Group1 Development Banks Ppt

7/30/2019 Group1 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.2


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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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D.M. Mithani:A development bank may be

defined as a financial institution concerned with

providing all types of financial assistance

(medium as well as long-term) to business units

in the form of loans, underwriting, investmentand guarantee operations and development in

general and industrial area.

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A development bank does not accept

deposits from the public 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.

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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.

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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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capital formation

support to the capital market

rupee loans

foreign currency loans

assistance to backward area

promotion of new entrepreneur

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The recommendation for setting up industrial financing

institutions was made in 1931 by Central Banking

Enquiry Committee but no concrete steps were taken.

In 1949,Reserve Bank had 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.

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In 1951, Parliament passed State FinancialCorporation 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.

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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) andGeneral

Insurance Corporation of India (GIC) set up in 1973 alsofinance industrial activities at all India level.

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In 1982 theExport-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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In India, various financial institutions were set up

after independence only. The Government of India has

taken steps to set up institutions which assist various

sectors of the economy. At present the country has 12

institutions at the national level and 46 at the state

level. The All India Financial Institutions comprise

All-India Development Banks, namely:

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Industrial Development Bank of India,

Industrial Finance Corporation of India Ltd.,

Industrial Credit and Investment

Corporation of India Ltd.,

Small Industries Development Bank of India,

Industrial Reconstruction And Development

Bank of India,

NABARD

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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 developmentcorporations.

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The government established The Industrial Finance

Corporation of India (IFCI) on July 1, 1948, as the first

Development Financial Institution in the country to cater to

the long-term finance needs of the industrial sector. Thenewly-established DFI was provided access to low-cost funds

through the central bank's Statutory Liquidity Ratio or SLR

which in turn enabled it to provide loans and advances to

corporate borrowers at concessional rates.


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To promote short, medium or long-term loans or working

capital facilities.

To subscribe, underwrite and sell shares and debentures.

To provide consultancy and merchant banking services.To undertake functions relating to bill marketing and

factoring etc.

To act as trustees of and deeds.

To deal in bill of exchange, promissory notes and othernegotiable instruments.

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INDUSTRIAL DEVELOPMENT

BANK OF INDIA


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OBJECTIVES


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FUNCTIONS


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SUBSIDIARIES AND NEW INSTITUTIONS

CO -SPONSERED BY IDBI-


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ICICI


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OBJECTIVES-

FUNCTIONS


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FUNCTIONS


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SUBSIDIARIES OF ICICI


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SIDBI was established on April 2, 1990. The Charter

establishing it, The Small Industries Development Bank of

India Act, 1989 envisaged SIDBI to be "the principal financial

institution for the promotion, financing and development of

industry in the small scale sector and to co-ordinate thefunctions of the institutions engaged in the promotion and

financing or developing industry in the small scale sector and

for matters connected therewith or incidental thereto.


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Granting refinance for term loans provided by

SFCs, SIDCs, and commercial banks to the SSI

units.

Discounting and re-discounting of bills.Providing assistance in equity capital seed

capital.

Assistance to SFCs, SSI, DCs, SIDCs and

NSIC.

Provide term loan to industrial units and

leasing companies.

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NABARD is set up on July 12, 1982 as an apex

Development Bank with a mandate for facilitatingcredit flow for promotion and development of

agriculture, small-scale industries, cottage and

village industries, handicrafts and other rural crafts.

It also has the mandate to support all other allied

economic activities in rural areas, promote

integrated and sustainable rural development and

secure prosperity of rural areas


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Credit Functions

Developmental andpromotional functions

Supervisory Functions

Core Functions

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Framing policy and guidelines for rural

financial institutions.

Providing credit facilities to issuing

organizations. Preparation of potential-linked credit plans

annually for all districts for identification of

credit potential.

Monitoring the flow of ground level rural

credit.

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Help cooperative banks and Regional Rural Banks to

prepare development actions plans for themselves.

Enter into MoU with state governments and cooperative

banks specifying their respective obligations to improve theaffairs of the banks in a stipulated time frame.

Monitor implementation of development action plans of

banks and fulfillment of obligations under MoUs.

Provide financial assistance to cooperatives and RegionalRural Banks for establishment of technical, monitoring and

evaluations cells.

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http://www.nabard.org/development&promotional/developmentalinitiatives.asphttp://www.nabard.org/development&promotional/developmentalinitiatives.asp


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Undertakes inspection of Regional Rural Banks(RRBs) and cooperative banks (other thanurban/primary cooperative banks) under the

provisions of Banking Regulation Act, 1949.

Undertakes inspection of State CooperativeAgriculture and Rural Development Banks(SCARDBs) and apex non-credit cooperativesocieties on a voluntary basis.

Undertakes portfolio inspections, systems study,

besides off-site surveillance of cooperative banks andRegional Rural Banks (RRBs).

Administering the Credit Monitoring Arrangements inSCBs and CCBs.

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To protect the interest of the present and future

depositors.

To ensure that the business conducted by these banks is

in conformity with the provisions of the relevant

Acts/Rules, regulations/Bye-Laws, etc.

To ensure observance of rules, guidelines, etc.

formulated and issued by NABARD/RBI/Government.

To examine the financial soundness of the banks.

To suggest ways and means for strengthening the

institutions so as to enable them to play more efficient

role in rural credit.

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There are 18 SFCs at present. Seventeen ofthem have been set up under State FinancialCorporation Act 1951, by the respective state

governments as regional institutions. They play an effective role in the

development of small and mediumenterprises and in bringing about regionally

balanced economic growth. They aim at wider dispersion of small and

medium units within each state.

They meet term credit needs of such units.

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The activities of SFCs were under theoverall control and supervision of

the IDBI and RBI till about 1990 afterwhich the SIDBI and RBI have beenperforming the overseeing function.

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Share capital, reserves, bond issues,loans from the RBI,IDBI, and state

govt.Refinance from the RBI and IDBI

Fixed deposits from the state

governments, local authorities andthe public

Assistance from IDA and foreigncurrency line of credit from the IDBI

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The annual growth rates of the theirsanctions and disbursements have been

quite high ( 13 to 45 %) in most of theyears, but they have fluctuated ratherwidely over the years.

The SFCs operate as regional

development banks in respectivestates.

They provide financial assistance toindustrial units by way of term loans,guarantees, direct subscription to equity.

Over the year they have diversified theiractivities and increased the scope and

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Development bank plays a very importantrole in economic development of ourcountry. Since independence they havecontributed a lot to the inception ofindustrialization and all other technologicalinnovations. There basic objective is toassist the development in country whichperform by proving every kind of help

possible i.e. financial, advisory,technological etc.

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Thanks to allaudience

Have a nice

Day

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Group1 Development Banks Ppt