IFCI was set up as a statutory corporation in 1948 by the Government of India. Its main objective was to provide medium and long term credit to eligible industrial concerns. Since July, 1993, it has been brought under the Company Act, 1956. The IFCI performs three important functions.
Functions of Industrial Finance Corporation of India
(i) It grants loans and advances to industrial concerns and subscribes to the debentures floated by them.
(ii) It guarantees loans raised by the industrial concerns in the capital market.
(iii) It underwrites the issue of stocks, shares, bonds and debentures of industrial concerns provided such stocks, shares etc. are disposed by the corporation within a period of seven years from the time of acquisition. It also subscribes to the equity and preference shares and debentures of companies. In addition to providing financial assistance, IFCI also performs promotional activities.
Promotional Activities of IFCI
(i) To fill in the gaps in the institutional infrastructure for promotion and growth of industries.
(ii) To provide much needed guidance in project identification, formulation, implementation, operation etc. to the new tiny, small scale or medium scale entrepreneurs.
(iii) To improve the productivity of human and material resources.
(iv) To give a better deal to the weaker and underprevileged sections of the society in consonance with the socio-economic objectives laid down by the Government of India.
(v) To undertake research and surveys for evaluating or dealing with marketing of investments.
(vi) To undertake or carry on techno-economic studies in connection with the development of industries.
(vii) To provide technical and administrative assistance to any individual concern for the promotion, management or expansion of any industry.
(viii) To undertake merchant banking operations.