Development Banks.ppt

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Development banks are the institutions engaged in the promotion and

development of industry, agriculture and other key sectors.

National or regional financial institution designed to provide medium-

and long-term capital for productive investment. Such investment is

usually accompanied by technical assistance.

Some development banks are government-owned, while others are

private. Many have been established under the auspices of the World

Bank.

Among the largest are the Inter-American Development Bank, the Asian

Development Bank, and the African Development Bank.

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A development bank does not accept deposits from thepublic like commercial banks and other financial

institutions who entirely depend upon saving mobilization.

It is a specialized financial institution which provides

medium term and long-term lending facilities.

It is a multipurpose financial institution. Besides providing

financial help it undertakes promotional activities also. It

helps an enterprises from planning to operational level. It provides financial assistance to both private as well as

public sector institutions.

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The role of a development bank is of gap filler, when assistance from

other sources is not sufficient then this channel helps. It does not

compete with normal channels of finance.

Development banks primarily aim to accelerate the rate of growth. It

helps industrialization specific and economic development in general.

The objective of these banks is to serve public interest rather than

earning profits.

Development banks react to the socio-economic needs of development.

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Lay Foundations for Industrialization

Meet Capital Needs

Need for Promotional Activities

Help Small and Medium Sectors'

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Financial Gap Fillers

Undertake Entrepreneurial Role

Joint Finance

Refinance Facility

Credit Guarantee

Underwriting of Securities

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The recommendation for setting up industrial financing institutions was made in1931 by Central Banking Enquiry Committee but no concrete steps were taken.

In 1949, Reserve Bankhad undertaken a detailed study to find out the need for

specialized institutions.

It was in 1949 that the first development bank i.e. Industrial Finance Corporation

of India (IFCI) was established.

In 1951, Parliament passed State Financial Corporation Act. Under this Act state

governments could establish financial corporations for their respective regions.

The IFCI and state financial corporations served only a limited purpose. There was

a need fordynamic institutions which could operate as true development agencies.

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The Industrial Credit and Investment Corporation of India (ICICI) were established

in 1955 as a Joint Stock Company. Though ICICI was established in private sector but its

pattern of shareholding and methods of raising funds gives it the characteristic of a public

sector financial institution.

Another institution ,Refinance Corporation for Industry Ltd. (RCI) was set up in 1958

by Reserve Bank of India, LIC and Commercial Banks.

In 1964, Industrial Development Bank of India (IDBI) was set up as an apex

institution in the area of industrial finance, RCI was merged with IDBI. IDBI was a

wholly owned subsidiary of RBI and was expected to co-ordinate the activities of the

institutions engaged in financing, promoting or developing industry.

The State Industrial Development Corporations (SIDC's) were established in the

sixties to promote medium scale industrial units.

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The State Small Industries Development Corporations (SSIDC's) were

also set up to cater to the needs of industry at state level.

The Unit Trust of India (UTI) established in 1964, Life Insurance

Corporation of India (1956) and General Insurance Corporation of

India (GIC) set up in 1973 also finance industrial activities at all India

level.

In 1982 the Export-Import Bank of India (Exim Bank) was established to

provide financial assistance to exporters and importers.

In order to meet credit needs of agriculture and rural sector, National' Bank

for Agriculture and Rural Development (NABARD) was set up in 1982.

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Providing Funds Infrastructural Facilities

Promotional Activities

Development of Backward Areas

Planned Development

Accelerating Industrialization

Employment Generation

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Set-up in 1948 to provide institutional credit to

medium and large industries.

Project financing: Medium/Long term credit for

setting up new project, expansion schemes, financialassistance by way of rupee loans, loans in foreign

currencies, underwriting of direct subscription of

shares/debentures.

Financial Services and corporate advisory services.


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Established in 1964 for coordinating the working ofinstitutions at national level and state levels engagedin financing, promoting and developing industries.

Provides merchant banking & corporate advisoryservices as a part of its fee based activities.

Provide advice & services for issue management,private placement of equity/debt instrument, project

evaluation, corporate restructuring etc.


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Set up in 1990, the principal financial institution forthe promotion, financing and development ofindustries in the small sector and to co-ordinate thefunctions of other institutions engaged in similar

activities. An apex institution, SIDBI makes use of the network

of the banks and state financial institutions.

Financial Products- Micro finance, venture capital,

project finance, assistance for technologydevelopment, export finance etc.


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An apex institution which promotes foreign trade.

Creating export capability by arranging competitivefinancing at various stages of export cycle.

Bank provides export credit on deferred payment termson exports of indian machinery, manufactured goodsand technology services.


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An apex institution set up for providing & regulating

credit and other facilities for the promotion &

development of agriculture, small scale industries,

cottage & village industries, handicrafts and other rural

crafts and other allied economic activities in rural

areas.


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First development bank in the world to beset up in the private sector

Objective is to provide medium-term &long-term financing to Indian business.

ICICI Securities & Finance Co. Ltd.

ICICI Venture Funds Management Co. Ltd.

ICICI Prudential Life Insurance

ICICI Home Finance Co. Ltd. ICICI Investment Management Co. Ltd.


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The Infrastructure Development Finance Company

Limited (IDFC )

India's leading integrated infrastructure finance

player providing end-to-end infrastructure financing

and project implementation services


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Discount and Finance House of India Ltd.

a unique institution of its kind, was set up in April

1988.

The discount has been established to deal in

money market instruments in order to provide

liquidity in the money market.


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The Sub-Group on Housing Finance for the Seventh

Five Year Plan (1985-90) identified the non-availability

of long-term finance to individual households


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It is responsible for the development of

industries in the state by formulating policies that

help industry growth, and also by establishingIndustrial Estates.


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There are three investment institutions:

Life Insurance Corporation of India Ltd.,

Unit Trust of India and

General Insurance Corporation of India.

At state level there are 18 State Finance Corporations

and 28 state industry development corporations.

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Survey of Backward Areas

Inter institutional Groups (IIGs)

Establishment technical Consultancy Organizations

(TCOs) Entrepreneurial Development Programs (EPPs)

Technological Improvements


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Development Banks.ppt

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