Traditionally the role of commercial banks
 
Traditionally the role of commercial banks in the field of long-term finance to industry has been negligible. Therefore, the Government has set up a number of special financial institutions in the country to provide long-term finance to business enterprise The IFCI, IDBI, ICICI; Sacs are the main among such financial institutions. The term-lending institutions or development banks have become a major source of fence for flotation o new concerns as well as for the modernization and expansion existing oceans. The supplement other sources of fiancé and fill gaps. They provide fennec Goth in the form of equity and debt. These institutions provide both direct (loans) and indirect (purchase and underwriting of securities) assistance. These institutions re not simply financial institutions. They also provide promotional, technician managerial services. They take initiative on locating and filling gaps in the country’s industrial structure. In addition to well-known development banks in the country, the LIC, General Insurance Corporation, NIDC, NSIC, etc. also help in providing finance to industry.
The main advantages of institutional finance are as follows: (i) both risk as well as loan capital is available. Special financial institutions provide underwriting and direct subscript triton facilities also. (ii) New companies which may find it difficult to raise finance form the public can get finance from these institutions. Assistance is available when recourse to normal sources is impracticable or unprofitable. (iii) As these institutions carry out a thorough investigation before granting assistance to a concern, relationship with them help it increase the creditworthiness of a company. (iv) Loans and guarantees in foreign currency and deferred payment facilities are available for the import of required machinery and Kauai mint. (v) The rate of interest and payment procedures is convenient and economical. Facilities for repayment in easy installments are made available to deserving concerns. (vi) Along with finance, a company can obtain expert advice and guidance for the successful planning and administration of projects.
However, institutional financing may involve him following limitations: (i) the concern requiring fiancée form special financial institutions has tourist itself to a thorough investigation. A number of formalities and documents are involved. (ii) Many deserving concerns may fail to get assistance for want of security and other conditions laid own by these institutions. (iii) Sometimes, these institutions place restrictions on the autonomy o management. They lay down a convertibility clause inland agreements. In seedcases, they insist on the appointment of their nominees on the Board of Directors of the debtor company.
Tags: based business home start, Best Price Offers, blackberry, Economic