LENDING INSTITUTIONS IN INDIA DEFINITION:A financial institution that makes loans an institution(public or private) that collects funds (from

the public or other institutions) and invests them in financial assets.

LENDING INSTITUTIONIt may or may not also be a depository institution. A bank credit union or finance company that makes loans.

PRIME RATEThe interest rate charged by banks to their largest, most secure, and most credit worthy customers on short-term loans. This rate is used as a guide for computing interest rates for other borrowers are called prime rate.

INTRODUCTION:A lending institution is any type of financial organization or institution that provides loans to borrowers. There are many different types of lenders in the marketplace today, ranging from banks and credit unions to mortgage and payday loan companies. The range of loan types offered by any one financial institution will vary, depending on the structure of the organization. Typically, all lenders will charge some rate of interest for the amount of funds borrowed, and require the borrower to commit to a contract that spells out the terms for repayment. One of the more common examples of a lending institution is a bank. The ability to provide loans is only one of several services offered by banks, but consumers often think of approaching the bank where they already have existing accounts such as checking and savings when they are in need of financing for the purchase of a home, a car, or even a personal loan of some type. A bank is a depository institution, a trait that is not universally shared by all types of lending institutions. Other organizations such as a building society, credit union, and savings and loan association can also be considered examples of a lending institution. All offer various services to clients that include but are not limited to providing loans for different purposes.As with banks, these organizations may cover a wide range of financial loans, ranging from secured and unsecured loan plans that are designed for both individual and commercial use. The rate of interest a Bank charge to its customers depend upon a number of factors like category of customers, schemes, advance amounts etc. As there are numerous interest rates a base rate is needed to make a relation between the different rates. So a base rate viz Prime Lending Rate is evolved. It is supposedly the best rate a Bank has given to its Prime customers. All other rates of interests are depend upon the Prime Lending rate and it is usually noted by the bank like 1% below the PLR or like 2% above PLR. Time to time bank announces only the PLR rate, but all other rates will change accordingly.
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LENDING INSTITUTIONS IN INDIA INDIA PRIME LENDING RATE:Bank Lending Rate in India decreased to 9.50 percent in September of 2013 from 10.25 percent in August of 2013. Bank Lending Rate in India is reported by the Reserve Bank of India. India Prime Lending Rate averaged 14.15 Percent from 1978 until 2013, reaching an all time high of 20 Percent in February of 1992 and a record low of 8 Percent in July of 2010. In India, the prime lending rate is the average rate of interest charged on loans by commercial banks to private individuals and companies. This page contains - India Prime Lending Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

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OBJECTIVES OF THE LENDING POLICY 2011-2012:1.Due compliance of all regulatory requirement, such as exposure norms, prudential norms, assets-liability management guidelines, regulatory and other statutory restrictions, other related directives instructions issued by government of India, R.B.I Bank Board of Directors and the top management. 2.To ensure planned lending and healthy growth of loan portfolio and achieve lending preemption & preventing assets-liabilities mismatches while keeping the NPA level to the minimum and improving the yield on advances which is main driver of profit. 3.To induce improvements of systems and procedure and decentralized decision making & have a built flexibility in operations. 4.To have a well-making and diversified loan portfolio with proper pricing policies, dispersed credit risks covering various sectors of the economy and different industries sector vis--vis market forces and competition. 5.Special emphasis on flow of credit towards segments of priority sector i.e. agriculture, SME, retail, export housing finance to individuals and other allied industries. 6.To enlarge client base through aggressive credit marketing and meet the diverse needs of customers through product mix development and innovation. 7.To improve the non-fund business with a view to increase fee based income. 8.To ensure that aggregate risk in loan assets is not allowed to increase by stabilizing and percolating credit risk management system. 9.Timely and adequate flow of credit to meet the genuine needs of existing and prospective borrowers, to fulfill socio-economic obligations and also to meet the genuine credit needs of the clients by ensuring quicker and prompt credit decisions. 10.Comprehend the importance of financial sector reforms and resultant rapid changes in the economy.

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LENDING INSTITUTIONS IN INDIA IMPORTANCE OF LENDING INSTITUTION:The role played by large banks in the financial system. U.S. financial institutions have taken tremendous steps in recent years to reduce risk on their balance sheets, shore up capital, and focus on prudent, responsible lending. Claims that banks with global reach are somehow inherently bad or more risky are wrong. Large institutions provide significant value to customers in the sheer size of credits they can deliver, in the array of products and services they can provide, and their geographic reach that smaller institutions simply cannot provide. This unique economic value is particularly important to large, globally active U.S. corporations and contributes directly to economic growth and job creation. According to a report released this week, more than 25 large banks have also increased small business lending in 2011, with the largest banks pledging an additional $100 billion for 2011 and beyond. Commercial banks with more than $10 billion in assets make half of all small business loans. Large institutions are also far more diversified in their business mix and revenue streams as compared to smaller institutions, which tend to be engaged in fewer business and regions and, therefore, are exposed to greater concentration risk. In this regard, larger institutions are more stable than smaller institutions. Rather than being a source of risk, size and diversity of activities can be a risk mitigated. Research conducted by Columbia University finance professor Charles Calamaris has shown that the gains produced by efficiencies of scale and scope at larger institutions accrue to customers in the form of better and cheaper financial services. Large financial institutions active in many markets and many countries across the globe have served to integrate global stock, bond, and foreign exchange markets, making those markets more modern, liquid, and efficient. Large, globally active financial institutions have also expanded the supply of credit and other financial services to emerging market economies, contributing importantly to the expansion of trade flows, opening foreign markets to U.S. goods and services and, therefore, contributing importantly to economic growth and job creation. To be a global financial leader, the United States needs institutions of all sizes, business models, and areas of expertise. And being a global financial leader is an enormous strategic advantage for the U.S. economy and American businesses, workers, savers, and investors an advantage we should work hard to preserve.

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LENDING INSTITUTIONS IN INDIA ADVANTAGES AND DISADVANTAGES OF LENDING INSTITUTIONS:Advantage:

The main advantage of using your bank to borrow money is that they know what sort of spending patterns you have, and if you have built a rapport with them they are likely to be more generous than other lending institutions. It may also be convenient to use the same bank that you do now, as all your accounts are in one place and you can manage your money more easily. Relaxed Credit RequirementsMany new small business owners have difficulty accessing capital through traditional banks to start or grow their firms. Small business lending companies target these owners to provide financing even though they have challenged credit. There will be a premium charged through interest rates and other fees for access to capital but being granted necessary funding is most important to owners in a financial bind. Flexible Loan TermsLoans that can be repaid over a long period of time help reduce the monthly payment required for payback. SBLCs have the flexibility to provide terms according to their schedule since they are not banks and unregulated by federal or state governments. Additionally, they tend to offer smaller loans with no collateral required by the borrower. There are also a number of disadvantages to using your own bank. Although your bank may give you a good deal, it may not be the best deal you can possibly find. Although speaking to your own bank is a good idea, you should shop around and look at other lenders in order to get the best possible terms. You should also make sure that borrowing money is right for you, and that you can make any repayments that are required.

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Disadvantage:
Higher Interest RatesGiven the credit risk of their customer base, SBLCs tend to charge higher interest rates than traditional banks. They typically charge the "Wall Street Journal" prime rate plus a premium dependent on the amount of funding the business owner takes out. As of 2011, this premium could be from 2.25 percent to over 6 percent. Traditional fundings highest average rates are slightly higher than 8 percent, while SBLC interest can be as high as nearly 12 percent.

UnregulatedSBLCs are unregulated by federal or state governments. This gives them leeway to conduct business in any way they want to. Although it provides some flexibility towards their lending policies, you may find yourself in a sticky situation if you have challenges with the way they conduct business. As SBLCs, there are rules they must adhere to as provided by the SBA or their lending capability may be provoked.

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LENDING INSTITUTIONS IN INDIA TYPES OF LENDING:NON-BANKS VERSUES BANK:

Banks play a key role in the monetary system, yet their lending now accounts for less than 20% of the total credit market debt in the U.S. Most of the lending is done by non-bank financial institutions such as finance companies, mortgage companies, insurance, pension funds, and investment banks. Non-banks cannot accept demand deposits, and therefore play no direct role in the payment system. But they provide a variety of financial products and complete with banks and each other for lending opportunities.

NON-BANKING LENDING:
Non-banks are ordinary intermediaries. They act as a conduit between those with funds to lend and those in need of funds. By pooling the funds of invertors from whom they borrow, they can then lend in various amounts and periods. For their service they charge a fee, usually in the form of periodic interest payments. Their borrowing and lending increase the total credit market debt but has no direct effect on the money supply. Non-banks simply intermediate the transfer of funds from the bank account of the original investors to the bank accounts of the ultimate borrowers. Non-bank usually borrows short-term at lower rates to lend longer term at higher rates.That means a non-bank must be able to roll over its short-term debt at favorable rates. It must also be able to borrow on short notice to manage any cash flow problems. For that reason it must maintain an excellent credit rating, or it may not be able to borrow at all. BANK LENDING: Banks are not ordinary intermediaries. Like non-banks, they also borrow, but they do not lend then if necessary borrowing the funds needed to meet the reserve ratio requirement. The account s of other depositors remain intact and their deposits fully available for withdrawal. Thus a bank loan increases the total of bank deposits, which means an increase in the money supply. When the loan is paid up, the money supply decreases. A net increase in bank lending results in a shortage of reserves needed by the banking system, which only the fed can supply in order to maintained control of fed funds rate. i.e. the interest rate on overnight loans between banks, the fed must provide the funds as required. It does so purchasing treasury securities from the public.

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Bank lending has no effect on a banks own capital. But bank lending is limited by the capital ratio requirement set by the fed. If a bank has sufficient capital, it can expand its balance sheet by issuing more loans however if it is not holding excess reserves it will have acquire more in order to meet reserve ratio requirement. Banks therefore actively seek new deposits of course they prefer deposits on which they pay no interest, like ordinary checking accounts. They also borrow from savers who open saving accounts and investors who buy their CDs.

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LENDING INSTITUTIONS IN INDIA PRINCIPLES OF LENDING:1.Safety:

Safety first' should be guiding principle. Banks should ensure safety of the funds .Borrower should be in a position to repay the loans borrowed with interest, as and when they are due.

2.Liquidity:
It is the ability of the banker to convert an asset in to cash readily without much loss in its value. Banks should be in a liquid position to meet the demands of customers at any time .Money granted for long periods will have less liquidity (because it cannot be received as and when needed).The principle of liquidity demands that a banker should confine his lending to short term, against assets which can be converted to cash immediately

3.Profitability:
Commercial banks run also for profit. Profit is for paying interest on deposits, salaries to staff and to meet day-to-day expenses.

4.Security:
Banker will not see horo scoped customers. So security should be insisted upon, which must be adequate, easily realizable and free from encumbrances.

5.Purpose of the Loan:

Lending should be made after knowing the purpose of the loan. Repayment is based on the purpose.

6.Diversification of Risks:
A banker should not concentrate all his loan able funds in one industry, or one particular group or a group of few customers only. Loans should be given to large number of customers because every loan entails some risk element.

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7.Assured Repayment:
Lending should be made when there is assurance for repayment. When there is default in repayment, a banker's ability to create further credit is affected.

8.Social Objectives:
Highest priority should be given to national interest. Today banks have a strong social objectives and social conscience.

9.The Law of Limitation act:

The banker should keep in mind this act. As piths act, a debt will become a bad one after the expiry of 3 years from the date of the loan.

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LENDING INSTITUTIONS IN INDIA STRATEGIC APPROACH:Phase One: Review of Existing Guarantee Services:
An in-depth review of existing guarantee services will be conducted to identify the schemes appropriate for socially-oriented lending institutions. Additionally, an information platform will be developed to increase lender awareness of the various schemes and the conditions on their use.

Phase Two: Amendment of Existing Guarantee Services:

It will work directly with the providers of identified guarantee facilities to identify and reduce the barriers that may impact the operation of guarantee facilities by social-lending institutions. FAST will also facilitate the adaptation of existing guarantee schemes to improve access for its constituents.

Phase Three: Establishment of a Specific Guarantee Fund:

It may work to establish a guarantee facility dedicated to social-lending institutions if the previous phases have not adequately expanded the total capital available within the sector.

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LENDING INSTITUTIONS IN INDIA METHODS OF LENDING:Like many other activities of the banks, method and quantum of short-term finance that can be granted to a corporate was mandated by the Reserve Bank of India till 1994.This control was exercised on the lines suggested by the recommendations of a study group headed by Shri Prakash Tandon.The study group headed by Shri Prakash Tandon the then Chairman of Punjab National Bank, was constituted by the RBI in July 1974 with eminent personalities drawn from leading banks, financial institutions and a wide cross-section of the Industry with a view to study the entire gamut of Bank's finance for working capital and suggest ways for optimum utilization of Bank credit. This was the first elaborate attempt by the central bank to organize the Bank credit. The report of this group is widely known as Tandon Committee report. Most banks in India even today continue to look at the needs of the corporate in the light of methodology recommended by the Group. As per the recommendations of Tandon Committee, the corporate should be discouraged from accumulating too much of stocks of current assets and should move towards very lean inventories and receivable levels. The committee even suggested the maximum levels of Raw Material, Stock-in-process and Finished Goods which a corporate operating in an industry should be allowed to accumulate These levels were termed as inventory and receivable norms. Depending on the size of credit required, the funding of these current assets (working capital needs) of the corporate could be met by one of the following methods

1.First Method of Lending:

Banks can work out the working capital gap, i.e. total current assets less current liabilities other than bank borrowings (called Maximum Permissible Bank Finance or MPBF) and finance a maximum of 75 per cent of the gap; the balance to come out of long-term funds, i.e., owned funds and term borrowings. This approach was considered suitable only for very small borrowers i.e. where the requirements of credit were less than Rs.10 lacs

2.Second Method of Lending:

Under this method, it was thought that the borrower should provide for a minimum of 25% of total current assets out of long-term funds i.e., owned funds plus term borrowings. A certain level of credit for purchases and other current liabilities will be available to fund the build up of current assets and the bank will provide the balance (MPBF). Consequently, total current liabilities inclusive of bank borrowings could not exceed 75% of current assets. RBI stipulated that the working capital needs of all borrowers enjoying fund based credit facilities of more than Rs. 10 lacs should be appraised (calculated) under this method.

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3.Third Method of Lending:
Under this method, the borrower's contribution from long term funds will be to the extent of the entire CORE CURRENT ASSETS, which has been defined by the Study Group as representing the absolute minimum level of raw materials, process stock, finished goods and stores which are in the pipeline to ensure continuity of production and a minimum of 25% of the balance current assets should be financed out of the long term funds plus term borrowings.

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LENDING INSTITUTIONS IN INDIA LENDING INSTITUTION OPTION FOR CUSTOMERS:When it comes to borrowing money there are broadly speaking two sources, institutional lenders and private lenders. It is important to make sure that you know what the differences between the two are and whether or not you qualify to borrow from an institutional lender. Institutional lending is nothing more than a loan that comes from a lender that is regulated by law. It is almost certainly an option for you as the vast majority of loans that are issued are from institutional lenders. This would include loans from your bank, credit union or from an insurance company. That being said there are times when it might make sense to borrow from a private lender as there can be advantages to doing so. If you visit the Ameri save website you will find a discussion about when institutional lending makes sense and when it doesn't. Institutional lenders are regulated because they are lending money that is not actually theirs. A bank lends out the money that is deposited with them for example or an insurance company lends out money that is paid in as premiums. In order to make sure that the people who put their money into these institutions are protected there are rules about who they can lend money to and under what terms. While this does protect people's money it also puts limits on the ability of lender to issue loans which means that there will be times when it makes sense for borrowers to go to other sources. Lenders who are using their own money are not subject to the same regulation as institutional investor which means that they can issue loans that the banks can't. If you are looking for a mortgage with bad credit for example you will almost certainly be turned away by the banks because of the rules that they have to operate under. A private lender on the other hand may well be willing to lend you money, although it will probably be at a very high insurance rate. Private lenders are also able to operate under different rules in terms of things like minimum down payments. If you are looking for a mortgage and you are not sure whether or not you should use an institutional lender the first thing that you should do is to find out if you qualify for a loan under their rules. If you do it usually makes sense to take a loan from an institutional lender as they tend to be more stable companies and usually offer the best rate. A private lender should really only be considered if you can't get a loan from a traditional source. You can easily find out if you qualify to borrow from an institutional lender by contacting Aversive and applying through their website.

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LENDING INSTITUTIONS IN INDIA CATEGORIES OF LENDING INSTITUTIONS:1.Agriculture (Direct and Indirect finance):
Direct finance to agriculture shall include short, medium and long term loans given for agriculture and allied activities directly to individual farmers, Self-Help Groups (SHGs) or Joint Liability Groups (JLGs) of individual farmers without limit and to others (such as corporate, partnership firms and institutions) up to Rs.20 lakh, for taking up agriculture/allied activities.

2. Small Scale Industries (Direct and Indirect Finance):

Direct finance to small scale industries (SSI) shall include all loans given to SSI units which are engaged in manufacture, processing or preservation of goods and whose investment in plant and machinery (original cost) excluding land and building does not exceed the amounts specified in Section I, appended. Indirect finance to SSI shall include finance to any person providing inputs.

3. Small Business:
Service Enterprises shall include small business, retail trade, professional & self employed persons, small road & water transport operators and other service enterprises as per the definition given in Section I and other enterprises that are engaged in providing or rendering of services, and whose investment in equipment does not exceed the amount specified in Section I, appended.

4. Micro Credit:
Provision of credit and other financial services and products of very small amounts not exceeding Rs. 50,000 per borrower to the poor in rural, semi-urban and urban areas, either directly or through a group mechanism, for enabling them to improve their living standards, will constitute micro credit.

5. Education loans:
Education loans include loans and advances granted to only individuals for educational purposes up to Rs. 10 Lakh for studies in India and Rs. 20 Lakh for studies abroad, and do not include those granted to institutions.

6. Housing loans:
Loans up to Rs.15 Lakh for construction of houses by individuals, (excluding loans granted by banks to their own employees) and loans given for repairs to the damaged houses of individuals up to Rs.1 Lakh in rural and semi-urban areas and up to Rs.2 Lakh in urban areas.

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LENDING INSTITUTIONS IN INDIA FINANCIAL INSTITUTIONS:Financial sector plays an indispensable role in the overall development of a country. The most important constituent of this sector is the financial institutions, which act as a conduit for the transfer of resources from net savers to net borrowers, that is, from those who spend less than their earnings to those who spend more than their earnings. The financial institutions have traditionally been the major source of long-term funds for the economy. These institutions provide a variety of financial products and services to fulfill the varied needs of the commercial sector. Besides, they provide assistance to new enterprises, small and medium firms as well as to the industries established in backward areas. Thus, they have helped in reducing regional disparities by inducing widespread industrial development. The Government of India, in order to provide adequate supply of credit to various sectors of the economy, has evolved a well developed structure of financial institutions in the country. These financial institutions can be broadly categorized into All India institutions and State level institutions, depending upon the geographical coverage of their operations. At the national level, they provide long and medium term loans at reasonable rates of interest. They subscribe to the debenture issues of companies, underwrite public issue of shares, guarantee loans and deferred payments, etc. Though, the State level institutions are mainly concerned with the development of medium and small scale enterprises, but they provide the same type of financial assistance as the national level institutions.

National Level Institutions:

A wide variety of financial institutions have been set up at the national level. They cater to the diverse financial requirements of the entrepreneurs. They include all India development banks like IDBI, SIDBI, IFCI Ltd, IIBI; specialized financial institutions like IVCF, ICICI Venture Funds Ltd, TFCI; investment institutions like LIC, GIC, UTI; etc. All-India Development Banks (AIDBs):- Includes those development banks which provide institutional credit to not only large and medium enterprises but also help in promotion and development of small scale industrial units. Industrial Development Bank of India (IDBI)It was established in July 1964 as an apex financial institution for industrial development in the country. It caters to the diversified needs of medium and large scale industries in the form of financial assistance, both direct and indirect. Direct assistance is provided by way of project loans, underwriting of and direct subscription to industrial securities, soft loans, technical refund loans, etc. While, indirect assistance is in the form of refinance facilities to industrial concerns.

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Industrial Finance Corporation of India Ltd (IFCI Ltd)It was the first development finance institution set up in 1948 under the IFCI Act in order to pioneer long-term institutional credit to medium and large industries. It aims to provide financial assistance to industry by way of rupee and foreign currency loans, underwrites/subscribes the issue of stocks, shares, bonds and debentures of industrial concerns, etc. It has also diversified its activities in the field of merchant banking, syndication of loans, formulation of rehabilitation programmes, assignments relating to amalgamations and mergers, etc.

Small Industries Development Bank of India (SIDBI)It was set up by the Government of India in April 1990, as a wholly owned subsidiary of IDBI. It is the principal financial institution for promotion, financing and development of small scale industries in the economy. It aims to empower the Micro, Small and Medium Enterprises (MSME) sector with a view to contributing to the process of economic growth, employment generation and balanced regional development. National Bank For Agriculture And Rural Development (NABARD)NABARD is established as a development Bank, in terms of the Preamble of the Act, "for providing and regulating Credit and other facilities for the promotion and development of agriculture, small scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas with a view to promoting integrated rural development and securing prosperity of rural areas and for matters connected therewith or incidental thereto." NABARD (i) serves as an apex financing agency for the institutions providing investment and production credit for promoting the various developmental activities in rural areas; (ii) 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. ; (iii) 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; and (iv) undertakes monitoring and evaluation of projects refinanced by it.

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Industrial Investment Bank of India Ltd (IIBI)It was set up in 1985 under the Industrial reconstruction Bank of India Act, 1984, as the principal credit and reconstruction agency for sick industrial units. It was converted into IIBI on March 17, 1997, as a full-fledged development financial institution. It assists industry mainly in medium and large sector through wide ranging products and services. Besides project finance, IIBI also provides short duration non-project asset-backed financing in the form of underwriting/direct subscription, deferred payment guarantees and working capital/other shortterm loans to companies to meet their fund requirements. Specialized Financial Institutions (SFIs)They are the institutions which have been set up to serve the increasing financial needs of commerce and trade in the area of venture capital, credit rating and leasing, etc. ICICI Venture Funds LtdIt formerly known as Technology Development & Information Company of India Limited (TDICI), was founded in 1988 as a joint venture with the Unit Trust of India. Subsequently, it became a fully owned subsidiary of ICICI. It is a technology venture finance company, set up to sanction project finance for new technology ventures. The industrial units assisted by it are in the fields of computer, chemicals/polymers, drugs, diagnostics and vaccines, biotechnology, environmental engineering, etc. State Bank of IndiaState Bank of India was constituted on 1 July 1955. More than a quarter of the resources of the Indian banking system thus passed under the direct control of the State. Later, the State Bank of India (Subsidiary Banks) Act was passed in 1959, enabling the State Bank of India to take over eight former State-associated banks as its subsidiaries (later named Associates). The Bank is actively involved since 1973 in non-profit activity called Community Services Banking. All the branches and administrative offices throughout the country sponsor and participate in large number of welfare activities and social causes. Business is more than banking because we touch the lives of people anywhere in many ways.

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Tourism Finance Corporation of India (TFCI)It is a specialized financial institution set up by the Government of India for promotion and growth of tourist industry in the country. Apart from conventional tourism projects, it provides financial assistance for non-conventional tourism projects like amusement parks, ropeways, car rental services, ferries for inland water transport, etc. Investment Institutions:- are the most popular form of financial intermediaries, which particularly catering to the needs of small savers and investors. They deploy their assets largely in marketable securities. Life Insurance Corporation of India (LIC)It was established in 1956 as a wholly-owned corporation of the Government of India. It was formed by the Life Insurance Corporation Act,1956 , with the objective of spreading life insurance much more widely and in particular to the rural area. It also extends assistance for development of infrastructure facilities like housing, rural electrification, water supply, sewerage, etc. In addition, it extends resource support to other financial institutions through subscription to their shares and bonds, etc. The Life Insurance Corporation of India also transacts business abroad and has offices in Fiji, Mauritius and United Kingdom. Besides the branch operations, the Corporation has established overseas subsidiaries jointly with reputed local partners in Bahrain, Nepal and Sri Lanka.

Unit Trust of India (UTI)It was set up as a body corporate under the UTI Act, 1963, with a view to encourage savings and investment. It mobilizes savings of small investors through sale of units and channelizes them into corporate investments mainly by way of secondary capital market operations. Thus, its primary objective is to stimulate and pool the savings of the middle and low income groups and enable them to share the benefits of the rapidly growing industrialization in the country. In December 2002, the UTI Act, 1963 was repealed with the passage of Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002, paving the way for the bifurcation of UTI into 2 entities, UTI-I and UTI-II with effect from 1st February 2003.

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State Level Institutions:

Several financial institutions have been set up at the State level which supplement the financial assistance provided by the all India institutions. They act as a catalyst for promotion of investment and industrial development in the respective States. They broadly consist of 'State financial corporations' and 'State industrial development corporations'. State Financial Corporations (SFCs)This are the State-level financial institutions which play a crucial role in the development of small and medium enterprises in the concerned States. They provide financial assistance in the form of term loans, direct subscription to equity/debentures, guarantees, discounting of bills of exchange and seed/ special capital, etc. SFCs have been set up with the objective of catalyzing higher investment, generating greater employment and widening the ownership base of industries. They have also started providing assistance to newer types of business activities like floriculture, tissue culture, poultry farming, commercial complexes and services related to engineering, marketing, etc. There are some State Financial Corporations (SFCs) in the country:-

Andhra Pradesh State Financial Corporation (APSFC) Himachal Pradesh Financial Corporation (HPFC) Madhya Pradesh Financial Corporation (MPFC) North Eastern Development Finance Corporation (NEDFI) Rajasthan Finance Corporation (RFC) Tamil Nadu Industrial Investment Corporation Limited Uttar Pradesh Financial Corporation (UPFC)

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LENDING INSTITUTIONS IN INDIA IDENTITY THEFT PROCEDURES FOR LENDING INSTITUTIONS:Establishing identity theft procedures at lending institutions has become an essential part of doing business. Protecting customers from identity theft is not only good customer service, but it will help protect your institution from expensive losses. In addition, regulations enacted by the Federal Trade Commission now make it mandatory for lending institutions to establish policies and procedures for the prevention, detection and mitigation of identity theft.

Prevention:
Under the Fair and Accurate Credit Transactions Act (FACT Act), lending institutions must make efforts to prevent identity theft from occurring in connection with their lending activities. The most effective way of doing this is to properly identify your customers during the application process. Lenders should be trained to ask for and examine photo identification presented at application. IDs that appear to have been tampered with or that do not bear the authentication markings specific to the state in which they were issued are suspect. If the address given by the customer does not match the address printed on the ID, it is best to ask for address verification in the form of utility bills or rental agreements. Additionally, be sure to examine customer's credit reports carefully for fraud alerts or other suspicious activity, as these can be indicative of potential identity theft. If you determine that someone may be applying under a false identity, the application should be turned down immediately. Identity theft prevention from the perspective of a lending institution is all about verifying that the person applying for credit really is who he says he is.

Detection:
Lending institutions also have the responsibility of monitoring their current loans and other credit products to detect potential identity theft over the life of the loan. In order to determine where your detection efforts would best be spent, consider creating a risk matrix that outlines your products, the methods a consumer may use to access them, and the level of risk you believe is associated with each one. For instance, the balance of a mortgage cannot be accessed by the customer, whereas a line of credit likely has a credit card that could be at risk of being stolen or used fraudulently. Therefore, a line of credit would be at a higher risk of incidents of identity theft. Once you have determined where your risks are as a lending institution, set any monitoring software you use to detect suspicious activity on those accounts. Suspicious activity could be uncharacteristic account use, activity originating from a different geographic area than normal, or strange requests for information or account changes. Appendix J to the FACT Act contains a list of red flags linked to identity theft that lending institutions may use to aid in their prevention and detection policies and procedures.

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Mitigation:
The final requirement of the Fair and Accurate Credit Transactions legislation is that institutions implement processes for mitigating identity theft once it has affected a customer. This could include reporting the incident to your corporate security department, aiding the customer in filing any necessary paperwork with the police, or training employees to help the customer contact each credit bureau to freeze their credit report. The Federal Trade Commission has compiled an identity theft recovery packet to aid consumers affected by this type of fraud, which may be distributed to customers if necessary.

Points: Prepaid interest charged by a lending institution:-

Points: Prepaid interest charged by a lending institution for a mortgage; each discount point is equal to 1 percent of the loan amount.

Refinance: Obtaining a new mortgage on a home to get a lower interest rate or a more favorable loan agreement.

Second mortgage: A cash advance based on the paid-up value of a home; also called a home equity loan.

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LENDING INSTITUTIONS IN INDIA

CONCLUSION:In order to determine whether or not they will lend money to your company business lending institutions will evaluate certain standards. Otherwise, if the secured loan is not repaid in a timely manner, the lending institution will instead take the borrowers home, or other collateral set up in the secured loan, as payment. The most important part in obtaining financing is to shop for a lending institution that offers the best type of advance at the best rates. Small Business Administration lending institution means a concern that is operating under regulations of a state or Federal licensing, supervising, or examining body, or whose shares are publicly traded and listed on a recognized stock exchange or NASDAQ and which has assets in excess of $ 500 million; and which, in either case, holds itself out to the public as engaged in the making of commercial and industrial loans and whose lending operations are not for the purpose of financing its own or an Associates sales or business operations.

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LENDING INSTITUTIONS IN INDIA BIBLIOGRAPHY:-

www.economicstimes.co.in www.domainb.com/finance/banks www.scribd.com www.slideshare.com www.lendinginstitutionfinance.com www.finance.com

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