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Financial Ins
Financial Ins
23. State Financial CorporationsFunctions To provide loans for a period not exceeding 20
years to industrial units. To underwrite the issue of shares, debentures and bonds for a
period not exceeding 20 years of industrial units. To give guarantee to loans taken by
industrial units for a period not exceeding 20 years. To make payment of capital goods
purchased in India by these industrial units. To subscribe to the share capital of the
industrial units, in case they wish to raise additional capital. 23
24. Kerala State Industrial Development Corporation Industrial and investment promotion
agency of the Government of Kerala promotion and development of medium and large
scale units in the State of Kerala Nodal Agency for foreign and domestic investments in
Kerala provides support for investors, besides processing various incentive schemes
and facilitating interaction between the government and the industrial sector. Established
in 1961, KSIDC is led by a group of professionals from various fields including
Engineering, Management, Finance and Law. 24
25. Kerala State Industrial Development CorporationAreas of focusIdentification of
Investment IdeasTranslating ideas into concrete proposalsFeasibility Study, Project
EvaluationFinancial Structuring, Loan SyndicationAssisting in Central and State
Govt. ClearancesDevelopment and Administration of Growth CentersIndustrial and
Infrastructure development 25
26. specialized financial institutionsExport and Import Bank (EXIM Bank),Export
Credit Guarantee Corporation (ECGC)Industrial Reconstruction Bank of India (IRBI) 26
27. specialized financial institutionsThe special purpose finance institutions, IRBI
provides finance for rehabilitation of sick units, which show signs of recovery.EXIM
Bank provides finance and other related services for import and export of goods and for
export project. It functions as a coordinating agency in export finance.ECGC provides
the credit insurance cover against the commercial and other risks inherent in the exports
27
28. Forms of AssistanceDirect financial Assistance Fund based assistance Rupee
term loans Foreign currency term loans Subscription to equity shares Seed
capitalIndirect Financial Assistance Deferred payment guarantee Guarantee for
foreign currency loans underwriting 28
29. Direct financial Assistance Fund based assistance provided in both rupees and in
foreign currency. Apart from this, funds are provided by subscription to the equity shares
of the company. Rupee term loans extended for site, construction, factory and other
buildings purchase of plant and machinery, as well as, for technical know how,
preliminary and pre-operative expenses, and margin money for working capital.
Generally, the repayment period is five to fifteen years with an initial moratorium of six
months 29
30. Direct financial Assistance Foreign currency term loans fund the acquisition of fixed
assets like plant and machinery, as well as to acquire technical know how from foreign
suppliers Subscription to equity shares This form of assistance is available to the
project only when institutions are sure that the project is not able to take any more debt,
although the proposed venture is worthwhile. It is often a very small part of the project
cost 30
31. Direct financial Assistance Seed capital All borrowers have to submit their
proposals, through their respective SFCs and SIDCs. This assistance carries interest as
low as one percent, and can be payable on easy terms, subject to the applicability of
certain conditions. 31
32. Indirect Financial Assistance Deferred payment guarantee Financial institutions
provide this deferred credit facility to the equipment suppliers on behalf of their clients
and charge guarantee commission to the client. Guarantee is provided for the purchase
of both indigenous and imported equipment. Most scheduled banks and co- operative
banks provide this facility Guarantee for foreign currency loans This kind of
guarantee is provided to the client as raised term loans from overseas market, directly.
Underwriting The process by which investment bankers raise investment capital from
investors on behalf of corporations and governments that are issuing securities (both
equity and debt). 32
33. Special SchemesBill rediscounting schemesSuppliers line of creditSoft loan
schemeEquipment finance scheme 33
34. Term Loan procedureSubmission of loan applicationInitial processing of loan
applicationAppraisal of the proposed projectIssue of the letter of
sanctionAcceptance of the terms and conditions by the borrowing unitExecution of
the loan agreementDisbursement of loansCreation of securityMonitoring 34
35. Project appraisalSystematic and comprehensive review of theeconomic,
environmental, c financial, social,technical and other such aspects of a project
todetermine if it will meet its objectives. 35
36. Project appraisalMarket appraisalTechnical appraisalFinancial
appraisalEconomic appraisalManagerial appraisal 36
37. Key financial indicatorsInternal rate of returnDebt service coverage ratioBreak
even point 37