Tourism Finance Corporation of India was incorporated as a public limited company under the Company Act, 1956 on 27th January 1989. The operational activities were started on 1st February 1989. It was set up as a specialized cell to cater to the needs of Tourism and Hotel Industry. It was expected to ensure priority in funding tourism and tourism-related projects.
TFCI has to undouble made a dent in the tourism sector. It has been showing better performance since its inception in 1989. The investment of TFCI has grown appreciably over the year from Rs. 265 crores to Rs. 6,978 crores in 2001-02.[better-ads type=”banner” banner=”1142″ campaign=”none” count=”2″ columns=”1″ orderby=”rand” order=”ASC” align=”center” show-caption=”1″][/better-ads]
TFCI is a commercial venture and hence it cannot afford to finance those tourism and hotel project which do not ensure recovery of interest and the principal amount of loan in time. It will help TFCI in generating some surplus which is so essential for further expansion of its activities.
Organizational Structure of TFCI
Generally, the organizational structure serves three basic functions. These includes:
(i) It intends to produce output to achieve the business objectives.
(ii) It minimizes the influence of individual variation on the organization.
(iii) It helps in performing activities, decisions and other relationships in a systematic manner.
The organizational structure of TFCI is consisting of the board of directors, managing directors and other professional staff at middle and lower levels. Theoretically, the board of directors is a supreme organ of the management of TFCI. However, in practice, the managing director wields the real power because of directors almost delegates its powers to the managing directors (M.D).
The main function of the board is to formulate the policies and strategies while M.D is responsible for the execution and implementation of these policies and strategies. He directs, co-ordinates and controls day to day functioning of TFCI.
Objectives of TFCI
According to Memorandum and articles of associations, the main objectives of TFCI are:
- To commence and carry on the business of assisting industrial, commercial, professional and trading enterprises – corporate bodies, partnership firms, trust, individuals or other concern whosoever constituted and engaged or to be engaged in setting up and development of tourism, hotel, and tourism-related activities.
- To commence and carry on the business of lending or granting by way of loans or advances in rupees and/or foreign currency or in any other form money with or without interest or with or without security for the purpose of assisting enterprises in India.[better-ads type=”banner” banner=”1142″ campaign=”none” count=”2″ columns=”1″ orderby=”rand” order=”ASC” align=”center” show-caption=”1″][/better-ads]
- To commence and carry on the business of facilitating, through the grant of loans and other financial, technical and professional assistance, the acquisition, maintenance, modification, construction, reconstruction, refurbishing and renovation of tourism and travel related activities.
- To commence and carry on the activities of coordinating and formulating guidelines and policies relating to the financing of all such projects in the tourism and tourism-related activities, facilities and services.
- To commence and carry on the development and promotional functions with regard to tourism and tourism-related activities.
- To commence and carry on the business of merchant banking and other allied activities.
- To commence and carry on the business as assessors, designers, draftsman, estimators, surveyors and other materials.
- To commence and carry on or be interested in the business of buying, selling, distributing, leasing, exporting and importing of furniture, machinery, equipment, and other material.
- To carry on business as share brokers and agents of insurance for all kinds and for all of the risks.
- To carry on the business of agents for the central or state government or any other international or national institution or organization in the transaction of any business concerned with tourism and tourism-related activities, facilities and services.
Operations of TFCI
TFCI provides all forms of financial assistance to enterprises for setting and developing travel and travel related activities, facilities and services. It also coordinates and formulates policies and strategies related to the financing of tourism projects. Since its inception, the company has been playing a catalytic role in providing all forms of financial assistance for new, expansion, diversification and modernization project in the tourism industry and related activities.
The major function of TFCI are following as:
- Rupee loans
- Underwriting of public issue of share/debenture and direct subscription on such securities.
- Guarantee for deferred payments and credits raised in India and/ or abroad.
- Equipment finance and equipment leasing.
- Assistance under suppliers credit.
- Merchant Banking and Advisory services.
TFCI is operating on similar lines as other all India Financial Institutions. It provides financial assistance for the project in the tourism industry on its own and in consortium with other all India Financial Institutions, namely IFCI, IDBI, and ICIC.
The tourism projects financed by TFCI include inter alia Hotel restaurants, Holiday Resorts, Amusement Parks and Sports, Safari Park Ropeways, Convention Halls, Transport, Travel, and Tour operating agency, Air Taxi Services, Tourist Emporia, Sports facilities etc.[better-ads type=”banner” banner=”1142″ campaign=”none” count=”2″ columns=”1″ orderby=”rand” order=”ASC” align=”center” show-caption=”1″][/better-ads]
TFCI is a financing non-conventional and small projects which were not eligible for institutional finance earlier but are heaving great importance from tour point of view. Hence, TFCI is playing a developmental role for promote of tourism within the overall policies of the Government of India.
The present product line of TFCI consist following main areas:
(a) Project Financing
(b) Financial Services
Composition of Assistance
With the assistance of the company, it encompasses both direct and indirect financial assistance.
Under direct assistance TFCI provides:
- Underwriting and direct subscription to the share and debentures
- Equipment financing and leasing
- Technical Development Fund
TFCI provides a significant share in the total assistance to tourism enterprises indirectly through other financial institutions like SFCs, SIDCs, and commercial banks. These are:
- Refinancing of the Industrial loan
- Bill Finance
- Seed Capital Assistance
- Bridge Financing
Roles of TFCI
The TFCI has been endeavoring to take such steps which are considered vital in preparing the base of the tourism industry in the country. TFCI has been playing an increasingly important role. These are following as:
- To provide assistance to the project located in identified backward and hill areas of the country.
- It plays a vital role in achieving the growth targets set for the travel and tourism industry.
- It plays a pivotal role in motivating private investors to put their fund in travel related projects.
- TFCI helps in attracting more and more investment into the non-conventional segments of tourism industry such as adventure tourist resorts, ropeways, human resource training, institutes, ferries, and air taxis and other tourism promotional facilities.
- To suggest a measure, TFCI should forecast the financial requirements of the travel and tourism sector.
- To maintain good coordination among the enterprises and other financial institutions.
Travel and Tourism infrastructure requires an extensive investment of both public and private sectors to finance the preliminary planning, development stages, and fixed assets. Due to the huge investments, travel and tourism industry are also known as ‘capital-intensive industry’. ITFC plays an important role in the promotion and development of tourism in India.