(ii) Specialised Financial Institutions (SFIs)20

Two new FIs were set up by the Central Government in the late 1980s to finance risk and innovation in the area of industrial expansion; this was India’s trial in the area of venture capital funding.

(a) IFCI Venture Capital Funds Ltd (IFCI Venture), 2000: It was promoted as a Risk Capital Foundation (RCF) in 1975 by IFCI Ltd., a society to provide financial assistance to first generation professionals and technocrat entrepreneurs for setting up own ventures through soft loans, under the Risk Capital Scheme.

In 1988, RCF was converted into a company—Risk Capital and Technology Finance Corporation Ltd. (RCTC)—when it also introduced the Technology Finance and Development Scheme (TFDS) for financing development and commercialisation of indigenous technology. Besides, under Risk Capital Scheme, RCTC started providing financial assistance to entrepreneurs by way of direct equity participation. Based on IFCI Venture’s credentials and strengths, Unit Trust of India (UTI), entrusted RCTC with the management of a new venture capital fund named Venture Capital Unit Scheme (VECAUS-III) in 1991 with its funds coming from the UTI and IFCI. To reflect the shift in the company’s activities, the name of RCTC was changed to IFCI Venture Capital Funds Ltd. (IFCI Venture) in February 2000.

In order to focus on Asset Management Activities, IFCI Venture discontinued Risk Capital and Technology Finance Schemes in 2000-01 and continued managing VECAUS-III. In 2007, as UTI had ceased to carry out its activities and its assets vested with Specified Undertaking of the Unit Trust of India (SUUTI), the portfolio of VECAUS-III under management of IFCI Venture was transferred to SUUTI.

(b) Tourism Finance Corporation of India Ltd (TFCI), 1989: The Government of India had, on the recommendations of the National Committee on Tourism (Yunus Committee) set up under the aegis of the Planning Commission, decided in 1988, to promote a separate All India Financial Institution for providing financial assistance to tourism-related activities/projects. In accordance with the above decision, the IFCI Ltd. along with other all-India financial/investment institutions and some nationalised banks promoted a Public Limited Company under the name

of “Tourism Finance Corporation of India Ltd. (TFCI)” to function as a Specialised All-India Development Financial Institution to cater to the financial needs of the tourism industry.

TFCI was incorporated as a Public Limited Company in 1989 and became operational with effect from 1989. TFCI was notified as a Public Financial Institution in January 1990. Its promoter, the IFCI, holds major share (41.6 per cent) in it, while the rest of the shares are with the ‘public’ (26 per cent), public sector banks, public insurance companies and public mutual fund (i.e., UTI Mutual Fund Ltd.).