Fi Sanctions Up 58.4 Per Cent
There are indications of a pick up in investments by corporates if the operations of financial institutions be taken as an indicator.
Hinting at the possibility of a turnaround, the report on development banking in India 1996-97 published by the Industrial Development Bank of India (IDBI) reveals that during the first nine months of the current financial year, sanctions and disbursement by financial institutions increased by 58.4 per cent and 20.6 per cent respectively over the corresponding period in the last financial year. Sanctions have increased to Rs 52,466 crore and disbursements to Rs 32,644 crore.
According to the report, the aggregate assistance sanctioned by all financial institutions during 1996-97 amounted to Rs 55,737 crore and disbursements to Rs 42,067 crore. During the last financial year, while sanctions declined by 14.9 per cent, disbursements grew by 8.8 per cent.
The decline in sanctions and deceleration in disbursements were on account of subdued industrial growth and sluggishness in the capital market for the second successive year reflecting a weakening of intended investment by corporates, states the report.
The report reveals that cumulatively up to end March 1997, sanctions and disbursements by financial institutions aggregated Rs 3,69,277 crore and Rs 2,52,933 crore respectively. The report covers the operations of the five all Indian development banks IDBI, ICICI, IFCI, Sidbi, IIBI the three specialized financial institutions, RCTC, TDICI, TFCI; the three investment institutions i.e. LIC, GIC, UTI; 18 state financial corporations and 28 state industrial development corporations.
Bulk of the sanctions by financial institutions in 1996-97 was claimed by private sector and constituted 81.9 per cent of the total figure. The industries accounting for the bulk of the sanctions were chemicals and chemical products (14.1 per cent), electricity generation (10.6 per cent), basic metals (10.5 per cent), textiles (7.5 per cent) and services (14.5 per cent).
In the context of the fast changing business scenario, the development financial institutions continued to reorient their business strategies to meet the challenges posed by the new competitive and deregulate environment.
The report also summarises the developments in the financial sector the foray of development banks into short-term and working capital financing, the reorganization in IDBI, merger of SCICI with ICICI, the formation of I Credit, the transformation and re-christening of IRBI and the new schemes launched by SIDBI.