Role of IFCI in industrial developments in India

At the initial stage of Indian independence, the Capital Markets were relatively less developed. Though demand for capital was growing rapidly, there was a lack of providers of capital. The commercial banks of that time were not equipped well enough to provide for long-term capital needs in any significant manner. Given this, the Government of India established IFCI Ltd as a Statutory Corporation (previously Industrial Finance Corporation of India) on July 1, 1948, to provide medium and long-term finance to industry under the ownership of the Ministry of Finance, Government of India. The Liberalisation of the Indian Economy in 1991 made significant changes in the Indian Capital Markets & Financial System. To aid the rising of funds directly through capital markets, the constitution of IFCI was changed from a statutory corporation to a Company under the Indian Companies Act, 1956. Subsequently, the name of the company was changed to ‘IFCI Limited’ with effect from October 1999. IFCI is also registered with the Reserve Bank of India (RBI) as a Systemically Important Non-Deposit Non-Banking Finance Company (NBFC-ND-SI) and is also a notified Public Financial Institution under Section 2(72) of the Companies Act, 2013. Currently, the Government of India holds a 61.02% share in the paid-up capital of IFCI.

 The primary business of IFCI is to provide medium to long-term financial assistance to the manufacturing, services, and infrastructure sectors. IFCI has the mandate to provide financial support for the diversified growth of Industries across the spectrum. The financing activities cover various kinds of projects such as airports, roads, telecom, power, real estate, manufacturing, services sector, and other allied industries. During its 75 years of existence, mega projects like Adani Mundra Ports, GMR Goa International Airport, Salasar Highways, NRSS Transmission, and Raichur Power Corporation, to name a few, have been set up with IFCI financial assistance.

IFCI offers Government Advisory services and Corporate Advisory services. It provides advisory services for Project Development, Project Appraisal, Strategic Analysis, Corporate Restructuring Legal Advisory, etc. Over the years, IFCI has played a pivotal role in the establishment of various entities (including some of its subsidiaries & associates) that are respected in their fields today, namely Stock Holding Corporation of India Ltd (SHCIL), National Stock Exchange Ltd (NSE), LIC Housing Finance Ltd, Tourism Finance Corporation of India Ltd (TFCI), ICRA Ltd, among many others. With the changes in the markets over some time, a few of the subsidiaries were divested and currently, IFCI Group has the following subsidiaries;

1. Stock Holding Corporation of India Ltd,
2. IFCI Venture Capital Fund Ltd,
3. IFCI Factors Ltd,
4. IFCI Infrastructure Development Ltd,
5. IFCI Financial Services Ltd,
6. MPCON

Besides the above subsidiaries, IFCI has one Associate company, viz. KITCO Ltd. which is a Technical Consultancy Organization, incorporated under the Companies Act, of 1956.

In addition to its core competence in long-term lending to industrial and infrastructure sectors, IFCI has also developed competence in providing advisory services and has been a nodal agency for providing advisory services to various Govt. of India schemes such as Sugar Development Fund, M-SIPS, Production Linked Incentive (PLI) Scheme and Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS). Further, IFCI also enhanced its organizational value by optimising the value of core and non-core assets & investments. IFCI has also been appointed as a Project Management Agency for two of its Schemes, by the Department of Pharmaceuticals (DoP), Ministry of Chemicals & Fertilizers, and Promotion of Medical Devices Parks. Further IFCI is offered the Project Management Agency (PMA) for the Scheme for Promotion of Manufacturing of Electronics Components and Semiconductors (SPECS) by the Ministry of Electronics and Information Technology (MeitY).

Under Corporate Advisory, IFCI is offering financial advisory, Project advisory services, and Environmental, Social, and Governance (ESG) Advisory Services to help companies manage shareholders’ expectations on ESG risks, opportunities, and disclosures. IFCI is the Verifying & Monitoring Agency for various capital subsidy schemes. IFCI has also been the Nodal Agency for monitoring loans of the Sugar Development Fund (SDF) since 1984. It is also the nodal agency for the Credit Enhancement Guarantee Scheme for Scheduled Castes.

Major Source: IFCI website  

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