Development Finance Institutions
The Need of DFIs
Classification of DFIs
| All India DFIs | Special DFIs | Investment Institutions | Refinance Institutions | State Level DFIs |
| IFCI
IDBI SIDBI ICICI ICICI ceased to be a DFI and converted into a Bank on 30 March 2002. IDBI was converted into a Bank on 11 October 2004. |
EXIM Bank
IFCI Venture Capitalist Fund Tourism Finance Corporation of India. IDFC. |
LIC
Union Trust of India. General Insurance Corporation. |
National Housing Board.
NABARD. |
State Financial Corporation.
State Industrial Development Corporations. |
All India Development Finance Institutions
| IFCI | ICICI | IDBI | SIDBI |
| IFCI was the first DFI to be setup in 1948. | It was setup in January 1995. | The IDBI was initially set up as a Subsidiary of the RBI. In February 1976, IDBI was made fully autonomous. | SIDBI was setup as a subsidiary of IDBI in 1989. |
| With Effect from 1 July 1993, IFCI has been converted into Public Limited Company. | With effect from April 2002, ICICI has been converted into a Bank. | The IDBI was designated as apex organisation in the field of Development Financing. However, it was converted in a bank wef Oct 2004. | The SIDBI was designated as apex organisation in the field of Small Scale Finance.
The Union Budget of 1998-99 proposed the delinking of SIDBI from IDBI. |
| The key function of IFCI was; granting long-term loans(25 years and above); Guaranteeing rupee loans floated in open markets by industries; Underwriting of shares and debentures; Providing guarantees for industries. | The key functions of ICICI were; to provide long term or medium term loans or equity participation; Guaranteeing loans from other private sources; providing consultancy services to industry. | The key functions of IDBI were; it provides refinance against loans granted to industries; it subscribed to the share capital and bond issues of other DFIs; it also acted as the coordinator of DFIs at all India level. | The key function of SIDBI was; to provide assistance to small scale units; initiating steps for technological up gradation and modernization of SSIs; expanding the marketing channel for the Small Scale Industries product; promotion of employment creating SSIs. |
| IFCI was a public sector DFI. | The ICICI differed from IFCI and IDBI with respect to ownership, management and lending operation. ICICI was a Private sector DFI. | It was a Public sector DFI. |
Investment Institutions
| UTI | LIC | GIC |
| The UTI was setup on Nov 1963 after Parliament passed the UTI Act. | LIC was setup in 1956 after the insurance business was nationalised. | The GIC was formed by the central government in 1971. |
| The objective of UTI was to channel the savings of people into equities and corporate debts. The flagship scheme of the UTI was called Unit Scheme 64. | The objective of LIC is to provide assistance in the form of term loans; subscription of shares and debentures;resource support to financial institutions and Life insurance coverages. | The GIC had four subsidiaries; National Insurance Co; New India Assurance; Oriental Insurance; and United India Insurance. |
| In 2002, the Union Cabinet had decided to split UTI into UTI 1 and UTI 2 as a result of the prolonged crisis in UTI. | The General Insurance Nationalisation Amendment Act, 2002, has delinked the GIC from its four subsidiaries. |
By
Himanshu Arora
Doctoral Scholar in Economics & Senior Research Fellow, CDS, Jawaharlal Nehru University
