presentation

on
state financial corporation

Presented by:- parul jain

Vanadna Tyagi
Jitendra singh
 Introduction
 Introduction - A Central Industrial Finance
corporation was set up under the industrial
Finance corporations Act, 1948 in order to
provide medium and long term credit to
industrial undertakings which fall outside
normal activities of commercial banks.
 In the act Financial corporations are
established under section 3 A of the State
financial Corporations Act of 1951.
 main features of the State financial
Corporations
1. The bill provides that the state government may, by
notification in the official gazette, establish a
financial corporation for the state.
2. The share capital shall be fixed by the State
government but shall not exceed Rs 2crores .
3. Shares of the corporation will be guaranteed by the
State government as to the re – payment of
principal and the payment of a minimum dividend
to be prescribed in consultation with the central
government.
4:- The corporation may accept deposits from the
public repayable after not less than five years,
subject to the maximum not exceeding the paid
up capital.

5:- The corporation will be managed by a board

consisting of a majority of Directors nominated by
the Sate governments , The Reserve banks and
the industrial Finance corporation of India.
6. The corporation will be authorized to make
long term loans to industrial concerns which are
repayable within a period not exceeding 25
years
 Financial resources of the SFC’s:
1. Their own Share capital
2. Income from investment and repayment of
loans
3. Sale of bonds
4. Loans from the IDBI
5. Borrowings from the Reserve Bank of India
6. Deposits from the Public
7. Loans from State Governments.
 Role of sfc
• a) The manufacturing, preservation or processing of
goods.
• b) The mining or development of mines
• c) The hotel industry
• d) The transport of passengers or goods by road or by
water or by air ( or ropeway or lift )
• e) The generation or distribution of electricity or any
other form of power ,
• f) The maintenance, repair, testing or servicing of
machinery of any description
• . g) Assembling , repairing or packaging and article with
the aid of machinery or power h)The setting up or
development of an industrial area industrial estate
• i)Fishing or providing shore facilities for fishing or
maintenance
• j) Providing weight bridge facilities
• k)Providing engineering, technical, financial,
management, marketing or other services or facilities
for industry.
• l)Providing medical, health or other allied services
 functions of State Financial Corporations
• To provide loans to small scale industries, firms and companies.
• Project conceptualization and related services, including
guidance in relation to selection of projects, preparation of
feasibility studies, capital structuring, techno –economic
feasibility, financial engineering, project management design etc.
•To provide the underwriting facilities for stocks, shares and
debentures.
•To act as an agent of the IFCI or the central government in
respect of loans sanctioned to the industries.
• Placement of debt – equity including design of the structure of
instruments, placement of instruments with financial institutions,
bank etc.
 . LIST OF 18 STATE FINANCING
CORPORATIONS IN INDIA
• . Assam Financial Corporation
• Andhra Pradesh State Financial Corporation
• Bihar State Financial Corporation
• Delhi Financial Corporation
• Gujarat State Financial Corporation
• The Economic Development Corporation of Goa
• Haryana Financial Corporation
• Himachal Pradesh Financial Corporation
• Jammu & Kashmir State Financial Corporation
• Karnataka State Financial Corporation
• Kerala Financial Corporation
• Madhya Pradesh Financial Corporation
• Maharashtra State Financial Corporation
• Orissa State Financial Corporation
• Punjab Financial Corporation
• Rajasthan Financial Corporation
• Uttar Pradesh financial corporation
• West Bengal financial corporation
• Tamil Nadu Industrial Development Corporation Ltd.
 TAMIL NADU INDUSTRIAL INVESTMENT
CORPORATION INTRODUCTION
TIIC was incorporated as a company under the
Companies Act. TIIC is a State Financial
Institution extending financial assistance for the
creation of industrial fixed assets for starting
new industrial units as well as for expansion,
modernization and diversification of existing
units.
 2. TYPE OF ASISTANCE:
• TIIC offers long and medium term financial
assistance in the following forms:
a) Term Loans
b) Term Loan and working capital assistance under
the Single Window Scheme.
c) Lease financing for machinery/equipments.
d) Hire Purchase financing for
machinery/equipments.
e) Factoring ( i.e. Bill discounting).
 ELIGIBLE ACTIVITIES:
• a) Manufacturing, Processing or preservation of goods.
• b) Generation of electricity or any form of power including wind
mills.
• c) Setting up of nursing homes/hospitals and purchase of electro
medical equipments.
• d) Hotels and Restaurants.
• e) Purchase of vehicles for material/goods transportation and for
transport of passengers.
• f) Facilities for preservation of marine products and food items
including cold storage.
• g) Commercial complex/Storage godown/ Marriage Hall.
• h) Computer Training Institutions
 QUANTUM OF LOAN ASSISTANCE
TIIC provides term loan assistance upto
maximum of Rs. 800 lakhs. TIIC has 8 Regional
Offices and 36 Branches in Tamilnadu. Branch
Offices have been delegated with powers to
sanction Loans upto Rs.30. lakhs. Loan above
Rs.30.00 lakhs are considered by Head Office.
 5.HOW TO APPLY
: For getting financial assistance from TIIC, one
has to apply in the Prescribed application forms
available in all the TIIC offices. There are
separate application forms for various schemes.
 . APPRAISAL OF PROJECT BY TIIC:
: The appraises the application for the technical
feasibility and economic viability before
according sanction. The applicant should satisfy
TIIC regarding the marketability and furnish the
details of the cost of production, cash flow etc.,
during the loan period to assess the pay back
period.
 7. RATE OF INTEREST:
• The rate of intrest for the term loan is in the
range of 12.5% p.a to 16% p.a. based on the
quantum of loan and nature of industries. A
rebate of 1% p.a. will be allowed for prompt
payment at the end of every year.
 8. FINANCIAL NORMS:
1.Debt-Equity Ratio:-The maximum debt-equity ratio for both SSI and medium Scale
units shall be 2:1.
2.Promoter’s Contribution:-The minimum promoter’s contribution is around 22.5% to
35%. Higher pormoter;s contribution will be stipulated wherever necessary.
3. Margin of Security: For term loans, minimum of 15% to 25% security margin on
fixed assets is stipulated.
4. Collateral Security:-In addition to primary security of assets financed, TIIC may
Stipulate collateral security wherever needed.
5.Repayment Period:-Loan repayment is generally spread over a period of 5 to 9 Years
with a moratorium ranging from 3 months to two years
6. Stamp Duty:-SSI are exempted from levy of stamp duty in respect of Mortgage
deed.