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