1. COSIDICI had been continuously following up with IDBI/SIDBI to increase the resource support to SLFIs. As a result the refinance limit was increased from 65% to 80%.
2. The definition of `Industrial concern' under section 2 (c) of IDBI Act relaxed to approve :
a) Financing of construction of commercial complexes, showrooms and sales outlets independent of hotel business, finance of cost of establishments of departmental stores, shopping malls, tourist homes.
b) Setting up of vocational training centres for imparting technical knowledge to the entrepreneurs for setting up and running units efficiently and produce quality goods.
3. IDBI/SIDBI would charge additional interest for 1 1/2 months instead of 3 months as at present i.e. only 50% premium on the amount of premature instalment repaid to IDBI/SIDBI.
4. Training: COSIDICI has been organising training programmes for the executives of SLFIs relevant to their working operations in subjects from time to time. In the year 1999 the executives of SLFIs participated in the following programmes:
Project training and monitoring
IDBI is also arranging specific training programmes for the benefit of our Member Corporations at subsidised rates. IDBI’s training college at Hyderabad is in the process of designing these programmes based on the feedback provided by COSIDICI regarding the varied needs and requirements of the SLFIs keeping the nature of their operations, their geographical location and the work culture of the state they are located in.
5. Due to sustained efforts of COSIDICI, the Department of Company Affairs issued notifications on 16.5.1989 and 10.9.1990 exempting SIDCs and infrastructure corporations respectively from payment of tax on certain major items of unrealised income. The corporation thus saved millions by way of tax. Also the date of applicability of provisioning norms to SIDCs and SFCs was postponed by a few years which improved their financial performance considerably. The ceiling on project cost per unit for an industrial unit for being financed by SFCs/SIDCs has now been increased to Rs. 12 cr. For ‘A’ category and Rs. 8 cr. and Rs. 5 cr. for ‘B’ & ‘C’ category SFCs after having been taken up by COSIDICI with IDBI and SIDBI consistently since 1997.
Contribution of State Level Financial Institutions to the Indian Economy
The SLFIs formed an integral part of the country’s financial system. They were established on the premise that the industrial base of the country would be expanded to far flung corners of the country through them. Operating at the grass rootlevel, these development finance institutions have played a significant role in bringing about decentralised economic development, dispersal of industrial activities and means of production, development of backward regions and reduction in the regional imbalances. They have played crucial role in the promotion of first generation entrepreneurs. As on 31st March, 1998, their cumulative sanctions and disbursements aggregated Rs. 44704.6 and Rs. 34988.6 respectively. As on 31st March, 1998, the number of SSI units in the country was 31.4 crore generating employment of 167.2 lakh persons. The value of production aggregated Rs. 4,65,171 crore contributing nearly 40% of the country’s total industrial production and 35% to India’s total exports. Initial functions of SLFIs have now been expanded and comprise the following activities:
1. They provide a host of products and services, from project conception to post production stage.
2. Also identify industrial opportunity provide guidance and advise to prospective entrepreneurs as well as necessary financial assistance to realise these opportunities.
3. Assistance given for setting up new projects.
4. Assistance given for expansion, modernisation and diversification of existing companies in the small, medium and large scale sectors including health care, hospitals, hotels tourism etc.
5. Important products offered are: Term Loans, Equipment Finance, Lease Finance, Corporate Loan, Bill discounting, Non convertible payment, Guarantees, Letters of credit.