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Financial institutions refer to central or state government establishments that exist to finance business operations. These institutions provide long-term finance to firms to help them in their expansion, modernisation and reorganisation programmes.
The following are the three main financial institutions.
(a) Unit Trust of India (UTI): The UTI was established in 1964 under the Unit Trust of India Act, 1963, with the objective of mobilising the community’s savings and utilising the funds to finance profitable ventures.
(b) Industrial Credit and Investment Corporation of India (ICICI): The ICICI was established as a public limited company in 1955. The main objective of the ICICI was to facilitate the creation, modernisation and expansion of enterprises in the private sector.
(c) Industrial Finance Corporation of India (IFCI): The IFCI was established in 1948 under the Industrial Finance Corporation Act, 1948, with the objective of facilitating regional development and encouraging new entrepreneurs to enter the priority sectors of the economy.