IndiaCSR News Network
NEW DELHI: Government of India has paved the way for IFCI Ltd., the country’s oldest Financial Institution, to become a Government Company with effect from 7th April, 2015 by acquiring 6 Crore Preference Shares of Rs. 10 each of IFCI from certain Public Sector Banks.
A ‘Government Company’ is defined in section 2(45) of the Companies Act, 2013 as a company in which not less than fifty one per cent of the paid-up share capital is held by central government, or by any state government or governments, or partly by the central government and partly by one or more state governments and it includes a company which is a subsidiary of a government company defined thus
IFCI Ltd. was set up in 1948 as Industrial Finance Corporation of India, a Statutory Corporation to provide medium and long term finance to industry.
IFCI was provided access to low-cost funds through SLR Bonds guaranteed by the Government of India, which in turn enabled it to provide loans and advances to corporate borrowers at concessional rates. After repeal of IFCI Act in 1993, IFCI became a Public Limited Company registered under the Companies Act, 1956.
It became a Government controlled company subsequent to acquisition of equity shareholding to the extent of 55.53% by Government of India by December, 2012. With the acquisition of the said Preference Shares, GOI increased its holding from 47.93 percent to 51.04 percent of the total paid-up share capital. As a result, IFCI Ltd. has become a ‘Government Company’ as per the provisions of the Companies Act, 2013.
IFCI Ltd. is also registered with the Reserve Bank of India (RBI) as a systemically important non-deposit taking Non-Banking Finance Company (NBFC-ND-SI).The primary business of IFCI is to provide medium to long term financial assistance to the manufacturing, services and infrastructure sectors.
Through its subsidiaries and associate organizations, IFCI has diversified into a range of other businesses including broking, venture capital, financial advisory, depository services, factoring etc. As part of its development mandate, IFCI was one of the promoters of National Stock Exchange (NSE), Stock Holding Corporation of India Ltd (SHCIL), Technical Consultancy Organizations (TCOs) and social sector institutions like Rashtriya Gramin Vikas Nidhi (RGVN), Management Development Institute (MDI) and Institute of Leadership Development (ILD).
In order to promote entrepreneurship among the scheduled castes and to provide concessional finance to them, IFCI Group has been entrusted with the setting up of a `Venture Capital Fund for Scheduled Castes’ of the Government with an initial capital of Rs. 200 crore, which can be supplemented every year
IFCI has also been provided another Rs. 200 Crore for ‘Credit Enhancement Guarantee Scheme for Scheduled Castes’ Entrepreneurs’ under the sponsorship of the Government. Recently, CARE Ratings have upgraded the rating assigned to debt instruments of IFCI upward from ”CARE A” to ”CARE A+” for long term borrowings, from ”CARE A1” to ”CARE A1+” for short term bank facilities and Commercial Papers and from ”CARE A-” to ”CARE A” for Subordinate Bonds.
After becoming a Government Company, IFCI is now better equipped to participate in the Country’s growth movement by lending to diversified industries and thus contribute its share towards making `MAKE IN INDIA’ programme a success.
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