Companies Act Section 2(72) Public Financial Institution

Public Financial Institution Section 2 (72)

1. Ownership and Control:

Public Financial Institutions (PFIs) are often established or controlled by the government or public sector entities. 

They may operate under specific statutes, regulations, or guidelines that govern their structure, operations, and governance.

2. Role and Functions:

PFIs play a crucial role in promoting economic development by providing long-term finance, credit facilities, and financial services to priority sectors such as agriculture, industry, infrastructure, and small-scale enterprises.

They typically focus on funding projects and activities that contribute to national development goals, employment generation, and overall economic growth.

3. Regulatory Framework:

PFIs are subject to regulatory oversight by government authorities such as the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), or other regulatory bodies depending on their specific activities and functions.

They must comply with statutory regulations, capital adequacy norms, prudential guidelines, and disclosure requirements as stipulated by the regulatory authorities.

4. Financial Assistance:

PFIs provide financial assistance through various instruments such as loans, equity investments, guarantees, and advisory services to support infrastructure projects, industrial development, export promotion, and other strategic sectors of the economy.

5. Public Accountability:

Being owned or controlled by the government, PFIs are accountable for their performance, financial management, and utilization of funds to stakeholders, including the government, shareholders, depositors (if applicable), and the public.

Examples of Public Financial Institutions in India:

Industrial Development Bank of India (IDBI): 

Originally established as a Development Financial Institution (DFI) to provide credit and financial assistance to industrial projects.  

National Bank for Agriculture and Rural Development (NABARD): 

Facilitates credit flow for agriculture and rural development through refinancing, direct lending, and other financial services.  

Export-Import Bank of India (EXIM Bank): 

Provides financial assistance and advisory services to promote international trade and export-oriented industries.