Industrial Finance Corporation of India

At the time of independence in 1947, India's capital market was relatively underdeveloped. Although there was significant demand for new capital, there was a dearth of providers. Merchant bankers and underwriting firms were almost non-existent. And commercial banks were not equipped to provide long-term industrial finance in any significant manner. It is against this backdrop that the government established The Industrial Finance Corporation of India (IFCI) on July 1, 1948, as the first Development Financial Institution in the country to cater to the long-term finance needs of the industrial sector. The newly-established DFI was provided access to low-cost funds through the central bank's Statutory Liquidity Ratio or SLR which in turn enabled it to provide loans and advances to corporate borrowers at concessional rates. This arrangement continued until the 1990's when it was recognized that there was need for greater flexibility to respond to the changing financial system. It was also felt that IFCI should directly access the capital markets for its funds needs. It is with this objective the constitution of IFCI was changed in 1993 from a statutory corporation to a company under the Indian Companies Act, 1956. Subsequently the name of the company was also changed to 'IFCI Limited ' with effect from October 1999. IFCI has fulfilled its original mandate as a DFI by providing long term financial support to all segments of Indian Industry. It has also been chiefly instrumental in translating the government's development priorities into reality. Until the establishment of ICICI in 1956, IFCI remained solely responsible for implementation of the government's industrial policy initiatives. Its contribution to the modernization of Indian Industry, export promotion, import substitution, entrepreneurship development, pollution control, energy conservation and generation of both direct and indirect employment is noteworthy.

Formation of IFCI
The IFCI was the 1st specialized financial institution setup in India to provide term finance to large industries in India. It was established on 1st July, 1948 under The Industrial Finance Corporation Act of 1948. In 1993 it was reconstituted as a company to impart higher degree of operational flexibility.

Objectives of IFCI
The main objective of IFCI is to provide medium and long term financial assistance to large scale industrial undertakings, particularly when ordinary bank accommodation does not suit the undertaking or finance cannot be profitably raised by the concerned by the issue of shares.

Functions of IFCI
1) For setting up a new industrial undertaking.

2) For expansion and diversification of existing industrial undertaking. 3) For renovation and modernization of existing concerns. 4) For meeting the working capital requirements of industrial concerns in some exceptional cases. 5) Direct financial support (by way of rupee term loans as well as foreign currency loans) to industrial units for under taking new projects, expansion, modernization, diversification etc. 6) Subscription and underwriting of public issues of shares and debentures. 7) Guaranteeing of foreign currency loans and also deferred payment guarantees. 8) Merchant banking, leasing and equipment finance.

ICICI Bank
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ICICI Bank Limited

Type

Private

BSE: 532174 Traded as NSE: ICICIBANK NYSE: IBN BSE SENSEX Constituent

Industry

Banking, Financial services

Founded

1954

Headquarters Mumbai, Maharashtra, India

Area served

Worldwide

Key people

Ms.Chanda Kochhar (MD & CEO)

Credit cards, Consumer banking, corporate Products banking, finance and insurance, investment banking, mortgage loans, private banking, wealth management US$ 13.52 billion (2012)[1]

Revenue

Operating income

US$ 2.117 billion (2012)[1]

Profit Total assets

US$ 1.597 billion (2012)[1] US$ 98.99 billion (2012)[1] US$ 12.62 billion (2012)[1] 81,254 (2012)[1]

Total equity Employees

Website

www.icicibank.com

ICICI Bank is an Indian multinational bank and financial services company headquartered in Mumbai. Based on 2013 information, it is the second largest bank in India by assets and third largest by market capitalisation. It offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank has a network of 3,350 branches and 10,486 ATM's in India, and has a presence in 19 countries.[2] ICICI Bank is one of the Big Four banks of India, along with State Bank of India, Punjab National Bank and Canara Bank.[3]

The bank has subsidiaries in the United Kingdom, Russia, and Canada; branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre; and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. The company's UK subsidiary has established branches in Belgium and Germany.[4] In March 2013, Operation Red Spider showing high-ranking officials and some employees of ICICI Bank involved in money laundering. After a government inquiry, ICICI Bank suspended 18 employees and faced penalties from the Reserve Bank of India in relation to the activity.[5][6][7][8][9]

Contents
[hide]

1 Corporate history 2 Corporate governance o 2.1 Group Anti Money Laundering Policy o 2.2 Code of Conduct 3 Creation of market infrastructure in India 4 Corporate Social Responsibility programmes for Elementary Education o 4.1 Read to Lead Phase I o 4.2 Read to Lead Phase II 5 Products o 5.1 MySavings Rewards o 5.2 iWish- the flexible recurring deposit 6 Go Green Initiative o 6.1 Objective o 6.2 Green products and services o 6.3 Carbon Footprint Calculator 7 Subsidiaries o 7.1 Domestic o 7.2 International 8 Acquisitions 9 Awards 10 Controversies o 10.1 Inhuman debt recovery methods o 10.2 Money laundering allegations 11 Credit Rating 12 See also 13 References 14 External links

Corporate history[edit source | editbeta]

ICICI Bank was established by the Industrial Credit and Investment Corporation of India, an Indian financial institution, as a wholly owned subsidiary in 1954. The parent company was formed in 1955 as a joint-venture of the World Bank, India's public-sector banks and publicsector insurance companies to provide project financing to Indian industry.[10][11] The bank was initially known as the Industrial Credit and Investment Corporation of India Bank, before it changed its name to the abbreviated ICICI Bank. The parent company was later merged with the bank. ICICI Bank launched internet banking operations in 1998.[12] ICICI's shareholding in ICICI Bank was reduced to 46 percent, through a public offering of shares in India in 1998, followed by an equity offering in the form of American Depositary Receipts on the NYSE in 2000. ICICI Bank acquired the Bank of Madura Limited in an all-stock deal in 2001 and sold additional stakes to institutional investors during 2001-02. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group, offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE.[13] In 2000, ICICI Bank became the first Indian bank to list on the New York Stock Exchange with its five million American depository shares issue generating a demand book 13 times the offer size. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002 and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002.[14] In 2008, following the 2008 financial crisis, customers rushed to ICICI ATMs and branches in some locations due to rumours of adverse financial position of ICICI Bank. The Reserve Bank of India issued a clarification on the financial strength of ICICI Bank to dispel the rumours.[15]

Corporate governance[edit source | editbeta]

Group Anti Money Laundering Policy[edit source | editbeta]

The ICICI Group AML Policy establishes the standards of AML compliance and is applicable to all activities.[16]

Code of Conduct[edit source | editbeta]

ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors and employees.[17] The Bank of Rajasthan(BOR) was acquired by the ICICI Bank in 2010 for 3,000 crores. RBI was critical of BOR's promoters not reducing their holdings in the company. BOR has since been merged with ICICI Bank. Each 118 shares of BOR will be converted into 25 shares of ICICI Bank.

Creation of market infrastructure in India[edit source | editbeta]

ICICI Bank has contributed to set up different institutions which include the following:
National Stock Exchange

The National Stock Exchange was promoted by Indias leading financial institutions (including ICICI Ltd.) in 1992 on behalf of the Government of India with the objective of establishing a nationwide trading facility for equities, debt instruments and hybrids, by ensuring equal access to investors all over the country through an appropriate communication network.[18]
Credit Rating Information Services of India Limited

In 1987, ICICI Ltd along with UTI set up CRISIL as India's first professional credit rating agency. CRISIL offers a comprehensive range of integrated products and service offerings which include credit ratings, capital market information, industry analysis and detailed reports.[19]
National Commodities and Derivatives Exchange Limited

NCDEX is a professionally managed online multi-commodity exchange, set up in 2003, by ICICI Bank Ltd, LIC, NABARD, NSE, Canara Bank, CRISIL, Goldman Sachs, Indian Farmers Fertiliser Cooperative Limited (IFFCO) and Punjab National Bank.[20]
Financial Innovation Network and Operations Pvt Ltd.

ICICI Bank has facilitated setting up of "FINO Cross Link to Case Link Study" in 2006, as a company that would provide technology solutions and services to reach the underserved and underbanked population of the country. Using cutting edge technologies like smart cards, biometrics and a basket of support services, FINO enables financial institutions to conceptualise, develop and operationalise projects to support sector initiatives in microfinance and livelihoods.[21]
Entrepreneurship Development Institute of India

Entrepreneurship Development Institute of India (EDII), an autonomous body and not-for-profit society, was set up in 1983, by the erstwhile apex financial institutions like IDBI, ICICI, IFCI

and SBI with the support of the Government of Gujarat as a national resource organisation committed to entrepreneurship development, education, training and research.[22]
North Eastern Development Finance Corporation

North Eastern Development Finance Corporation (NEDFI) was promoted by national level financial institutions like ICICI Ltd in 1995 at Guwahati, Assam for the development of industries, infrastructure, animal husbandry, agri-horticulture plantation, medicinal plants, sericulture, aquaculture, poultry and dairy in the North Eastern states of India. NEDFI is the premier financial and development institution for the North East region.[23]
Asset Reconstruction Company India Limited

Following the enactment of the Securitisation Act in 2002, ICICI Bank together with other institutions, set up Asset Reconstruction Company India Limited (ARCIL) in 2003, to create a facilitative environment for the resolution of distressed debt in India. ARCIL was established to acquire non performing assets (NPAs) from financial institutions and banks with a view to enhance the management of these assets and help in the maximisation of recovery. This would relieve institutions and banks from the burden of pursuing NPAs, and allow them to focus on core banking activities.[24][25]
Credit Information Bureau of India Limited

ICICI Bank has also helped in setting up Credit Information Bureau of India Limited (CIBIL), Indias first national credit bureau in 2000. CIBIL provides a repository of information (which contains the credit history of commercial and consumer borrowers) to its members in the form of credit information reports. The members of CIBIL include banks, financial institutions, state financial corporations, non-banking financial companies, housing finance companies and credit card companies.[26]

Corporate Social Responsibility programmes for Elementary Education[edit source | editbeta]

Read to Lead Phase I[edit source | editbeta]

Read to Lead is an initiative of ICICI Bank to facilitate access to elementary education for underprivileged children in the age group of 314 years including girls and tribal children from the remote rural areas. The Read to Lead initiative supports partner NGOs to design and implement programmes that mobilise parent and community involvement in education, strengthen schools and enable children to enter and complete formal elementary education. Read to Lead has reached out to 100,000 children across 14 states of Andhra Pradesh, Bihar, Delhi, Gujarat, Haryana, Jharkhand, Karnataka, Maharashtra, Orissa, Rajasthan, Tamil Nadu, Tripura, Uttar Pradesh and West Bengal.[27]
Read to Lead Phase I is focused on

Bridge courses to support dropout children to re-enrol in formal education Remedial coaching to potential dropout children to ensure their continuation in formal schooling Educational kits that include uniforms, books, stationery, woollen clothes etc. Inclusive and special education for children with special needs, such as mentally challenged and physically disabled children Health and nutritional support for children Community initiatives for sensitisation on importance of education, including parent groups, school enrolment drives, workshops and seminars, and publications Holistic development of children through instruction in arts and crafts, street plays, and life skills education

Read to Lead Phase II[edit source | editbeta]

In Phase II of the Read to Lead programme, ICICI Bank has supported the establishment of 63 libraries that will reach out to approximately 7,200 children in the rural areas of Jagdalpur block of Bastar district in Chhattisgarh. The programme includes building libraries, sourcing books and conducting various interactive activities to make the library a dynamic centre for learning.[citation
needed]

Products[edit source | editbeta]

MySavings Rewards[edit source | editbeta]

ICICI Bank has rolled-out the programme MySavings Rewards from 1 September 2012, where reward points are offered to individual domestic customers for a variety of transactions done through the savings bank account. Reward points are offered automatically to customers for activating Internet banking, shopping online/ paying utility bills with Internet banking and autodebit from savings account towards equated monthly installments for home/ auto/ personal loan/ recurring deposit. Customers are required to maintain a monthly average balance of 15,000 or more.[28] Customers can redeem their reward points by

logging into his ICICI Bank internet banking account Calling up customer care Walking into the nearest ICICI Bank branch

iWish- the flexible recurring deposit[edit source | editbeta]

iWish is a flexible recurring deposit product launched by ICICI Bank for its savings account customers. iWish is a fun and flexible way to encourage savings among youth for fulfilling aspirations. Unlike a traditional recurring deposit, iWish allows customers to save varying amounts of money at any time of their choice. Customers can create several goals and track their progress on an easy-to-use online interface. They can also share their wishes on Facebook and let their friends and family be a part of their dreams by contributing to their account from any bank

account. There will be no penalties if a customer misses his monthly contribution to the recurring deposit. The minimum duration is six months and a customer can open this account starting with 500.[29] The key features of iWish are:

Flexibility: Flexible recurring deposit allows a customer to deposit any amount at any point of time. Customers also have an option of depositing money by giving a standing instruction. Better returns: Customers can earn recurring deposit interest rates on their iWish account while enjoying the freedom of not having to deposit every month. Sharing: Customers can choose to share their wishes on Facebook and let their friends and family be part of their dreams. Contributions: iWish gives an opportunity to the family and friends of a customer to contribute and help him attain his aspirations faster. Contributions can be made from any bank account using a VISA debit card.

ICICI Bank has developed this product in collaboration with Social Money.

Go Green Initiative[edit source | editbeta]

The Go Green Initiative is an organisation wide initiative that moves beyond moving people, processes and customers to cost effective automated channels to build awareness and consciousness of our environment,our nation and our society.[30]
Objective[edit source | editbeta]

ICICI Banks Green initiative is to make healthy environment in the organisation i.e.; to create intrapersonal skills amongs the customer and understanding between employees of the organisation. Broad objectives of the ICICI are: (a) to assist in the creation, expansion and modernisation of private concerns; (b) to encourage the participation of internal and external capital in the private concerns; (c) to encourage private ownership of industrial investment.
Green products and services[edit source | editbeta] Instabanking

It is the platform that brings together all alternate channels under one umbrella and gives customers the option of banking through Internet banking, i-Mobile banking, IVR Banking. This reduces the carbon footprint of the customers by ensuring they do not have to resort to physical statements or travel to their branches.[30]

Vehicle Finance

As an initiative towards more environment friendly way of life, Auto loans offer 50% waiver on processing fee on car models which uses alternate mode of energy. The models identified for the purpose are, Maruti's LPG version of Maruti 800, Omni and Versa, Hyundai's Santro Eco, Civic Hybrid of Honda, Reva electric cars, Tata Indica CNG and Mahindra Logan CNG versions.[30]
Carbon Footprint Calculator[edit source | editbeta]

Inputs include region, user input of the distance traveled in a particular medium of transport daily, electricity consumed per month and LPG cylinder/piped natural gas used per month. It calculates the net carbon footprint to create awareness and sensitize people about the environment.It also shows the world's and India's average carbon footprint.[31][32]

Subsidiaries[edit source | editbeta]

Domestic[edit source | editbeta]

ICICI Prudential Life Insurance Company Limited ICICI Lombard General Insurance Company Limited ICICI Prudential Asset Management Company Limited ICICI Prudential Trust Limited ICICI Securities Limited ICICI Securities Primary Dealership Limited ICICI Venture Funds Management Company Limited ICICI Home Finance Company Limited ICICI Investment Management Company Limited ICICI Trusteeship Services Limited ICICI Prudential Pension Funds Management Company Limited [33]

International[edit source | editbeta]

ICICI Bank UK PLC ICICI Bank Canada ICICI Bank Eurasia Limited Liability Company ICICI Securities Holdings Inc. ICICI Securites Inc. ICICI International LImited

Acquisitions[edit source | editbeta]

1996: SCICI Ltd. A diversified financial institution with headquarters in Mumbai 1997: ITC Classic Finance. Incorporated in 1986, ITC Classic was a non-bank financial firm that engaged in hire,m purchase, and leasing operations. At the time of being acquired, ITC Classic had eight offices, 26 outlets, and 700 brokers.

1998: Anagram Finance. Anagram had built up a network of some 50 branches in Gujarat, Rajasthan, and Maharashtra that were primarily engaged in retail financing of cars and trucks. It also had some 250,000 depositors. 2001: Bank of Madurai 2002: The Darjeeling and Shimla branches of Grindlays Bank 2005: Investitsionno-Kreditny Bank (IKB), a Russian bank 2007: Sangli Bank. Sangli Bank was a private sector unlisted bank, founded in 1916, and 30% owned by the Bahte family. Its headquarter were in Sangli in Maharashtra, and it had 198 branches. It had 158 in Maharashtra and 31 in Karnataka, and others in Gujarat, Andhra Pradesh, Tamil Nadu, Goa, and Delhi. Its branches were relatively evenly split between metropolitan areas and rural or semi-urban areas. 2010: Bank of Rajasthan.

Awards[edit source | editbeta]

2004

Best Bank in India Award presented by Euromoney Magazine[34]

2007

ICICI Bank has been conferred the Euromoney Award 2007 for the Best Bank in the Asia-Pacific Region[35] ICICI Bank wins the Excellence in Remittance Business award by The Asian Banker[36]

2009

ICICI Bank bags the "Best bank in SME financing (Private Sector)" at the Dun & Bradstreet Banking awards[37]

2011

ICICI Bank is the only Indian brand to figure in the BrandZ Top 100 Most Valuable Global Brands Report, second year in a row[38] ICICI Bank ranked 5th in the list of "57 Indian Companies", and 288 th in World Rankings in Forbes Global 2000 list.[39] ICICI Bank has won the "Banking Technology Awards 2010" at The Indian Banks Association in the following categories[40] ICICI Bank was recognised for its Special Citation of the Fully Electronic Branch Service Channel, first set up at Hiranandani Estate, Thane, at the Financial Insights Innovation Awards held in conjunction with Asian Financial Services Congress[41] For the second year in a row, ICICI Bank was ranked 70th in the Brandirectory league tables of the worlds most valuable brands by, The BrandFinance Banking 500[42] ICICI Bank was ranked 1st in the Banking and Finance category and 9th in the "2010 Best Companies To Work For" by Business Today[43] ICICI Bank UK, HiSAVE product range has been awarded the Consumer Moneyfacts Awards 2011 for the 'Best Online Savings Provider'[44]

For the second consecutive year, ICICI Bank was ranked second in the "India's 50 Biggest Financial Companies", in The BW REAL 500 by Business World[45] ICICI Bank was one of the winners in the Global Awards for Enterprise & IT Architecture Excellence. ICICI Bank bagged the award in the Business Intelligence and Analytics' category.[46] The Brand Trust Report ranks ICICI among the top 4 most trusted financial institutions.[47] ICICI Bank awarded "House Of The Year (India)", by Asia Risk magazine, for eighth time in a row since 2004[48] ICICI Bank awarded the most Tech-friendly Bank award by Business World[49] ICICI Bank received the Best Trade Finance Bank in India by The Asset Triple A Award, Hong Kong[50] ICICI Bank is the first and the only Indian brand to be ranked as the 45th most valuable global brand by BrandZ Top 100 Global Brands Report[51]

2012

Airtel, ICICI among 'top 100 global brands' [52] ICICI Bank won the "Best Bond House (India) 2011", by IFR Asia [53] ICICI Bank awarded the Best Bank (India) by Global Finance [54] ICICI Bank won the "Century International Quality Era Award" at Geneva [55] ICICI Bank was awarded the "Best Foreign Exchange Bank (India)" by Finance Asia Country Awards.[56] ICICI Bank received the "Dataquest Technology Innovation Awards 2012" for Data centre migration by Dataquest. ICICI Bank was conferred the Best Performance Award for Self Help Group (SHG) Bank Linkage Programme in NABARD's State Level Awards announced by their Maharashtra Regional Office. The Bank received the first prize for the year 2010-11 in the Private Sector Bank category and 2nd runner up for the year 2011-12 in the Commercial Bank category. For the second consecutive year, ICICI Bank won the NPCI's NFS Operational Excellence Awards in the MNC and Private Sector Banks Category for its ATM network. Mr.K.V.Kamath was awarded the "Hall Of Fame" by Outlook Money for his long standing contribution in the financial services sector.[57] ICICI Bank won the Best Bank - India Award by The Banker.[58] Ms. Chanda Kochhar ranked 18th in the Fortune's list of '2012 Businesspersons of the Year'. The 50 global leaders is Fortune's annual ranking of leaders who are "the best in business".[59] Ms. Chanda Kochhar tops the list of "50 Most Powerful Women in Business" by Fortune India. ICICI Bank tops the list of "Private sector and Foreign Banks" by Brand Equity, Most Trusted Brands 2012. It ranks 15th in the "Top Service 50 Brands".[60] For the third consecutive year, ICICI Bank ranked second in "India's 50 Biggest Financial Companies" in The BW Real 500 by Businessworld.[61] For the second year in a row, Ms. Chanda Kochhar, Managing Director & CEO was ranked 5th in the International list of 50 Most Powerful Women In Business by Fortune. ICICI Bank tops the list of most fans in India and globally ranks fifth amongst financial institutions on Facebook in the social media engagement study conducted by Ketchum Sampark.[62] ICICI Bank in the Private Sector Bank category won the Best Technology Bank Of The Year, Best Financial Inclusion Initiative and Best Use Of Technology In Training and e-Learning by Indian Bank's Association (IBA) Technology Awards. The Bank also received the first runner up for Best Online Bank, Best Customer Relationship Initiative and Best Use Of Mobility Technology in Banking by IBA Technology Awards .

ICICI Bank awarded the Best SME Bank for Treasury and Working Capital (India) by The Asset Triple A.[63] ICICI Bank received the Best Trade Finance House and Best Cash Management House by The Corporate Treasurer Alliance Country Awards.[64] ICICI Bank awarded the Best Private Sector Bank in Global Business Development, Rural Reach and SME financing categories by Dun & Bradstreet - Polaris Financial Technology Banking Awards.[65]

2013

ICICI Bank awarded the Most Admired Infrastructure Debt Financer and PPP Project of the Year: Yamuna Expressway Project, in the 5th KPMG Infrastructure Today Awards by ASAPP Media Information Group[66] ICICI Bank Limited has been conferred the Best Remittance Business award at The Asian Banker's International Excellence in Retail Financial Services 2013 Awards ceremony. ICICI Bank was honored with the Medici Innovation Hall of Fame Award, instituted by The Medici Institute in collaboration with the Medici Group, USA. ICICI Bank and its IT partner Fundtech won The Asian Banker Technology Implementation Award for the Convergence Banking project from Asian Banker. Ms. Chanda Kochhar, MD & CEO, was ranked as the most powerful business woman in India in Forbes' list of 'The World's 100 Most Powerful Women 2013'.[67] Ms. Chanda Kochhar, MD & CEO, was also featured in the Power List 2013 of 25 most powerful women in Inda by India Today, for the third year in a row.[68]

Controversies[edit source | editbeta]

Inhuman debt recovery methods[edit source | editbeta]

A few years after its rise to prominence in the banking sector, ICICI bank faced allegations on the recovery methods it used against loan payment defaulters. A number of cases were filed against the bank and its employees for using "brutal measures" to recover the money. Most of the allegations were that the bank was using goons to recover the credit card payments and that these "recovery agents" exhibited inappropriate and in some cases, inhuman behavior. Incidents were reported wherein the defaulters were put to "public shame" by the recovery agents. The bank also faced allegations of inappropriate behavior in recovering its loans. These allegations started initially when the "recovery agents" and bank employees started threatening the defaulters. In some cases, notes written by the bank's employees asking the defaulters to "sell everything in the house including family members", were found. Such charges faced by the bank rose to a peak when suicide cases were reported wherein the suicide notes spoke of the Bank's recovery methods as the cause of the suicide. This led to a lot of legal battles and the bank paying huge compensations.[69][70][71]

Money laundering allegations[edit source | editbeta]

ICICI Bank was one of the leading Indian banks accused of blatant money laundering through violation of RBI guidelines in the famous CobraPost[72] sting operation which shook up Indian banking industry during AprilMay 2013.[73] On 14 March 2013 the online magazine Cobrapost released video footage from Operation Red Spider showing high-ranking officials and some employees of ICICI Bank agreeing to convert black money into white, an act in violation of Money Laundering Control Act. The Government of India and Reserve Bank of India ordered an inquiry following the expos. On 15 March 2013, ICICI Bank suspended 18 employees, pending inquiry.[5][6][7] On 11 April 2013 Deputy Governor of RBI, H R Khan reportedly told that the central bank is initiating action against ICICI Bank in connexion with allegations of money laundering.[8][9]

Credit Rating[edit source | editbeta]

On account of the growing concerns over the country's sovereign debt ratings,credit ratings agency Moody's has lowered the ratings for ICICI Bank.

IDBI Bank
IDBI Bank Limited

Type

Public (BSE: 500116)

Industry

Banking, Financial services

Founded

July 1964

Headquarters

Mumbai, India M.S. Raghavan (CMD)

Key people Bal Kishan Batra (DMD) Products consumer banking, corporate banking,

finance and insurance, investment banking, mortgage loans, private banking, private equity, wealth management, Agriculture Loan Revenue Operating income Net income Total assets Employees Website 254.89 billion (US$4.1 billion) (2012)[1] 40.57 billion (US$650 million) (2012) 20.32 billion (US$320 million) (2012) 2650 billion (US$42 billion) (2012) 15,435 (2012) www.idbi.com

IDBI Bank Limited is an Indian financial service company headquartered Mumbai, India. RBI categorised IDBI as an "other public sector bank". It was established in 1964 by an Act of Parliament to provide credit and other facilities for the development of the fledgling Indian industry.[2] It is currently 10th largest development bank in the world in terms of reach with 1715 ATMs, 1111 branches including one overseas branch at DIFC, Dubai and 766 centers including two overseas centres at Singapore & Beijing.[3] Some of the institutions built by IDBI are the Securities and Exchange Board of India (SEBI), National Stock Exchange of India (NSE), the National Securities Depository Limited (NSDL), the Stock Holding Corporation of India Limited (SHCIL), the Credit Analysis & Research Ltd, the Exim Bank (India), the Small Industries Development Bank of India (SIDBI), the Entrepreneurship Development Institute of India, and IDBI Bank, which is owned by the Indian Government. IDBI Bank is on a par with nationalized banks and the SBI Group as far as government ownership is concerned. It is one among the 26 commercial banks owned by the Government of India. The Bank has an aggregate balance sheet size of Rs.2908.37 billion as on 31 March 2012.

Contents
[hide]

1 Recent developments 2 Overview of development banking in India 3 Industrial Development Bank of India (IDBI) 4 Acquisition of United Western Bank 5 See also 6 References 7 External links

Recent developments[edit source | editbeta]

The name of Mr. M. S. Raghavan was recently cleared by Government of India to become CMD of IDBI Bank, taking over from outgoing CMD Mr. R.M. Malla. Mr. Raghavan, who was executive director in Bank of India, assumed the charge on July 5, 2013. To meet emerging challenges and to keep up with reforms in financial sector, IDBI has taken steps to reshape its role from a development finance institution to a commercial institution. With the Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003, IDBI attained the status of a limited company viz. "Industrial Development Bank of India Limited" (IDBIL). Subsequently, the Reserve Bank of India (RBI) issued the requisite notification on 30 September 2004 incorporating IDBI as a 'scheduled bank' under the RBI Act, 1934. Consequently, IDBI, formally entered the portals of banking business as IDBIL from 1 October 2004. The commercial banking arm, IDBI BANK, was merged into.

Overview of development banking in India[edit source | editbeta]

The concept of development banking rose only after Second World War, after the Great Depression in 1930s. The demand for reconstruction funds for the affected nations compelled in setting up a worldwide institution for reconstruction. As a result the IBRD was set up in 1945 as a worldwide institution for development and reconstruction. This concept has been widened all over the world and resulted in setting up of large number of banks around the world which coordinating the developmental activities of different nations with different objectives among the world. The Narashimam committee had recommended to give up its direct financing functions and to perform only the promotional and refinancing role. However, the S.H.Khan committee, appointed by the RBI, recommended its transformation into a universal bank.[4] The course of development of financial institutions and markets during the post-Independence period was largely guided by the process of planned development pursued in India with emphasis on mobilisation of savings and channeling investment to meet Plan priorities. At the time of Independence in 1947, India had a fairly well developed banking system. The adoption of bank dominated financial development strategy was aimed at meeting the sectoral credit needs, particularly of agriculture and industry. Towards this end, the Reserve Bank concentrated on regulating and developing mechanisms for institution building. The commercial banking network was expanded to cater to the requirements of general banking and for meeting the short-term working capital requirements of industry and agriculture. Specialised development financial institutions (DFIs) such as the IDBI, NABARD, NHB and SIDBI, etc., with majority ownership of the Reserve Bank were set up to meet the long-term financing requirements of industry and agriculture. To facilitate the growth of these institutions, a mechanism to provide concessional finance to these institutions was also put in place by the Reserve Bank. The first development bank In India incorporated immediately after independence in 1948 under the Industrial Finance Corporation Act as a statutory corporation to pioneer institutional credit to

medium and large-scale. Then after in regular intervals the government started new and different development financial institutions to attain the different objectives and helpful to five-year plans.

Inof IDBI Act.

Industrial Development Bank of India (IDBI)[edit source | editbeta]

The Industrial Development Bank of India (IDBI) was established on 1 July 1964 under an Act of Parliament as a wholly owned subsidiary of the Reserve Bank of India. In 16 February 1976, the ownership of IDBI was transferred to the Government of India and it was made the principal financial institution for coordinating the activities of institutions engaged in financing, promoting and developing industry in the country. Although Government shareholding in the Bank came down below 100% following IDBIs public issue in July 1995, the former continues to be the major shareholder (current shareholding: 75%). IDBI provides financial assistance, both in rupee and foreign currencies, for green-field projects as also for expansion, modernisation and diversification purposes. In the wake of financial sector reforms unveiled by the government since 1992, IDBI also provides indirect financial assistance by way of refinancing of loans extended by State-level financial institutions and banks and by way of rediscounting of bills of exchange arising out of sale of indigenous machinery on deferred payment terms.[citation needed] IDBI has played a pioneering role, particularly in the pre-reform era (196491),in catalyzing broad based industrial development in the country in keeping with its Government-ordained development banking charter.[citation needed] Narasimam committee[5] recommends that IDBI should give up its direct financing functions and concentrate only in promotional and refinancing role. But this recommendation was rejected by the government. Later RBI constituted a committee under the chairmanship of S.H.Khan to examine the concept of development financing in the changed global challenges. This committee is the first to recommend the concept of universal banking. The committee wanted the development financial institution to diversify its activity. It recommended to harmonise the role of development financing and banking activities by getting away from the conventional distinction between commercial banking and developmental banking.

Acquisition of United Western Bank[edit source | editbeta]

In 2006, IDBI Bank acquired United Western Bank in a rescue.[6] Annasaheb Chirmule, who worked for the cause of Swadeshi movement, founded Satara Swadeshi Commercial Bank in 1907, and some three decades later founded United Western Bank. The bank was incorporated in 1936, and commenced operations the next year, with its head office in Satara, in Maharashtra State. It became a Scheduled Bank in 1951. In 1956 it merged with Union Bank of Kolhapur, and in 1961 with Satara Swadeshi Commercial Bank.[7] At the time of the merger with IDBI, United Western had some 230 branches spread over 47 districts in 9 states, controlled by five Zonal Offices at Mumbai, Pune, Kolhapur, Jalgaon and Nagpur.

National Bank for Agriculture and Rural Development

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Jump to: navigation, search

National Bank for Agriculture and Rural Development

Logo of NABARD Headquarters in Mumbai

Headquarters Mumbai, Maharashtra, India 12 July 1982[1] Dr.Prakash Bakshi[2]

Established

Chairman

Currency

(Rupees)

Reserves

Rs.81,220 crore (2007)

Website

www.nabard.org

NABARD is the apex development bank in India

National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India having headquarters based in Mumbai (Maharashtra)[3] and other branches are all over the country. The Committee to Review Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD), set up by the Reserve Bank of India (RBI) under the Chairmanship of Shri B. Sivaraman, conceived and recommended the establishment of the National Bank for Agriculture and Rural Development (NABARD). It was established on 12 July 1982 by a special act by the parliament and its main focus was to uplift rural India by increasing the credit flow for elevation of agriculture & rural non farm sector and completed its

25 years on 12 July 2007.[4] It has been accredited with "matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India". RBI sold its stake in NABARD to the Government of India, which now holds 99% stake.[5] NABARD is active in developing financial inclusion policy and is a member of the Alliance for Financial Inclusion.[6]

Contents
[hide]

1 History 2 Associated with NABARD 3 Role 4 Rural innovation 5 Microfinance and NABARD 6 NABARD a 100 % CSR company 7 References 8 External links

History[edit source | editbeta]

NABARD was established on the recommendations of Shivaraman Committee, by an act of Parliament on 12 July 1982 to implement the National Bank for Agriculture and Rural Development Act 1981. It replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation (ARDC). It is one of the premier agencies to provide credit in rural areas. Nabard is India's specialised bank.

Associated with NABARD[edit source | editbeta]

International associates of NABARD ranges from World Bank-affiliated organizations to global developmental agencies working in the field of agriculture and rural development. These organizations help NABARD by advising and giving monetary aid for the upliftment of the people in the rural areas and optimizing the agricultural process. nabard was established on the recomondations of shivaraman committee.
[7]

Role[edit source | editbeta]

NABARD is the apex institution in the country which looks after the development of the cottage industry, small industry and village industry, and other rural industries. NABARD also reaches out to allied economies and supports and promotes integrated development. And to help NABARD discharge its duty, it has been given certain roles as follows:

1. Serves as an apex financing agency for the institutions providing investment and production credit for promoting the various developmental activities in rural areas 2. Takes measures towards institution building for improving absorptive capacity of the credit delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, training of personnel, etc. 3. Co-ordinates the rural financing activities of all institutions engaged in developmental work at the field level and maintains liaison with Government of India, State Governments, Reserve Bank of India (RBI) and other national level institutions concerned with policy formulation 4. Undertakes monitoring and evaluation of projects refinanced by it. 5. NABARD refinances the financial institutions which finances the rural sector. 6. The institutions which help the rural economy, NABARD helps develop. 7. NABARD also keeps a check on its client institutes. 8. It regulates the institution which provides financial help to the rural economy. 9. It provides training facilities to the institutions working the field of rural upliftment. 10. It regulates the cooperative banks and the RRBs, and manages talent acquisition through IBPS CWE.[8] NABARD's refinance is available to State Co-operative Agriculture and Rural Development Banks (SCARDBs), State Co-operative Banks (SCBs), Regional Rural Banks (RRBs), Commercial Banks (CBs) and other financial institutions approved by RBI. While the ultimate beneficiaries of investment credit can be individuals, partnership concerns, companies, Stateowned corporations or co-operative societies, production credit is generally given to individuals. NABARD has its head office at Mumbai, India. NABARD operates throughout the country through its 28 Regional Offices and one Sub-office, located in the capitals of all the states/union territories. Each Regional Office[RO] has a Chief General Manager [CGMs] as its head, and the Head office has several Top executives like the Executive Directors[ED], Managing Directors[MD], and the Chairperson.It has 336 District Offices across the country, one Sub-office at Port Blair and one special cell at Srinagar. It also has 6 training establishments. NABARD is also known for its 'SHG Bank Linkage Programme' which encourages India's banks to lend to self-help groups (SHGs). Because SHGs are composed mainly of poor women, this has evolved into an important Indian tool for microfinance. As of March 2006 22 lakh SHGs representing 3.3 crore members had to been linked to credit through this programme.[9] NABARD also has a portfolio of Natural Resource Management Programmes involving diverse fields like Watershed Development, Tribal Development and Farm Innovation through dedicated funds set up for the purpose.

Rural innovation[edit source | editbeta]

NABARD role in rural development in India is phenomenal.[10] National Bank For Agriculture & Rural Development (NABARD) is set up as an apex Development Bank by the Government of India with a mandate for facilitating credit flow for promotion and development of agriculture,

cottage and village industries. The credit flow to agriculture activities sanctioned by NABARD reached Rs 1,57,480 crore in 2005-2006. The overall GDP is estimated to grow at 8.4 per cent. The Indian economy as a whole is poised for higher growth in the coming years. Role of NABARD in overall development of India in general and rural & agricultural in specific is highly pivotal. Through assistance of Swiss Agency for Development and Cooperation, NABARD set up the Rural Infrastructure Development Fund. Under the RIDF scheme Rs. 51,283 crore have been sanctioned for 2,44,651 projects covering irrigation, rural roads and bridges, health and education, soil conservation, water schemes etc. Rural Innovation Fund is a fund designed to support innovative, risk friendly, unconventional experiments in these sectors that would have the potential to promote livelihood opportunities and employment in rural areas.[11] The assistance is extended to Individuals, NGOs, Cooperatives, Self Help Group, and Panchayati Raj Institutions who have the expertise and willingness to implement innovative ideas for improving the quality of life in rural areas. Through member base of 25 crore, 600000 cooperatives are working in India at grass root level in almost every sector of economy. There are linkages between SHG and other type institutes with that of cooperatives. The purpose of RIDF is to promote innovation in rural & agricultural sector through viable means. Effectiveness of the program depends upon many factors, but the type of organization to which the assistance is extended is crucial one in generating, executing ideas in optimum commercial way. Cooperative is member driven formal organization for socio-economic purpose, while SHG is informal one. NGO have more of social color while that of PRI is political one. Does the legal status of an institute influences effectiveness of the program? How & to what an extent? Cooperative type of organization is better (Financial efficiency & effectiveness) in functioning (agriculture & rural sector) compared to NGO, SHG & PRIs.[12] Recently in 2007-08, NABARD has started a new direct lending facility under 'Umbrella Programme for Natural Resource Management' (UPNRM). Under this facility financial support for natural resource management activities can be provided as a loan at reasonable rate of interest. Already 35 projects have been sanctioned involving loan amount of about Rs 1000 crore. The sanctioned projects include honey collection by tribals in Maharashtra, tussar value chain by a women producer company ('MASUTA'), eco-tourism in Karnataka[13] etc.[14]

Microfinance and NABARD[edit source | editbeta]

Thus the Reserve Bank of INDIA and NABARD has laid out certain guidelines in 06-07 for the commercial banks, Regional Rural Banks and Cooperative Banks to provide the data to RBI and es data regarding loans given by banks to the microfinance institutions.[15]

NABARD a 100 % CSR company[edit source | editbeta]

NABARD has been instrumental in grounding rural,social innovations and social enterprises in the rural hinterlands. This endeavour is perhaps unparalleled in the country, it has in the process partnered with about 4000 partner organisations in grounding many of the interventions be it,

SHG-Bank Linkage programme, tree-based tribal communities livelihoods initiative, watershed approach in soil and water conservation, increasing crop productivity initiatives through lead crop initiative or dissemination of information flow to agrarian communities through Farmer clubs.Despite all this, it pays huge taxes too, to the exchequer figuring in the top 50 tax payers consistently. NABARD virtually ploughs back all the profits for development spending, in their unending search for solutions and answers. Thus the organisation had developed a huge amount of trust capital in its 3 decades of work with rural communities.[16]

Small Industries Development Bank of India

From Wikipedia, the free encyclopedia

Jump to: navigation, search Small Industries Development Bank of India is an independent financial institution aimed to aid the growth and development of micro, small and medium-scale enterprises (MSME) in India. Set up on April 2, 1990 through an act of parliament, it was incorporated initially as a wholly owned subsidiary of Industrial Development Bank of India. Current shareholding is widely spread among various state-owned banks, insurance companies and financial institutions.[citation needed] Beginning as a refinancing agency to banks and state level financial institutions for their credit to small industries, it has expanded its activities, including direct credit to the SME through 100 branches in all major industrial clusters in India.[citation needed] Besides, it has been playing the development role in several ways such as support to micro-finance institutions for capacity building and onlending. Recently it has opened seven branches christened as Micro Finance branches, aimed especially at dispensing loans up to 5 lakh.[citation needed] It is the Principal Financial Institution for the Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector and for Co-ordination of the functions of the institutions engaged in similar activities.[1] SIDBI has also floated several other entities for related activities. Credit Guarantee Fund Trust for Micro and Small Enterprises ([2]) provides guarantees to banks for collateral-free loans extended to SME. SIDBI Venture Capital Ltd.([3]) is a venture capital company focussed at SME. SME Rating Agency of India Ltd. (SMERA - [4]) provides composite ratings to SME. Another entity founded by SIDBI is ISARC - India SME Asset Reconstruction Company in 2009, as specialized entities for NPA resolution for SME. Mr. Sushil Muhnot is the chairman of SIDBI since April 4, 2012.[2]

Contents
[hide]

1 SIDBI 2 Achievements 3 References

4 External links

SIDBI[edit source | editbeta]

The purpose is to provide refinance facilities and short term lending to industries.[citation needed] Its headquarters is in Lucknow.[3]

Achievements[edit source | editbeta]

SIDBI retained its position in the top 30 Development Banks of the World in the latest ranking of The Banker, London. As per the May 2001 issue of The Banker, London, SIDBI ranked 25th both in terms of Capital and Assets.[updation needed] Credit Guarantee Fund Trust for Micro and Small Enterprises popularly known as CGTMSE is widely being used by many PSU Banks and Private sector banks to fund MSME sector. During the year 2002-03 the aggregate sanction and disbursements of SIDBI amounted to 10,904 crore and 6,789 crore respectively. SIDBI has been permitted to raise finances upto 2,730 crore the year 2013 onward by the Reserve Bank of India.[4] Mission "To facilitate and strengthen credit flow to MSMEs and address both financial and developmental gaps in the MSME ecosystem" Vision To emerge as a single window for meeting the financial and developmental needs of the MSME sector to make it strong, vibrant and globally competitive, to position SIDBI Brand as the preferred and customer - friendly institution and for enhancement of share - holder wealth and highest corporate values through modern technology platform

Exim Bank (India)

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Exim Bank

Type

Public

Banking Industry Financial services Export Credit Agency

Founded

1982

Headquarters Mumbai, India[1]

Key people

T.C.A Ranganathan,Chairman and Managing Director

Corporate Finance Lines of Credit Export Credits Products Film financing Export Services SME & Agro Finance Buyer's Credit NEIA

Website

Official Website

Export-Import Bank of India is the premier export finance institution of the country, established in 1982 under the Export-Import Bank of India Act 1981.

Contents
[hide]

1 Description 2 Organization 3 References 4 External links

Description[edit source | editbeta]

Government of India launched the institution with a mandate, not just to enhance exports from India, but to integrate the countrys foreign trade and investment with the overall economic

growth. Since its inception, Exim Bank of India has been both a catalyst and a key player in the promotion of cross border trade and investment. Commencing operations as a purveyor of export credit, like other Export Credit Agencies in the world, Exim Bank of India has, over the period, evolved into an institution that plays a major role in partnering Indian industries, particularly the Small and Medium Enterprises, in their globalisation efforts, through a wide range of products and services offered at all stages of the business cycle, starting from import of technology and export product development to export production, export marketing, pre-shipment and postshipment and overseas investment.[2]

Organization[edit source | editbeta]

Exim Bank is managed by a Board of Directors, which has representatives from the Government, Reserve Bank of India, Export Credit Guarantee Corporation of India, a financial institution, public sector banks, and the business community. The Bank's functions are segmented into several operating groups including:

Corporate Banking Group which handles a variety of financing programmes for Export Oriented Units (EOUs), Importers, and overseas investment by Indian companies. Project Finance / Trade Finance Group handles the entire range of export credit services such as supplier's credit, pre-shipment Agri Business Group, to spearhead the initiative to promote and support Agri-exports. The Group handles projects and export transactions in the agricultural sector for financing. Small and Medium Enterprise: The group handles credit proposals from SMEs under various lending programmes of the Bank. Export Services Group offers variety of advisory and value-added information services aimed at investment promotion. Export Marketing Services Bank offers assistance to Indian companies, to enable them establish their products in overseas markets. The idea behind this service is to promote Indian export. Export Marketing Services covers wide range of export oriented companies and organizations. EMS group also covers Project exports and Export of Services. Besides these, the Support Services groups, which include: Research & Planning, Treasury and Accounts, Loan Administration, Internal Audit, Management Information Services, Information Technology, Legal, Human Resources Management and Corporate Communications. National Housing Bank (NHB)- Web Site of NHB
National Housing Bank (NHB), a wholly owned subsidiary of Reserve Bank of India (RBI), was set up by an Act of Parliament in 1987. NHB is an apex financial institution for housing. It commenced its operations in 9th July 1988. NHB has been established with an objective to operate as a principal agency to promote housing finance institutions both at local and regional levels and to provide financial and other support incidental to such institutions and for matters connected therewith

NHB registers, regulates and supervises Housing Finance Company (HFCs), keeps surveillance through On-site & Off-site Mechanisms and co-ordinates with other Regulators.

ENERGY EFFICIENT HOUSING SCHEME (EEHS)

NHB has formulated a Scheme called, Energy Efficient Housing Scheme (EEHS), 2011 for lending towards energy efficient housing units/buildings. The objective of the Scheme is to provide refinance assistance to Housing Finance Companies (HFCs) in respect of their direct lending up to Rs.50 lakhs to individuals for purchase/construction of new energy efficient housing units in urban areas. While the broad policy framework, eligibility of HFCs for refinance, operational procedures are the same as for the other Schemes of refinance there are certain changes in terms and conditions and eligibility of the end borrower. This self contained brochure containing all necessary information is given as under. This scheme was launched in financial year 2011-12. The disbursement made under the scheme (from 01.07.11 to 07.06.12 ) was Rs 81.36 crores. HFCs are expected to utilize this Refinance Assistance and assist such persons to have an energy efficient shelter of their own by extending need-based housing loans to them. HFCs are also encouraged to avail of refinance from NHB under its other scheme to enable leverage of EEHS so that the principal objective of increasing housing stock in the urban areas is served. Refinance from NHB will be available to the extent of 100 per cent of housing loans sanctioned and disbursed by the HFCs for acquisition/construction of new housing units, in accordance with the provisions of the Scheme. The refinance assistance under this dispensation would remain valid upto 30th December 2013 or till such further time as decided by NHB.

Rural Housing Fund (RHF)

The National Urban Housing and Habitat Policy 2007 released by the Government of India in December 2007 commend a multi pronged strategy for achieving the national goal of Affordable Housing to All. In particular, rural housing is an underserved segment with about only 10% of the housing finance from banks flowing to rural housing. The Golden Jubilee Rural Housing Refinance Scheme introduced by National Housing Bank in 1997 has been successful to some extent and needs to be supplemented. An announcement was made in the Union Budget, 2011-12, to provide an amount of Rs. 3000 crores for rural housing. The Honble Union Minister for Finance stated that Financial inclusion can be taken forward by expanding the reach of NABARD, SIDBI and NHB. Hence, in order to increase the resource base of these three banks, I propose to tap into the resources of scheduled commercial banks to the extent that they fall short of their obligation to lend to the priority sector. Accordingly, it is proposed to create the following funds: a fund of Rs.1200 crore in NHB to enhance its refinance operations in the rural housing sector. In year 2011-12 the disbursement made from 01.07.12 to 07.06.12 under the scheme was Rs 2732.41 crore. The interest rate charged to the PLIs will remain fixed during the entire tenure of the refinance assistance. Currently, refinance is being extended at a concessional rate of 6%-7 %( varying according to the loan size), fixed for a period of seven years.

REFINANCE OF CONSTRUCTION FINANCE FOR AFFORDABLE HOUSING

NHB introduced a new refinance scheme for construction finance for affordable housing. NHB under the scheme is extending support to the housing activities with special focus on Tier II and Tier III cities through various intermediaries by way of refinance. Slum redevelopment in metros is also being covered under the scheme in addition to industrial worker housing, working women hostels and old age homes, housing projects financed under the JNNURM or any other similar Central Government/State Government scheme such as natural disaster affected housing. The Scheme incorporates certain key restrictions on unit cost, unit area, land price etc., to ensure that refinance is not used for higher income housing.

Main Programmes and Schemes. Scheme of 1% Interest Subvention on Housing Loan up to Rs. 15 lakhs
The Finance Minister had announced a Scheme of 1% Interest Subvention on Housing Loan up to Rs. 10 lakhs. Pursuant to the above mentioned announcement, the Government of India had approved a Scheme of Interest Subvention on Housing Loan up to Rs. 10 lakhs, provided the cost of the unit does not exceed Rs. 20 lakhs. From FY 2011-12, the scheme of 1% interest subvention is available for Housing Loan up to Rs. 15 lakhs, provided the cost of the unit does not exceed Rs. 25 lakhs. The Scheme is implemented throughout the country and is in operation for a period of 1 year starting from 1st October, 2009 to 30th September, 2010. Interest subsidy of 1%, is applicable for first 12 months of eligible loans sanctioned and disbursed during the currency of the Scheme. This scheme has further been extended twice i.e. for FY 2011-12 and FY 2012-13 respectively. The Scheme is implemented through the Scheduled Commercial Banks (SCBs) and Housing Finance Companies (HFCs) registered with National Housing Bank (NHB). The Reserve Bank of India (RBI) and NHB are Nodal Agencies for the Scheme for SCBs and HFCs respectively. From the FY 2011-12, Ministry of Finance, Government of India has designated National Housing Bank (NHB) as the Common Nodal Agency for both Schedule Commercial Banks (SCBs) and Housing Finance Companies (HFCs) for implementation & disbursement of subsidy under the Scheme. Earlier Reserve Bank of India (RBI) and NHB were the Nodal Agencies, for SCBs and HFCs, respectively. The Government had allocated a sum of Rs. 300 crores for implementation of the Scheme during the financial year 2011-12. The full allocated budget under the Scheme for FY 2011-12 has been utilized. The Department of Financial Services (DFS) has framed guidelines for implementation of the Scheme.

Investment banking
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A series on financial services

Banking

Types of banks[show]

Bank accounts[show]

Bank cards[show]

Funds transfer[show]

Banking terms[show]

Finance series[show]

v t e

An investment bank is a financial institution that assists individuals, corporations, and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions and provide ancillary services such as market making, trading of derivatives and equity securities, and FICC services (fixed income instruments, currencies, and commodities). Unlike commercial banks and retail banks, investment banks do not take deposits. From 1933 (GlassSteagall Act) until 1999 (GrammLeachBliley Act), the United States maintained a separation between investment banking and commercial banks. Other industrialized countries, including G8 countries, have historically not maintained such a separation. As part of the DoddFrank Act 2010, Volcker Rule asserts full institutional separation of investment banking services from commercial banking. There are two main lines of business in investment banking. Trading securities for cash or for other securities (i.e. facilitating transactions, market-making), or the promotion of securities (i.e. underwriting, research, etc.) is the "sell side", while buy side is a term used to refer to advising institutions concerned with buying investment services. Private equity funds, mutual funds, life

insurance companies, unit trusts, and hedge funds are the most common types of buy side entities. An investment bank can also be split into private and public functions with an information barrier which separates the two to prevent information from crossing. The private areas of the bank deal with private insider information that may not be publicly disclosed, while the public areas such as stock analysis deal with public information. An advisor who provides investment banking services in the United States must be a licensed broker-dealer and subject to Securities & Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) regulation.[1]

Contents
[hide]

1 Organizational structure 2 Core investment banking activities o 2.1 Front office 2.1.1 Investment banking 2.1.2 Sales and trading 2.1.3 Research o 2.2 Front office/Middle office 2.2.1 Risk Management o 2.3 Middle office o 2.4 Back office 2.4.1 Operations 2.4.2 Technology o 2.5 Other businesses 3 Industry profile o 3.1 Global size and revenue mix o 3.2 Top 10 banks 4 Financial crisis of 2008 5 Criticisms o 5.1 Conflicts of interest o 5.2 Compensation 6 See also 7 External links 8 Further reading 9 References

Organizational structure[edit source | editbeta]

Investment banking is split into front office, middle office, and back office activities. While large service investment banks offer all lines of business, both sell side and buy side, smaller sell-side

investment firms such as boutique investment banks and small broker-dealers focus on investment banking and sales/trading/research, respectively. Investment banks offer services to both corporations issuing securities and investors buying securities. For corporations, investment bankers offer information on when and how to place their securities on the open market, an activity very important to an investment bank's reputation. Therefore, investment bankers play a very important role in issuing new security offerings.[2]

Core investment banking activities[edit source | editbeta]

Investment banking has changed over the years, beginning as a partnership form focused on underwriting security issuance (initial public offerings and secondary offerings), brokerage, and mergers and acquisitions and evolving into a "full-service" range including sell-side research, proprietary trading, and investment management. In the modern 21st century, the SEC filings of the major independent investment banks such as Goldman Sachs and Morgan Stanley reflect three product segments: (1) investment banking (fees for M&A advisory services and securities underwriting); (2) asset management (fees for sponsored investment funds), and (3) trading and principal investments (broker-dealer activities including proprietary trading ("dealer" transactions) and brokerage trading ("broker" transactions)).[3] In the United States, commercial banking and investment banking were separated by the Glass Steagall Act, which was repealed in 1999. The repeal led to more "universal banks" offering an even greater range of services. Many large commercial banks have therefore developed investment banking divisions through acquisitions and hiring. Notable large banks with significant investment banks include JPMorgan Chase, Bank of America, Credit Suisse, Deutsche Bank, Barclays, and Wells Fargo. After the financial crisis of 20072008 and the subsequent passage of the DoddFrank Wall Street Reform and Consumer Protection Act, regulations have limited certain investment banking operations, notably with the Volcker Rule's restrictions on proprietary trading.[2] The traditional service of underwriting security issues has declined as a percentage of revenue. As far back as 1960, 70% of Merrill Lynch's revenue was derived from transaction commissions while "traditional investment banking" services accounted for 5%. However, Merrill Lynch was a relatively "retail-focused" firm with a large brokerage network.[2]
Front office[edit source | editbeta] Investment banking[edit source | editbeta]

Corporate finance is the traditional aspect of investment banks which also involves helping customers raise funds in capital markets and giving advice on mergers and acquisitions (M&A). This may involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. Another term for the investment banking division is corporate finance, and its advisory group is often termed mergers and acquisitions. A pitch book of financial information is generated to market the bank to a potential M&A client; if the pitch is successful, the bank arranges the deal for the client. The investment banking division (IBD) is

generally divided into industry coverage and product coverage groups. Industry coverage groups focus on a specific industry such as healthcare, public finance (governments), FIG (financial institutions group), industrials, TMT (technology, media, and telecommunication) and maintains relationships with corporations within the industry to bring in business for the bank. Product coverage groups focus on financial products such as mergers and acquisitions, leveraged finance, public finance, asset finance and leasing, structured finance, restructuring, equity, and high-grade debt and generally work and collaborate with industry groups on the more intricate and specialized needs of a client. The Wall Street Journal, in partnership with Dealogic, publishes figures on investment banking revenue such as M&A in its Investment Banking Scorecard.[4]
Sales and trading[edit source | editbeta]

On behalf of the bank and its clients, a large investment bank's primary function is buying and selling products. In market making, traders will buy and sell financial products with the goal of making money on each trade. Sales is the term for the investment bank's sales force, whose primary job is to call on institutional and high-net-worth investors to suggest trading ideas (on a caveat emptor basis) and take orders. Sales desks then communicate their clients' orders to the appropriate trading desks, which can price and execute trades, or structure new products that fit a specific need. Structuring has been a relatively recent activity as derivatives have come into play, with highly technical and numerate employees working on creating complex structured products which typically offer much greater margins and returns than underlying cash securities. In 2010, investment banks came under pressure as a result of selling complex derivatives contracts to local municipalities in Europe and the US.[5] Strategists advise external as well as internal clients on the strategies that can be adopted in various markets. Ranging from derivatives to specific industries, strategists place companies and industries in a quantitative framework with full consideration of the macroeconomic scene. This strategy often affects the way the firm will operate in the market, the direction it would like to take in terms of its proprietary and flow positions, the suggestions salespersons give to clients, as well as the way structurers create new products. Banks also undertake risk through proprietary trading, performed by a special set of traders who do not interface with clients and through "principal risk"risk undertaken by a trader after he buys or sells a product to a client and does not hedge his total exposure. Banks seek to maximize profitability for a given amount of risk on their balance sheet. The necessity for numerical ability in sales and trading has created jobs for physics, mathematics and engineering Ph.D.s who act as quantitative analysts.
Research[edit source | editbeta]

The equity research division reviews companies and writes reports about their prospects, often with "buy" or "sell" ratings. Investment banks typically have sell-side analysts which cover various industries. Their sponsored funds or proprietary trading offices will also have buy-side research. While the research division may or may not generate revenue (based on policies at different banks), its resources are used to assist traders in trading, the sales force in suggesting ideas to customers, and investment bankers by covering their clients. Research also serves outside clients with investment advice (such as institutional investors and high net worth individuals) in the hopes that these clients will execute suggested trade ideas through the sales

and trading division of the bank, and thereby generate revenue for the firm. Research also covers credit research, fixed income research, macroeconomic research, and quantitative analysis, all of which are used internally and externally to advise clients but do not directly affect revenue. All research groups, nonetheless, provide a key service in terms of advisory and strategy. There is a potential conflict of interest between the investment bank and its analysis, in that published analysis can affect the bank's profits. Hence in recent years the relationship between investment banking and research has become highly regulated, requiring a Chinese wall between public and private functions.
Front office/Middle office[edit source | editbeta] Risk Management[edit source | editbeta]

Risk management involves analyzing the market and credit risk that an investment bank or its clients take onto their balance sheet during transactions or trades. Credit risk focuses around capital markets activities, such as loan syndication, bond issuance, restructuring, and leveraged finance. Market risk conducts review of sales and trading activities utilizing the VaR model and provide hedge-fund solutions to portfolio managers. Other risk groups include country risk, operational risk, and counterparty risks which may or may not exist on a bank to bank basis. Credit risk solutions are key part of capital market transactions, involving debt structuring, exit financing, loan amendment, project finance, leveraged buy-outs, and sometimes portfolio hedging. Front office market risk activities provide service to investors via derivative solutions, portfolio management, portfolio consulting, and risk advisory. Well-known risk groups in JPMorgan Chase, Goldman Sachs and Barclays engage in revenue-generating activities involving debt structuring, restructuring, loan syndication, and securitization for clients such as corporates, governments, and hedge funds. J.P. Morgan IB Risk works with investment banking to execute transactions and advise investors, although its Finance & Operation risk groups focus on middle office functions involving internal, non-revenue generating, operational risk controls.[6][7][8] Credit default swap, for instance, is a famous credit risk hedging solution for clients invented by J.P. Morgan's Blythe Masters during the 1990s. The Loan Risk Solutions group[9] within Barclays' investment banking division and Risk Management and Financing group[10] housed in Goldman Sach's securities division are client-driven franchises. However, risk management groups such as operational risk, internal risk control, legal risk, and the one at Morgan Stanley are restrained to internal business functions including firm balance-sheet risk analysis and assigning trading cap that are independent of client needs, even though these groups may be responsible for deal approval that directly affects capital market activities. Risk management is a broad area, and like research, its roles can be client-facing or internal.
Middle office[edit source | editbeta]

This area of the bank includes treasury management, internal controls, and internal corporate strategy. Corporate treasury is responsible for an investment bank's funding, capital structure management, and liquidity risk monitoring.

Financial control tracks and analyzes the capital flows of the firm, the Finance division is the principal adviser to senior management on essential areas such as controlling the firm's global risk exposure and the profitability and structure of the firm's various businesses via dedicated trading desk product control teams. In the United States and United Kingdom, a Financial Controller is a senior position, often reporting to the Chief Financial Officer. Internal corporate strategy tackling firm management and profit strategy, unlike corporate strategy groups that advise clients, is non-revenue regenerating yet a key functional role within investment banks. This list is not a comprehensive summary of all middle-office functions within an investment bank, as specific desks within front and back offices may participate in internal functions.[11]
Back office[edit source | editbeta] Operations[edit source | editbeta]

This involves data-checking trades that have been conducted, ensuring that they are not erroneous, and transacting the required transfers. Many banks have outsourced operations. It is, however, a critical part of the bank.
Technology[edit source | editbeta]

Every major investment bank has considerable amounts of in-house software, created by the technology team, who are also responsible for technical support. Technology has changed considerably in the last few years as more sales and trading desks are using electronic trading. Some trades are initiated by complex algorithms for hedging purposes. Firms are responsible for compliance with government regulations and internal regulations.
Other businesses[edit source | editbeta]

Global transaction banking is the division which provides cash management, custody services, lending, and securities brokerage services to institutions. Prime brokerage with hedge funds has been an especially profitable business, as well as risky, as seen in the "run on the bank" with Bear Stearns in 2008. Investment management is the professional management of various securities (shares, bonds, etc.) and other assets (e.g., real estate), to meet specified investment goals for the benefit of investors. Investors may be institutions (insurance companies, pension funds, corporations etc.) or private investors (both directly via investment contracts and more commonly via collective investment schemes e.g., mutual funds). The investment management division of an investment bank is generally divided into separate groups, often known as Private Wealth Management and Private Client Services. Merchant banking can be called "very personal banking"; merchant banks offer capital in exchange for share ownership rather than loans, and offer advice on management and strategy.

Merchant banking is also a name used to describe the private equity side of a firm.[12] Current examples include Defoe Fournier & Cie. and JPMorgan's One Equity Partners and the original J.P. Morgan & Co. Rothschilds, Barings, Warburgs and Morgans were all merchant banks. (Originally, "merchant bank" was the British English term for an investment bank.)

Commercial banking: see commercial bank. Real Estate Increased Equity Collateral Sale Also called REIECS Advanced Financial Model in which a Real Estate Asset Value is increased thought an Investment Banking Institution (Usually only the Biggest Investment Banks are able to handle REIECS.

Industry profile[edit source | editbeta]

There are various trade associations throughout the world which represent the industry in lobbying, facilitate industry standards, and publish statistics. The International Council of Securities Associations (ICSA) is a global group of trade associations. In the United States, the Securities Industry and Financial Markets Association (SIFMA) is likely the most significant; however, several of the large investment banks are members of the American Bankers Association Securities Association (ABASA)[13] while small investment banks are members of the National Investment Banking Association (NIBA). In Europe, the European Forum of Securities Associations was formed in 2007 by various European trade associations.[14] Several European trade associations (principally the London Investment Banking Association and the European SIFMA affiliate) combined in 2009 to form Association for Financial Markets in Europe (AFME). In the securities industry in China (particularly mainland China), the Securities Association of China is a self-regulatory organization whose members are largely investment banks.
Global size and revenue mix[edit source | editbeta]

Global investment banking revenue increased for the fifth year running in 2007, to a record US$84.3 billion,[15] which was up 22% on the previous year and more than double the level in 2003. Subsequent to their exposure to United States sub-prime securities investments, many investment banks have experienced losses. As of late 2012, global revenues for investment banks were estimated at $240 billion, down about a third from 2009, as companies pursued less deals and traded less.[16] Differences in total revenue are likely due to different ways of classifying investment banking revenue, such as subtracting proprietary trading revenue. In terms of total revenue, SEC filings of the major independent investment banks in the United States show that investment banking (defined as M&A advisory services and security underwriting) only made up about 15-20% of total revenue for these banks from 1996 to 2006, with the majority of revenue (60+% in some years) brought in by "trading" which includes brokerage commissions and proprietary trading; the proprietary trading is estimated to provide a significant portion of this revenue.[3]

The United States generated 46% of global revenue in 2009, down from 56% in 1999. Europe (with Middle East and Africa) generated about a third while Asian countries generated the remaining 21%.[15]:8 The industry is heavily concentrated in a small number of major financial centers, including City of London, New York City, Frankfurt, Hong Kong and Tokyo. According to estimates published by the International Financial Services London, for the decade prior to the financial crisis in 2008, M&A was a primary source of investment banking revenue, often accounting for 40% of such revenue, but dropped during and after the financial crisis.[15]:9 Equity underwriting revenue ranged from 30% to 38% and fixed-income underwriting accounted for the remaining revenue.[15]:9 Revenues have been affected by the introduction of new products with higher margins; however, these innovations are often copied quickly by competing banks, pushing down trading margins. For example, brokerages commissions for bond and equity trading is a commodity business but structuring and trading derivatives has higher margins because each over-the-counter contract has to be uniquely structured and could involve complex pay-off and risk profiles. One growth area is private investment in public equity (PIPEs, otherwise known as Regulation D or Regulation S). Such transactions are privately negotiated between companies and accredited investors. Banks also earned revenue by securitizing debt, particularly mortgage debt prior to the financial crisis. Investment banks have become concerned that lenders are securitizing in-house, driving the investment banks to pursue vertical integration by becoming lenders, which is allowed in the United States since the repeal of the Glass-Steagall act in 1999.[citation needed]
Top 10 banks[edit source | editbeta] Further information: List of investment banks

The ten largest investment banks as of December 31, 2012, are as follows (by total fees from all advisory).[17] The list is just a ranking of the advisory arm of each bank and does not include the generally much larger portion of revenues from sales and trading and asset management.
Rank Company Fees ($m)

1. JP Morgan Chase $5,467.07 2. Bank of America $4,600.05 3. Goldman Sachs $4,150.52 4. Morgan Stanley $3,740.89 5. Citi 6. Credit Suisse $3,617.11 $3,442.95

7. Deutsche Bank 8. Barclays 9. UBS 10. Wells Fargo

$3,319.32 $3,232.53 $2,197.52 $1,894.03

World's biggest banks are ranked for M&A advisory, syndicated loans, equity capital markets and debt capital markets. The Financial Times, The Wall Street Journal and Bloomberg often cover Mergers and Acquisitions and Capital Markets. League tables are also available:

Investment Banking Review, Financial Times. Investment Banking Scorecard, Wall Street Journal. Global M&A Financial Advisory Rankings, Bloomberg. Global Capital Markets League Tables, Bloomberg.

Financial crisis of 2008[edit source | editbeta]

The 2008 financial credit crisis led to the notable collapse of several banks, notably including the bankruptcy of large investment bank Lehman Brothers and the hurried sale of Merrill Lynch and the much smaller Bear Stearns to banks which effectively rescued them from bankruptcy. The entire financial services industry, including numerous investment banks, was rescued by government loans through the Troubled Asset Relief Program (TARP). Surviving U.S. investment banks such as Goldman Sachs and Morgan Stanley converted to traditional bank holding companies to accept TARP relief.[18] Similar situations occurred across the globe with countries rescuing their banking industry. Initially, banks received part of a $700 billion Troubled Asset Relief Program (TARP) intended to stabilize the economy and thaw the frozen credit markets.[19] Eventually, taxpayer assistance to banks reached nearly $13 trillion, most without much scrutiny,[20] lending did not increase[21] and credit markets remained frozen.[22] The crisis led to questioning of the business model of the investment bank[23] without the regulation imposed on it by Glass-Steagall.[neutrality is disputed] Once Robert Rubin, a former cochairman of Goldman Sachs, became part of the Clinton administration and deregulated banks, the previous conservatism of underwriting established companies and seeking long-term gains was replaced by lower standards and short-term profit.[24] Formerly, the guidelines said that in order to take a company public, it had to be in business for a minimum of five years and it had to show profitability for three consecutive years. After deregulation, those standards were gone, but small investors did not grasp the full impact of the change.[24] A number of former Goldman-Sachs top executives, such as Henry Paulson and Ed Liddy were in high-level positions in government and oversaw the controversial taxpayer-funded bank bailout.[24] The TARP Oversight Report released by the Congressional Oversight Panel found

that the bailout tended to encourage risky behavior and "corrupt[ed] the fundamental tenets of a market economy".[25] Under threat of a subpoena, Goldman Sachs revealed that it received $12.9 billion in taxpayer aid, $4.3 billion of which was then paid out to 32 entities, including many overseas banks, hedge funds and pensions.[26] The same year it received $10 billion in aid from the government, it also paid out multi-million dollar bonuses; the total paid in bonuses was $4.82 billion.[27][28] Similarly, Morgan Stanley received $10 billion in TARP funds and paid out $4.475 billion in bonuses.[29]

Criticisms[edit source | editbeta]

The investment banking industry, and many individual investment banks, have come under criticism for a variety of reasons, including perceived conflicts of interest, overly large pay packages, cartel-like or oligopolic behavior, taking both sides in transactions, and more.[30] Investment banking has also been criticised for its opacity.[31]
Conflicts of interest[edit source | editbeta]

Conflicts of interest may arise between different parts of a bank, creating the potential for market manipulation, according to critics. Authorities that regulate investment banking (the FSA in the United Kingdom and the SEC in the United States) require that banks impose a Chinese wall to prevent communication between investment banking on one side and equity research and trading on the other. Critics say such a barrier does not always exist in practice, however. Conflicts of interest often arise in relation to investment banks' equity research units, which have long been part of the industry. A common practice is for equity analysts to initiate coverage of a company in order to develop relationships that lead to highly profitable investment banking business. In the 1990s, many equity researchers allegedly traded positive stock ratings for investment banking business. Alternatively, companies may threaten to divert investment banking business to competitors unless their stock was rated favorably. Laws were passed to criminalize such acts, and increased pressure from regulators and a series of lawsuits, settlements, and prosecutions curbed this business to a large extent following the 2001 stock market tumble after the dot-com bubble. Philip Augar, author of The Greed Merchants, said in an interview that: "You cannot simultaneously serve the interest of issuer clients and investing clients. And its not just underwriting and sales; investment banks run proprietary trading operations that are also making a profit out of these securities."[30] Many investment banks also own retail brokerages. During the 1990s, some retail brokerages sold consumers securities which did not meet their stated risk profile. This behavior may have led to investment banking business or even sales of surplus shares during a public offering to keep public perception of the stock favorable. Since investment banks engage heavily in trading for their own account, there is always the temptation for them to engage in some form of front running the illegal practice whereby a

broker executes orders for their own account before filling orders previously submitted by their customers, there benefiting from any changes in prices induced by those orders. Documents under seal in a decade-long lawsuit concerning eToys.com's IPO but obtained by New York Times Wall Street Business columnist Joe Nocera alleged that IPOs managed by Goldman Sachs and other investment bankers involved asking for kickbacks from their institutional clients who made large profits flipping IPOs which Goldman had intentionally undervalued. Depositions in the lawsuit alleged that clients willingly complied with these demands because they understood it was necessary in order to participate in future hot issues.[32] Reuters Wall Street correspondent Felix Salmon retracted his earlier, more conciliatory, statements on the subject and said he believed that the depositions show that companies going public and their initial consumer stockholders are both defrauded by this practice, which may be widespread throughout the IPO finance industry.[33] The case is ongoing, and the allegations remain unproven.
Compensation[edit source | editbeta]

Investment banking is often criticized for the enormous pay packages awarded to those who work in the industry. According to Bloomberg Wall Street's five biggest firms paid over $3 billion to their executives from 2003 to 2008, "while they presided over the packaging and sale of loans that helped bring down the investment-banking system." [34] The highly generous pay packages include $172 million for Merrill Lynch & Co. CEO Stanley O'Neal from 2003 to 2007, before it was bought by Bank of America in 2008, and $161 million for Bear Stearns Co.'s James Cayne before the bank collapsed and was sold to JPMorgan Chase & Co. in June 2008.[34] Such pay arrangements have attracted the ire of Democrats and Republicans in Congress, who demanded limits on executive pay in 2008 when the U.S. government was bailing out the industry with a $700 billion financial rescue package.[34] Writing in the Global Association of Risk Professionals, Aaron Brown, a vice president at Morgan Stanley, says "By any standard of human fairness, of course, investment bankers make obscene amounts of money." [30]