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At the time of independence in 1947, India's capital market was relatively under-developed. Although
there was significant demand for new capital, there was a dearth of providers. Merchant bankers and
underwriting firms were almost non-existent. Also commercial banks were not equipped to provide longterm
industrial finance in any significant manner. It is against this backdrop that the government
established The Industrial Finance Corporation of India (IFCI) on July 1st, 1948, as the first Developing
Financial Institution in the country to cater to the long-term finance needs of the industrial sector. The
newly-established DFI was provided access to low-cost funds through the central bank's Statutory
Liquidity Ratio (SLR) which in turn enabled it to provide loans and advances to corporate borrowers at
concessional rates. Financial institutions like IFCI have been experiencing considerable difficulties in
recovering loans and enforcement of securities charge with them.