The Government of India set up the Industrial Reconstruction Corporation of India (IRCI) in 1971 under the Indian Companies Act particularly to look into the problems of the sick units and provide assistance for their, speedy reconstruction and rehabilitation. In August 1984, the Government passed an act converting the IRCI into the Industrial Reconstruction Bank of India. IRBI has been set up with a view of enabling it to function as the principal credit and reconstruction agency for industrial revival by undertaking modernisation, expansion, reorganisation, diversification or rationalisation of industry and to coordinate similar work of the other institutions engaged therein and to assist and rehabilitate industrial concerns.
Functions of Industrial Reconstruction Bank of India
(i) IRBI is empowered to grant loans and advances to industrial concerns.
(ii) To undertake stock, shares, bonds and debentures.
(iii) To guarantee loans/deferred payments and performance obligations of any contract undertaken by industrial concerns.
(iv) To act as an agent of Central and State Governments, Reserve Bank of India, State Bank of India, Scheduled commercial and cooperative Banks, Public financial institutions, State financial corporations and such other persons as Central Governments may authorise.
(v) To engage in development activities such as providing infrastructural facilities, raw materials, consultancy, managerial and merchant banking services for reconstruction and development of industrial concerns and providing machinery and other equipment on lease or hire purchase basis etc.
Through its consultancy services, IRBI attempts to help banks and financial institutions to assess intrinsic worth of sick units which are seeking assistance for revival. Through its merchant banking services, IRBI helps the units in the process of (amalgamation, merger) and reconstruction/ Equipment leasing is, in fact, an extension of the IRBI hire purchase scheme.