State financial corporations and industrial development (A case study of PFC and HFC)

State Financial Corporations were established in the States under the Central Act, viz. The State Financial Corporations Act, 1951, with the basic objective of promoting and developing small scale industries in the respective states with a special focus on spreading industrial culture in the rural, semi-urban and backward areas of the States. These corporations are owned by the respective state governments jointly with IDBI and they are functioning under the administrative control of the state governments. These corporations have opened a number of regional offices in the states to cater to the requirements of the entrepreneurs. SFCs provide term loan to small and medium scale industries for creation of assets, viz., land, building and machinery. They also provide working capital term-loan to the industrial units on competitive terms. The main purpose of the study is to analyze the role of SFCs in promoting and rendering financial assistance to small and medium scale industries. The present study is mainly based on the secondary data published in annual reports. The period of the study is 1998–99 to 2008–09.