Development Banks are the financial institutions that provide funds and financial assistance to new and upcoming business enterprises. Development banks like IDBI, SIDBI, and IFCI etc. were setup to meet long term capital requirements of the industry. They help in accelerating industrial and economic growth.
These are the financial institutions concerned with providing all types of financial assistance (medium as well as longterm) to business units, in the form of loans, underwriting, investment and guarantee operations, and promotional activities, economic development in general, and industrial development, in particular. In short, a development bank is a development-oriented bank.
In our country development banks were started with the objective of increasing the pace of industrialization. To help all round industrialization development banks were made multipurpose institutions. Besides financing, they were assigned promotional work also. The traditional financial institutions could not take up this challenge because of their limitations.
An outstanding financial development of the post-independence period has been the rapid growth of development banks in the country. These banks are specialized financial institutions which perform the twin functions of providing medium and long-term finance to private entrepreneurs and of performing various promotional roles conducive to economic development. As the name clearly suggests, they are development-oriented banks. As banks, they provide finance. But they are unlike ordinary commercial banks.
The financial assistance to industry is given in the following four main forms:
- Term loans and advances,
- Subscription to shares and debentures,
- Underwriting of new issues, and
- Guarantees for term loans and deferred payments.
At present, at the all-India level, there are five industrial development banks:
This story is from the July 2022 edition of BANKING FINANCE.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the July 2022 edition of BANKING FINANCE.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
The Rise Of Green Marketing: Driving Sustainable Change
Green marketing refers to the practice of promoting products or services that are environmentally friendly or sustainable. It involves incorporating eco-friendly elements into various aspects of marketing strategies, including product development, packaging, advertising, and distribution.
ICICI Bank partners with PhonePe to offer instant credit on UPI
ICICI Bank announced that it has partnered with PhonePe to offer instant credit on UPI to its pre-approved customers on the app of the digital payments company.
Indiagold Eyes Major Expansion in India's Gold Loan Market
Indiagold, a prominent fintech company specialising in gold loans, is set to disrupt the gold loan industry with its ambitious expansion plans and innovative product offerings.
RBI CIRCULAR
Facilitating accessibility to digital payment systems for Persons with Disabilities Guidelines
Legal News
The Supreme Court announced the launch of a new webpage on its official website providing summaries of landmark judgments.
The Role and Impact of the Insolvency and Bankruptcy Code (IBC) in NPA Recovery
Indian banks, especially grappling with the mounting challenge of Non-Performing Assets (NPAs) within Scheduled Commercial Banks (SCBs), are experiencing a significant downturn in their capacity for credit recycling, resulting in reduced business opportunities and declining profits. However, various factors contributing to the severity of NPA problem are including macro-economic, political, and internal factors, emphasizing the complexity of the issue. With this background, the present study puts an effort to look at the role of the Insolvency and Bankruptcy Code (IBC) in NPA recovery and also showcasing its significance in resolving insolvency and maximizing creditor recovery.
Big Data in Banking: Analysing its Role, Advantages and Challenges
Globally Inflation started rising post April 2021 and went above the target range set by most of the Central Banks. It had remained low and dormant for a substantial duration since the global financial crisis. CPI inflation in developed countries such as US, UK and Euro zone, began to exceed their traditional target of 2% and continue to stay at these elevated levels till recent time.
Is SIP Always the Best Option? A Look into Lump-Sum vs SIP During Volatile Markets
SIP is a method of investing a fixed amount at regular intervals, typically monthly, into a mutual fund. It allows investors to buy more units when prices are low and fewer when prices are high, a process known as rupee cost averaging.
Strategies for Mutual Fund Retail Investors during market downturns
When stock markets experience a decline, mutual fund investors often face a sense of insecurity and apprehension. The volatility can lead to impulsive decisions, which, rather than securing financial health, may impair long-term investment objectives.
Fraud Risk Management In Banking
Fraud risk management is a fundamental aspect of overall Risk Management within the banking sector. In India, banks adhere strictly to guidelines set forth by the Reserve Bank of India (RBI) to prevent, detect, and promptly report fraudulent activities.
