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Reliance’s TV – 18 ready to launch Tamil News Channel Medical costs hit the roof... Parliament in paralysis... Measuring roof tops in terms of KW/MW A Grand Finale for SN’s MS centenary at the US… Adharma of opposition politics Don’t seem to feel the pulse… Modi and the lady No Maha Koottani in TN... Paytm karo... Airlines in India: cost and space TN – agglomerate land holdings without alienating ownership Maximising the micro pricing … Computation of GDP – conundrums continue R Sridhar steps down as CEO of Shriram Capital Russi Mody – a tribute Focus on quality of power - its only around 170-180V Small units prefers to remain small... Welcome thrust on trade in Modi’s foreign visits... ONGC at KG Basin Tatas moving out of urea production... Boy, can you beat these? Valli, they are more marginalised The Ports’ Pasha expands into Tamil Nadu EEC at the National Media Centre …and of a popular trade leader Tribute – M V Murugappan Sweet news for TN sugar mills Modi storms Silicon Valley All eyes on Sankara Nethralaya A rich pool of talent not utilised…. A friendly business group Wise Presidents Fall in crude prices help in oil sector reform IAS invades NDDB... A glass full of corruption Not just in-laws (and outlaws); they’ve renowned academics at the helm! Nuclear power at the nucleus An inexplicable neglect Eternal support for capitalisation of PS banks Land reclamation from sea appears cheaper! He saved millions from starvation... When online building permits work…. The rise and fall of Annamalai University S Ramanathan – a versatile musician, musicologist Rs.1600 crore paper board plant of TNPL Polls and promises The why of tax incentives Roaring Ro-Ro facility Streamlining mandatory third party cover Alexa – Talking Wikipedia CSR and CMI: promise of another Srinivasan Ramanujan... West Bengal: mindless malignancy Tough task taking states together TIAM turns a full cycle For whom the bell tolls? Where a state respects its litterateurs… Fuel for thought Poor representation for Kerala and TN in Cabinet Naidu’s return augurs well for Seemandhra Secularism and anti-Hinduism Preserving for the future Gay abandon in pricing Road development slows down The Jan Dhan bonanza Padma Bhushan for A Ramakrishna How Air-India loses customs... 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Quality education through the PPP mode Shanti and Sadhana through Music Naidu will soon build a new Hyderabad to the lack of interest on the part of these to focus on original research. This despite the much lower costs of such research in India. The industry which thrived on the protection of a closed economy and the advantage of a vast domestic market, has failed to organise its evolution on healthy lines IPL type auction for VCs? CRS, a jewel among managers, is no more. Tihar, Puzhal not different from Parappana Agrahara Five star activism stalls development activity When the President was rendered homeless… The ‘Jayanthi Tax.’ Vibrant Gujarat A professional at the helm of IRDA... TN accounts for the largest recruits by the IT sector Editor's Says Which side are you, Montek? PPP mode for upgrading Corporation Hospitals Moily’s bold thrust Intellectual of rare qualities Excel Generators provide the vital back-up Kinetic Karnataka EVM is tamper-proof Why land prices zoom in TN? Varuna (rain) in 2015; Vaayu (air) in 2016. Chennai devastated The Swadeshi Trump The ‘Ayyo-yes’ is no more A welcome initiative by the judiciary Cement prices continue to rise… Why this malaise in medical education? Plummeting profits of PSBs Tatas moving out of urea production... When TN politicians can emulate Kerala's There was flood of milk. Reason: no milk commissioner! Shipping woes of Chennai companies Things happen by accident and not by design... London, London Narayan Fortune for Indian Airlines TGS- The king storyteller A think tank for Chennai Welcome changes that testify to Jayalalithaa’s return to health Building loyalty through the stomach The star of Spencers is no more B H Kothari - a tribute WTO Meet: resolved to meet again No mega rail project for Tamil Nadu More heat than light The nuclear option Telangana in top gear… Rahman at CIC Editor's Notes Limit foreign borrowings to hi-tech, export potential projects... 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Tribute – Manikam Ramaswami Discoms deserve better… TELANGANA at last…BUT Towards speedy justice Multi-faceted Venkat SoA @ 80 Kulandai was a giant This scant respect for Law Kudos to NDTV... The brown list of Venkitaramanan A Grand Finale for SN’s MS centenary at the US… Whistle-Stop Tour of Raghuram Rajan An enemy’s enemy is a friend The power-full Hindujas Shaming of Tamils by Tamil farmers at Delhi Recognition to role of NBFCs.... Convulsions in The Hindu A yen for wastage… Fortune 500 review Solar thermal shines… Align crops to agro climate endowments… The sea- saw battle continues... Demise of a media baron... Remembering Indira Sivasailam... Protest masters... Where is Rajaji? Strengthen the base... Quality silica from Neyveli Robber barons everywhere Haul over the coal Funding the un-funded Odisha: spectacular win by Naveen Patnaik Liberal imports idling indigenous capacities Sri Lanka votes for change More tributes to GR Waning interest in public discussions… Infrastructure funding – lessons learnt Tribute Banning booze... Revving up the manufacturing sector An informal presentation - analytical, forward locking... Come elections, come advertisements... Another Indian music maestro at the UN New IT products of Ramco in the pipeline… A more liberated TN… MHC should not return to its old indisciplined ways
 
Revive development banks...

The first three decades of industrial development were marked by provision of finance on facile terms. Specialised development banks like ICICI, IDBI, IFCI and state financial institutions lent capital and term loans on attractive terms. The Madras Industrial Investment Corporation (that later became TIIC), set up in 1949, pioneered such industrial development finance both for equity and loans. These institutions have been extremely effective in attracting hordes of new class of entrepreneurs with modest resources of their own. I cite the instance of the evolution of the Padi complex where the famous house of TVS embarked on manufacturing. In 1962, the first of such units, Wheels India Ltd, was inaugurated. This was quickly followed by Sundaram Clayton, Brakes India, Lucas TVS... The funding was simple: for Wheels India, the total initial cost was Rs 200 lakh; around Rs 25 lakh each was contributed as equity by TVS and the collaborator Dunlop of UK. The balance was sourced as a term loan from a development bank.

    Similar was the funding for the other units at Padi that commenced production in quick succession. Dozens of units of Amalgamations, the Rane Group and several companies in the sectors of automobile, textiles, cement and sugar were set up with modest capital outlays with a portion contributed by the promoters and the balance funded through equity/term loans from development banks and SFCs. Until George Fernandes as Industry Minister in the Janata government  mandated public participation for a portion of equity capital, there wasn’t the need felt by promoters to go to the public for capital. In fact, the modest capital base of most southern companies didn't really need public funding. The promoters, for most part, were reluctant to go public.

Development banks, thus did a yeomen service in nurturing entrepreneurship. Hundreds of companies owe their existence to the funding extended by such banks. The latter developed a great deal of expertise in raising resources and in lending these over the medium and long terms. Of course, not all the portfolios ended profitable and there were bad debts and non-performing assets. But on the balance, these did yeomen service for industrial development.

In the 1990s with the opening up of the economy these institutions underwent a massive change. There arose vastly expanded scope for raising deposits from the public. This resulted in the development banks opting to become commercial banks. In the enthusiasm and attraction to grow as large commercial banks, these have lost their earlier thrust for development financing. There is also the mismatch between raising deposits over short term and lending for infrastructure and industry over long term. The resulting huge ballooning of non-performing assets is a cause for serious concern. (see article by S A Raghu page 36)

I feel there is need to return to the old days: of setting up development banks for industry. Specialised infrastructure development financing agencies on the one hand and the MUDRA Bank on the other are welcome initiatives. There is need for such specialised institutions to lend for equity and term loans escpecially for hundreds of mid-sized enterprises on modest  interest rates.


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