• IFCI Loan

    IFCI is a public sector non-banking financial company that is currently listed on the NSE and BSE. It provides financial assistance for the growth of industries in India. These activities are aligned to projects in the airport, road, power, telecom, real estate, and manufacturing sectors.

    IFCI is also a nodal agency that encourages entrepreneurship in the lower sections of the society. In this regard, IFCI provides guarantees to banks against loans offered to young entrepreneurs who belong to Scheduled Castes.

    Financial Products Offered by IFCI

    IFCI has always helped in the modernisation of industries in the country, improvement of export promotion, nurturing of sunrise industries, etc. through initiatives that are market-friendly. There are three segments of financial products offered by the company, as indicated below:

    1. Project Finance – IFCI provides customised financial solutions for meeting the growing requirements of greenfield projects, brownfield initiatives, and the diversification of existing projects in the sectors of manufacturing and infrastructure. The industries that fall under this category are power, telecommunications, oil and gas, roads, airports, urban infrastructure, basic metals, electronics, chemicals, textiles, and real estate.
    1. Corporate Finance – IFCI provides services to a wide range of customers including small, mid, and large corporates. The financial products offered by the company are in the realms of corporate finance, i.e., Balance Sheet Funding, Lease Rental Discounting, Loan Against Shares, Long Term Working Capital Needs, Promoter Funding, Regular Maintenance Capex, and Capital Expenditure. There is also a short-term loan product offered by the company that has a repayment tenure of up to 1 year. This loan can be taken to meet the business needs of the customer, which includes short-term working capital finance and bridge financing.
    1. Syndication Advisory – IFCI provides customised corporate advisory services to customers. This can be used for the financial re-engineering of companies and corporate houses. The experience of the company in project appraisal, syndication, documentation, and product design is used to provide comprehensive solutions to clients. Other services offered are equity/debt syndication and advisory services.

    IFCI is also involved in providing structured debt products to customers. Additionally, it offers loan solutions such as sponsor financing, pre-IPO financing, acquisition financing, and Off-Balance Sheet Structured Solutions.

    Government Scheme involving the IFCI

    The government financing schemes involving the IFCI are as follows:

    Credit Enhancement Guarantee Scheme for Scheduled Castes (CEGSSC)

    As part of the Union Budget 2014-15, the government announced a sum of Rs.200 crore to be allocated for the credit enhancement needs of young entrepreneurs belonging to Scheduled Castes in the country. Loans under this scheme would be provided to start-ups in which the founding members belong to Scheduled Castes. The Ministry of Social Justice and Empowerment is the sponsoring agency for this scheme and IFCI is responsible for implementing it.

    Purpose of the Scheme:

    The motive of the scheme is to encourage entrepreneurial skills and job creation in the lower sections of the society. The scheme also looks to provide credit enhancement guarantees to banks and other financial institutions that will be assisting Scheduled Caste (SC) entrepreneurs. This programme is a social inclusion initiative as well.

    Scheme Structure:

    The initial corpus set aside by the government towards this scheme was Rs.200 crore. This is being used to provide funding to Member Lending Institutions (MLI) for extension of term loans, working capital loans, or composite term loans to SC entrepreneurs.

    Fund Duration:

    The duration of the scheme was expected to be 7 years from the initial date of implementation. This was expected to be reviewed and extended for another 7 years from the date of set up of each corpus.

    Guarantee Period:

    This is initially 1 year. It can be renewed after every passing year for the entire loan tenure. The maximum tenure can be 7 years, as long as timely payments of the renewal fee are made by the MLI in favour of the individual who has availed the loan.

    Closing of the Fund:

    This is an open-ended scheme that works on a first-come first-served basis for MLIs till the corpus is completely exhausted.

    Amount of Guarantee:

    The guarantee details are as indicated in the table below:

    Parameters Loan Amount
    Rs.15 lakh to Rs.1 crore Rs.1 crore to Rs.2 crore Rs.2 crore to Rs.5 crore Above Rs.5 crore
    Amount of guarantee cover 100% of the sanctioned amount 80% of the sanctioned amount 70% of the sanctioned amount 60% of the sanctioned amount
    Cover available Rs.15,000 to Rs.1 crore Rs.1 crore to Rs.1.6 crore Rs.1.6 crore to Rs.3.5 crore Rs.3.5 crore to Rs.5 crore

    The guarantee cover will be associated with a lock-in period of 1 year from the date of loan disbursement. The claims made under the guarantee will not be entertained by IFCI if the account changes to an NPA during the lock-in period.

    Sugar Development Fund

    IFCI has been the nodal agency for the Indian government since the time the Sugar Development Fund (SDF) was proposed. The motive of this scheme is to disburse, follow-up, and recover SDF loans that are provided to private sugar factories for the following purposes:

    • Modernisation and expansion
    • Setting up of bagasse-based cogeneration power projects
    • Zero Liquid Discharge (ZLD) distillery projects
    • Ethanol manufacturing units
    • Case development schemes

    IFCI takes ownership of the examination and execution of the loan. The inspection of security documents, recommendation for the release of funds, arrangement of site visits, maintenance of loan accounts, recovery of SDF dues, verification of loan utilisation, and implementation of legal measures against defaulting borrowers are some of the other functions of the IFCI.

    IFCI also performs financial appraisals of SDF loan projects for sugar mills.

    Modified Special Incentive Package Scheme (M-SIPS)

    The M-SIPS scheme was set up by the Ministry of Electronics and Information Technology (MeitY) to promote large-scale manufacturing in the country. The scheme initially received applications for 3 years. Later on, it was extended, and new product categories were added to the scope of the project. The incentives provided by the programme will be available for 5 years from the approval date of the application.

    The scheme provides 20-25% subsidy for capital expenditure investments in the setup of electronic manufacturing units. Incentives are given for four categories of electronic products. The units included in the value chain are procurement of raw materials, assembly, testing, and packaging.


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