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Institutional Borrowings

In: Business and Management

Submitted By drisyasaseendran
Words 4866
Pages 20
20
Role of
Specialised Financial Institutions
20.1 Introduction
In the previous lesson you have learnt that companies raise long-term and medium-term finance by issuing shares and debentures. Specialised financial institutions are also an important source of such finance. In this lesson, we shall discuss the role and functions of specialised financial institutions. 20.2 Objectives
After studying this lesson, you will be able to :- l explain the need for and importance of specialised financial institutions; l identify the types of such institutions; l describe the functions and objectives of Industrial Finance
Corporation of India (IFCI) and State Financial Corporations (SFCs); l discuss the role and objectives of Industrial Development Bank of
India (IDBI); l state the functions of IDBI; l Recall the meaning of ‘investment trust’;
56 :: Business Studies l discuss the objectives and function of Unit Trust of India (U.T.I.) ; l Explain the objectives of Industrial Credit and Investment
Corporation of India (ICICI) ; l describe the functions of ICICI ;
20.3 Need for and importance of Specialised Financial
Institutions (SFIs)
SFIs are institutions set up mainly by the government for providing medium and long-term financial assistance to industry. As these institutions provide developmental finance, that is, finance for investment in fixed assets, they are also known as ‘development banks’ or ‘development financial institutions’. These institutions receive funds for their financing operations primarily from the government or other public institutions. These institutions also raise funds from the capital market.
Need for SFIs
The need for establishing SFIs arose mainly because of the following reasons:- 1. It was difficult for industry in general to procure sufficient longterm funds in the capital markets. There were no other

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