Benagaluru , Friday, February 20, 2015 : IFCI Infrastructure Development Ltd. (IIDL), a 100 % subsidiary of IFCI Ltd., has entered into an MOU with Karnataka Industrial Area Development Board (KIADB), Government of Karnataka to develop a state of art IFCI Financial City spread over 50 Acres of land located at Devanahalli, Bengaluru. It would house banks/financial institutions. The Government of Karnataka is developing Hardware Park in Devanahalli, Bengaluru. (IIDL) has been allotted a plot admeasuring 15Acres by KIADB. KIADB is in process of handing over the possession of land. IIDL will develop the land for constructing residential units for the employees of the banks/financial institutions and other organizations located in the area as part of the IFCI Financial City.
The Government of India has floated a venture capital fund worth Rs200 crore or $32 million to back entrepreneurs from the scheduled castes (SC) group. The fund will invest up to Rs15 crore in backing entrepreneurs from the SC communities with a six- year investment horizon. Government of India, Ministry of Social Justice and Empowerment is the Anchor investor with an Initial Contribution of Rs.200 crore and IFCI Ltd. has committed a contribution of Rs.50 crore as lead investor and Sponsor in the Fund. IFCI Venture Capital Funds Ltd (a subsidiary of IFCI Ltd). is the Investment Manager of the fund.
Apart from the above fund, government is setting up a Scheme of Credit Enhancement Guarantee for Scheduled Caste (SC) Entrepreneurs as per Finance Minister’s budget pronouncement. IFCI Ltd shall be the nodal agency to carry out the Scheme, under the directions of Department of Social Justice & Empowerment, Ministry of Social Justice & Empowerment (MoSJ & E), Government of India (GoI). Initially, GoI shall place a corpus of Rs.200 crore with IFCI and IFCI shall in turn issue Credit Enhancement Guarantee (subject to maximum amount of Rs.5 crore) on a first cum first serve basis to Banks and Financial Institutions (FIs) for extending Term Loans/Composite Terms Loans to SC entrepreneurs. Small & Medium Enterprises promoted and run by SCs, which are not covered under any other State/Central Government Subsidy/ Guarantee Schemes, shall be eligible for availing the facility. The guarantee shall be extended for a maximum period of 7 years or repayment period of the Loan, whichever is earlier. The Scheme is expected to be launched soon.Industrial Finance Corporation of India was set up in 1948 as a Statutory Corporation under the Industrial Finance Corporation Act, 1948. The Act has since been repealed by the Industrial Finance Corporation (Transfer of Undertaking and Repeal) Act, 1993 and IFCI Ltd was registered under the Companies Act, 1956 on 31.03.1993. Currently, IFCI is registered with the Reserve Bank of India (RBI) as a Systemically Important Non Deposit accepting Non-Banking Finance Company (NBFC-ND-SI), with pan India presence.
IFCI has been seeking the status as a Development Financial Institution (DFI) with Government and RBI. DFIs are an integral part of economic growth in developing nations. Because of the important role being played by DFIs, many developed countries like Japan, Germany, etc. are still continuing with DFIs. Most infrastructure projects have debt requirements which can be repaid over a period exceeding 10 years. However, due to asset-liability mismatch, neither banks nor NBFCs are able to provide such long term funding. This is where DFIs can step in to raise long term funds at low cost and pass on the cost benefit to infrastructure projects by way of loans with lower rates of interest. IFCI, ICICI and IDBI were set up as DFI. However ICICI and IDBI have been converted into banks. Given its origins and vast experience, IFCI is well placed to serve as a DFI.
IFCI, along with its group entities, provides complete financial solutions by offering a bouquet of financial services. These include, besides long term corporate loans, advisory services in the areas of Project Development, Project Appraisal, Risk Analysis, Credit Syndication, Placement of Debt and Equity, Corporate Restructuring, Infrastructure Financing and Legal Advisory to an entire gamut of sectors. The infrastructure portfolio services includes conception, techno-economic viability study, financial advisory, monitoring of project implementation and commercial production of projects in core infrastructure sectors like power generation and transmission, roads, ports & port services, logistics etc. Â
Over the decades, IFCI has evaluated more than 6,000 projects in a well-diversified sector portfolio and extended cumulative financial assistance of over Rs 65,000 crore. IFCI’s financial assistance has helped create significant production capacities in various Industries such as Agro-based industry (textiles, paper, sugar), Basic industry (iron & steel, fertilizers, basic chemicals, cement), Capital & intermediate goods industry (electronics, synthetic fibres, synthetic plastics, miscellaneous chemicals), Service industry (hotels, hospitals) and Infrastructure Sector(power generation, telecom services, Roads).
IFCI has supported the development of the cooperative movement, particularly in the sugar and textile industries. The growth and development of sugar cooperatives in the country is closely linked to the growth of IFCI – the first sugar cooperative factory set up in Maharashtra in 1949-50, was assisted by IFCI. Since then cooperative sugar factories have made rapid strides with substantial assistance extended by all financial institutions, especially IFCI. A noteworthy feature of IFCI’s assistance to industrial co-operatives is that it has gone to units located in remote corners of the country and has been instrumental not only in bringing industries to places where there were none, but also in changing the entire rural scene.
