INSTITUTIONAL

BORROWINGS
 Institutional finance or other wise called
institutional borrowings means finance raised
from financial institutions other than
commercial banks.
 These financial institutions act as an
intermediary or link between savers and
investors.
 They provide finance and financial services in
areas which are outside the purview of
traditional commercial banking.
 Institutions aim at promoting the industrial
development of a country and are called
‘development banks’. The main role of a
financial institution is to transfer financial
resources from those who save it to those who
are in need of financial resources for economic
activity.
Advantages 
  Both risk as well as loan capital are available.
  New companies which may find it difficult to raise
finance from the public can get it from these
institutions.
 Loans and guarantees in foreign currency and deferred
payment facilities are available.
  The rate of interest and repayment procedures are
convenient and economical.
 Facilities for repayment in easy installments are made
available to the deserving concerns.
 Limitations
 The concern requiring finance from public financial
institutions has to submit itself to a thorough
investigation that involves a number of formalities and
documents.
 Many deserving concerns may fail to get assistance for
want of security and other conditions laid down by these
institutions.
 Institutions place restrictions on the autonomy of
management. They lay down a convertibility clause in loan
agreements.
 In some cases, they insist on the appointment of their
nominees to the Board of Directors of the borrowing company.
 Financial Institutions

 Industrial Finance Corporation of India (IFCI)

 State Financial Corporations (SFC)
 Industrial Credit and Investment Corporation of
India (ICICI)
 Industrial Development Bank of India (IDBI)
 Industrial Investment Bank of India Ltd.