KSFC Summer Final

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ISATIONAL STUDY OF KSFC
INTRODUCTION
INDUSTRY PROFILE
THE GROWTH AND FACETS OF DEVELOPMENT BANKING.
One of the outstanding phenomena of the Indian economy

in the post independence era is the progress of development banks, which era
specialized financial institution providing medium and long term loans and risk
capital also endeavoring to perform potential role in a variety of ways. India is
known very well served by a network of development banks, which have made
valuable contribution to the industrial development of the country and growth of
the economy generally.
Beginning with establishment of the industrial finance corporation

of India, with effect from July 1, 1948, India has traversed a great deal in the
sphere of development banking. In fact, it would not be wrong to say that in the
field of development banking. In fact, it would not be wrong to say that in the field
of development banking, India is fairly advanced country, with a capacity for
providing technical assistance to the less developed countries in establishing and
running development banks.
SCOPE OF DEVELOPMENT BANKS:
Development banking is essentially a phenomena of the post war (2) years.

One of the most important reasons for the erstwhile colonies and dependencies to
secure political independence was the desire to achieve and maintain high rates of
MSNM BESANT INSTITUTE OF PG STUDIES Page 1

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economic growth. Although generally developments banks and are meant to meet
the capital requirements of the private sector of an industry, with increasing state
participation in industrial growth, the development banks can also acts as providers
of long term finance to public sector institutions, on the consideration that a
financial institution can do a better job of investment appraisal and surveillance of
a project than a government department can.
STATE FINANCIAL CORPORATION:
STATE FINANCE CORPORATION ACT 1951

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 the normal activities of
Commercial Banks. The State GOVT expressed their desire that similar
Corporations be set up in States to supplement the work of the Industrial Finance
Corporation. State Government also expressed that the State Corporations be
established under special statute in order to make it possible to incorporate in the
Constitution necessary provisions in regard to majority control by the Government,
guaranteed by the State Government in regard to the payment of principal. In order
to implement the views expressed by the State Governments the State Financial
Corporation Bill was introduced in the Parliament.

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STATEMENT OF OBJECTS AND REASONS
In order to provide medium and long term credit to industrial

undertakings, which fall outside the normal activities of Commercial Banks, a
Central Industrial Finance Corporation was set up under the Industrial Finance
Corporation Act, 1948 (XV of 1948). The State Governments wish that similar
Corporations should also be set up in the States to supplement the work of the
Industrial Finance Corporation. The intention is that the State Corporations will
confine their activities to financing medium and small scale Industrial and will, as
far as possible, consider only such cases as are outside the scope of The Industrial
Finance Corporation. The State Governments also consider that the State
Corporations should be established under a special Statute in order to make it
possible to Incorporate in the Constitution necessary provisions in regard to
majority control by Government, guaranteed by the State Government in regard to
the repayment of principal, And payment of a minimum rate of dividend on the
shares, restriction on distribution of Profits and special powers for the
enforcement of its claims and recovery of dues. Since the incorporation, regulation
and winding up of such Corporations fall within the purview of Parliament vide
Entry No.43 of the Union List—The State Governments have requested the
Government of India to enact the necessary enabling legislation, which is sought to
be effected by this Bill.

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The main features of the Bill are as follows:—
(I) The Bill provides that the State Government may, by notification in the Official
Gazette, establish a Financial Corporation for the State.
(ii) The share capital shall be fixed by the State Government but shall not exceed
Rs. 2 crores. The issue of the shares to the public will be limited to 25 percent, of
the share capital and the rest will be held by the State Government, the Reserve
Bank, Scheduled Banks, Insurance Companies, and Investment Trusts, Co-
operative Banks and other Financial Institutions.
(iii)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.
(iv) The Corporation will be authorized to issue bonds and debentures for amounts
which together with the contingent liabilities of the Corporation shall not exceed
five-times the amount of the paid-up share capital and the reserve fund of the
Corporation. These bonds and debentures will be guaranteed as to the payment of
the principal and the payment of interest at such rate as may be fixed by the State
Government.
(v) 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.

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(vi) 0p’pThe Corporation will be managed by a Board consisting of a majority of

Directors nominated by the State Government, the Reserve Bank and the Industrial
Finance Corporation of India.
(vii) The Corporation will be authorized to make long-term loans to industrial

concerns and to guarantee loans raised by industrial concerns which are repayable
within a period of not exceeding 25 years. The Corporation will be further
authorized to underwrite the issue of stocks, shares, bonds or debentures by
industrial concerns, subject to the provision that the Corporation will be required to
dispose of any shares, etc., acquired by it in fulfillment of its underwriting liability
within a period of 7 years.
(viii) Until a reserve fund is created equal to the paid-up share capital of the
Corporation and until the State Government has been repaid all amounts paid by
them, if any, in fulfillment of the guarantee liability, the rate of dividend shall not
exceed the rate guaranteed by the State Government. Under no circumstances shall
the dividend exceed 5 per cent, per annum and surplus profits will be re-payable to
the State Government.
(ix) The Corporation will have special privileges in the matter of enforcement of its
claims against borrowers.
STATE FINANCIAL CORPORATION:

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For a vast country like India with a federal set up it is quite obvious that
development banks at the state level are necessary. This point was set forth as
already mentioned report of the central banking enquiry committee more than six
decades back. The idea of having special industrial financial institutions in the
various states was revived at the time of establishment of the IFCI.
Speaking on a motion to refer the IFC bill to a state

committee in the central legislature the then finance minister to small and medium
size industries at the state level, said he would persuade the provisions to set up
corporation similar to the IFC, to aid small scale industrial units. He also pointed
out that institutions to finance large scale and small scale industries co existed in
several other countries. In 1950 the government of India circulated a draft bill for
eliciting the views of the states and of the RBI. The state financial corporations’
bill was introduced in parliament in December 1950 and passed in 1951. It came
into force on August 1, 1952.
Thereafter, starting with the Punjab SFC in 1953, SFCs

were established in various states. All the states of the Indian union excepting
Tamil Nadu , Nagaland, Manipur, Tripura , Meghalaya , have set up financial
corporation under SFCs Act, taking the total to 18 now. The Assam Financial
Corporation operates in Tripura and Manipur. The union territories of Chandigarh,
Goa, Daman and Diu, Dadar and Nagar Haveli and Pondicherry are being served
by the Delhi, Maharashtra, Gujarat, Tamil Nadu corporations respectively.
OBJECTIVES OF SFCs

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The SFCs have been authorized under sec 25 of the SFCs Act to carry on the
following kinds of business,
I. It is established with definite purpose and objective of speedy

industrialization of the state.
II. Granting of loans and advances to or the subscribing to debentures of

industrialization concern repayable with a period not exceeding 20 years
from the date on which they are guaranteed or subscribing as the case may
be.
III. Underwriting of the issue of stocks, shares, bonds or debentures by industrial

concerns.
IV. Guarantying on such terms and conditions as may be agreed upon raised by
industrial concern that are repayable within a period not exceeding 20 years
capital are floated in the public market.
V. Generally doing of all such acts and things as may be incidental to or

consequential upon the exercises of their powers or the discharging of their
duties under the act.
VI. It gives industrial finance.
FUNCTIONS AND TYPES OF ASSISTANCE:

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A SFC is authorized by statue to provide different forms of assistance:
a) Granting loans or advances for periods not exceeding 20 years;
b) Subscribing debentures repayable within 20 years;
c) Guaranteeing loans raised by industrial concerns either in the public market

or from scheduled or co-operative banks and repayable within 20 years;
d) Guaranteeing deferred payments due from any industrial concern for

purchase of capital goods within India;
e) Underwriting the issue of stocks, bonds or debentures;
f) Subscribing to stocks, shares, bonds or debentures of industrial concerns

from out of the special capital referred to the above.

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A corporation is also authorized to act as the agent of the central

government, state government, the IDBI or any other notified financial
institution in matters connected with grant of loans or advances or
subscription to debentures.
NUMBER OF STATE FINANCIAL CORPORATION:
At present there are 18 SFCs in the country.17 of which were set

up under the SFCs Act 1951. Tamil Nadu Industrial investment corporation
ltd set up in 1949 under the companies Act as Madras Industrial Investment
Corporation also Functions as a Full- Fledged SFC
1) Andhra Pradesh state Financial Corporation
2) Assam Financial Corporation
3) Bihar state Financial Corporation
4) Delhi Financial Corporation
5) Gujarat state Financial Corporation
6) Haryana Financial Corporation
7) Himachal Pradesh Financial Corporation
8) Jammu & Kashmir state Financial Corporation
9) Karnataka State Financial Corporation

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10) Kerala Financial Corporation
11) Madhya Pradesh Financial Corporation
12) Maharashtra state Financial Corporation
13) Orissa state Financial Corporation
14) Punjab Financial Corporation
15) Rajasthan Financial Corporation
16) Tamil Nadu Industrial Investment Corporation Ltd
17) Uttar Pradesh Financial Corporation
18) West Bengal Financial Corporation
OBJECTIVES OF THE STUDY
1) To study the various departments in the organization.
2) To study the co-relation between the theoretical concept and practical

application of this concept in the organization.

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3) To know about the services provided by the organization through the

various branches.
KARNATAKA STATE FINANCIAL CORPORATION:
INTRODUCTION:
Karnataka State Financial Corporation is a state level financial institution

established by state government in the year-1959, under the state financial
corporation Act-1951 to meet mainly the long term financial needs of Small and
Medium Enterprises (SMEs) in the state of Karnataka. In 1950 the government of
India circulated a draft bill for eliciting the views of the state and of the RBI. The
SFCs bill was introduced in parliament in December 1950 and passed in 1951; it
came into force on AUG 1, 1951.

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The KSFC which prior to November 1, 1973 was known as the

Mysore state financial corporation was established on March 30, 1959 that is to say
the last but one day of the financial year 1959-60.Although STATE FINANCIAL
CORPORATION ACT came into effect as far back as August 1, 1952.the then
government of Mysore established corporation several years later. In the reserve
bank report on currency and finance for the year 1955-56 it was stated that the
MYSORE GOVRNMENT have also decided to set up a financial corporation.
However this event happened four years later. It has not been possible to find out
the reasons for the delay in the establishment of the corporation. As a pioneering
and responsive financial institution KSFC is fine tuned to fulfill the plans and
aspiration of entrepreneurs by extending all possible assistance.
In the 50 years of existence, KSFC has contributed most

significantly for the growth of small scale industries, backward area development
and promotion of first generation entrepreneurs. Its achievement in these areas is
unparalleled.
KSFC, as ISO 9001:2000 certified organization is proud to have

played a major role in the industrial development of the state. It is also the proud
privilege of KSFC to have assisted many industries that are internationally
recognized like the INFOSYS, BIOCON, BPL, etc.
Area of operation
KSFC operates within the state of Karnataka. Industrial/service projects setup or to

be set up in Karnataka are eligible for operation. KSFC operates within a wide
spectrum of schemes which can take care of almost every category of
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entrepreneurs. The industries assisted vary from very small projects in the tiny
sector to more sophisticated projects in the fields of electronics,
telecommunication, pharmaceutical, engineering, software, and Bio-Technology,
know-how, etc.
Quality objective
The managing director, other executives and staff of the organization are
committed to ensuring that the system is effective in achieving quality and
satisfying customers both now and in the future. To this end, KSFC will strive
continually improve upon their products, service, and quality management system.
KSFC have set measurable quality objective, which will be measured against and
reported upon all regular intervals.
To foster a culture of continual improvement the organization will continue to

recognize and reward effective teamwork and individual achievement. The
organization shall also review its products process and service regularly. KSFC
invests in people and their emphasis on training acts as a testimonony to KSFC
commitment in this area.

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MISSION STATEMENT:
“KSFC is committed to nature develop and service the SME sector through need
based product and service.”
VISION STATEMENT:

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“Vision of KSFC is to be a premier financial institution in the country by

providing effective and efficient service to all sectors of people under one roof.
Its vision is all for one and one for all.”
GOALS
“Overall development of small scale and medium scale industries.”
QUALITY POLICY
“Customer satisfaction through professional management and team work.”
SERVICE NETWORK OF KSFC:
KSFC services the nook and corner of Karnataka with its network of 7
zonal offices , 3 super ‘A’ grade branch offices,12 ‘A’ grade branch offices, and 14
‘B’ grade branch offices with empowered and decentralized administrative system.
It is the only term lending financial institution in the state of Karnataka with such a
wide spread network.
HEAD OFFICE:
KSFC head office is located at,

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M/s Karnataka state financial corporation

“KSFC BHAVAN”
#1/1 timmaiah road
Near cantonment railway station
Bangalore -560052
Tel: 22250130
Web: www.ksfc.in
SUPER ‘A’ GRADE BRANCHES:
(1) M.G ROAD BRANCH BENGALURU.
(2) JAYANAGAR BRANCH BENGALURU.
(3) RAJAJINAGAR BRANCH BENGALURU.
 ‘A’ GRADE BRANCHES:
(1) BENGALURU RURAL. (7) MANGLORE.
(2) BELGUAM. (8) HASSAN.
(3) DHARWAD. (9) MANDYA.
(4) MYSORE. (10) KOLAR.

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(5) GULBARGA. (11) BELLARY.
(6) TUMKUR. (12) UDUPI.
 ‘B’ GRADE BRANCHES:
1) BAGALKOT. 8) GADAG
2) BIDAR. 9) HAVERI
3) BIJAPUR. 10) KARWAR
4) CHAMARAJ NAGAR. 11) KOPPALA
5) CHIKKAMAGALORE. 12) MADIKERI
6) CHITRADURGA. 13) RAICHUR
7) DAVANAGERE. 14) SHOMOGGA

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 ZONAL BRANCHES
(1) BANGALURU RURAL

(2) MANGLORE
(3) BELGAUM
(4) DHARWAD
(5) MYSORE
(6) GULBARGA
(7) DAVANAGERE

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FINANCIAL SERVICES OF KSFC
KSFC is a financial super market. It extends all types of financial

assistance in the form of long term loans, short term loans (in the form of corporate
loans), lease finance, hire purchase finance, merchant banking and financial service
etc. KSFC assistance covers almost all types of industrial and service sectors.
As per SFC’s act, the following activities are eligible for financial
assistance.
 Manufacture, preservation or process goods
 Mining or development of mines
 Hotel industry
 Acquisition of transport vehicle (passenger/goods)
 Maintenance, repair testing or servicing of machine
 Setting up or development of an industrial area or estate
 Providing weigh bridge facility
 Providing medical, health or other allied services.
 Construction activity

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 Development, maintenance and construction of roads
 Providing commercial complex facilities and community centers including

conference halls
 Floriculture
 Tissue culture, fish culture, poultry farming breeding and hatcheries
 Service industry
 Research and development activities
 Such other activities approved by the SIDBI from time to time
LENDING POLICY – NORMS AND PARAMETERS
Lending policy of the corporation:
The corporation formulates lending policy of the corporation at the

beginning of each year. The loans are given based on the lending policy of the
corporation. The lending policy covers various aspects like the group exposure,
thrust, and sectors in the negative list. The industry policies of the state government
and central government are also taken into account while formulating the lending
policy of the corporation.
Norms and parameters:
Cost of project: the project cost ceiling for extending financial assistance
by KSFC is Rs.12.00 crores in respect of SSI and MSI. However, in respect of

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service sector projects, the ceiling cost of the project is Rs.20.00 crores. The
entrepreneurs whose project cost exceeds the above limit will have to approach
banks or other institution.
Promoter’s Contribution:
The minimum promoter’s contribution as the % of the total project cost

varies between 12.5% and 25% depending on the location of the project, various
schemes of SIDBI operated by the corporation, category of entrepreneurs etc.
Debt equity ratio:
The corporation adopts the norms of promoters’ contribution and debt equity ratio
etc, as per the guidelines by the SIDBI from time to time.
The present norms are D.E.R
Loans up to Rs 10.00 lakhs up to 3:1
Loans above Rs 10.00 lakhs up to 2:1
Loans under TDMF scheme up to 4:1
Repayment period:

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The repayment period of the term loan varies between 3 to 8 years

including moratorium period of max 2 years depending on the period of
implementation. In respect of corporate loan, the max repayment period is 30
months including six month moratorium.
SCHEMES OF THE CORPORATION
 NATIONAL EQUITY FUND SCHEMES
The objective of the schemes is to provide

equity type of support to entrepreneurs. Assistance from NEF helps
the small scale units in strengthening their equity base and thereby
improving their acceptability for term financing.
 TECHNOLOGY DEVELOPME AND MODERNISATION
The objective of the scheme is to encourage the existing SSI to

modernize their production facilities in order to improve their

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productivity, quality etc. and compete successfully in domestic and

international market.
 ACQUISITION OF ISO 9000 SERIES CERTIFICATION
The purpose of assistance will be towards meeting the expenses on

consultancy, documentation audit, certification fee etc.
 ASSISTANCE FOR MARKETING ENTERPRISES
The objective of the scheme is to assist entrepreneurs to set up

sales outlets or renovation, expansion of existing sales outlets for
marketing products irrespective of whether it is product of a small
scale industry or not.
 INTEREST SUBSIDY SCHEME OF GOK
To encourage small and medium scale entrepreneurs and upgrade

the technology and modernize their existing production facilities
the government of Karnataka has come with an interest subsidy
scheme. This scheme is applicable to the units financed by KSFC
and KSIIDC only.

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 CREDIT LINKED CAPITAL SUBSIDY SCHEME (CLCSS)
The objective of the scheme is to facilitate technology up gradation

of SSI units in specified products/ sub sector by providing 12%
capital subsidy for induction of proven technologies approved
under the scheme.
 ASSISTANCE TO ENTERTAINMENT INDUSTRY
The objective of the scheme is to provide financial assistance for

the construction / purchase of cinema halls and multiplex,
production of TV serials and feature films as well as software for
visual media publicity to be set up/ produced/ filmed within
Karnataka.
 ASSISTANCE TO COMMERCIAL COMPLEXES
The objective of the scheme is to provide assistance to commercial

complexes which are an important infrastructure for the growth of
SME service units, marketing outlets and for small business.
 NON CONVERTIBLE DEBENTURES
This scheme was introduced to subscribe the private placement of

the debentures issued by the corporate entities. The proceeds of

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this debenture issue should be utilized by the companies to meet

their long term working capital.
 FOREIGN LETTER OF CREDIT.
KSFC has been operating the scheme of opening foreign letter of

credit for importing the capital goods through commercial bank
exclusively for KSFC borrowers since 1995. The scheme is
operated in the HP&FS department.
PRODUCTS OR SERVICES OF KSFC:

Activities/ Schemes For
Objective / Purpose
Financial Assistance ORGAN
General Scheme For establishment
ISATIONAL of new Tiny/SSI/MSI/ Service units
STUDY OF KSFC
and for expansion/modernization/ diversification of

existing units
Assistance To Construction /For establishing commercial complexes, residential
Infrastructure Related Activities apartments, development of residential layouts, group
housing, industrial estates, software parks, godowns,
warehouses, acquisition of ready built offices/new office
building, sales outlets/showrooms and other
infrastructure projects like flyovers, bridges etc and
construction, development and maintenance of roads.
Assistance To Hotels/For setting up of medium and star category standard
Restaurants hotels in the state capital, district ad taluk HQ, important
tourist centers. The hotels should have boarding, lodging
and restaurant facilities and building plan approved by
local authorities. Assistance for mobile canteens is also
available.
Assistance To Tourism RelatedSetting up of amusement parks, convention centers, travel
Activities and transport, tourist service agencies and restaurants.
Assistance To Doctors/NursingFor setting up clinic, nursing homes, hospitals, and for
Homes/Hospitals/ Electro Medicalacquiring electro- medical equipment
Equipments
Assistance To EntertainmentFor construction and purchase of cinema halls and
Industry multiplexes, production of short TV serials and feature
films, software for visual media publicity.
Single Window Scheme To provide loan both for fixed assets and working capital
to tiny and small-scale units whose project cost does not
exceed Rs. 35 lakhs and working capital requirement does
not exceed Rs. 15 lakhs.
Corporate Loan Scheme Short term loans to the existing successful units who
require urgent working capital funds either to meet gap in
theSTUDIES
MSNM BESANT INSTITUTE OF PG working capital requirements or funds required
Page 26 for
executing the rush of orders and also for meeting statutory
dues to government like payment of income tax, sales tax
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Limits of Assistance
Category Maximum loan
Proprietary ConcernsRs. 200.00 lakh
/Partnership Firms
Private And Public LimitedRs. 500.00 lakh
Companies And Co-Operative
Societies
Debt Equity Ratio

For Loans Up To Rs. 10.003:1
Lakh
For Loans Above Rs. 10.002:1
Lakh
RSR Scheme Flexible
Modernisation Scheme2:1
(Overall)
Promoter’s Contribution
Particulars Minimum percentage on Project Cost
Backward District /Regions 20%
Non- Backward District22.5%
Regions
RSR Flexible
DG Set Loan 10%

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UTI MUTUAL FUND PRODUCTS
KSFC has entered into MOU with UTI MF for distributing UTI MF products. UTI
Mutual Fund is one of the leading Mutual Funds in the country. It has got more
than Rs.1, 35,000 crores worth of assets under its management. It has got more
than 40 schemes to offer, suitable for short term and long term investments in the
category of debt funds, balance funds and equity linked schemes. The
individuals, co-operative societies, private limited companies, charitable trusts and
PF trusts, co-operative banks can invest their inevitable surplus in the UTI Mutual
Fund products.

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The Corporation has got professionally trained persons to guide in the investment
process of UTI Mutual Fund at Head Office and Branch Offices. The service
carries no extra charges.
MONITORING AGENCY
As per SEBI guidelines any company which is issuing more than Rs.500 crore
shares for subscription by the public, has to appoint a monitoring agency. KSFC is
a notified agency for this. The work involves inspection of the books of accounts
and physical assets of the company every six months, until the completion of the
project to verify and certify that the proceeds of the issue are utilized towards the
objects of the issue declared in the prospectus. The companies planning to issue
IPOs can utilize the services of Corporation for Monitoring Agency assignment as
per SEBI guidelines.
NON-LIFE INSURANCE
The Corporation has entered into an MOU with IFFCO TOKIO General Insurance
Co. for marketing its non-life insurance policies.
This would enable the clients of KSFC to have credit and the insurance cover
under one roof. The premium tariffs applicable are same as the other insurance
companies and at no extra service charges. An exclusive Insurance Cell with well-
trained staff is in operation at Head Office and also at all the Branch Offices.
The details of the general perils covered are:
1. Fire

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2. Earth quake
3. Burglary
4. Machinery breakdown
5. Marine
6. Cash safe/transit
7. Fidelity guarantee
8. Household insurance
9. Personal accident cover
10.Medical insurance
11.Vehicle insurance
12. Bankers indemnity
13.Trade and office
14.Electronic equipment
PROCEDURE FOR AVAILING FINANCIAL ASSISTANCE:
A special cell viz., Entrepreneur Guidance (EG) section headed by

an asst. general manager operates at the head office of the corporation to guide
the entrepreneurs’ in respect of various schemes operated by the corporation,
loan facility etc, and also provides information about the minimum requirements
to be given to enable them to be called before the project clearance committee
chaired by the MD which meets once in a week.
A brief project profile will have to be given by the

promoters to enable the same to be placed before the committee. The details are
to be given as per the format provided by the corporation.

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After receipt of the project profile as per the format along with
the bio-data and net worth details, the main promoters are called for discussion
with the committee and after discussion, if the project is found support worthy
the application form is issued on the spot. A set of 3 applications are issued.
The duly filled applications have to be submitted in duplicate along with
various enclosures as per check list given in the application form. One
application may be retained by the entrepreneur for reference. The application
form will have to be submitted along with the applicable processing fees.
The following are the fee structure prevailing at present.

Application processing fees: ½ %of the loan amount.
Upfront fee :
SSI and other ½ % of the loan amount.
Medium scale industries 1% of the loan amount.
The upfront fee will have to be paid at the time of legal

documentation or before availing the first disbursement of the loan amount. The
application processing fee and upfront fee are non refundable. However, in case the
loan application is rejected, refund up to a maximum of 75% of processing fee paid
is allowed on a case to case basis.
Legal fee: In addition to the above, documentation fee for legal

scrutiny of the title deeds, execution of hypothecation and mortgage deed., at 0.1%
of the loan amount.

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The EG department after scrutinizing the application and

the enclosure submitted, draws the receipt for the processing fee paid and
forward the application to the credit department through general manager
(CREDITS). The credit department appraises the project and disburses
funds after the sanction of loan and will monitor the implementation of
the project till the project is completed and final disbursement made.
ORGANISATIONAL STRUCTURE OF KSFC:
KSFC has extensive network, offices encompassing entire Karnataka.

KSFC services every nook and corner of Karnataka with its network of 7 zonal
offices, 3 super ‘A’ grade branch offices, 12 ‘A’ grade branch offices and 14 ‘B’
grade branch offices with en empowered and decentralized administrative system.
It is the only term lending financial institution in the Karnataka with such a
widespread network.
Chairman, Board of directors and the managing director

appointed by the state government, make policy decision and road map to KSFC.

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The day to day administration is monitored by managing director .The head office
have various departments to give service to the customer. KSFC has two executive
directors (FINANACE AND OPERATION) and 6 general manager-corporate
planning, credits, internal audit, zonal, administration and asset reconstruction. At
the senior management level DGMs’, AGMs’, with a legal advisor and two
additional legal advisors are functioning. Mangers and deputy managers are
executing the policies at the middle level. Zonal offices and super ‘A’ grade
branches are headed by DGMs’. All ‘A’ grade branches are headed by AGMs’.
Managers head all ‘B’ grade branches.
ABBREVAITIONS:
MD-MANAGING DIRECTOR
ED- EXICUTIVE DIRECTOR
EA-EXICUTIVE ASSISTANCE
GM-GENERAL MANAGER
DGM-DEPUTY GENERAL MANAGER
IA-INTERNAL AUDIT

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P, A&T- PERSONNEL, ADMINISTRATION AND TRAINING
AR-ASSET RECONSTRUCTION
BO-BRANCH OFFICE
HO-HEAD OFFICE
AGM- ASSISTANT GENERAL MANAGER
HP&FS-HIRE PURHUSE AND FINANCIAL SERVICE DEPARTMENT
FSD-FINANCIAL SERVICES DEPARTMENT
CP-CORPORATE PLANNING
MIS-MANAGEMENT INFORMATION SYSTEM
BD & CR- BUSINESS DEVELOPMENT AND CREDIT RESEARCH.
CGS-CUSTOMER GRIEVIANCE CELL
ZM-ZONAL MANAGER
BM-BRANCH MANAGER.
LIST OF BOARD OF DIRECTORS
S l.
No NAME DESIGNATION
1) Shri. M.R. Sreenivas Murthy, IAS CHAIRMAN
2) Dr. Rajkumar Khatri, IAS DIRECTOR
3) Shri V Madhavan Nair, IAS DIRECTOR
4) Shri. Ramesh Dharmaji DIRECTOR

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5) Mrs V Kalyani DIRECTOR

6) Shri S R Hanchinamani DIRECTOR
7) Shri C. Basavegowda DIRECTOR
8) Shri G S Doreswamaiah DIRECTOR
9) Shri Nataraj V Angandi DIRECTOR
10) Shri H V S Krishna DIRECTOR
11) Shri Kaushik Mukarji MANAGING DIRECTOR
FUNCTIONS OF VARIOUS DEPARTMENTS OF KSFC
1) RECOVERY DEPARTMENT:
Collection of amounts due is termed as Recovery. Recovery of money is one of the

major sources of the funds for the corporation. The health of the corporation is
judged by the extent of recovery that it can effort. The repayment period is
generally fixed up to 7-8 years with a moratorium period of 1-2 years for sound
viable project.
Head Office has 2 recovery department called recovery-1 and

recovery-2. R1 looks the Bangalore cases, R2 looks after the outside Bangalore
cases. It has also 2 Deputy G.M.to looks after recovery works for BENGALURU

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and other than BENGALURU cases. The total recovery during the year 2007-08
was Rs 561.14 crores as compared to Rs 502.74 crores made in the previous year.
Recovery in respect of loans was Rs542.24 crores. Rs 0.30 crore in respect of hire
purchase, Rs 1.80 crore in respect of leasing and Rs 16.80 crore in respect of
financial service
2) LEGAL DEPARTMENT:
1) It is one of the important department in the organization.
2) Whenever the person applies for the loan this department will scrutinize the
document.
3) They will create proper securities.
4) They may take personal guarantee.
5) They will take securities such as fixed asset land documents, etc.
6) If the borrower does not pay proper interest then this department will issue
legal notice, suit files etc.,
3) ISO CELL
1) Documentation of quality management system.
2) Issue and control of ISO document.
3) Arranging for requisite ISO training program for personnel.

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4) Conduct of internal quality audit once in 3 month.
5) Co-ordination with M/s Bureau of Indian Standards, Bangalore for conduct

of renewal audits.(re-certification)
4) MANAGEMENT INFORMATION SYSTEM DEPARTMENT
1) It prepares annual corporate budget and fix target in the key of operational
area.
2) Collect and comprise weekly and monthly performance from branch office
or department at head office and furnishes the performance reports and other
to the management for taking appropriate decision.
3) Furnishing of performance of corporation t SIDBI monthly, quarterly, annual

returns.
4) Furnishing information to government department industries and commerce

department.
5) Prepares operational statistics of corporation.
6) SECRETARY DEPARTMENT
It facilitates smooth functioning of management

(Board, constitution of board, executive committee) conducts board meeting
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executive committee meeting, servicing the share holders, policy making by

policing the matters before the board to facilitate policy making for efficient
working of corporation by placing the important matters before the board for
executive committee.
7) CREDIT DEPARTMENT
1) It collects the data from the loan applicants.
2) It verifies the data.
3) It appraises the project on all aspects in financial, technical, marketing,

etc.
4) Based on the viability of the project it recommends the loan.
8) PERSONNEL, ADMINISTRATION AND TRAINING DEPARTMENT.

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The manpower strength the corporation stood at 1230 at the end of the
march 2008 as against the 1266at the end of the March 2007. 78
employees/officers were deputed to external training program during the
year 2007-8.
The corporation has classified employees as

class-A, class-B, class-C employees.
Class-A consist of executives directors, general managers deputy

general managers, assistant general managers, managers and deputy
mangers
Class –B consist of assistant managers, assistants, stenographers,
Typist and clerks.
Class –C consist of drivers, daffedars, peons etc.
The corporation has unique combination of

professionals on its pay-rolls- CAs, CFAs, MBAs, MAs, MCOMs, LLBs,
M.TECHs, BEs, PhDs, etc. thus diversity in its human resources is one of
the great strength and asset of the corporation.
OBJECTIVES:
 Individual development
 Coordinating between employers and employees
 Selection of employees

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 Good relation with trade union
FUNCTIONS:
 Framing HR policies
 Training and development
 Recruitment, transfer and promotions
RECRUITMENT AND INCENTIVES:
 In KSFC there are number of incentives given to the employees in the

form of reimbursement of convenience and medical expenses and
advances at concessional rates to employees such as house building
advances motor car advances etc.
 The KSFC is also introduced various schemes for the employees like
voluntary retirement scheme (VRS) where employees can opt for
retirement voluntary.
 In appraisal, the employees overall performance is assessed for the

his/her promotion

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 There is a reservation to SC/ST category for recruitment and

promotion
9) HIRE PURHASE AND FINANCIAL SERVICES
The fee based and financial services activities such as underwriting of

public issue, issue management, pre-issue project appraisal and project
report preparation are under taken by hire purchase and financial
department at head office. The operations of the schemes such as bill
discounting, equity participation, financial guarantee have been
temporarily suspended.
A) FUND BASED ACTIVITY
 Bill discounting scheme.
 Equity participation.

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 Factoring facility.
 Subscription to non-cumulative debentures.
B) NON-FUND BASED ACTIVITY
 Deferred payment guarantee.
 Underwriting of public issue
C) FINANCIAL SERVICES
 Issue management.
 Pre-issue project appraisal.
 Foreign letter of credit.
 Project report preparation.
10) LIBRARY
 KSFC have full- fledged special library will collection of books on

finance, industries, banking etc.
 Library maintains data bank on industrial updates.
 It also contains KSFC news, magazines, various special subject

journals related to finance, management, technology, banking, etc
annual reports of KSFC and other SFCs, different daily news papers.

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11) CONTROLLER DEPARTMENT
It is one of the big department in the organization. It consists of 4

departments, they are accounting-1, accounting-2, accounting-3,
accounting-4, and functions are;
 To ensure timely issue of cheques to the customer.
 All it is concerned with passing the various bills such as TA, DA,
customer bill, etc.
 A-2 department deals with maintain ace of customer a/c, loan a/c,
etc where in all disbursements are entered into the ledger and also
maintain statement of account to loanees.
 A-3 deals with cash. It is concerned with actual receipt of cash

and writing of cash book.
 A-4 deals with consolidation of a/c’s of all the

branches/reconciliation of fund transfer.
 This department also concerned in preparation of P&L a/c and

balance sheet.
12) INFORMATION TECHNOLOGY DEPARTMENT
 It helps in maintaining and updating the records of the data of

customers.

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 The effective use IT in accounting and all operational aspects of the

corporation.
 Improved customer service.
 Improvement in communication through advanced technology.
 Better controlled over decentralized operation.
13)ASSET RECONSTRUCTION DEPARTMENT.
 This department handles chronic default cases, MR cases and cases

where suits are filled for further recovery.
 Department also engaged in the task of liquidating assets which are

seized/ taken over as per the power conferred to KSFC u/s 29 of the
SFCs Act.
 It ensures recover loan installments with interest and other applicable

charges out of NPA cases.

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14) SEC-29 DEPARTMENT.
The objective of this department is to help recovery out of chronic

under SEC-29 of SFCs Act pertaining to branch offices where the loan
sanctioned is Rs 25 lakhs or more assets take over U/S 29 will be bought for
sale through negotiation committee which is headed by ED (F).
The sale of assets will be finalized and branches will be

advised to complete the sale process wherever the sale of assets is approved
by competent authority.
15) INTERNAL AUDIT DEPARTMENT.
 The internal audit department is located at HO with internal audit

cell at MYSORE, DHARWAD, and RAICHUR.
 The department conducts audit of corporation covering all the areas

of sanction, disbursement, recovery, finance and accounts, legal
documentation, and general administration etc.
 The internal audit department at HO is functioning as a nodal office

and coordinating the works of internal auditors and the audit
committee of the board.

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16) TREASURY DEPARTMENT.
To mobilize funds at competitive cost to meet the requirement of

KSFC promptly services the funds raised.
The financial year 2007-08 was an year of challenging in terms

of resource mobilization and the need for the re-capitalization.
17) BUSINESS DEVELOPMENT AND CREDIT RESEARCH DEPARTMENT.
BD & CR department conducts business promotional activities to

enhance business opportunities for corporation to explore the possibilities of
extending financial assistance. The department undertakes following
activities.

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 TO design viable schemes based on the market and customer

requirements.
 The department carries out the advertisement & publicity assignment

and printing of promotional materials.
 The department brings out KSFC news an in house magazine of

corporation.
 Follow –up with successful Entrepreneurs to provide financial

assistance for expansion/ diversification.
18) ENTREPRENUER GUIDENCE DEPARTMENT.
 To have interface with existing and potential customers and extent

them necessary guidance to get financial assistance from the
corporation.
 The Entrepreneurs who approach for availing a loan in the corporation

are given proper guidance in their respective business field.
 To create a good volume of business to corporation with its lending

policies keeping an eye on qualify with an intension to create
qualitative portfolio.
19)CUSTOMER GRIEVIANCE CELL DEPARTMENT.

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 It is a government owned institution and it’s accountable to the

public.
 Every 1st Saturday of the month meeting is conducted to address the

cases reported to PGC.
20)FINACIAL SERVICES.
 An exclusive insurance cell with well trained staff is operated at

HO.
 The corporation has entered into a tie up with IFCO-TOKIO general

insurance products. The corporation has commenced operation of
these services from 27/02/2002.
 The corporation has also taken up marketing life insurance product

of LIC.
 As per SEBI guidelines, IPOs of more than Rs 500 crores needs to

be monitored by way of appointing monitoring agency. The
corporation is known taking such organizations. It now been listed
in SEBI as “monitoring agency”. This activity will be taken up as
fee based activity.

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RESPONSIBILITY AND AUTHORITY OF KEY PERSONNEL OF KSFC
Responsibility and authority of Managing Director
A)Managing Director
M.D is the chief executive officer of KSFC responsible for overall

strategy, policies, resources and operation of the business. He is the authority
for implementing the directives of the board and also the disciplinary
authority; as such he leads KSFC quality initiatives.
Responsibility and authority of Managing Director
1) Setting the targets for various performance parameters& their

accomplishment through suitable operational strategies
2) Empowered to carry out executive function including quality system either

independently or through delegation of authority.
3) In addition to the above he is responsible and authorized
a) To define & review the quality policy and quality objective of KSFC.
b) To define and develop the organizational structure, defining authorities&

responsibilities of personnel and their inter relationship.
c) To provide adequate material and human resource.
d) To appoint management representative.

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e) To conduct management reviews.
EXECUTIVE DIRECTOR (OPERATIONS)
1) Carrying out business operations as per the targets set for different
performance parameter.
2) Managing the affairs pertaining to entrepreneurial guidance, businesses

develop.
3) Issuing operational guidance.
4) Effective implementation of quality system in his functional areas including;
a) Review of quality objective.
b) Documents and data control.
c) Verification plan and their measurement.
d) Control of non conforming service and product.
e) Corrective and preventive action.
f) Process control and its validation.
EXECUTIVE DIRECTOR (FINANCE)
1) Managing the affairs pertaining to finance and treasury.
2) Managing the affairs pertaining to leasing and hire purchase finance.
3) Managing the affairs pertaining to all branches and zones.
5) Effective implementation of quality system in his functional areas including;

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a) Review of quality objective.
b) Documents and data control.
g) Verification plan and their measurement.
h) Control of non conforming service and product.
i) Corrective and preventive action.
j) Process control and its validation.
k) Quality management review.
GENERAL MANAGER (CREDITS)
Responsible for
1) Matters pertaining to sanctions disbursement and monitoring to HO under

authority delegated from time to time.
2) Supervision of functioning of credit department.
3) Appraising the projects of specific category and recommending sanction of

loans to the sanctioning authority.
4) Finalizing the contract.
5) Release a sanctioned loan as per contract.
6) Transfer the loan file to recovery after final release of loan.

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GENERAL MANAGER (ASSET RECONTROCTION)
He is responsible for
1) Matters pertaining to recovery from deputy commissioner and memorandum

register port folio of the corporation including
2) Investigation of personal property.
3) Investigation of missing asset and persons.
4) One time settlement of proposal from Bangalore and head office.
5) Supervision and guidance to zonal managers and branch managers.
GENERAL MANAGERS (ZONES):
There are two zones, north and south.
1) Effective and efficient functioning of branch office in respect of
a) Business development.
b) Entrepreneurial guidance.
c) Enquiry handling.

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d) Handling of application.
e) Appraisal of project.
f) Recovery of loan.
g) Internal audit of branch officers
OPERATIONS AT A GLANCE:
(Rs in crores)
Particulars 2005-06 2006-07 2007-08 Since

inception up
to31.03.2008
Paid up capital at the 97.84 97.84 97.84
year end
Gross sanctions
a. Number 1161 1326 1195 159225
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b. amount 3 16.20 424.53 368.15 8536.53
Assistance to SSIs
a. number 788 875 795 103595
b. amount 165.00 178.53 173.05 4495.42
Disbursements 199.86 310.39 303.13 6829.53

Loans outstanding 1342.28 1320.71 1264.58 -
Recoveries 555.06 502.74 561.14 -
Percentage of NPA 46 33 24 -
Income 210.16 195.71 265.21 -
Expenditure 204.50 182.31 201.92 -
Operating profit 8.56 17.32 31.66 -
KARNTAKA STATE FINANCIAL CORPORATION
BALANCE SHEET FROM 2003-2004 TO 2007-2008 (Rs in lakhs)
Particulars 2003-04 2004-05 2005-06 2006-07 2007-08

C
APITAL AND LIABILITIES:
Share capital 12467.55 12467.55 12467.5 12467.55 27467.55

Loan pending conversion to share capital 917 .69 917 .69 917
5 .69 917 .69 917 .69
Reserve fund and others reserves 425.00 425.00 425.00 425.00 5640.69
Term borrowing 182492.79 175269.2 176808. 164985.1 156142.19
Current liabilities &provisions 0 83 0
TOTAL 207522.31 207557.2 203053. 186612.1 209069.08
9 09 1

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Cash and bank balance 4655.88 12401.70 11563.8 4871.07 4995.99

Investment 515.50 444.06 456.86
7 369.91 15317.17
Loans and advances 127505.27 122265.7 106924. 105790.6 105734.63
Fixed assets 1366.46 1022.14
5 821.85
43 748.21
1 6155.17
Current assets 12888.92 11107.74 22970.1 14741.07 22937.62
Profit and loss account balance 60590.28 60315.91 60315.9
6 60091.24 53874.50
TOTAL 207522.31 207557.2 203053.
2 186612.1 209069.08
9 09 1
: Notes and significant accounting policies forming part of accounts
SOURCE: KSFC ANNUAL REPORT
KARNATAKA STATE FINANCIAL CORPORATION

PROFIT AND LOSS ACCOUNT FROM 2003-04 TO 2007-08
Particulars 2003-04 2004-05 2005-06 2006-07 2007-08

INCOME:
Interest income 20798.22 20531.4 17394.8 16721.7 18894.75
Other income 2399.55 1264.50
7 3621.19
7 2849.70
0 7536.72
TOT 23197.77 21795.9 21016.0 19571.4 26521.47
EXPENDITURE:
AL 7 6 0
Interest and other financial expenses 18740.43 17670.3 16780.6 14110.6 13634.01
Personnel expenses 2280.32 2584.28
7 2581.67
2 2856.76
6 3383.73
Administrative expenses 766.49 764.85 758.22 827.89 808.97
Bad debts written off 792.35 340.80 155.81 355.81 413.39

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Provisions towards contingencies - - - - 1875.56

Depreciation 719.21 356.28 174.57 80.72 76.11
TOTAL 23298.80 21716.5 20450.8 18231.8 20191.77
Profit before tax: -101.04 79.40
8 565.17
9 1339.56
4 6329.70
Less: provisions for fringe benefit tax - - 39.00 44.19 41.00
Less: provision for diminution in the value of investment
0.00 - - - -
Provision for wealth and income tax-prior years - - - - 71.96
Add: excess provision on NPAs of earlier years written back
121.42 177.04 - -
Add: excess provision on investments of earlier years written
66.92 17.93 - -
back
Available for appropriation 87.30 274.37 526.17 1295.37 1295.37
Adjusted towards dividend deficit a/c - - 526.17 247.05 247.05
Less: dividend payable to GOK 823.64 823.64
B/F loss from previous year - - - - -60091.24
Surplus/deficit C/F to balance sheet -60,677.58 -60590.2 -60315.9 -60315.9 -53874.50
: Notes and significant accounting60590.28
policies forming
60315.9part 60315.9
of account 60091.2
(Rs in lakhs
NPA CHART:
YEAR 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09
NPA % 40.21 44.31 49.16 49.16 49.16 55.6 50.62 46.09 32.8 24.11 9.29

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SWOT ANALYSIS
 STRENGTH:
1) Government organization
KSFC was established under state Financial Corporation Act-1951, by the

government. The state government has more than 50% of the stake holding
And hence has gained public confidence.

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2) Wide network coverage
KSFC has branches all over the state. There are branches in every district
so that the people can have a better access to the corporation and avail the
assistance they need.
3) Human resources
KSFC managers and personnel are competent to perform their assigned

task and have the ability to resolve any problems either directly or in
consultation with the other functional executives. The existing personnel
who perform task effecting quality are made aware of the importance of their
work and how it affects their overall quality of the products and service
provided by the organization
4) Diversified facilities
KSFC not only provides term loans and assistance to small and medium
scale industries but also deals with mutual funds, insurance and also
provides other services.

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5) Quality service
The managing director and other executives end staff of the organization are
committed to ensuring that the system is effective in achieving quality and
satisfying customer both now and in the future.
6) Flexible repayment period.
7) All financial services under one roof. i.e. availability
 WEAKNESS:
1) Higher interest rates:
Interest rates are costlier when compared to nationalized and private

banks and view of this it is difficult for the organization to attract good
customer.

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2) Adaptability :
Changing the policy adopted may be difficult to the organization,

because it is a statutory corporation with lots of government control.
3) Lack of internal financing
The corporation is heavily dependent on outsider’s fund. I.e. there is

no internal financing.
4) Very long procedure in some schemes
 OPPORTUNITIES:
1) Infrastructure development is what the companies are asking can be

financed to large extent.
2) Growing population provides an opportunity to innovate new products

and services to serve them.
3) The rate of growth of economy also provides an opportunity to extend the

financial assistance to an increasing trend.
4) Development in infrastructure sector.

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 THREATS:
1) Private bank likes ICICI, HDFC and commercial banks are very
aggressive in financing loans by reducing their lower interest rate and
processing time in their corporate finance.
2) Some corporations like IDFC are focusing their operations only on

particular area like infrastructure.
3) Longer procedure, too many terms and conditions may create bad
impression among the customer.
4) Commercial banks are coming up with new innovative ideas for

increasing the loan amount.

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FINDINGS:
 Prior to providing assistance to a new unit an intensive study is
done on the technical feasibility and financial liability of the
proposed project by appropriate expertise in the field.
 KSFC has norms to decide the repayment period for a loan. Apart
from this cash generation capacity of the proposed project is
considered to fix up actual repayment period.
 KSFC provides guidelines to the borrowers, and supervise/monitor

the progress of a project and makes follow up during the period of
project implementation.
 A borrower can avail financial assistance under more than one

scheme and can take additional loan before repaying the previous
loan. But this depends upon the existing loan transactions with the
corporation.

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 The concentration of SSI units in and around Bangalore is more,

comparatively to the other parts of the state. Most of them are
proprietary concerns and private limited companies. So KSFC has
to add new schemes for providing financial assistance to SSI units
by charging lesser rate of interest. This will attract new customers
to KSFC.
 The corporation is effectively utilizing its human resources.
SUGGETIONS:
 KSFC should reduce the time required to approve the loan sanction
period.
 In KSFC interest rates are high compare to the other commercial
banks. It should be revised. For this government control should be
minimized and working should be done as in a private company.
 Targets should be set to the recovery officers and a special incentive
should be provided to those officers who achieve their targets.

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 The organization structure should be modified and surplus staff should
be downsized so that overhead expenses are reduced.
 The appraisal department has to consider more parameters in the area
of technical analysis, financial analysis, and marketability of the
product while sanctioning the financial assistance to the project.
ACHIEVEMENTS OF THE CORPORTION
KSFC completed 50 years of operation. It has contributed significantly for the
growth of the economy of the state in particular country in general. It has created a
strong employment base during 1970s, 1980s, 1990s; .It has extended financial
assistance to rural area, cottage industries and other economically weaker section
of the society under special loan scheme. KSFC has developed good no of first

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generation entrepreneurs. INFOSYS, BIOCON, BPL and many other big
companies now are assisted by KSFC in the initial establishment.
The proud achievements of KSFC
1) INFOSYS, BOICON, BPL were one time customer of KSFC.
2) It is an ISO 2000:9001 certified institution.
3) It has created employment directly to more than 30 lakhs people
indirectly about 50 lakhs.
4) About 18 % f the SSI assistance in the state is by KSFC.
5) KSFC has contributed for social up-liftment of the state.
6) It was no 1 SFC among the SFCs till 2003.
7) It has reached the common man of the state to come forward to
establishing in the SSI units by its well established branch system.

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KSFC Summer Final

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ORGAN

ISATIONAL STUDY OF KSFC

One of the outstanding phenomena of the Indian economy

Beginning with establishment of the industrial finance corporation

SCOPE OF DEVELOPMENT BANKS:

Development banking is essentially a phenomena of the post war (2) years.

MSNM BESANT INSTITUTE OF PG STUDIES Page 1

STATE FINANCIAL CORPORATION:

STATE FINANCE CORPORATION ACT 1951

A Central Industrial Finance Corporation was set up under the

MSNM BESANT INSTITUTE OF PG STUDIES Page 2

STATEMENT OF OBJECTS AND REASONS

In order to provide medium and long term credit to industrial

MSNM BESANT INSTITUTE OF PG STUDIES Page 3

The main features of the Bill are as follows:—

(iii)Shares of the Corporation will be guaranteed by the State Government as to the

MSNM BESANT INSTITUTE OF PG STUDIES Page 4

(vi) 0p’pThe Corporation will be managed by a Board consisting of a majority of

(vii) The Corporation will be authorized to make long-term loans to industrial

STATE FINANCIAL CORPORATION:

MSNM BESANT INSTITUTE OF PG STUDIES Page 5

Speaking on a motion to refer the IFC bill to a state

Thereafter, starting with the Punjab SFC in 1953, SFCs

MSNM BESANT INSTITUTE OF PG STUDIES Page 6

I. It is established with definite purpose and objective of speedy

II. Granting of loans and advances to or the subscribing to debentures of

III. Underwriting of the issue of stocks, shares, bonds or debentures by industrial

V. Generally doing of all such acts and things as may be incidental to or

VI. It gives industrial finance.

FUNCTIONS AND TYPES OF ASSISTANCE:

MSNM BESANT INSTITUTE OF PG STUDIES Page 7

A SFC is authorized by statue to provide different forms of assistance:

a) Granting loans or advances for periods not exceeding 20 years;

b) Subscribing debentures repayable within 20 years;

c) Guaranteeing loans raised by industrial concerns either in the public market

d) Guaranteeing deferred payments due from any industrial concern for

e) Underwriting the issue of stocks, bonds or debentures;

f) Subscribing to stocks, shares, bonds or debentures of industrial concerns

MSNM BESANT INSTITUTE OF PG STUDIES Page 8

A corporation is also authorized to act as the agent of the central

NUMBER OF STATE FINANCIAL CORPORATION:

At present there are 18 SFCs in the country.17 of which were set

1) Andhra Pradesh state Financial Corporation

2) Assam Financial Corporation

3) Bihar state Financial Corporation

4) Delhi Financial Corporation

5) Gujarat state Financial Corporation

6) Haryana Financial Corporation

7) Himachal Pradesh Financial Corporation

8) Jammu & Kashmir state Financial Corporation

9) Karnataka State Financial Corporation

MSNM BESANT INSTITUTE OF PG STUDIES Page 9

10) Kerala Financial Corporation

11) Madhya Pradesh Financial Corporation

12) Maharashtra state Financial Corporation

13) Orissa state Financial Corporation

14) Punjab Financial Corporation

15) Rajasthan Financial Corporation

16) Tamil Nadu Industrial Investment Corporation Ltd

17) Uttar Pradesh Financial Corporation

18) West Bengal Financial Corporation

OBJECTIVES OF THE STUDY