Notes On Objectives And Functions Of S.F.C:

      At the time of setting up of the Industrial Finance Corporation of India, the necessity of establishing similar other institutions at the state level for assisting the smaller industrial concern had not been recognised because it was not possible for a single institution to satisfy the capital needs of smaller concerns spreaded all over the country. In 1951, the State Financial Corporation was passed by the Central Government to create a separate financial corporation for the states. The S.F.C. meets the financial requirements of small industrial concerns in the private sectors.

Objectives and Scopes:

      The main objectives of the S.F.C are to provide financial assistance to medium and small scale industries which are outside the scope of I.F.C.I. The main function of S.F.C. is limited within its states. It covers not only public limited companies but also private limited companies, partnership firms and proprietary concerns.

Functions Of SFC:

      The main functions of S.F.C. are as follows:

  1. It grants loan and advances to industrial concerns that are repayable within the maximum period of 20 years.

  2. It subscribes the shares and debentures of industrial concerns.
  3. It underwrites the shares and debentures of the industrial concerns.
  4. It guarantees loans raised by the industrial concerns repayable within 20 years.
  5. Guarantees deferred payments for purchase of capital goods with India.
  6. It acts as an agent of the State and central Government.

      According to section 2(C) of the SFC Act 1951 as amended in 1961, the SFC can assist an industrial concern that is engaged in any of the following activities:

  1. Manufacture, preservation or processing of goods
  2. Hotel Industries
  3. Road Transport
  4. Generation or distribution of electricity or any other form of power
  5. Development of any area of land as industrial estate.
  6. Fishing or providing facilities for fishing or manufacture of fish products.
  7. Providing special or technical knowledge or other services for the promotion of industrial growth.

      SFC provides foreign exchange loans under World Bank schemes.

      The SFC occupies an important place as an institution for industrial development in the country. The major beneficiaries of the SFC are assistances are the following industries:

  1. Food Processing
  2. Textile Chemical and Chemical Products
  3. Metal Production
  4. Cement.