A Development Bank is a multi-purpose financial institution. It strives to promote & finance economic development .A development bank provides a package of services from identification to management. It arranges package of incentives to entrepreneurs. It brings in institutional innovations related to development.
The first development bank in India is Industrial Finance Corporation of India (IFCI) which was established in 1948.
Name of Development banks in India:
- Industrial Finance Corporation of India (IFCI)
- State finance Corporations (Established in 1951)
- Industrial Credit and Investment Corporations Limited (ICICI) [Established in 1955]
- Industrial Development Bank of India (IDBI) [Established in 1964]
- Industrial Reconstruction Bank of India (Established in 1971)
- National Bank for Agriculture Development and Rural Development (Established in 1982)
- Export and Import Bank of India ( Established in January 1982)
- Small Industries Development Bank of India (SIDBI) [Established in 1989]
Developments Banks are development oriented and differ from Commercial Banks in these respects
- The development banks do not seek and accept deposits from public
- They provide medium and long term finance while commercial banks advance short term finance
- The development bank’s main function is to promote investment and enterprise while commercial bank’s functions are related to both general public & industries.
Objectives & Functions of Development Banks in India
- To serve as an agent for the development of industries, international trade etc.
- To accelerate the growth of economy
- To take care rural development
- To finance projects which would play an important role in the development of the economy
- To finance exports
- To develop the skills of entrepreneur
- Mobilizing resources to use them productively
- To finance banking and small scale industries
- Providing technical and administrative assistance to businesses & industries
- Cooperating with the government, Reserve Bank and other organizations which are concerned with investment of development funds.