PRESENTATION ON INDUSTRIAL FINANCIAL SYSTEM IN INDIA AND SOURCES OF FINANCE NEED FOR INDUSTRIAL FINANCE

1. INDUSTRIAL FINANCE IN INDIA
PRESENTED BY
DIPAYAN
GOSWAMI

2. INTRODUCTION
• Finance is considered as the life-force of industry. Without
getting adequate finance industrial development is not at all
possible. Due to the lack of adequate finance, industrial
development in India could not achieve a significant position
and shape. Industries require both short term, medium term
and long term finance for meeting their requirements of fixed
capital expenditure and also to meet their working capital
needs.

3. DEFINITIO
N
Describing a company or economy that engages largely or
exclusively in the manufacture of products. An industrial
company, for example, makes a good, which it then sells either
to retailers or directly to consumers. An industrial company is
characterized by having a disproportionate amount of its GDP
growth in industrial companies and government agencies.

4. SOURCES OF INDUSTRIAL FINANCE
• Shares & debentures.
• Public deposit
• Commercial banks
• Term landing institutions ( ICICI, IFCI, SIDC)
• Retained profits

5. SHARES &
DEBENTURES
• Indian industries are normally raising a major portion of their
capital by selling shares in low denominations of Rs. 10 each.
Share may be a preference share or an ordinary share.
Debentures are also issued in the capital market by the
companies and in recent years convertible debentures are
gradually becoming more popular.

6. PUBLIC
DEPOSIT
• Another source of industrial finance is the deposit raised from
the public. Ahmedabad textile industry was primarily
established on the basis of public deposit. Besides, Cotton Mills
of Mumbai and Sholapur. Tea Gardens of Assam and Bengal
have also raised their fixed capital in sufficient quantity
through public deposit.

7. COMMERCIAL
BANKS
• Commercial banks are also offering short-term loans on cash-
credit basis on the security of stock and on the additional
guarantee of the managing agent. The commercial banks are
generally advancing loan for meeting working capital needs of
the industries in the form of advancing loan, overdraft, and
cash credit facilities against government securities and pledge
of stocks. Commercial Banks, nowadays, have been advancing
medium term loan to the industries particularly since the
establishment of IDBI.

8. TERM-LENDING
INSTITUTIONS
• In view of the inadequacy of finance from the above mentioned
sources, various term lending institutions have been developed
to advance loan in order to meet financial requirement of these
industries. These institutions include Industrial Finance
Corporation of India (IFCI), Industrial Credit and Investment
Corporation of India (ICICI), Industrial Development Bank of
India (IDBI), (IRCI), State Financial Corporations and State
Industrial Development Corporations (in different states).
Besides,-Life Insurance Corporation of India (LICI) and Unit
Trust of India are also providing a good amount of loan to
Indian industries and emerged as a most important source of
industrial finance in recent years.

9. NEED FOR INDUSTRIAL
FINANCE
• A business firm, whether it is owned by an individual proprietor
or partners or shareholders, undertakes business in
anticipation of future gain or return from it. For setting up in
business the firm has to make advance expenditure before it
receives any return.
• The machines are to be purchased, the factory space is to be
purchased or leased, raw materials are to be bought and wages
and salaries arc to be paid to the employees for their services
Finance is needed to undertake all such activities in business.

10. NEED FOR INDUSTRIAL FINANCE
CONTD.…
• The money which the firm commits on its business is expected
to come back to the firm in the form of return m due coursed
of time. The firm has to wait for this. Similarly, a manufactures
has to produce goods be ore he can sell them He can do only
when he has adequate finances for production of his goods. It
is true that some industries goods are sold before they are
made but even in such industries the entrepreneurs need
finance to equip themselves for necessary facilities of
production of the goods and services. Finance is thus a
necessary precondition for business both for its initiation and
smooth running

11. THANK YOU