CHAPTER III

DEVELOPMENT FINANCIAL INSTITUTIONS IN CAPITAL

MARKET OF INDIA

• Overview of Development Banking in India

• What are Development Financial Institutions?
• Aims and objectives of DFIs
• All India Financial Institutions
o Industrial Finance Corporation of India (IFCI)
o Industrial credit and Investment Corporation of India.(ICICI)
o National Bank for Agriculture and Rural Development (NABARD)
o Export Import Bank of India(EXIM)
o Small Industries Development Bank of India(SIDBI)
o Industrial Reconstruction Bank of India (IRBI)
o Unit Trust of India(UTI) now Axis Bank
 CHAPTER III

DEVELOPMENT FINANCIAL INSTITUTIONS IN CAPITAL

MARKET OF INDIA

3.1 Overview of Development Banking in India

The concept of development banking rose only after Second World War, after the Great
Depression in 1930s. The demand for reconstruction funds for the affected nations
compelled in setting up a worldwide institution for reconstruction. As a result, the IBRD
was set up in 1945 as a worldwide institution for development and reconstruction. This
concept has been widened all over the world and resulted in setting up of large number of
banks around the world, which coordinate the developmental activities of different
nations with different objectives among the world. The Narashimam committee had
recommended to give up its direct financing functions and to perform only the
promotional and refinancing role. However, the S. H. Khan committee, appointed by the
RBI, recommended its transformation into a universal bank.

The course of development of financial institutions and markets during the post-
Independence period which largely guided by the process of planned development
pursued in India with emphasis on mobilization of savings and channeling investment to
meet plan priorities. At the time of Independence in 1947, India had a fairly well
developed banking system. The adoption of bank dominated financial development
strategy that aimed at meeting the sectorial credit needs, particularly of agriculture and
industry. Towards this end, the Reserve Bank concentrated on regulating and developing
mechanisms for institution building. The commercial banking network expanded to cater
to the requirements of general banking and for meeting the short-term working capital
requirements of industry and agriculture. Specialized development financial institutions
(DFIs) such as the IDBI, NABARD, NHB and SIDBI, etc., with majority ownership of
the Reserve Bank were set up to meet the long-term financing requirements of industry
and agriculture. To facilitate the growth of these institutions, a mechanism to provide
concessional finance to these institutions also put in place by the Reserve Bank.
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The first development bank In India incorporated immediately after independence in
1948 under the Industrial Finance Corporation Act as a statutory corporation to pioneer
institutional credit to medium and large-scale. Then after in regular intervals the
government started new and different development financial institutions to attain the
different objectives and helpful to five-year plans.

The early history of Indian banking and finance was marked by strong governmental
regulation and control. The roots of the national system were in the State Bank of India
Act of 1955, which nationalized the former Imperial Bank of India and its seven associate
banks. In the early days, this national system operated alongside of a large private
banking system. Banks were limited in their operational flexibility by the government’s
desire to maintain employment in the banking system and were often drawn into
troublesome loans in order to further the government’s social goals.

The financial institutions in India were set up under the strong control of both central and
state Governments, and the Government utilized these institutions for the achievements in
planning and development of the nation as a whole. Thus, India financial institutions can
be classified under five heads according to their economic importance:

• All-India Development Banks

• Specialized Financial Institutions
• Investment Institutions
• State-level institutions
• Other institutions.

3.2 What are Development Financial Institutions?

Development Finance Institutions (DFIs) are government-controlled institutions that

invest in sustainable private sector projects with the twofold objective of spurring
development in developing countries while themselves remaining financially viable.
DFIs are already quite well known in some countries, where their strong record of
accomplishment in promoting development is widely acknowledged. However, still

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more needs to be done to make private investors and policy-makers aware of the
growing role of DFIs and to highlight potential new areas of collaboration.

The Development Financial Institution plays a crucial role in developing countries. It is a

vital factor for growth and job creation and, by spurring economic development, provides
the fiscal base, which allows governments to realize general investments and bring about
redistribution of wealth.

Development Financial Institutions can be directly responsible for the provision of

certain basic services in the social sector, and plays an important role in providing access
to certain essential services such as water, sanitation, energy, transport and
communication, particularly through public-private partnerships.
Throughout the course of their existences, most of the DFIs have demonstrated their
ability to catalyze private investment in developing countries with these three ends in
view. Whilst operating under market conditions they have witnessed a continuous growth
in commitments and results, bearing testament to a strategy based around complementary
strengths between themselves and a complete range of long-term financial instruments.

Since last two decades, the DFIs have shared developmental impact evaluation tools
applied to their operations. The aim of these tools allow them to highlight the
contributions that the projects financed by each of them are making to development, to
growth and employment, to the access the populations concerned have to basic services,
as well as controlling the effects of its projects on the local and global environment.

This research introduces the DFIs and their work. It also puts them into the context
of current international development policy priorities, including the creation of
sustainable employment opportunities and the reduction of poverty levels in low-
income countries.

A thriving private sector is the engine of growth. The number of people living in
extreme poverty worldwide has leveled off in recent years. However, many

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countries still face numerous obstacles in the fight against poverty. The continuation
of the positive trend in economic growth will be essential to sustain that fight.

The DFIs have different areas of specialization and expertise, often reflecting the
comparative advantages of partners in the country. Some of them are fully state-
owned while others have private participation. The DFIs also have diverse
investment strategies and operate in various areas of the country, using different
investment instruments. Each one of them is profiled in this chapter.

Private sector investment is strongly associated with economic growth through the
creation of profits, jobs, government tax revenues and other benefits to the society.
According to one major global survey by the World Bank, more than 70% of the
world‘s poor believe that the best way to escape poverty is to get a job. Finally, DFIs
are continually exploring ways and means of updating their working practices and
investment strategies to address new issues and opportunities. Measuring development
impact and managing the sustainability of investments are two areas where DFIs have
recently developed fresh and innovative approaches. Together with their governments,
they have also been looking at how they can update their mandates and regulations to
become as effective as possible in development policy.

Finally, the record of accomplishment of DFIs makes them potentially an attractive

alternative asset class for institutional investors. Several DFIs are considering how best to
exploit this potential to expand their participation.

Development institutions also include banks, which were established to finance and
nurture the industries. They differ from the other banks in the way that they are mainly
involved in the process of lending the money to the required sections. They have some
major function like medium and long term loans to the industries, subscription to the
share and debenture of the industries and underwriting of the new issues( as a way of
financing the new companies) and provide securities to the newly established companies.

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They have many subsidiary established over all the states to look after the need for the
industrial finance needed for the small and medium scale enterprises and other industrial
requirements.

In a general sense, the term “Development bank” is used to include both development
banks proper and finance corporations. The difference between these two lies in the fact
that the former are primarily concerned with long-term loan, capita, while the latter deal
with equity capital and assume responsibility for fostering and managing individual
companies. However, the object of both the development banks and of finance
corporations is to provide long-term industrial finance.

3.3 Aims and objectives of DFIs

DFIs’ objectives are often multiple, and may include investing in sustainable private
sector projects; maximizing impacts on development; remaining financially viable in the
long term; and mobilizing private sector capital.

3.4 All India Financial Institutions

All India Financial Institutions (AIFI) is a group composed of Development Finance

Institutions (DFI) and Investment Institutions that play a pivotal role in the financial
markets. Also known as "financial instruments", the financial institutions assist in the
proper allocation of resources, sourcing from businesses that have a surplus and
distributing to others who have deficits-this also assists with ensuring the continued
circulation of money in the economy. Possibly, of greatest significance, the financial
institutions act as an intermediary between borrowers and final lenders, providing safety
and liquidity. This process subsequently ensures earnings on the investments and savings
involved. In Post-Independence India, people were encouraged to increase savings; a
tactic intended to provide funds for investment by the Indian government. However, there
was a huge gap between the supply of savings and demand for the investment
opportunities in the country.

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National Level Institutions :

List of All India Financial Institutions

• Industrial Development Bank of India (IDBI)

• Industrial Finance Corporation of India (IFCI)

• Export - Import Bank of India (Exim Bank)

• Industrial Reconstruction Bank of India (IRBI) now (Industrial Investment Bank

of India)

• National Bank for Agriculture and Rural Development (NABARD)

• Small Industries Development Bank of India (SIDBI)

• National Housing Bank (NHB)

• Life Insurance Corporation of India (LIC)

• General Insurance Corporation of India (GIC)

• Risk Capital and Technology Finance Corporation Ltd. (RCTC)

• Technology Development and Information Company of India Ltd.(TDICI)

• Tourism Finance Corporation of India Ltd. (TFCI)

• Shipping Credit and Investment Company of India Ltd. (SCICI)

• Discount and Finance House of India Ltd. (DFHI)

• Securities Trading Corporation of India Ltd. (STCI)

• Power Finance Corporation Ltd.

• Rural Electrification Corporation Ltd.

• Indian Railways Finance Corporation Ltd.

• Infrastructure Development Finance Co. Ltd.

• Housing and Urban Development Corporation Ltd. (HUDCO)

• Indian Renewable Energy Development Agency Ltd. (IREDA)

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The detailed Information about DFI’s is as follows:

3.4 (a) Industrial Finance Corporation of India (IFCI)

1. Introduction
2. Main Object
3. Main Function
4. Economic contribution
5. Financial Position
6. Social responsibility
7. Subsidiaries

Introduction:

The Industrial Finance Corporation of India was established on 1st July, 1948 under the
Industrial Finance Corporation Act, 1948 as the first development financial institution in
the country to make the medium and long-term finance more readily available to
industrial concerns in India. IFCI is the first financial institution to be converted into a
public limited company.

This was set up in the 1948 to provide term lending finance to the medium and large
scale industries by providing them long term loans. It has been rather conservative in
nature in the sense that for the time being it had provided loan to the industries. It is 50%
subsidiary of IDBI and the banks and insurance corporations hold rest share. It provides
assistance in all forms like loans, underwriting and subscribing to the share and
debentures. It's lending had suffered from the high rate of defaults.

Genesis of IFCI
At the time of independence in 1947, India's capital market was relatively under-
developed. Although there was significant demand for new capital, there was a dearth of
providers. Merchant bankers and underwriting firms were almost non-existent. In
addition, commercial banks were not equipped to provide long-term industrial finance in
any significant manner.

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It is against this backdrop that the government established The Industrial Finance
Corporation of India (IFCI) on July 1, 1948, as the first Development Financial
Institution in the country to cater to the long-term finance needs of the industrial sector.
The newly established DFI was provided access to low-cost funds through the central
bank's Statutory Liquidity Ratio or SLR, which in turn enabled it to provide loans and
advances to corporate borrowers at concessional rates.

Liberalization-Conversion into Company in 1993

By the early 1990s, it was recognized that there was need for greater flexibility to
respond to the changing financial system. It was also felt that IFCI should directly access
the capital markets for its funds needs. It is with this objective that the constitution of
IFCI was changed in 1993 from a statutory corporation to a company under the Indian
Companies Act, 1956. Subsequently, the name of the company was also changed to "IFCI
Limited" with effect from October 1999.

Main Object of IFCI

IFCI was established under IFCI Act 1948 during July 1948 as India’s first development
bank. The main objective for which IFCI was established, are to make medium and long-
term credit available to the industrial undertakings and to assist them in creation of
industrial facilities.

Main Function of IFCI

Its functions include:

1. Direct financial support (by way of rupee term loans as well as foreign currency
loans) to industrial units for undertaking new projects, expansion, modernization,
diversification etc.
2. Subscription and underwriting of public issues of shares and debentures.
3. Guaranteeing of foreign currency loans and deferred payment guarantees.
4. Merchant banking, leasing and equipment finance.

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During 1994, IFCI was converted into a joint-stock company and came out with a public
issue of shares. A Board of Directors manages it. It floated institutions such as TFCI,
ICRA etc.

Economic Contribution of IFCI

Until the establishment of ICICI in 1956 and IDBI in 1964, IFCI remained solely
responsible for implementation of the government’s industrial policy initiatives. It made a
significant contribution to the modernization of Indian industry, export promotion, import
substitution, pollution control, energy conservation and generation through commercially
viable and market- friendly initiatives. Some sectors that have directly benefited from
IFCI include:

ƒ Agro-based industry (textiles, paper, sugar)

ƒ Service industry (hotels, hospitals)
ƒ Basic industry (iron & steel, fertilizers,
basic chemicals, cement)

Capital & intermediate goods industry

(electronics, synthetic fibers, synthetic plastics, miscellaneous chemicals) and
Infrastructure (power generation, telecom services)

IFCI’s Economic Contribution can be measured from the following: -

1. Cumulatively, IFCI has sanctioned financial assistance of Rs.462 billion to 5707

concerns and disbursed Rs.444 billion since inception.

2. In the process, IFCI has catalyzed investments worth Rs.2,526 billion in the
industrial and infrastructure sectors.

3. By way of illustration, IFCI’s assistance has been helped create production capacities
of :

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• 6.5 million spindles in the textile industry
• 7.2 million tons per annum (tpa) of sugar production
• 1.7 million tpa of paper and paper products
• 18.5 million tons tpa of fertilizers
• 59.3 million tpa of cement
• 59.3 million tpa of cement
• 30.2 million tpa of iron and steel
• 32.8 million tpa of petroleum refining
• 14,953 MW of electricity
• 22,106 hotel rooms
• 5,544 hospital beds
• 8 port projects, 66 telecom projects and 1 bridge project.

4. The direct employment generated as a result of its financial assistance is estimated at

almost 1 million persons.

5. IFCI has played a pivotal role in the regional dispersal of industry - 47% of IFCI’s
assistance has gone to 2,172 units located in backward areas, helping to catalyze
investments worth over Rs.1, 206 billion.

6. IFCI’s contribution to the Government exchequer by way of taxes paid is estimated

at Rs.9 billion.
7. IFCI has played a key role in the development of cooperatives in the sugar and
textile sectors, besides acting as a nodal agency in both sectors.371 cooperative
societies in these sectors have been assisted by IFCI.

8. IFCI has promoted Technical Consultancy Organizations (TCOs), primarily in less

developed states to provide necessary services to the promoters of small- and
medium-sized industries in collaboration with other banks and institutions.

9. IFCI has also assisted self-employed youth and women entrepreneurs under its
Benevolent Reserve Fund (BRF) and the Interest Differential Fund (IDF). IFCI has
founded and developed prominent institutions like:

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• Management Development Institute (MDI) for management training and development
• ICRA for credit assessment rating
• Tourism Finance Corporation of India (TFCI) for promotion of the hotel and tourism
industry
• Institute of Leadership Development (ILD)
• Rashtriya Gramin Vikas Nidhi (RGVN) for promoting, supporting and developing
voluntary agencies engaged in uplifting rural and urban poor in east and northeast
India.

10. IFCI, along with other institutions, has also promoted:

• Stock Holding Corporation of India Ltd. (SHCIL)

• Discount and Finance House of India Ltd. (DFHI)
• National Stock Exchange (NSE)
• OTCEI
• Securities Trading Corporation of India (STCI)
• LIC Housing Finance Ltd.
• GIC GrihVitta Ltd., and
• Bio-tech Consortium Ltd. (BCL).

11. IFCI has also set up Chairs in reputed educational/ management institutions and
universities.

A major contribution of IFCI has been in the early assistance provided by it to some
of today’s leading Indian entrepreneurs who may not have been able to start their
enterprises or expand without the initial support from IFCI.

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Financial Position in India (As at march 2010, Rs. in crore)

Total assets 18,172.26, Total share capital 1000.2, Equity share capital 737.84, Reserves
2413.8, Net worth 4609.8, Total debt 13562.46, Total liabilities 18172.26 Investments
5882.43

Corporate Social Responsibility

The Company continued to undertake Corporate Social Responsibilities (CSR) initiatives,

which began with special focus on public health, Education, environmental and micro-
finance. Under this initiative, company released an amount of Rs79.30 lakh towards
various social activities including setting up a Bamboo Farm Demonstration and Training
Facility at Jaipur, undertaking a Village Adoption Programme in Begah in District
Sonepat Haryana), sponsoring the Delhi Half Marathon, a School Meal Programme in
Delhi, school education for children in slumsin Karnal and institution of scholarships for
needy students in the District of Murshidabad.

3.4 (b) Industrial credit and Investment Corporation of India (ICICI)

Introduction:
It was established in 1955 to provide finance to the large private enterprises and
industries. It issues money by underwriting of the new securities and subscribing to the
stocks and debentures of the company. The World Bank from time to time had tried to
improve the working by developing new project appraisal techniques and developing
modern methodologies to evaluate the project feasibility. The rate of default had been
quite low due to the excellent selection of the private enterprises and better evaluation
methodologies. The insurance agencies, banks and other financial institutions had
provided its capital.

ICICI Bank offers a wide range of banking products and financial services to corporate
and retail customers through a variety of delivery channels and through its specialized
subsidiaries in the areas of investment banking, life and non-life insurance, venture
capital and asset management.

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The Bank currently has its subsidiaries in the United Kingdom, Russia and Canada,
branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai
International Finance Centre and representative offices in United Arab Emirates, China,
South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has
established branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs)
are listed on the New York Stock Exchange (NYSE).

Main Object:

ICICI was set up during 1955 as a private company with a view to provide support to
industry in India by way of rupee and foreign currency loans, particularly the private
international investment and World Bank funds to assist the industry in the country in
private sector.

Main Function:

Its functions include:

• Assistance to industrial undertakings for new projects, expansion, modernization,

diversification etc. in the shape of rupee loans or foreign currency loans,
• Subscription and underwriting of capital issues ,
• Guaranteeing the payment for credits,
• Merchant banking, equipment leasing and project counseling.

Economic Contribution:

It floated a number of institutions successfully, which include credit rating agency

CRISIL, ICICI Banking Corporation, SCICI (since merged with it) a Mutual Fund etc.
During Sept 1998 it changed its name to ICICI Ltd. off late; it has started providing
working capital support to industrial undertakings.

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Creation of market infrastructure in India

ICICI Bank has contributed to set up different institutions, which include the following:

National Stock Exchange

The National Stock Exchange was promoted by India’s leading financial institutions
(including ICICI Ltd.) in 1992 on behalf of the Government of India with the objective of
establishing a nationwide trading facility for equities, debt instruments and hybrids, by
ensuring equal access to investors all over the country through an appropriate
communication network.

Credit Rating Information Services of India Limited

In 1987, ICICI Ltd. along with UTI set up CRISIL as India's first professional credit
rating agency. CRISIL offers a comprehensive range of integrated products and service
offerings which include credit ratings, capital market information, industry analysis and
detailed reports.

National Commodities and Derivatives Exchange Limited

NCDEX is a professionally managed online multi-commodity exchange, set up in 2003,

by ICICI Bank Ltd, LIC, NABARD, NSE, Canara Bank, CRISIL, Goldman Sachs,
Indian Farmers Fertilizer Cooperative Limited (IFFCO) and Punjab National Bank.

Financial Innovation Network and Operations Pvt. Ltd.

ICICI Bank has facilitated setting up of "FINO Cross Link to Case Link Study" in 2006,
as a company that would provide technology solutions and services to reach the
underserved and under banked population of the country. Using innovative technologies
like smart cards, biometrics and a basket of support services, FINO enables financial
institutions to conceptualize, develop and operationalizes projects to support sector
initiatives in microfinance and livelihoods.

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Entrepreneurship Development Institute of India

Entrepreneurship Development Institute of India (EDII), an autonomous body and not-

for-profit society, was set up in 1983, by the erstwhile apex financial institutions like
IDBI, ICICI, IFCI and SBI with the support of the Govt. of Gujarat as a national resource
organization committed to entrepreneurship development, education, training and
research.

North Eastern Development Finance Corporation

North Eastern Development Finance Corporation (NEDFI) was promoted by national

level financial institutions like ICICI Ltd in 1995 at Guwahati, Assam for the
development of industries, infrastructure, animal husbandry, agree-horticulture
plantation, medicinal plants, sericulture, aquaculture, poultry and dairy in the North
Eastern states of India. NEDFI is the premier financial and development institution for
the North East region.

Asset Reconstruction Company India Limited

Following the enactment of the Securitization Act in 2002, ICICI Bank together with
other institutions, set up Asset Reconstruction Company India Limited (ARCIL) in 2003,
to create a facilitative environment for the resolution of distressed debt in India. ARCIL
was established to acquire nonperforming assets (NPAs) from financial institutions and
banks with a view to enhance the management of these assets and help in the
maximization of recovery. This would relieve institutions and banks from the burden of
pursuing NPAs, and allow them to focus on core banking activities.

Credit Information Bureau of India Limited

ICICI Bank has also helped in setting up Credit Information Bureau of India Limited
(CIBIL), India’s first national credit bureau in 2000. CIBIL provides a repository of
information (which contains the credit history of commercial and consumer borrowers) to
its members in the form of credit information reports. The members of CIBIL include
banks, financial institutions, state financial corporations, non-banking financial
companies, housing finance companies and credit card companies.

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Awards:

• In 2004: Best Bank in India was Award presented by Euro money Magazine.
• 2007: ICICI Bank has been conferred the Euro money Award 2007 for the Best
Bank in the Asia-Pacific Region.
• 2007: ICICI Bank wins the Excellence in Remittance Business award by The Asian
Banker.
• 2009: ICICI Bank bags the "Best bank in SME financing (Private Sector)" at the
Dun & Bradstreet Banking awards.

Financial Position in India:

ICICI Bank is India's second-largest bank with total assets of Rs.3,634.00billion (US$ 81
billion) at March 31, 2010 and profit after tax Rs.40.25billion (US$ 896 million) for the
year ended March 31, 2010. The Bank has a network of 2,529 branches and 6,102 ATMs
in India, and has a presence in 19 countries, including India.

Subsidiaries of ICICI:

Domestics:
• ICICI Lombard
• ICICI Prudential Life Insurance Company Limited
• ICICI Securities Limited
• ICICI Prudential Asset Management Company Limited
• ICICI Venture
• ICICI Home Finance
• ICICI direct.com
• ICICI fund

International :
• ICICI Bank UK PLC
• ICICI Bank Canada
• ICICI Bank Eurasia LLC.

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3.4(c) National Bank for Agriculture and Rural Development (NABARD)

Introduction

NABARD, an apex development bank, was set up on the recommendations of

CRAFICARD Committee on July 12, 1982 under NABARD Act 1981 with a capital of
Rs.100crore contributed by Central Govt. and RBI, with its main office in Mumbai, by
merging the Agriculture Credit Depts. And Rural Planning and Credit Cell of RBI and
took over the entire functions of Agriculture Refinance and Development Corporation
(ARDC) Board of Directors consisting of Chairman, Managing Director other directors
manages NABARD.

NABARD raises funds through National Rural Credit - Long Term operations, National
Rural Credit-Establishment fund, through bonds and debentures guaranteed by Central
Govt., borrowing from RBI, Central Govt. or any other organization approved by Central
Govt. and funds from external sources.

It credit functions include providing credit to agriculture, small and village and cottage
industries through banks by way of refinance facilities to commercial banks, RRBs, Coop
Banks, Land Development Banks and other Financial Institutions like KVIC. Its
developmental functions are co-ordination of various institutions, acting as agent of Govt.
and RBI, providing training and research facilities. The regulatory functions include
inspection of RRBs and Coop Banks, receipt of returns and making of recommendations
for opening new branches.

Main Objective:

NABARD is set up as an apex Development Bank with a mandate for facilitating credit
flow for promotion and development of agriculture, small-scale industries, cottage and
village industries, handicrafts and other rural crafts. It also has the mandate to support all
other allied economic activities in rural areas, promote integrated and sustainable rural
development and secure prosperity of rural areas. In discharging its role as a facilitator
for rural prosperity NABARD is entrusted with :

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1. Providing refinance to lending institutions in rural areas

2. Bringing about or promoting institutional development and

3. Evaluating, monitoring and inspecting the client banks

Besides this pivotal role, NABARD also:

• Acts as a coordinator in the operations of rural credit institutions

• Extends assistance to the government, the Reserve Bank of India and other
organizations in matters relating to rural development
• Offers training and research facilities for banks, cooperatives and organizations
working in the field of rural development
• Helps the state governments in reaching their targets of providing assistance to
eligible institutions in agriculture and rural development
• Acts as regulator for cooperative banks and RRBs

Development and Promotional Functions

Credit is a critical factor in development of agriculture and rural sector as it enables

investment in capital formation and technological up gradation. Hence, strengthening of
rural financial institutions, which deliver credit to the sector, has been identified by
NABARD as a thrust area. Various initiatives have been taken to strengthen the
cooperative credit structure and the regional rural banks, so that adequate and timely
credit is made available to the needy.

In order to reinforce the credit functions and to make credit more productive, NABARD
has been undertaking a number of developmental and promotional activities such as:-

• Help cooperative banks and Regional Rural Banks to prepare development action
plans for themselves.
• Enter into MoU with state governments and cooperative banks specifying their
respective obligations to improve the affairs of the banks in a stipulated timeframe.

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• Help Regional Rural Banks and the sponsor banks to enter into MoUs specifying
their respective obligations to improve the affairs of the Regional Rural Banks in a
stipulated timeframe.
• Monitor implementation of development action plans of banks and fulfillment of
obligations under MoUs.
• Provide financial assistance to cooperatives and Regional Rural Banks for
establishment of technical, monitoring and evaluations cells.
• Provide organisation development intervention (ODI) through reputed training
institutes like Bankers Institute of Rural Development (BIRD), Lucknow,
www.birdlucknow.in, National Bank Staff College, Lucknow, www.nbsc.in and
College of Agriculture Banking, Pune, etc.
• Provide financial support for the training institutes of cooperative banks.
• Provide training for senior and middle level executives of commercial banks,
Regional Rural Banks and cooperative banks.
• Create awareness among the borrowers on ethics of repayment through Vikas
Volunteer Vahini and Farmer’s clubs.

• Provide financial assistance to cooperative banks for building improved

management information system, computerization of operations and development
of human resources.

Economic Contribution of NABARD:

Some of the milestones in NABARD's activities are :

A. Business Operations:

• Production Credit: Production Credit (or Crop Loans) to Cooperative Banks and
Regional Rural Banks (RRBs) stood at Rs.48,981crore during 2011-12, registering
a growth of 45 per cent over the previous year.
• Investment Credit : Investment Credit for capital formation in agriculture & allied
sectors, non-farm sector activities and services sector to commercial banks, RRBs

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 and co-operative banks reached a level of Rs.15,421crore as on 31 March 2012
registering an increase of 14 per cent, over the previous year.
• Rural Infrastructure Development Fund (RIDF): Through the Rural Infrastructure
Development Fund (RIDF) Rs.14927crore was disbursed covering irrigation, rural
roads and bridges, health and education, soil conservation, drinking water schemes,
flood protection, forest management etc.

B. New Business Initiatives:

• NABARD Infrastructure Development Assistance (NIDA): NABARD has set up

NIDA, a new line of credit support for funding of rural infrastructure projects. The
cumulative sanctions under NIDA during the year 2009-10was Rs. 890.85crore and
disbursement was Rs.422.90crore.
• Producers Organisations Development Fund (PODF): In order to support and
finance Producers’ Organizations, NABARD set up PODF. During the year, 13
projects were sanctioned to Producers Organizations and 70 projects to PACS, with
an assistance of Rs.32.29crore and Rs.7.75crore, respectively. The cumulative
sanction under the fund was Rs.40.04crore.
• Direct Lending to CCBs: Under Direct lending to CCBs, Rs.937.74crore was
disbursed during the year 2010.
• PACS as Multi Service Centers: A total of 2,335 PACS have been developed as
Multi-service Centers through various interventions from NABARD.
• Core Banking Solutions (CBS): Through Core Banking Solution (CBS), Co-
operatives are being brought to a higher technology platform so as to compete with
other banks for business and growth.

C. Development Initiatives:

• Watershed Development Fund (WDF): NABARD provided assistance of

Rs.152crore during 2010-11 for watershed development covering an area of 5.29
lakh.

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• Farm Innovation and Promotion Fund (FIPF): During 2010, 41 projects were
sanctioned under FIPF in 14 States with financial assistance of Rs.56.53crore under
the Fund. The Fund also supported the pilot testing of the unique mobile-enabled
Kisan Credit Project (m-KCC) project.
• Farmers’ Technology Transfer Fund (FTTF): During the year 2010, 395 proposals
were sanctioned in 29 States with grant assistance of Rs.20.59crore.
• Farmers’ Clubs: With the launching of 25,243 new Farmers’ Clubs during the year.
• Umbrella Programme on Natural Resource Management (UPNRM): UPNRM aims
to boost rural livelihoods by supporting community-managed sustainable natural
resource management projects and supported 104 projects in 16 States with
disbursements to the tune of Rs.131.89crore.
• Tribal Development Fund (TDF): During the year 2009-10, financial assistance of
Rs.290.63crore was sanctioned for 98 projects benefiting 72,419 tribal families in
16 States.
• SHG-Bank Linkage Programme: There were more than 74.62 lakh savings linked
Self Help Groups (SHG) and more than 47.87 lakh credit-linked SHGs covering
9.7crore poor households under the micro-finance programme. The SHG - Bank
Linkage Programme was given a renewed thrust with the launch of SHG-2.

Financial Position:

In Business World Survey NABARD was in 14th position by doing all its developmental
activities successfully .And it is also got marked for its social activities.

Social Responsibility:

To fulfill its responsibility towards the society NABARD has contributed in so many
issues in the favor of common people’s welfare. Some of them are as follows:

A: Solar power: MNRE (GOI) has signed an MOU with NABARD to promote SOLAR
HOME LIGHTING SYSTEMS to rural areas. This program is to be implemented under
the Jawaharlal Nehru National Solar Mission (JNNSM). JNNSM aims to achieve
20000mw of solar power production by the year 2022.

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B: Contract Farming: The Government of India's National Agricultural Policy
envisages that private participation will be promoted through contract farming and land
leasing arrangements to allow accelerated technology transfer, capital inflow and assured
market for crop production, especially of oil seeds, cotton and horticultural crops.
National Agricultural Policy of GoI has also recognized contract farming as an important
aspect of agri-business and its significance for small farmers. The Inter -Ministerial Task
Force on Agricultural Marketing reforms observed that contract farming was becoming
increasingly important.

NABARD’s Initiatives in Contact Farming :

Recognizing the potential and benefits of contract farming arrangements in the

agriculture sector, NABARD took the important initiative of supporting such
arrangements by the banking sector and developed a special refinance package for
contract farming arrangements (within and outside AEZs) aimed at promoting increased
production of commercial crops and creation of marketing avenues for the farmers.

3.4 (d) Export Import Bank of India (EXIM)

Introduction:

Export-Import Bank of India was set up in 1982 by an Act of Parliament for the purpose
of financing, facilitating and promoting India’s foreign trade. It is the principal financial
institution in the country for coordinating the working of institutions engaged in
financing exports and imports. Exim Bank is fully owned by the Government of India
and the Bank’s authorized and paid up capital are 10,000crore and 2,300crore
respectively.

Government of India launched the institution with a mandate, not just to enhance exports
from India, but to integrate the country’s foreign trade and investment with the overall
economic growth. Since its inception, Exim Bank of India has been both a catalyst and a
key player in the promotion of cross border trade and investment. Commencing
operations as a purveyor of export credit, like other Export Credit Agencies in the world,

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Exim Bank of India has, over the period, evolved into an institution that plays a major
role in partnering Indian industries, particularly the Small and Medium Enterprises, in
their globalization efforts, through a wide range of products and services offered at all
stages of the business cycle, starting from import of technology and export product
development to export production, export marketing, pre-shipment and post-shipment
and overseas investment.

Organization
Exim Bank is managed by a Board of Directors, which has representatives from the
Government, Reserve Bank of India, Export Credit Guarantee Corporation of India, a
financial institution, public sector banks, and the business community.

The Bank's functions are segmented into several operating groups including:

• Corporate Banking Group which handles a variety of financing programmes for

Export Oriented Units (EOUs), Importers, and overseas investment by Indian
companies.

• Project Finance / Trade Finance Group handles the entire range of export credit
services such as supplier's credit, pre-shipment Agri Business Group, to spearhead
the initiative to promote and support Agri-exports. The Group handles projects and
export transactions in the agricultural sector for financing.

• Small and Medium Enterprise: The group handles credit proposals from SMEs
under various lending programmers of the Bank.

• Export Services Group offers variety of advisory and value-added information

services aimed at investment promotion.

• Export Marketing Services Bank offers assistance to Indian companies, to enable

them establish their products in overseas markets. The idea behind this service is to
promote Indian export. Export Marketing Services covers wide range of exports
oriented companies and organizations. EMS group also covers Project exports and
Export of Services.

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• Besides these, the Support Services groups, which include: Research & Planning,
Corporate Finance, Loan Recovery, Internal Audit, Management Information
Services, Information Technology, Legal, Human Resources Management and
Corporate affairs.

Main Object:

Exim Bank lays special emphasis on extension of Lines of Credit (LOCs) to overseas
entities, national governments, regional financial institutions and commercial banks.
Exim Bank also extends Buyer’s credit and Supplier’s credit to finance and promote
country’s exports. The Bank also provides financial assistance to export-oriented Indian
companies by way of term loans in Indian rupees or foreign currencies for setting up new
production facility, expansion/modernization or up gradation of existing facilities and for
acquisition of production equipment or technology. Exim Bank helps Indian companies
in their globalization efforts through a wide range of products and services offered at all
stages of the business cycle, starting from import of technology and export product
development to export production, export marketing, pre-shipment and post-shipment
and overseas investment.

Functions :

It undertakes following kind of functions:

• Direct finance to exporter of goods.

• Direct finance to software exports and consultancy services.
• Finance for overseas joint ventures and turnkey construction project
• Finance for import and export of machinery and equipment on lease basis
• Finance for deferred payment facility
• Issue of guarantees
• Multi-currency financing facility to project exporters.
• Export bills re-discounting
• Refinance to commercial banks in India guaranteeing the obligations.

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Financial position in India:

The bank has been known as the emerging bank from all development banks. It is among
the top ten development financial institutions in India.

Economic Contribution:

The Bank has introduced a new lending programme to finance research and development
activities of export-oriented companies. R&D finance by Exim Bank is in the form of
term loan to the extent of 80 per cent of the R&D cost. In order to assist in the creation
and enhancement of export capabilities and international competitiveness of Indian
companies, the Bank has put in place an Export Marketing Services (EMS) Programme.
Through EMS, the Bank proactively assists companies in identification of prospective
business partners to facilitating placement of final orders. Under EMS, the Bank also
assists in identification of opportunities for setting up plants or projects or for acquisition
of companies overseas. The service is provided on a success fee basis.

Exim Bank supplements its financing programs with a wide range of value-added
information, advisory and support services, which enable exporters to evaluate
international risks, exploit export opportunities and improve competitiveness, thereby
helping them in their globalization efforts’ improve competitiveness, thereby helping
them in their globalization efforts.

The mandate of the Department is to look after issues relating to Public Sector Banks,
Financial Institutions, Public Sector Insurance Companies and Pension Reforms.

Financial sector reforms initiated by the Reserve Bank of India (RBI) and Government
have been directed towards enhancing efficiency and productivity of banks, providing
additional options for augmentation of capital of banks for smooth transition to Basel II
norms, ensuring smooth and risk free functioning of payment and settlement system,
encouraging use of advance technology in banking operations with minimum risks and
according priority to financial inclusion. The operational rigidities in credit delivery

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system were addressed to ensure allocation efficiency and achievement of social
objectives.

Social responsibility:

The focus on ensuring adequate flow of credit to agriculture, small, medium and micro
industries, minorities and weaker sections continued with greater focus on financial
inclusion. A number of policy initiatives on strengthening the cooperative credit structure
and ensuring credit to agriculture and rural infrastructure and housing sector were
initiated/ continued in 2009-10 also.

It is apex institution for co-coordinating the working of institutions in India engaged in

financing exports and import of goods and services. With initial authorized capital of
Rs.200crore (increased to Rs.500 and then to Rs.2000crore) Exim Bank was established
on Jan 01, 1982 (and started functioning wef March 01, 1982) under Export Import Bank
of India Act 1982, which took over the export finance activities of IDBI. It raises funds
by way of bonds and debentures, borrowing from RBI or other institutions, raising
foreign deposits

3.4 (e) Small Industries Development Bank of India (SIDBI)

Introduction:

Small Industries Development Bank of India is an independent financial institution aimed

to aid the growth and development of micro, small and medium-scale enterprises
(MSME) in India. Set up on April 2, 1990 through an act of parliament, it was
incorporated initially as a wholly owned subsidiary of Industrial Development Bank of
India. Current shareholding is widely spread among various state-owned banks, insurance
companies and financial institutions. Beginning as a refinancing agency to banks and
state level financial institutions for their credit to small industries, it has expanded its
activities, including direct credit to the SME through 100 branches in all major industrial
clusters in India.. Besides, it has been playing the development role in several ways such
as support to micro-finance institutions for capacity building and on lending. Recently it
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has opened seven branches christened as Micro Finance branches, aimed especially at
dispensing loans up to Rs.5 lakh.

Main Object:

It is the Principal Financial Institution for the Promotion, Financing and Development of
the Micro, Small and Medium Enterprise (MSME) sector and for Co-ordination of the
functions of the institutions engaged in similar activities.

Functions:
1. Administration of SIDF and NEF for development and equity support to small and
tiny industry.

2. Providing working capital through single window scheme.

3. Providing refinance support to banks/development finance institutions.

4. Undertaking direct financing of SSI units.

5. Coordination of functions of various institutions engaged in finance to SSI and tiny

units.

Some other important functions are:

6. Refinance
• Memorandum (BIM)
• Facilitate response to queries raised by banks etc.

7. Risk Capital

In order to meet the risk capital requirements of MSMEs, especially those involving
innovations and new technologies, the Union Budget for FY 2008-09 announced
setting up of a fund of Rs.2,000 crore with SIDBI for risk capital financing. Under
the Risk Capital Fund, SIDBI provides Risk Capital assistance to MSMEs in the
form of equity, preference capital, optionally convertible debenture, optionally
convertible debt, sub-ordinate debt, etc. directly as well as through venture capital
funds.

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8. Loan Facilitation & Syndication Service

• Under this initiative, SIDBI facilitates Bank loans for new as well as existing
manufacturing and service sector units.

• SIDBI’s initiative in partnership with Banks, Rating Agencies (RAs) and

Accredited Consultants (ACs).

• It’s a transparent, structured mechanism for timely consideration of loan

applications. It is needed-

• To generate complete structured applications along with necessary documents as

are needed by Banks for sanctioning of loans.

• Independent Validation by ACs of the information furnished by MSMEs in the loan

applications provides a second check thereby enhancing the reliability of furnished
information and acts as an additional comfort to the banks in handling the loan
applications.

• Rating (not mandatory) of proposals by Rating Agencies, as and when required,

provides an independent opinion and helps the bankers for considering applications
expeditiously.

• The initiative would reduce delays and is expected to enhance flow of assistance to
MSME sector.

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Financial Position:

SIDBI retained its position in the top 30 Development Banks of the World in the latest
ranking of The Banker, London. As per the May 2001 issue of The Banker,London,
SIDBI ranked 25th both in terms of Capital and Assets.

Credit Guarantee Fund Trust for Micro and Small Enterprises popularly known as
CGTMSE is widely being used by many PSU Banks and Private sector banks to fund
MSME sector. During the year 2002-03 the aggregate sanction and disbursements of
SIDBI amounted to Rs.10904crore and Rs.6789crore respectively. SIDBI has been
permitted to raise finances upto Rs.2730crore the year 2013 onward by the Reserve Bank
of India.

Economic Contribution:

SIDBI has made the financing process easier for everyone, especially for Entrepreneurs.
Easy bank loan process made easier improved acceptance of the loan proposals by banks.
SIDBI has empanelled Accredited Consultants (ACs) who will prepare the Basic
Information Memorandum (BIM) for the MSME entrepreneurs based on the
information and requirements indicated by the MSMEs. It is not only a loan proposal but
more than that. BIM will capture all information required by the Banks and the Rating
Agencies, if needed, BIMs prepared by ACs would be submitted to SIDBI by ACs with
the approval of MSME entrepreneur. If required, SIDBI may get the proposal rated by
RBI approved Rating Agencies.

SIDBI provides Equity / Quasi- Equity for Growth Oriented existing units, Finance for
Service Sector Units, and provides credit to MSMEs for Energy Efficient and Cleaner
Production Processes.

In all other cases, the application would be forwarded to Public Sector Banks with whom
SIDBI has entered into a MoU for the purpose of Loans.

SIDBI, in essence, will handhold the Entrepreneur through all stages of loan processing.

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Services provided by Accredited Consultants :

Guide new/existing entrepreneurs regarding availability of schemes of SIDBI/

commercial banks Inform MSMEs of Government subsidies/ benefits, Provide borrowers
with debt counseling to Prepare Basic Information. Micro, Small and Medium
Enterprises (MSMEs) are planning to invest in:

• Energy saving investments in plant and machinery / production processes in order

to reduce carbon footprint and enhance Profitability.

• Cleaner Production and emission reduction measures, waste management and

Common Effluent Treatment Plant (CETP) facilities.

• Energy Service Companies (ESCOs) providing solutions for renewable energy

• Original Equipment Manufacturers (OEMs) which manufacture energy

efficient / cleaner production / green machinery / equipment for MSMEs

• Financial products to enable climate and environmental friendly investments to

promote energy saving in Micro, Small and Medium Enterprises(MSMEs) in
India, by providing financial assistance to MSMEs, directly by SIDBI as well as
through refinance to Primary Lending Institutions (PLIs) and Non-Banking
Financial Companies (NBFCs),
• Reduce the emission of greenhouse gases, especially Carbon Dioxide (CO2) to
contribute towards climate change mitigation and achieve a reduction or
avoidance of emissions and pollution through the introduction of financial
products
• Support MSMEs towards development, up-scaling, demonstration and
commercialization of innovative technology based project.

Needs Addressed

• Acquisition, installation, remodeling and upgrading of existing energy saving

equipment thus improving energy efficiency.

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• Installation of building envelopes, equipment, heating systems, lighting, and such
other equipment electrical power/motors in compliance with energy performance
standard provided in the Energy Conservation Building Code (ECBC).

• Alternative/Renewable Energy sources such as Wind Energy (Windmills), Solar

Energy (Photovoltaic & Thermal), Micro Hydro, Biomass/Bagasse
(Gasifier/Cogeneration), Municipal Solid Waste based power generation, etc. (on-
grid / off-grid; captive/ non-captive, etc.) and equipment which can reduce Green
House Emission.

• Investments in Effluent and Waste Treatment / Recycling and such other activity
which promote cleaner technology

• Investment in activities related to Energy Efficiency or Clean technologies such

as energy audit / environment compliance audit / pollution control & management
consultancy services, ratings, certification, etc. and Energy Service Companies
(ESCOs).

Key Benefits

• Attractive Rates of Interest on Energy Saving Projects

• Reduced Energy Costs & Enhanced Profits

• Recovery of valuable by-products;

• Improved quality of the finished product

• Waste reduction / minimization / Pollution control

• Participating in Sustainable Growth

• Eligible for Government of India subsidy like TEQUP, CLCSS, TUFS, etc.

Our Products & Services:

1. Service Sector Assistance

2. Loan Facilitation & Syndication Service

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3. Financing Schemes for Sustainable Development - Energy Efficiency and Cleaner
Production

4. Growth Capital & Equity Assistance

5. Flexible Assistance for Capital Expenditure

6. Finance for Up-gradation / Modernization

7. Government Subsidy Schemes

8. Revolving Fund for Technology Innovation

Social Responsibility :

Presently, the Bank provides refinance support through a network of eligible member
lending institutions for onward lending to MSMEs and direct assistance is channelized
through the Bank’s branch offices. SIDBI also extends financial assistance in the form of
loans, grants, equity and quasi-equity to Non-Government Organizations’ / Micro
Finance Institutions (MFIs) for on-lending to micro enterprises and economically weaker
sections of the society, enabling them to take up income generating activities on a
sustainable basis.

Subsidiaries of SIDBI :

SIDBI has also floated several other entities for related activities. Credit Guarantee
Fund Trust for Micro and Small Enterprises provides guarantees to banks for
collateral-free loans extended to SME. SIDBI Venture Capital Ltd. is a venture capital
company focused at SME. SME Rating Agency of India Ltd. (SMERA) provides
composite ratings to SME. Another entity founded by SIDBI is ISARC - India SME
Asset Reconstruction Company in 2009, as specialized entities for NPA resolution for
SME.

SIDBI has initiated various schemes for upliftment of MSME sector and continues to be
the prime lending institution for MSME sector. The necessity of continuously providing
low cost credit to MSEs through concessional resource support to SIDBI has become

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more pronounced in the present scenario of recovery of the Indian economy from the
economic slowdown.

3.4 (f) Industrial Reconstruction Bank of India (IRBI)

IIBI was initially set up as Industrial Reconstruction Corporation Limited during 1971
when it was renamed Indian Reconstruction bank of India wef Mar 20, 1985 under IRBI
Act 1984 to take over the function of IRC. During 1997 the bank was converted to a joint
stock company by naming it Industrial Investment Bank of India. Its earlier functions
were to provide finance for industrial rehabilitation and revival of sick industrial units by
way of rationalization, expansion, diversification and modernization and also to co-
ordinate the work of other institutions for these purpose agricultural and rural
requirements.

The Industrial Investment Bank of India is a 100% government of India-owned financial

investment institution. It was established in 1971 by resolution of the Parliament of India
u/s 617 of the Companies Act. It was said to be a brainchild to be of Mr. Pranab
Mukhrjee, then finance minister. The bank was headquartered at Kolkata and has
presence in New Delhi, Mumbai,Chennai, Bengaluru, Ahmedabad and Guwahati.

The Industrial Reconstruction Corporation of India Ltd., set up in 1971 for rehabilitation
of sick industrial companies, was reconstituted as Industrial Reconstruction Bank of India
in 1985 under the IRBI Act, 1984. With a view to converting the institution into a full-
fledged development financial institution, IRBI was incorporated under the Companies
Act 1956, as Industrial Investment Bank of India Ltd. (IIBI) in March 1997. IIBI offered
a wide range of products and services, including term loan assistance for project finance,
short duration non-project asset-backed financing, working capital/other short-term loans
to companies, equity subscription, asset credit, equipment finance and investments in
capital market and money market instruments.

In 2005, a merger of IIBI, IDBI and IFCI was considered, but IDBI refused and it was
decided in 2006-2007 to close the bank. As of 2011, the bank operated from its sole

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remaining office in Kolkata. Deloitte and Touche was appointed to dispose of IIBI's Non-
Performing assets.

3.4(g) Axis Bank

Introduction:

Axis Bank Limited is an Indian financial services firm headquartered in Mumbai,

Maharashtra. It had begun operations in 1994, after the Government of India allowed new
private banks to be established. The Bank was promoted jointly by the Administrator of
the Specified Undertaking of the Unit Trust of India (UTI-I), Life Insurance Corporation
of India (LIC), General Insurance Corporation Ltd., National Insurance Company Ltd.,
The New India Assurance Company, The Oriental Insurance Corporation and United
India Insurance Company UTI-I holds a special position in the Indian capital markets and
has promoted many leading financial institutions in the country. As on the year ended 31
March 2012, Axis Bank had operating revenue of 134.37 billion and a net profit of
42.42 billion. Axis Bank (erstwhile UTI Bank) opened its registered office in
Ahmedabad and corporate office in Mumbai in December 1993. The first branch was
inaugurated in April 1994 in Ahmedabad by Dr. Manmohan Singh, the Honorable
Finance Minister.

The Bank's Registered Office is situated in Ahmedabad and its Central Office is located
at Mumbai. The Bank has an extensive network of more than 1600 branches (including
169 Service Branches/CPCs as on 31 March 2012). The Bank has a network of over
10000 ATMs (as on 31 March 2012. Axis Bank operates one of the world’s highest ATM
sites at Thegu, Sikkim (at a height of 13,200 feet above sea level) and has the largest
ATM network among private banks in India.

Object:

• Erstwhile Unit Trust of India was set up as a body corporate under the UTI Act,
1963, with a view to encourage savings and investment. In December 2002, the UTI
Act, 1963 was repealed with the passage of Unit Trust of India (Transfer of
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 Undertaking and Repeal) Act, 2002 by the Parliament, paving the way for the
bifurcation of UTI into 2 entities, UTI-I and UTI-II with effect from 1st February
2003. In accordance with the Act, the Undertaking specified as UTI I has been
transferred and vested in the Administrator of the Specified Undertaking of the Unit
Trust of India (SUUTI), who manages assured return schemes along with 6.75%
US-64 Bonds, 6.60% ARS Bonds with a Unit Capital of over Rs. 14167.59 crores.
The bank has made the following objectives :

• Customer Centricity

• Ethics

• Transparency

• Teamwork

• Ownership

Functions:

Axis Bank operates its functions in four segments:

1. Treasury operation
2. Retail banking
3. Corporate/wholesale banking and
4. Other banking business.

1. Treasury operations

The Bank’s treasury operation services include investments in sovereign and corporate
debt, equity and mutual funds, trading operations, derivative trading and foreign
exchange operations on the account, and for customers and central funding.

2. Retail banking

In the retail banking category, the bank offers services such as lending to
individuals/small businesses subject to the orientation, product and granularity criterion,

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along with liability products, card services, Internet banking, automated teller machines
(ATM) services, depository, financial advisory services, and nonresident Indian (NRI)
services.

3. Corporate/wholesale banking

The Bank offers to corporate and other organisations services including corporate
relationship not included under retail banking, corporate advisory services, placements
and syndication, management of public issues, project appraisals, capital market related
services and cash management services.

4. Other Banking Services:

a. NRI services: Products and services for NRIs that facilitate investments in India.

b. International branches-

• Singapore
• Hong Kong
• Dubai
• Shanghai
• Abu Dhabi
• Colombo

c. Business banking

The Bank accepts income and other direct taxes through its 214 authorized branches at
137 locations and central excise and service taxes (including e-Payments) through 56
authorized branches at 14 locations.

d. Investment banking

The Bank’s Investment Banking business comprises activities related to Equity Capital
Markets, Mergers and Acquisitions and Private Equity Advisory. The bank is a SEBI-

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registered Category I Merchant Banker and has been active in advising Indian companies
in raising equity.

e. Lending to small and medium enterprises

Axis Bank SME business is segmented in three groups: Small Enterprises, Medium
Enterprises and Supply Chain Finance. Under the Small Business Group a subgroup for
financing micro enterprises is also set up. Axis bank is the 1st Indian Bank having TCDC
cards in 11 currencies.

Financial Position:

Axis Bank is the third largest private sector bank in India. Axis Bank offers the entire
spectrum of financial services to customer segments covering Large and Mid-Corporate,
SME, Agriculture and Retail Businesses.

The Bank has a large footprint of 1787 domestic branches (including extension counters)
and 10,363 ATMs spread across 1,139 centers in the country as on 31st December 2012.
The Bank also has 7 overseas branches / offices in Singapore, Hong Kong, Shanghai,
Colombo, Dubai, DIFC - Dubai and Abu Dhabi.

Axis Bank is one of the first new generation private sector banks to have begun
operations in 1994. The Bank was promoted in 1993, jointly by Specified Undertaking of
Unit Trust of India (SUUTI) (then known as Unit Trust of India),Life Insurance
Corporation of India (LIC), General Insurance Corporation of India (GIC), National
Insurance Company Ltd., The New India Assurance Company Ltd., The Oriental
Insurance Company Ltd. and United India Insurance Company Ltd. The shareholding of
Unit Trust of India was subsequently transferred to SUUTI, an entity established in 2003.

Axis Bank is ranked 9th amongst all Indian scheduled banks. Axis Bank has achieved
consistent growth and stable asset quality with a 5 year CAGR (2007-12) of 31% in Total
Assets, 30% in Total Deposits, 36% in Total Advances and 45% in Net Profit.

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To be the preferred financial solutions provider excelling in customer delivery through
insight, empowered employees and smart use of technology, the bank has-

1. Opens the 10,000th ATM - Largest ATM network amongst private sector banks in
India

2. Reached 2 lakh installed EDC machines-the highest for any bank in India

3. Becomes the first Bank in the world to reach $2 billion loading on prepaid Travel
Currency Cards

4. Launches India travel card - India's first and only Indian currency prepaid travel
card for foreign nationals

5. The Bank inaugurates Axis House, its new Corporate Office at Worli, Mumbai.

In 2011–12, Axis Bank set up 6 SME centers and SME cells each across the country,
taking the total number to 32 SME Centers. The Bank also organized the ‘Business
Gaurav SME Awards’ in association with Dun & Bradstreet to recognize and award
achievements in the SME space.

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Economic Contribution:

Till March 2010, the Bank had opened over 4.4 million No Frills accounts in over 7607
villages through a network of 15 Business Correspondents and nearly 6000 customer
service points. Axis Bank has a strong presence in Electronic Benefit Transfer (EBT) and
has covered 6800 villages across 19 districts and 9 states till date with over 3.7 million
beneficiaries. 401 branches of the Bank have dedicated officers for providing agricultural
loans to farmers.

Axis Bank has a foreign network of four branches (Singapore, Hong Kong, DIFC (Dubai)
and Colombo (Sri Lanka) and three representative offices (Shanghai, Dubai and Abu
Dhabi) with presence in 6 countries.

Awards and recognitions

In year 2011–12

• Bank of the Year – India The Banker Awards 2011

• Best Bank – Private Sector NDTV Profit Business Leadership Awards
• Best Bank 2011 Outlook Money
• Brand Excellence Award 2011 (BFSI) StarNews
• The Most Consistent Large Bank Best Banks-2011 Survey by Business Today and
KPMG
• Most Preferred Bank Amongst Retail Customers CLSA survey on personal banking
trends
• Most Productive Private Sector Bank FIBAC 2011 Banking Awards
• 3rd Strongest Bank in Asia-Pacific Region Asian Banker
• The Best Domestic Bank- India The Asset Triple A Country Awards 2011
• The Best Domestic Bond House – India The Asset Triple A Country Awards 2011
• Best Risk Master (Private Sector Category) FIBAC 2011 Banking Awards
• Best Bond House India -2011 Finance Asia

An Analytical Study of Development Financial Institutions in Capital Market of India

(With Special Reference to IDBI 2005-2010) Page 82
The Axis Bank Corporate Office in Mumbai received the ‘Platinum’ rating by the US
Green Building Council for its environment friendly facilities and reduction of carbon
emission.

Social responsibility:

Axis Bank has set up a Trust – the Axis Bank Foundation, which contributes up to 1
percent of its net profit annually to various social initiatives undertaken by the
foundation. During the year 2011–12, the foundation has collaborated with 36 NGOs for
educating over a lakh underprivileged and special kids in 13 states. The recycling
initiative under the Green Banking banner has helped the bank productively use around
21572 kilograms of dry waste during the year.

The Axis Bank Foundation was founded in 2006 and supports supplementary education.
Axis bank is a scheduled commercial private sector new generation bank.

Subsidiaries:

Axis Bank actively monitors all its subsidiaries through their respective Boards and
regular updates to the Board of Directors of Axis Bank. The subsidiaries are-

1. AXIS Securities and Sales Ltd.

2. AXIS Private Equity Ltd.

3. AXIS Trustee Services Ltd.

4. AXIS Mutual Fund Trustee Services Ltd.

5. AXIS Asset Management Company Ltd.

6. Bussan Auto Finance India Private Ltd.

An Analytical Study of Development Financial Institutions in Capital Market of India

(With Special Reference to IDBI 2005-2010) Page 83