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Section 17 – The State Financial Corporations (Amendment) Act,2000

The State Financial Corporations (Amendment) Act,2000

Section 17. Amendment of section 25

In section 25 of the principal Act,-

(a) For sub-section (1), the following sub-sections shall be substituted, namely:-

”(1) The Financial Corporation may, subject to the provisions of this Act, carry on and transact any of the following kinds of business, namely:-

(a) Guaranteeing, on such terms and conditions as may be agreed upon,-

(i) Loans raised by industrial concerns which are repayable within a period not exceeding twenty years, and are floated in the public market;

(ii) Loans raised by industrial concerns from scheduled banks or State co-operative banks or other financial institutions;

(b) Guaranteeing, on such terms and conditions as may be agreed upon, deferred payments due from any industrial concern in connection with its purchase of capital goods within India;

(c) Underwriting of the issue of stock, shares, bonds or debentures by industrial concerns;

(d) Transferring for consideration any instruments relating to loans and advances granted by it to industrial concerns;

(e) Acting as agent of the Central Government or the State Government or the Development Bank or the Small Industries Bank or the IFCI Limited formed and registered under the Companies Act,1956 (1 of 1956), or any other financial institution notified in this behalf by the Central Government in respect of any matter connected with, or arising out of, the grant of loans or advances to an industrial concern, or subscription to debentures of an industrial concern or relating to the business of the Development Bank, Small Industries Bank, IFCI Limited or financial institution;

(f) Subscribing to, or purchasing of, the stock, shares, bonds or debentures of an industrial concern or any other concern;

(g) Retaining as part of its assets any stock, shares, bonds or debentures which it may acquire by subscription or in fulfilment of its underwriting liabilities and disposing of the stock, shares, bonds or debentures so acquired;

(h) Granting loans or advances to, or subscribing to debentures of, an industrial concern, repayable within a period not exceeding twenty years from the date on which they are granted or subscribed to, as the case may be: Provided that the Financial Corporation may, with the prior approval of the Small Industries Bank, exceed the said limit of twenty years up to a further period of ten years: Provided further that nothing contained in this clause shall be deemed to preclude the Financial Corporation from granting loans or advances to, or subscribing to debentures of, and industrial concern to which may be attached an option to convert such debentures or loans into stock or shares of the industrial concern:

Provided also that the Financial Corporation may, in the exercise of such option, convert the amounts outstanding on such debentures or loans into stock or shares of the industrial concern if such concern increases its subscribed capital by the issue of further stock or shares in accordance with and subject to, the provisions of section 81 of the Companies Act,1956 (1 of 1956) . Explanation.In this clause, the expression “the amounts outstanding on such debentures or loans” shall mean the principal, interest and other charges payable on such debentures or loans as at the time when the amounts are sought to be converted into stick or shares;

(i) Accepting or discounting promissory notes and bills of exchange made, drawn, accepted or endorsed by industrial concerns or by any person selling capital goods manufactured by one industrial concern to another industrial concern;

(j) Undertaking research and surveys for evaluating or dealing with marketing or investments or undertaking and carrying on techno-economic studies or other activities in connection w
ith the development of an y industry;

(k) Providing technical and administrative assistance to any industrial concern or any person for the promotion, management or expansion of any industry;

(l) Planning and assisting in the promotion and development of industries;

(m) Providing consultancy and merchant banking services;

(n) Acting as the trustee for the holders of debentures or other securities;

(o) Leasing, sub-leasing or giving on hire or hire-purchase of industrial plant, equipment, machinery or any other asset;

(p) Factoring;

(q) Providing export related credit and services;

(r) Undertaking money market related activities;

(s) Setting up of mutual funds and undertaking asset management activity;

(t) Promoting, forming or conducting or assisting in the promotion, formation, or conduct of companies, subsidiaries, societies, trusts or such other associations of persons as it may deem fit;

(u) Opening or confirming or endorsing letters of credit and negotiating or collecting bills and other documents drawn thereunder;

(v) Doing such other business as the Small Industries Bank may authorise, and or generally the doing of such acts and things as may be incidental to or consequential upon, the exercise of its powers or the discharge of its duties under this Act

(2) The Financial Corporation may receive, in consideration of any of the services mentioned in sub-section (1), such commission, brokerage, interest, remuneration or fee as may be agreed upon.”; (b) in sub-section (3), for the words ”’Development Bank”, the words ”Small Industries Bank” shall be substituted

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The State Financial Corporations (Amendment) Act,2000

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