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What are the objectives and functions of state financial corporations? 1. The main function is to provide non-term loans for the acquisition of land, building, plant, machinery and other movable assets. 2. To finance expansion, modernization and up-gradation of technology in the existing units. 3. To assist for the promotion of industry by the rural and urban artisans. 4. Providing seed capital assistance under the scheme of the Industrial Development Bank of India. Select the correct answer using the code given below :

What are the objectives and functions of state financial corporations? 1. The main function is to provide non-term loans for the acquisition of land, building, plant, machinery and other movable assets. 2. To finance expansion, modernization and up-gradation of technology in the existing units. 3. To assist for the promotion of industry by the rural and urban artisans. 4. Providing seed capital assistance under the scheme of the Industrial Development Bank of India. Select the correct answer using the code given below : Correct Answer 2, 3 and 4 only

Explanation:

The State Finance Corporations (SFCs) are an integral part of institutional finance structure of a country. Where SEC promotes small and medium industries of the states. Besides, SFC help in ensuring balanced regional development, higher investment, more employment generation and broad ownership of various industries.

Functions of State Financial Corporations:

Long Term Financial Assistance

  • Providing long-term financial assistance to finance small and medium industries is the prominent function for which the State Financial Corporations are set up. These enterprises may be in the form of individual proprietorships, partnership firms, private or public companies and the maximum tenure of the loan is twenty years. 

Guarantee for Loans

  • The State Financial Corporations also stand guarantee for loans taken by small and medium business concerns from cooperative banks, commercial banks, or any other banking financial institution for a tenure of up to 20 years.

Acts as Agents of Government

  • The State Financial corporation also acts as an agent of the state as well as the central government when it comes to implementing government schemes related to small and medium industries financing. The SFCs also disburse loans as per different schemes of the governments.

Underwriting and Subscription

  • The State Financial Corporation also functions as an underwriter by underwriting the shares of small and medium public companies. The SFCs also subscribe to debentures of these small and medium firms which are of tenure of fewer than 20 years. 

Credit and Guarantee for Purchases

  • The State Financial Corporation also provides loans and guarantees deferred payment for purchases for the industry like machinery, plant, or any other fixed expenditure. 

Related Questions

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