurers and provident societies were nationalized and a new single entity namely life insurance corporation was established September 1st by passing the LIC act 1956.
Objectives of life insurance corporation:- 
Spread the insurance plans for economic development:-
To spread life insurance much more widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country and providing reaching all insurable persons in the country and providing them adequate financial cover against death of reasonable cost.
Mobilization of peoples savings:-
maximize mobilization of peoples savings by making insurance linked saving schemes.
 conduct business with economy:-
   To conduct business with maximum economy        remembering always that the belongs to the policy.
Innovate new policies:-
To innovate and adopt to meet the changing life insurance needs of the community.
 Ex:- Children plans, Plans etc....
Provide efficient service to the public:-
To involve all the people working in the corporation to ensure efficient service to the insured public.
Protect their savings:-
To act as a trusts of the policy holders and protect their individual and collective interests.
            LIC has diversified its activities –
      LIC housing finance ltd.
      LIC mutual fund.
      Jeevan Bhima Sahayog Management Company ltd(JBS-AMC).
      LIC (International) E.C.

Organizational setup of LIC India:
Central office (1)

                         Zonal office (7)

                        Divisional office (100%)

                        Branch office 2048

General Insurance Corporation (GIC):-
      The General Insurance Services has been available since 1950 when the first Triton Insurance company was established again in Calcutta. Similarly in 1972,107 generally insurance were nationalized through passing of general insurance business act 1972. And visit in the hands of GIC and its four subsidiaries. Thus the whole insurance business in India become a GOVT. Monopoly from 1972. Malhotra committee has recommended certain of general insurance company.
      General insurance policies are not financial climes in the way. Life insurance policies are the general insurance companies do not collect savings, yet they accumulate pools of funds from premium. The liabilities of general insurance companies or mostly short term and unpredictable in natural as a result liquidity is a major consideration in their investment policy. GIC and its subsidiaries to fire, marine, aviation, theft, crop, accident and other types of insurances business.

      The yearly premium income of GIC and its subsidiaries which has significant increased over the years was as large as that of the LIC Tell the end of 1980’s. But there after the LIC has grown much faster then the GIC. The investment pattern of GIC is different form that LIC. The corporate securities, the Govt. Securities, housing and mortgage loans, due form subsidiaries, specific deposit with the Govt., loans to banks are its major investment assets.