The following points highlight the top seven term lending institutions in India. Some of the term lending institutions are: 1. State Financial Corporation’s (SFCs) 2. State Industrial Development Corporations (SIDCs) 3. Industrial Credit and Investment Corporation of India (ICICI) 4. The Industrial Development Bank of India (IDBI) 5. Unit Trust of India (UTI) and Others.

Term Lending Institution # 1.

State Financial Corporation’s (SFCs):

As the scope of IFCI was limited, thus it was felt that financial institutions should also be set up in each state to provide sufficient finance to medium and small scale industries for promoting industrial development there. To meet the requirement, State Financial Corporation’s (SFCs) were set up in different states.

The Government of India also passed the State Financial Corporation Act in 1951 and made it applicable to all states of India. The authorised capital of such corporation can vary within the maximum and minimum limit of Rs 50 lakh and Rs 5 crore.


The sum is divided into shares of equal value of which 25 per cent of the shares can he held by public and the remaining 75 per cent of the shares are normally held by State Government, the Reserve Bank, the scheduled banks, insurance companies, investment trusts, co-operative banks and other financial institutions.

The corporation can raise capital by selling bonds and debentures and can also accept deposit from public for five years. The management of SFCs is similar to that of IFCI.


Following are some of the important functions of State Financial Corporations:


(a) To guarantee loans raised by industrial units which are repayable within 20 years;

(b) To grant loans and advances to industrial units for a period not exceeding 20 years;

(c) To underwrite the issue of stocks, shares, bonds or debentures of industrial concerns; and

(d) To subscribe debentures floated by industrial concerns,


In India, there are at present 18 State Financial Corporations working in different States of India. Total amount of assistance advanced by all these corporations between the period 1971 to 1993 was to the tune of Rs 15,630 crore. Total amount of loan sanctioned by SFCs which was to the tune of Rs 2790.7 crore in 2000- 01 which however declined to Rs 1134 crore in 2003-04.

Term Lending Institution # 2.

State Industrial Development Corporations (SIDCs):

In most of the states of our country State Industrial Development Corporations have been established for the rapid industrialisation of all the states. There are 24 such SIDCs working in different states of the country. These corporations are providing financial assistance to small entrepreneurs and particularly to those industries which are established in backward areas.

During 1992-93, these corporations sanctioned assistance to the extent of Rs 1,140 crore as against Rs 1,010 crore, advanced during the previous year. At the end of March, 1993, the aggregate amount of loan sanctioned by SIDCs was Rs 7,710 crore. In recent years, total amount of loan sanctioned by SIDC which was to the tune of Rs 2080 crore in 2000-01 and then it declined to Rs 924 crore in 2002-03.

Term Lending Institution # 3.

Industrial Credit and Investment Corporation of India (ICICI):

In January 1955, the Industrial Credit and Investment Corporation of India was set up with the sponsorship of the World Bank for the development of small and medium industries in the private sector. The corporation was having an authorised capital of Rs 60 crore and a subscribed capital to the extent of Rs 22 crore.

The issued capital of this Corporation has been subscribed by Indian banks, insurance companies, individuals and corporations of United States, British eastern-exchange banks and other companies and the general public in India.


The major functions of the Corporation are:


(i) To assist industrial concerns with loans and guarantees for loans either in rupees or in any foreign currency;

(ii) To assist in the creation, expansion and modernisation of the industrial units lying within private sector;

(iii) To encourage and promote private capital, both internal and external, to participate in such enterprises;

(iv) To underwrite ordinary and preference shares and debentures and subscribes directly to ordinary and preference shares issues; and


(v) To encourage and promote private ownership of industrial investment along with the expansion of investment markets.

Up to March 1997, since its inception, the Corporation has sanctioned total financial assistance to the extent of Rs 81,857 crore but the total amount of disbursement was Rs. 48,094 crore. This financial assistance includes foreign currency loan, rupee loan, guarantees and subscription of shares and debentures.

Further, ICICI is also trying to develop new industries in backward regions of the country and in this respect total amount of loan sanctioned by this Corporation till March 1992 was to the tune of Rs, 5,600 crore.

ICICI has also started leasing operation in 1983 for modernisation, computerisation, energy conservation, export orientation etc.


In the meantime, ICICI has been privatized and it has expanded its business into wide areas. Total amount of loan sanctioned by ICICI increased from Rs 8491.4 crore in 1993-94 to Rs 55,815 crore in 2000-01 and then declined to Rs 36,229 crore in 2001-02.

However, the total disbursement of loan by the ICICI was Rs 4413 crore in 1993-94 and then it increased to Rs 31,664 crore in 2000-01 and then declined to Rs 25,831 crore in 2001-02.

However, in 2002, ICICI was merged with its offspring ICICI Bank in 2002.

Term Lending Institution # 4.

The Industrial Development Bank of India (IDBI):

In order to meet the needs of rapid industrialisation in the country and to coordinate the activities of all agencies a new institution with huge financial resources was necessary. Thus, to fulfill this two-fold objective, the Government of India has decided to set up the Industrial Development Bank of India (IDBI).

Accordingly in July 1964, the IDBI was set up formally to provide term finance to industries. Till 1976 this bank was a wholly owned subsidiary of the Reserve Bank of India. But in 1976 the IDBI was delinked from the RBI and was taken over by the Government of India. Since then IDBI became an autonomous, corporation.



Following are the man functions of IDBI:

(i) Coordinating Agency:

The first important function of IDBI is to co-ordinate the activities of all other institutions which are connected with the financing of industrial development. Thus to establish a harmonious relationship among the term lending institutions IDBI is working as a central coordinating agency.

(ii) Direct Financial Assistance:

The IDBI provides direct financial assistance and thus works as a development financing institution. Thus, the Bank:


(a) Directly grant loans and advances to industrial units,

(b) Subscribes, purchases or underwrites shares, debentures, bonds and stocks,

(c) Has the option open to convert its loans, advances into equity shares of the concerned industries units, and

(d) Guarantees loans taken by industrial units from scheduled co-operative banks.

(iii) Refinancing:

The IDBI is also helping the industrial units indirectly. The Bank:


(a) Refinances long term loans repayable within 3 to 25 years given by IFCI, SFC and other financial institutions,

(b) Refinances medium term loan repayable within 3 to 10 years advanced by scheduled banks and State Co-operative banks,

(c) Refinances export credit given by scheduled banks and the State co-operative banks.

(iv) Special assistance:

The IDBI has created a special fund known as “Development Association Fund” for assisting those industrial units which are not in a position to secure fund in normal course due to its low rate of return.

(v) Promotional Agency:


The bank is undertaking promotional activities like marketing, investment research surveys, techno-economic studies and providing technical and administrative guidance to any industrial unit for its promotion, management and expansion.

However, the total resources of IDBI amounted to Rs 63,846 crore in 2004.

Till the end of March 1997, the IDBI had sanctioned financial assistance to the extent of Rs 81,857 crore out of which Rs 48,094 crore was disbursed.

Total loans sanctioned by IDBI increased from Rs 12,086 crore in 1993-94 to Rs 27,442 crore in 2005- 06 and the volume of disbursement during the same period increased from Rs 8096 crore to Rs 12,984 crore.

Moreover, the cumulative amount of assistance disbursed by IDBI since inception and till the end of March 2004 amounted to Rs 1, 75,572 crore.

Term Lending Institution # 5.

Unit Trust of India (UTI):

To assist the small investors of middle income group in finding a safe and remunerative investment, the Unit Trust of India (UTI) was established in February 1964. The Unit Trust had an initial capital worth Rs 5 crore contributed by RBI, Insurance Companies, State Bank of India, Scheduled banks and other financial institutions.


The Trust has two-fold objectives:

(i) It stimulates savings among the middle and low-income groups and to mobilise these savings for further investment.

(ii) It helps the small investor to derive a share of the profits earned by trade and industry of the country.

To achieve these two objectives, the Trust sells Units among the small investors, invest the sale proceeds of the Units in industrial and corporate securities and finally pay dividends to the buyer of its units.

Till June 1993, total number of Unit Holders registered with the Trust was nearly 20 million and their total amount of investment was Rs 34,000 crore. Total investment fund of the Trust as on June 1990 was nearly Rs 17,496 crore, of which about 59 per cent was invested in shares and debentures of the corporate sector and the remaining 41 per cent was kept in the form of deposits in bank.

The Trust has already invested in the securities of 300 sound industries.

Total amount of loan sanctioned by UTI decreased from Rs 8332.6 crore in 1993-94 to Rs 6770 crore in 2000-01 and then further declined drastically to Rs 991 crore in 2001-02. Total investments made by UTI amounted to Rs 57,629 crore in 2001-12 out of which 86 per cent was invested in corporate sector.

Term Lending Institution # 6.

Small Industries Development Bank of India (SIDBI):

Small Industries Development Bank of India (SIDBI) was set up on April 2, 1990. It acts as the principal financial institution for the promotion, financing and development of the Micro, Small and Medium Enterprises (MSME) sector and also for the coordination of functions of the institutions engaged in similar activities.

Accordingly, financial support is provided by SIDBI by way of:

(a) Refinance to eligible Primary Lending Institutions (PLIs), such as banks, State Financial Corporation’s (SFCs) etc., for onward lending to MSMEs,

(b) Direct assistance to MSMEs which is channelized through the Bank’s branch offices and

(c) Financing other activities as per SIDBI Act.

The initial paid up capital of SIDBI was Rs 250 crore which was subsequently raised to R 450 crore. The upgrade financial resources of SIDBI were Rs 61,849 crore at the end of March 2013. Till the end of end of March 2012, the cumulative sanctions and disbursements of loan by SIDBI were to the extent of Rs 3, 22,814 crore and Rs 2, 44,859 crore respectively.

During 2012-13, total amount of assistance sanctioned and disbursed by SIDBI stood at Rs 41,120 crore and Rs 40,682 crore respectively.

Term Lending Institution # 7.

Life Insurance Corporation of India (LICI):

Life Insurance Corporation of India was set up in 1956 and at that time, life insurance business in India was nationalized. LICI with its central office located at Mumbai and eight zonal offices, 113 Divisional offices and 2048 branch offices operates its business throughout the country. With its 12.42 lakh agents and 1.16 lakh employees, it maintains its largest field organisation in the country.

In 2012-13, total amount of assistance sanctioned by LICI was Rs 43,014 crore out of which total disbursement of assistance was Rs 44,886 crore. In 2012-13, out of the total assistance sanctioned by all India financial institutions, the share of LICI was 48.4 per cent and in respect of total disbursement, the share of LICI was 50.2 per cent.