Ad Here  
August
September
October
November
December
January
 
 
Marketing expert Balagopal is no more Editor's Says Small units prefers to remain small... Preserving for the future For whom the MIDS bell tolls? ONGC at KG Basin Recognition to role of NBFCs.... …and of a popular trade leader Modi and the lady A friendly business group When the President was rendered homeless… Align crops to agro climate endowments… More Shakthi to Das’ elbow The rise and fall of Annamalai University TN – agglomerate land holdings without alienating ownership Airlines in India: cost and space Rahman at CIC Discoms deserve better… Why land prices zoom in TN? This scant respect for Law Bihar elections - the Rajaji formula worked A glass full of corruption Liberal imports idling indigenous capacities L&T- the specialty of special purpose vehicles Delhi is distant… Whistle-Stop Tour of Raghuram Rajan All eyes on Sankara Nethralaya Naidu will soon build a new Hyderabad The Jan Dhan bonanza CII projects higher growth… Welcome GST Another Indian music maestro at the UN The ‘Jayanthi Tax.’ MHC should not return to its old indisciplined ways Why this malaise in medical education? Russi Mody – a tribute F C Kohli - his concerns all embracing Solar, solar everywhere … B H Kothari - a tribute Return to king coal for urea... IPL type auction for VCs? Infrastructure funding – lessons learnt Which side are you, Montek? Tatas moving out of urea production... Not just in-laws (and outlaws); they’ve renowned academics at the helm! Silver Years of Madras Musings Tribute – M V Murugappan Medical costs hit the roof... Lalu’s envy, India’s pride An inexplicable neglect IPL - no surprise this scam The Swadeshi Trump Permanent secretariat for TN GIM Quality silica from Neyveli Parliament in paralysis... L&T: focus on infrastructure and more infrastructure… The Ports’ Pasha expands into Tamil Nadu Welcome focus on core competence Waning interest in public discussions… Shanti and Sadhana through Music There was flood of milk. Reason: no milk commissioner! Make standards certification mandatory... He continues the focus on social amelioration Welcome thrust on trade in Modi’s foreign visits... An informal presentation - analytical, forward locking... Maximising the micro pricing … Towards speedy justice Building loyalty through the stomach S V Raju – a ‘good’ true liberal Mu Sigma – is no more Boy, can you beat these? GM Technology at last! The ‘Ayyo-yes’ is no more The why of tax incentives Making ‘my Amaravati’... Nuclear power at the nucleus Gay abandon in pricing Diamond jubilee of Egmore Samskrt School SoA @ 80 Limit foreign borrowings to hi-tech, export potential projects... The power-full Hindujas Cement prices continue to rise… More Shakti to resource mobilisation... Cutting the nose to spite the face He saved millions from starvation... Measuring roof tops in terms of KW/MW Engineering seats go abegging Solar thermal shines… Poor quality of university VCs Polls and promises TIAM turns a full cycle TN-leverage strength of BHEL, NLC... No Maha Koottani in TN... Tribute West Bengal: mindless malignancy China invests in India The Gulf aviation boom Delhi returns to BJP Readers' Mail Road development slows down Insurance companies bleeding, yet no decision on increasing FDI limit! No engine for this car A yen for wastage… Pharma – overdose of copying Noble nonagenarians... Telangana in top gear… Increasing non co-operation of state leaders Remembering Indira Sivasailam... The star of Spencers is no more PC’s preference for professionals Shaming of Tamils by Tamil farmers at Delhi Music happens Godspeed, Chief Minister JJ Mersal magnified A more liberated TN… Plummeting profits of PSBs PPP mode for upgrading Corporation Hospitals Tatas moving out of urea production... Delhi is distant Revving up the manufacturing sector Welcome changes that testify to Jayalalithaa’s return to health Online not in line with brick and mortar businesses... Wanted: a second airport for Chennai How Air-India loses customs... Shipping woes of Chennai companies Rs.1600 crore paper board plant of TNPL Delhi Chalo... Revive development banks... Wise Presidents For whom the bell tolls? Varuna (rain) in 2015; Vaayu (air) in 2016. Chennai devastated 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 Naidu’s return augurs well for Seemandhra Sweeter prospects for sugar Eternal support for capitalisation of PS banks More tributes to GR Adharma of opposition politics A welcome initiative by the judiciary Editor's Notes Haul over the coal Where a state respects its litterateurs… Fuel for thought GNS - 100: our first subscriber Build close rapport with business leaders Kudos to NDTV... Of course, Gujarat is vibrant Tax agriculture Multi-faceted Venkat Roaring Ro-Ro facility Tribute – Manikam Ramaswami An enemy’s enemy is a friend CSR and CMI: promise of another Srinivasan Ramanujan... The nuclear option Banning booze... IAS invades NDDB... Focus on quality of power - its only around 170-180V Put expensive assets created to use... Demise of a media baron... Five star activism stalls development activity A Grand Finale for SN’s MS centenary at the US… Scientists urged to take up farmer-oriented research Robber barons everywhere Odisha: spectacular win by Naveen Patnaik Tough task taking states together The brown list of Venkitaramanan The few handicaps... R Sridhar steps down as CEO of Shriram Capital TELANGANA at last…BUT A rich pool of talent not utilised…. The rise and rise of KCP When TN politicians can emulate Kerala's TGS- The king storyteller EEC at the National Media Centre Computation of GDP – conundrums continue Modi storms Silicon Valley Intellectual of rare qualities Gas is the way forward Where is Rajaji? Land reclamation from sea appears cheaper! S Ramanathan – a versatile musician, musicologist CRS, a jewel among managers, is no more. Come elections, come advertisements... Shale gas and its shallow future When small is no larger beautiful.. TN accounts for the largest recruits by the IT sector Contrarian cousins Bihar – Nitish Kumar adopts the Lalu model When Ratan Tata visited SRM Fall in crude prices help in oil sector reform Sweet news for TN sugar mills Quality education through the PPP mode Convulsions in The Hindu Cleaning Ganga – relocate tanneries and install electric crematoria The balancing act Muffled voices for merit… London, London Narayan When online building permits work…. Colour-Chem’s colourful KRVS WTO Meet: resolved to meet again Padma Bhushan for A Ramakrishna A think tank for Chennai New IT products of Ramco in the pipeline… Lesson from Chandrababu Naidu Tihar, Puzhal not different from Parappana Agrahara Tribute – UCAL Selvan… Kinetic Karnataka Adapt Vajpayee dinner diplomacy Auto components surge… More heat than light Vibrant Gujarat No mega rail project for Tamil Nadu Strengthen the base... Secularism and anti-Hinduism Inflation: are we emulating Argentina and Brazil? The sea- saw battle continues... Alexa – Talking Wikipedia Protest masters... Dr C Rangarajan returns to Chennai Streamlining mandatory third party cover Kulandai was a giant A Grand Finale for SN’s MS centenary at the US… Reliance’s TV – 18 ready to launch Tamil News Channel Don’t seem to feel the pulse… Sri Lanka votes for change Funding the un-funded Fortune for Indian Airlines Paytm karo... CIPET hqrs to stay at Guindy – for the present? Should we change the official year? A professional at the helm of IRDA... Like Hinduism: many paths to reach God... Things happen by accident and not by design... Fortune 500 review Poor representation for Kerala and TN in Cabinet Breaththrough in malaria control Chennai and Kolkata miss opportunity to grow as Delhi and Mumbai Excel Generators provide the vital back-up Valli, they are more marginalised A C Muthiah – his munificent bequeaths to science A proud Madrasi When nations steal growth from one another… Air Asia India will set new benchmarks for budget travel Moily’s bold thrust EVM is tamper-proof
 
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.


Author :
Reported On :
Sector :
Shoulder :
RELATED NEWS
ABOUT IE
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
 
PRIVACY POLICY
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
TERMS AND CONDITIONS
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
 
CONTACT US
S-15, Industrial Estate,
Guindy,
Chennai - 600 032.
PHONE: +91 44 22501236
EMAIL: indecom1968@gmail.com