BBA Business Organisation Notes Function of IFCI
BBA Business Organisation Notes Function of IFCI : In This Article You Can Find Meaning Function of IFCI Business Organisation Notes and Forms of Business organisation, Points for a Good Forms of business Organisation, Financial Management That Its Is Best Topic of Business Organisation Study For Salient Features of a Company BBA 1st Semester Year . Here You Find Topic Wise,Chapter Wise, Subject Wise Study Material BBA And other Links of Related to the Business organisation . How To Learn BBA Business organisation Notes Forms of Business organisation, Points for a Good Forms of business Organisation, Business combination, You Here . Thanks For Read This Article.
Function of SSC BBA Notes
- To provide loans to small and medium scale industrial concens for a maximum period of 20 Years.
- To provide guarantee of loans used by companies which are available within a period of 20 Years.
- To Subscription to the debentures floated by industrial concern.
- To assist the small scale sector in backward areas.
- To underwrite the issue of shares, stocks, debentures, bonds etc., by industrial concerns, which have to be disposed of within 7 years.
IFSC (Industrial Finance Corporation of India) : IFCI was set up on 1st July 1948 under the IFCI Act of parliament, of provide medium and long term financial Assistance to industrial concerns.
Function of IFCI BBA Notes Business Organisation
- To provided medium and long term loans in loan to industrial concern for :
- Setting up of new industrial undertakings.
- Expansion or diversification of existing concerns.
- Modernization and renovation of existing concerns.
- Meeting working capital requirements.
- Meeting existing liabilities.
- To grant loans to industrial concerns repayable within 25 years.
- To underwriter shares, stocks, debenture, bones etc.
- To subscribe directly to the shares and debentures of public Ltd. Co.
IFCI (Industrial Finance Corporation of India) : Industrial Finance Corporation of India was the first financial set up in India in 1948, with the aim of providing medium and long-term finance to industrial concerns in the country.
Objectives : The primary objective of IFCI is to make medium and long-term credits more readily available to industrial concerns in India, particularly in the circumstances where normal banking accommodation is inappropriate to capital issue channels is impracticable.
Management : The head office of the IFCI is in New Delhi. It has its regional and branch offices in other part of the country. The management of the IFCI is vested in a Board of Directors consisting of one full-time chairman appointed by the Central Government in consultation with the board.
It has 12 Directors of which two of the directors are nominated by the Central Government, four by the IDBI, two by scheduled commercial Banks, two by Co-operative Banks and the committees to assets in its efficient functioning.
Functions The IFCI performs the following functions :
- Granting loans and advances to or subscribing to debentures of approved industrial concerns, repayable within a period of 25 years.
- Guaranteeing loans raised by industrial enterprise from scheduled banks or state co-operative banks, which are repayable within a period of 25 years.
- Underwriting of shares, debentures, bonds or stocks issued by industrial concerns and corporation,
- Subscribing directly to the shares of industrial concerns eligible for assistance from the corporation.
- Acting as an agent for the Central Government and the world Bank (IBRD) in respect of loans granted by them to industrial concerns.
The financial resources of the IFCI consist of ownership capital borrowing from Central Government and borrowing from market by issue of bonds. The Industrial Finance Corporation (Amendment) Act, 1986 has increased the authorized capital to 259 crores from the earlier limit of 100 Crores. On June 30,1989 its paid up capital stood at 58 corores.
The IFCI is authorized to issue and sell bonds and debentures for raising its working capital. The total amount of bonds, debentures and contingent liabilities should not exceed ten times the amount of the IFCI ‘s paid up share capital and retained earnings.
The IFCI is also authorized to borrow from the Central Government, Reserve Bank of India and Industrial Development Bank of India and to Accept deposits from the public, state Government and Local Authorities for a period of less than 5 years. The total amount of such deposits should not Exceed 10 Crores at any time. It is also empowered to raise money from foreign credits in foreign Currency.
Area of Operation BBA Notes
The IFCI provides assistance to public limited companies and co-operative societies engaged in the manufacture, preservation or processing of goods, or in the shipping, mining or hotel industry or in the generation or distribution of electricity or any other form of power.
The proprietary industrial concerns and firms are not eligible for financial assistance from the FICI, which may be granted for a maximum period of 25 Years in any of the forms mentioned above, while the effective rate of interest is 14 percent on rupee loans the concessional rate of interest on rupee loan for projects located in the notified less developed areas is 12.5 percent.
Responsibilities of Financial Management
Financial management is varied as an integral part of over-all management rather than as a staff specially concerned with the fund-rasising operations only. Though all the important financial decisions are made by the top management, the financial executive is deeply involved in this process. His main responsibility is to provide all the necessary accounting information, analyze and discuss the various alternatives and to suggest suitable solutions. His responsibilities lie in the following spheres of finance function :
- Financial Planning: It is the chief responsibility of a financial executive to make a sound financial forecast and then to play for achievement. He tries for efficient management so that the firm might not experience a financial crisis and defer its payments. The goodwill of the firm suffers severely and even the liquidation of the firm may be demanded by the creditors if the financial crisis continues for a long time.
- Raising of Necessary Funds: Another main responsibility of financial management is to supply adequate funds to the firm for its various operations. A cost benefit analysis of various alternative sources must be made before raising funds from any particular source. Impact of additional financing on the risk, control, and income of equity shareholders should be evaluated in term of its costs and its impact on the capital structure, etc.
- Controlling the use of funds: A business firm is basically a profit earning concern, whose earnings depend to a large extent upon the efficient utilization of funds. This requires sound investment decision, roper asset-management policies, proper depreciation provision and efficient management of working capital. there, effective control on cash-inflow and outflow should be maintained and financial checks should be followed.
- Disposition of Profits: The proper disposition of profits is also an important responsibility for financial management. Regarding the allocation of net profits after payment of taxes a typical firm may be said to have two choices :
- Efforts to Maximise Value: it is a regular and recurring responsibility of the financial manager to make continuous efforts to maximize the value of the firm for its shareholders. According to Prof. Solomon Ezra of Standard University the main goal of financial management is wealth maximization which depends to a large extent on the quality of decisions taken by a firm as evident from the following chart :
- Responsibilities to Owners: Shareholders are the real owners of a concern. The fiancial manager has the prime responsibility to those who have committed funds to the enerprise. He maintains the owners adequately for the risk capital they provided.
- Legal Obligation: The financial manager is under an obligation to consider the enterprise in light of its legal obligation. A host of laws, taxes and rules or regulations cover nearly every move and policy. Efficient financial management helps to develop a sound legal framework.
- Responsibilities to Employees: The financial management must try to realize a healthy going industrial concern capable of maintaining regular employment at satisfactory rates of pay under favorable working conditions. He should be given ample opportunity to participate in the financial decision making valuable suggestions to improve the financial health of the firm. He should think over various suggestions seriously and give effect to them in a thrust to boost their morale. As the long term financial interests of management, employees, and owners are common, the financial management should safeguard the interest of all these.
- Responsibilities to Customers: Financial management is necessary in order to make the payments of customer’s bill effective and ensure the creditors for the continued supply of raw materials.
- Wealth Maximisation: According to, Proof, Solomon of Stanford University the main goal of the finance function is wealth maximization .if the financial management follows the wealth maximization goal, other goals may be archived automatically. The financial manager is responsible for maximizing the wealth of the shareholders.
To conclude, the financial manager is responsible not only to maintain the financial health of the organization but also to increase the economic welfare of the shareholders by utilizing the funds in an effective manner.