 the industrial finance corpora- tion (amendment) bill, 1960~as introduced in lok sabra on 19th december, 1960) the indu stri al fin dn ce corpor ati on (ambndhent) bill, 1960 (iq re/as introduced in lok babha) 1 page 2, line 36,-iqr "under-wri ting" read "under14'14;!n&"o 2 page 5, line 5,-w_ ''unle ss" read 'under" 3 page 5, line 11 fr:t bot tom, -a f te r "s hare s ii 9j:l11; "," 4 page 5, line 1 from bottom,-!qr "payment" ~ "repaylilent" 5 page 6, line 2,-for "receipt" read ''recipient'' 6 psi":'j 10, line 3j," ~ ~-'-~ 6 psi? 10, 11ne m,'" ~ · !9l "rapayable" rtt-ad "repayable" -~ corre ct line nulll be rs ::m page s 2 and 3 7 new delhi, de cember 17 196qa-_ agr ahayana 26, 1882 ( sal:3)  (amendment) bill, 1960(as introduced in lok sabha) a bill further to amend the industrial fimance corporation act, 1948 be it enacted by parliament in the eleventh year of the republic of india as follows:-1 this act may be called the industrial finance corpomtion short title (amendment) act, 1960 s 2 in section 2 of the industrial finance corporation act, 1948 ~=:~~ (hereinafter referred to as the principal act), in clause (c), for the words "in the manufacture or processing of goods", the words uin  the manufacture, preservation or processing of goods" shall be substituted 10 3 in section 4 of the principal act, after sub-section (7), the amendment following sub-section shall be inserted, namely:-ofaection 4· 31 of i9~~· is "(8) in this section the expression "insurance companies" or uinsurance company" includes the life insurance corporation of india established under s~tion 3 of the life insurance corporation act, 1956"  4 in, section 11 of  the principal act, for sub-section (4), the aren~ment fqllowi,ag sub-section shall be substituted, namely: _ ~iaectjon "(4) direetors shall be paid such fees as may be prescribed for attending the meetings of the board and, if they are members 1802 (b) ls-2 of the central committee or any other committee appointed by the corporation, for attending meetings of such committee: provided that nothing in this sub-section shall apply to the chairman or to any other director who is a servant of the government"  5 in section 23 of the principal act,-amendment of 8ection 23· (1) for sub-section (1), the following sub-section shall be substituted, namely:-"(1) the corporation shall, subject to the provisions of this act, be authorised to carry on and transact the follow- 10 ing kinds of business, namely:-(a) guaranteeing, on such terms end conditions as may be agreed upon,-(i) loans raised by industrial concerns which are repayable within a period not exceeding twenty- is five years, and are floated in the public market; (it) loans mised by industrial concerns from scheduled banks or state co-operative banks; (b) guaranteeing, on such terms and conditions as may be agreed upon, deferred payments due from any 20 industrial concern-(i) in connection with its import of capital goods from outside india; or (ii) in connection with its purchase of capital 2s goods within india: provided that no guarantee under sub-clause (i) shall be given without the prior approval of the central government; (c) guaranteeing, on such terms and conditions as 30 may be agreed upon, loans raised from, or credit arrangements made with, any bank or financial institution in any country outside india by industrial concerns in foreign currency: provided that no such guarantee shall be given without the prior approval of the central government; 35 (d) under-writing the issue of stock, ~hares, bonds or debentur  by industrial concertllj s (e) acting as agent for the central government or, with its approval, for the international bank for reconstruction and development in the transaction of any business with an industrial concern in respect of loans or advances granted, or debentures subscribed, by either of them; (f) subscribing to the stock er shares of any industrial concern; 10 (g) receiving in consideration of the services mentioned in clauses (a) to (f), such commission as may be egreed upon; is (h) retaining as part of its assets any stock, shares, bonds or debentures which it may have to take up in fulfilment of its underwriting liabilities, so however that it disposes of the stock, shares, bonds or debentures so acquired as early as practicable but in no mse, the stocks, shares, bonds or debentures so acquired shall be retained beyond a period of seven years from the date of such acquisition, except with the permission of the central government; 20 (i) granting loans or adwnces to, or subscribing to debentures of, industrial concerns, repayable within a period not exceeding twenty-five years from the date on which they are granted or subscribedlo, as the case may be: 2s 30 provided that nothing contained in this clause shall be deemed to preclude the corporation from granting loans or advances to, or subscribing to debentures of, an industrial concern, which tllay at the option of the corporation be convertible into stock or shares of that concern within the period the loan, advance or debenture is repayable; and 3s (j) generally, the doing of all such matters and things a·s may be incidental to or consequential upon the exercise of its powers or the discharge of its duties under this act"; (2) in sub-section (2), for the words, brackets, letters and figure "clauses (a) and (e) of sub-section (1)", the words, brackets, letters and figure "clauses (a), (b), (c) and (i) of sub-section (1)" shall be substituted  6 in section 24 of the principal act,-amendment oflection 24· (1) for the words, brackets, letters and figure "clauses (a) and (e) of sub-section (1)" the words, brackets, letters and figure "clauses (a) and (i) of sub-section (1)" shall be substituted; (2) for the proviso, the following proviso shall be substi-s tuted, namely:-"provided that the aforesaid limit of one crore of rupees may be exceeded with the prior opproval of the central government"  7 in section 26 of the principal act, clause (b) and the proviso to shall be omittedamendment of section 26 amendment of section 42 8 section 42 of the principal act shall be re-numbered as subsection (1) of that section and after sub-section (1) as so re-numbered, the following sub-section shall be inserted, namely:-"(2) every rule made under this section shall be laid, as soon is as may be after it is made, before each house of parliament while it is in session for a total period of thirty days which may be comprised in one session or in two successive sessions, and, if, before the expiry of the session in which it is so laid or the session immediately following, both houses agree in making any 20 modification in the rule or both houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be, so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule" 25 it has been found from experience gained by the industrial finance corporation in its working since 1957 when the act was amended last, that it is necessary to amend the act in certain respects unless clauses (a) and (aa) of sub-section (1) of section 23 of the act, the corporation can guarantee loans floated by industrial concerns in the market and also guarantee, with the approval of the central government, deferred payments due for import of capital goods from abroad the corporation, however, cannot guarantee loans raised by an industrial concern from scheduled banks or state cooperative banks; the result, sometimes, is that the concerns which have already mortgaged their assets to the corporation are unable to offer suitable security to banks for accommodation the corporation has also now no power to guarantee deferred payments for acquisition of capital goods made in india this has an inhibiting effect on development of indigenous manufacture of capital goods then again, as the corporation is not authorised now to guarantee foreign exchange loans sought by indian concerns from institutions abroad, the concerns sometimes find it difficult to obtain credit owing to their inability to find suitable guarantors it is, therefore, proposed to amend section 23 suitably, so as to enable the corporation to guarantee the loans raised by industrial concerns frorp scheduled banks or state cooperative banks, the deferred payments for acquisition of capital goods manufactured in india and the credit arrangements made by industrial concerns from foreign financial institutions 2 the corporation is not authorised to subscribe directly to the share capital of an industrial concern although it can underwrite the issue of stock, shares, etc, and retain, up to seven years, without government permission and longer with government permission, such stock, shares etc, as it may have to take up in discharge of its underwriting obligations cases arise where concerns apply to the corporation for substantial loans although they would need smaller loan or none at all if they approach the public for capital with an assurance that the corporation would subscribe to a portion of the issue it is, therefore, proposed to enable the corporation to make direct subscription to the stock/share capital of industrial concerns· 3 under the existing provisions of the act, the corporation is entitled only to the payment of loans/debentures with stipulated interest and cannot share the profits of an industrial concern, which has been the receipt of substantial financial assistance in the shape of loans or debentures the new provision referred to in paragraph 2 above will pave the way for the corporation to subscribe to the shares of an industrial c~ncern where the terms of the loan granted to it or the terms of debentures issued by it enable the corporation to convert such loans or debentures into shares 4 under the provisions of section 24, the corporation cannot grant loans or advances to or subscribe to debentures of industrial concerns where the total amount exceeds one crore of rupees unless the central government, on the recommendation of the corporation, guarantee the repayment of such loans, advances or debentures and the payment of interest thereon government owns 20% of the share capital of the corporation and has guaranteed the balance of the share capital and all the bonds issued by the corporation; it is therefore felt that there is no particular advantage gained by the government guaranteeing over again, loans/debentures exceeding one crore of rupees advanced or subscribed by the corporation to a single industrial concern it is, therefore, proposed to amend the provisions suitably dispensing with the provision regarding the central government guarantee and substituting in its place the prior approval of the central government being obtained before the corporation grants loans or subscribes to debentures exceeding the aforesaid limit 5 the existing clause (c) of section 2 of the act defines an industrial concern as one which is engaged or to be engaged in the manufacture or processing of goods, etc this leaves out the cold storage industry it is proposed to enlarge the above definition to include concerns engaged or to be engaged in preservation of goods also 6 the bill seeks to achieve these objects opportunity has also been taken to incorporate some other amendments which are found necessary for the smooth working of the corporation or are of a consequential or procedural nature the notes on clauses appended to the bill explain the provisions thereof  new delhi; morarji desai the 14th december, 1960clause 2-this clause seeks to include industrial concerns engaged or to be engaged in the preservation of goods within the definition of "industrial concern" clause 3-it seeks to clarify that insurance companies include the life insurance corporation of india clause 4-as ther& is a doubt as to whether a director of the corporation other than the chairman and officials of the government is entitled to fees for attending meetings of any committee appointed by the corporation, it has become necessary to make specific provision for payment of fees to such directors for attending meetings of such committee clause 5 (1) -under section 23 (1) (a) and (aa) the carporation can guarantee loans floated by industrial concerns in the market and guarantee, with the approval of the central government, deferred payments due for import of capital goods from abroad; the cl)rporation, however, cannot guarantee loans raised by industrial concerns from scheduled banks or state co-operative banks with the result that, sometimes the concerns which have already mortgaped their assets to the corporation are unable to offer suitable securities to banks etc, for accommodation it has also no power to guarantee deferred payments for acquisition of capital goods made in india further the corporation is not authorised at present to guarantee loans/credits in foreign currency sought by an industrial concern from foreign financial institutions the concerns which may need foreign exchange loans or credits are handicapped owing to their inability to find suitable guarantors the sub-clause therefore seeks to authorise the corporation to guarantee (a) loans raised by industrial concerns from scheduled banks or state co-operative banks, (b) deferred payments for purchase of capital goods manufactured in india and (c) credit arrangements made by industrial concerns with foreign financial institutions the corporation can under section 23(1) (b) and (d) underw:rite issue of stock, shares etc of industrial concerns and retain up to seven years without government's permission and longer with government's permission, such stock, shares as it may have to take up in fulfilment of its underwriting obligations but the corporation cannot directly subscribe to the share capital of any concern it is felt that, if an industrial concern approaches the public for capital with an assurance that the corporation would subscribe to a portion of it, the industrial concern can reduce its requirement for loans from the corporation substantially if not avoid it altogether it is thus proposed to authorise the corporation to make subscription to the capital of an industrial concern directly with a view to enabling the corporation to snare in the prosperity of an industrial concern which 'has been the recipient of substantial assistance from the corporation, the clause will pave the way for the corporation to grant such loans or subscribe to such debentures which are at the option of the corporation also convertible into shares of industrial concerns the clause further provides for the corporation receiving commission for all types of business including those now proposed clause 5 (2) -the sub-clause seeks to bring within its ambit further types of business referred to in clause 5 (1) clause 6-the central government owns 20% of the share capital of the corporation and has guaranteed the balance and has also guaranteed all the bonds issued by the corporation; it is therefore felt that there is no particular advantage gained in guaranteeing over again the loans or advances granted, or debentures subscribed to, by the corporation to anyone industrial concern when such amount exceeds rs one crore either singly or in the aggregate the clause therefore seeks to substitute the existing guarantee provision in the proviso to section 24 by providing for prior approval of the central government the clause further makes consequential change in that section as a result of amendments proposed in clause 5 clause 7-it is consequential to the amendments proposed in clause 5 (1) clause 8-the amendment made to section 42 by this clause 11 in accordance with the present practice (c) "industrial concern" means any public limited company or cqope~tiv, society incorporated by a central act or an act of the 1at,islature of a state or under any law for the time being m toroe "dd reliatered in india whieh il engaged or is to be engaged in tne manufacture or processing of goods or in shipping q1' ijl minini or in hatel industry or in the «eneration or distribution of electricity or any other form of power: term of office and retirementof directors expum(ltwtt--the expresaioft "proceuin of ,gods" includes any art or prooess for producinl, preparing or making an article by li\lbjocting any material to a manual, mechanical, chemical, electrical or any other liko operation; - - - - - - - - - - - - 11 - - - - - - (4) directors shall be paid such fees for attending the meetings ot the boarcl, and, if they are members thereof, of the central com-inittee, as may be preloribecl: provided that nothing in this sub-section shall apply to the chairman of to jay oth" dir~tor who itl tl aervant of the government - - - - - - 83, (l) the corporation shall, subject to the provisions of this business act, be authorised to carry on and transact the following kinds of c!~~~fon bullinssl, namely:-may tranaact (a) guarailteeini, on /!iucll tef1ft6 and conditions as may be agreed upon, loans raised by industrial i!oncerns which-(0 are repayable within a period not exceeding twentyfive years, and 9 1602 (b) ls-l (ii) are floated in the public market; (00) guaranteeing on such terms and conditions as may be agreed upon, deferred payments due from any industrial concern in connection with its import of capital goods from outside india: provided that no such guarantee shall be given without the prior approval of the central government; (b) underwriting the issue of stock, shares, bonds or debentures by industrial concerns;  (c) receiving in consideration of the services mentioned in clauses (a) and (b) such commission as may be agreed upon; (d) retaining as part of its assets any stock, shares, bonds or debentures which it may have to take up in fulfilment of its underwriting liabilities, so however that it disposes of the stock, shares, b6nds or debentures so acquired as early as practicable but in no case, the stocks, shares, bonds or debentures so acquired shall be retained beyond a period of seven years from the date of such acquisition, except with the permission of the central government; (e) granting loans or advances to, or subscribing to deben-' tures of, industrial concerns, rapayable within a period not exceeding twenty-five years from the date on which they are granted or subscribed to, as the case may be; (ee) acting as agent for the central government or, with its approval, for the international bank for reconstruction and development in the transaction of any business with an industrial concern in respect of loans or advances granted, or debentures subscribed, by either of them; and (f) generally, the doing of all such matters and things as may be incidental to or consequential upon the exercise of its powers or the discharge of its duties under this act (2) no accommodation shall be given under clauses (a) and (e) of sub-section (1), unless it is secured by a sufficient pledge, mortgage, hypothecation or assignment of government or other securities, stocks, shares or secured debentures, bullion, movable or immovable property or other tangible assets in the manner prescribed by regulations or unless it is guaranteed as to the repayment of principal and the payment of interest by the central government, state government, a scheduled bank or a state co-operative bank 24 the corporation shall not enter into any arrangement under clauses (a) and (e) of sub-section (1) of section 23 with a single ijmit ofactommodation industrial concern for an amount exceeding one crore of rupees in the aggregate: provided that the aforesaid limit of one crore of rupees shall not apply to any such arrangement when any loans, advances or debentures are, on the recommendation of the corporation, guaranteed by the central government as to the repayment of the principal and the payment of the interest - - - - - - 26 the corporation shall not-prohibited business (a) - - - - - - (b) subscribe directly to the shares or stock of any company having limited liability; - - - - - - provided that nothing in clause (b) shall affect the right oi,the corporation to acquire any stock, shares, bonds or debentures of " company having limited liability in fulfilment of any underwriting agreement entered into by the corporation - - - - - - -  a billb~i1her lo amend the jnd1llti'ia1 finance corporation act, the president has, in pujsuance of clause (i) of article 117 of the constitution of india, recommended to lok sabha the introduction of the bill mn kaul, secretary (shri morarji desai, minister of finance) 