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Haryana Financial Corporation Company History and Annual Growth Details


State Financial Corporations (SFCs) are set up under the
SFCs Act, 1951 to provide credit facilities to small and
medium scale industries. The SFCs have now emerged as a
Premier Development Finance Institution (DFIs) operating at
the State level. Their operations have gathered significant
momentum and have increased stupendously from the early
70s, with annual sanctions increasing 43 times from Rs.35
crore in 1970-71 to Rs.1,500 crore mark by 1989-90 (source
MADA Committee report 1990-91). The State Governments have
substantial role in the affairs of SFCs by virtue of their
Share Capital support and the rights vested in them under
the SFCs Act. IDBI has been providing substantial resource
support to SFCs by way of share capital as also refinance
and subscription to adhoc bonds (New Debts Instruments) and
formulating in consultation with SFCs their annual business
plans. IDBI has been vested with specific powers and
responsibilities in the SFCs Act. These relate mainly to
appointment of directors on the SFC Board and undertaking
of annual performance evaluation studies.


Haryana Financial Corporation (HFC) came into existence on
1st April, 1967 as a result of reorganisation of erstwhile
Punjab Financial Corporation. It is a State Level
Financial Institution formed under SFCs Act, 1951. The
Corporation is one of the leading state level developmental
financial institutions promoted by the State Government of
Haryana. Backed by the strong support of State Government
and IDBI, the Corporation has been extending term loans
against fixed assets to industrial concerns in the State of
Haryana. The Corporation has been playing the key role of
identifying and developing first generation entrepreneurs
in the State of Haryana.

Besides, it has played a pivotol role in development of
industries in the State, development of backward area,
employment generation etc. It has a ready, continuously
increasing base of its clients in the State. The
Corporation has financed 8789 projects till March 31st,
1994 in the State with cummulative sanctions &
disbursements to the tune of Rs.61,511 lacs and Rs.50,570
lacs respectively. Over a period of five years, the total
income of the Corporation has increased from 1159 lacs in
1990-91 to 3756 lacs in 1993-94.


Haryana Financial Corporation may, subject to the
provisions of the SFC Act 1951, carry on and transact any
of the following kinds of business:

1. 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 floated in
the public market.

ii) Loans raised by industrial concerns from scheduled
banks or State Co-Operative banks or other financial

2. 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.

3. Underwriting of the issue of stock, shares, bonds or
debenture by industrial concerns.

4. Transferring for consideration any instruments relating
to loans and advances granted by it to industrial concerns.

5. Acting as agent of the Central Government or the State
Government or the Development Bank or the Industrial
Finance Corporation of India established under the
Industrial Finance Corporation Act, 1948 (15 of 1948) or
any other financial institution notified in this behalf by
the Central Government (in respect of any matter conected
with, or arising out of, the grant of loans or advances to
an industrial concern, or subscription to debentures of an
industral concern) or relating to be business of the
Development Bank, Industrial Finance Corporation of India
or financial institution.

6. Subscribing to, or purchasing of, the stock, shares,
bonds or debentures of an industrial concern or any other
concern with the prior approval of the Development Bank

7. Receiving in consideration of the services mentioned in
the preceding clauses such commission as may be agreed

8. 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.

9. Granting loans or advances to, or subscribing to
debenturns of, an industrial concern, repayable within a
period not exceeding twenty years from the date of which
they are granted or subscribed to, as the case may be.

10. 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.

11. Undertaking research and surveys for evaluating or
dealing with marketing or investments and undertaking and
carrying on techno-economic studies or other activities in
connection with the development of any industry.

12. Providing technical and administrative assistance to
any industrial concern or any person for the promotion,
management or expansion of any industry.

13. Planning and assisting in the promotion and development
of industries.

As per circular No. FI 8/94-95 dated Oct. 20, 1994 ttte
IDBI in pursuance of the powers vested with it under the
provision of the State Financial Corporation Act, 1951, has
authorised the State Financial Corporations to undertake
the following mentioned activities in addition to those
provided under section 25 of the Act (Listed above), to
enable the SFCs to diversify their activities.

i) Providing consultancy and merchant banking services;

ii) acting as the trustee for the holders of debentures or
other securties;

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

iv) granting, opening, issuing, confirming or endorsing
letters of credit and negotiating or collecting bills and
other documents drawn thereunder;

v) undertaking mutual fund activity including asset

vi) providing export related credit;

vii) undertaking money market relating activities;

viii) factoring; and

ix) promoting, forming or conducting or associating in the
promotion, formation or conduct of companies, subsidiaries,
societies, trusts or such other associations of persons, as
it may deem fit.


The Corporate mission has been defined as follows:

To be a premier, self sustaining financial institution for
catalysing, creating and sustaining viable investments, in
the small and medium scale sector of industry and services
in the State of Haryana.

The Corporation is providing integrated financial
assistance and service to Corporate sector both in the
small scale and the medium scale sectors. Financial
services are both fund based as well as non-fund based.
While the fund based activities are provided within the
State of Haryana, the non-fund based activities are being
offered on All India basis. The full range of activities of
the Corporation can broadly be classified into three major
categories as follows:


For development and promotion of Industries in Haryana, the
Corporation provides Term Loans to the extent of Rs.150
lacs to a company and Rs.90 lacs to
sole-proprietorship/partership concerns. In order to meet
financial requirements of different types of borrowers
under varying situations, HFC has a number of term lending
schemes like; Equipment Refinance Scheme, Modernisation
Scheme, Scheme for Financing Hotel Industry, Small
Hospitals/Nursing Homes, Assistance to Ex-servicemen,
Single Window Scheme, Rehabilitation of sick Units etc.
Financial assistance is provided on the basis of
Techno-Economic viability of projects, established after
appraisal of projects by qualified and experienced staff of
the Corporation. The total sanctions and disbursements made
by the Corporation stood at Rs.61,511.08 lacs and
Rs.50,570.88 lacs respectively as on 31.3.94. The
Corporation has played a pivotal rule in development and
growth of different types of Industries in Haryana during
the last 29 years.

The Industry wise coverage of assistance on a cumulative
basis upto 31st March, 1994 is giver below:

S.No. Industry Number of Amount % of Total
Project Sanctioned
(Rs.in lacs)

1. Metal 1038 10203.60 16.59%
2. Food processing & Agro
based. 1410 9749.72 15.85%
3. Textiles 1132 9255.43 15.05%
4. Chemicals/Petroleum &
Coal Based 485 5787.04 9.40%
5. Transport 1781 4489.98 7.30%
6. Machinery 487 4249.06 6.91%
7. Paper printing 389 3903.12 6.35%
Publishing & Allied
8. Footwear & Leather 239 1792.92 2.91%
9. Plastics, Rubber & Allied
Industries 240 1545.02 2.51%
10. Hotel & Tourism 16 800.17 1.30%
11. Miscellaneous 1572 9735.02 15.83%

8789 61511.08 100.00%

Other fund based activities include Equipment Leasing,
Car/Vehicle Leasing, Medical Equipment Leasing, Bill
Discounting, Bridge Loans upto a limit of Rs.150 lacs.
Besides, the Corporation has also started providing Working
Capital Finance in a major way to units. The Corporation
also provides financial guarailties to its clients and also
assists in opening of Foreign Letters of Credit.


The Corporation is a SEBI registerd Category-I Merchant
Banker effective December 1, 1994. The services being
provided include Issue Management, Underwriting, Project
Counselling and Advisory Services, Loan/Lease syndication,
Project appraisals and Capital structuring advice. Due to
the liberalization and disintermediation taking place in
the financial services sector, the Corporation envisages a
vast potential in this area and is in the process of
building up a motivated and professionally competent team
of Officers in this area.


The Corporation has identified Investment Banking as a
major thrust area in the years to come. The Corporation is
making investment in the equities of the units assisted by
it. It has applied for membership of the OTCEI. The
Corporation has already arranged/syndicated a number of
bought out deals. It has also participated in some of these
bought out deals. In view of its large client base in the
Small Scale Sector, and the financial disintermediation
taking place in the Indian Economy, the Corporation
foresees a major role for itself in this area.


-Haryana Financial Corporation Ltd has nominated Shri. N K Maini, CGM, SIDBI, HO, Lucknow as a Director on the Board of the Corporation in place of Shri. U S Lal, DGM, SIDBI (ceased as Director on the Board).

-Haryana Financial Corporation Ltd has appointed Smt. Neerja Sekher, IAS as Managing Director of the Corporation in place of Sh. Ram Niwas, IAS of State Financial Corporations Act, 1951.