List of Development Banks In India: Meaning, Types, Roles, Features, & Objectives

Development Banks In India: Unlike normal banks, Development Banks are the banks that provide medium and long term financing to businesses. Development Banks are established in developed as well as developing countries. For accelerating the economic development of the country the development banks play a major role. Development Banks are often referred to as Development Financial Institutions. Development Banks lend to prolonged projects such as irrigation systems, urban infrastructure, mining, heavy industries, and so on. In this article, we will discuss the industrial banks in India, development bank meaning, development banks in India, development bank example, development bank definition, development bank functions, development bank in India list, development bank importance, and so on in detail. Candidates can make use of this article for their preparation purposes. Our Guidley team has provided various other static gk topics for the preparation of the competitive exams aspirants can make use of them for their upcoming exams.

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What are Development Banks?

Development Banks mainly concentrate on developing the industrial and agricultural sectors by providing short term and long term financial needs. The areas covered by the Development Banks are agriculture, infrastructure, and industries. Development Banks are the financial entities that mainly focus on funding the basic needs of society. The only difference between normal banks and development banks is the immobilization of savings. Development Banks lend at low and stable interest rates which helps in long term investments with social benefits. 

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Types of Development Banks

In this section, we have provided the types of Development Banks in India. 

    • IFCI (Industrial Finance Corporation of India)

    • IDBI (Industrial Development Bank of India)

    • EXIM (Export-Import Bank of India)

    • SIDBI (Small Industries Development Bank of India)

    • NABARD (National Bank for Agriculture & Rural Development)

    • NHB (National Housing Bank)

Role And Functions of RBI

Let us discuss the Development Banks in India types in detail.

IFCI (Industrial Finance Corporation of India)

  • In July 1948, IFCI (Industrial Finance Corporation of India) was established under the Industrial Finance Corporation Act.

  • IFCI was the first Development Financial Institution in India

  • IFCI shoved the economic growth with the help of the development of infrastructure and industry.

  • After that IFCI has provided remarkably to the economy with its support of projects in various sectors of growth and development like manufacturing, infrastructure, services, and agriculture allied activities. 

  • The main objective of the Industrial Finance Corporation of India is to provide medium and long term loans to large businesses.

  • In 1948, IFCI was set up as a Development Financial Institution (DFI). Later in 1993, it became a public limited company and was listed on the stock exchange.

  • In 2015 IFCI was fully owned by the Government of India.

Government Banks in India

  • At present IFCI became a Systematically Important Non Deposit Taking Non Banking Finace Company (NBFC-ND-SI).

  • Industrial Finance Corporation of India (IFCI) Group consists of six subsidiaries such as
    • Stock Holding Corporation of India Ltd.

    • IFCI Venture Capital Funds Ltd.

    • IFCI FACTORS Ltd.

    • IFCI Infrastructure Development Ltd.

    • IFCI Financial Services Ltd.

    • mpcon

  • For social sector efforts, IFCI has established the following institutions
    • Management Development Institute

    • Institute of Leadership Development

    • National Rural Development Fund

About Regional Rural Banks in India

 

IDBI (Industrial Development Bank of India)

  • The Industrial Development Bank of India (IDBI) was established under the Industrial Development Bank of India Act of 1964 as a Development Financial Institution (DFI).

  • IDBI is headquartered in Bombay, Maharashtra.

  • Under the Companies Act 1956, IDBI is considered a public financial institution. Until 2004, for 40 years IDBI was considered the Development Bank of India.

  • After that IDBI was converted into a bank under the Industrial Development Bank of India Act of 2003.

  • A new government company was formed under the name of Industrial Development Bank of India Ltd., From October 2004, IDBI Ltd started its working as a bank.

  • In 2005, IDBI Bank Ltd was merged with IDBI Ltd to work as a single entity. 

Payment Bank of India

EXIM (Export Import Bank of India)

  • In March 1982, EXIM Bank was established under the Export Import Bank of India Act of 1981.

  • EXIM Bank (Export Import Bank of India) is a premier export financial institution of the country.
  • EXIM Bank helps in guiding the Export Import businesses of India.

  • This helps in developing by merging the foreign trade and investment with the economic rise of India.

  • EXIM Bank desires to boost the business of SMEs and industries.
  • The main purpose of the Export Import Bank of India is to generate foreign exchange for the country by providing term loans for foreign trading in India.

  • In January 1982, EXIM Bank was established with the aim of financing, and promoting Foreign Trade in India.

  • The main objectives of Export Import Bank of India are as follows
    • To provide financial assistance to exporters and importers.

    • Acts as a principal financial institution for organizing the institutions involved in financing the export and import of goods and services by encouraging the International trade of the country.

    • EXIM Bank helps in the globalization of Indian businesses and also helps in empowering the growth of partner countries.

    • Its main aim is to facilitate Indian trade and investment and support partner countries development as a financially, socially, and environmentally responsible institution.

 

SIDBI (Small Industries Development Bank of India)

  • In April 1990, under the Act of Parliament, the Small Industries Development Bank of India was established.

  • SIDBI headquarters in Lucknow, Uttar Pradesh.

  • Small Industries Development Bank of India is the wholly owned subsidiary of the Industrial Development Bank of India.

  • SIDBI acts as the Principal Financial Institution by implementing triple agenda for the promotion, financing, and development of the MSME (Micro, Small, and Medium Enterprises) sector and synchronizes the functions of institutions with similar motives.
  • The Government of India owns 33 percent of SIDBI's ownership.

  • The main function of SIDBI is to promote industries mainly in semi urban areas which will create more employment opportunities.

  • SIDBI improves the strengthening of credit flow to MSMEs by addressing the financial and development space in the MSME environment.

  • This also helps in marketing in small scale industries in domestic and international markets.

 

NABARD (National Bank for Agriculture and Rural Development)

  • In July 1982, under the Parliament Act 61 of 1981, the NABARD was established.

  • The National Bank for Agriculture and Rural Development (NABARD) is fully owned by the Government of India.
  • The prime development bank in India is the National Bank for Agriculture and Rural Development.

  • NABARD usually promotes sustainable agriculture and rural development.

  • NABARD has transformed Indian villages with its agricultural finance, infrastructure development, banking technology, microfinance promotion, and rural entrepreneurship through Self Help Groups (SHGs), Joint Liability Groups (JLGs), and so on.

  • NABARD consists of seven subsidiaries such as

    • NABKISAN

    • NABSAMRUDDHI

    • NABFINS

    • NABFOUNDATION

    • NABCONS

    • NABVENTURES

    • NABSanrakshan

  • NABARD helps build financial and non financial interventions, innovations, technology, and institutional development in rural areas.

  • NABARD regulates the Cooperative Banks and the Regional Rural Banks (RRBs).

 

NHB (National Housing Bank)

  • In July 1988, the NHB was established under Section 6 of the National Housing Bank Act of 1987.

  • NHB is headquartered in New Delhi.

  • The paid up capital of NHB was contributed by the Reserve Bank of India.

  • The High level group under the Chairmanship of Dr. C. Rangarajan, the former Governor of RBI has recommended the proposal for setting up of National Housing Bank as an autonomous Housing Finance Institution.

  • These recommendations were accepted by the Government of India.

  • National Housing Bank's mission is to promote the future market by providing the housing needs of all the divisions of the population with an aim of low and moderate income housing.

  • The main objectives of NHB are as follows

    • Promotes dedicated housing finance institutions for serving different regions and income groups.

    • Making the housing credit more affordable.

    • NHB supervises the other housing finance companies.

    • NHB helps encourage public agencies as a provider of service land for housing.

 

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Development Banks in India: FAQs

Here we have provided some of the important FAQs regarding the Development Banks in India.

Q. What is the difference between development banks and commercial banks?

A. Unlike commercial banks, development banks do not accept deposits. Development Banks do not depend on saving mobilization.

Q. Which is the first Development Bank in India?

A. IFCI (Industrial Finance Corporation of India) is the first development bank established in India.

Q. What are some of the Development Banks in India?

A. IFCI, SIDBI, NABARD, NHB, IDBI, and EXIM Banks are some of the Development Banks in India.

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