NAME : ARUNIMA SINGH

ROLL NO : 6

DEVELOPMENT FINANCIAL INSTITUTION OF INDIA

1. IIBI- Industrial Investment Bank of India

2. SIDBI- Small industrial Development Bank of India
3. NHB- National Housing Bank
4. EXIM - Export–Import Bank of India
5. IFCI - Industrial Finance Corporation of India
6. NABARD- National Bank For Agriculture & Rural Development
7. IDFC- Infrastructure Development Finance Company
8. IDBI- Industrial Development Bank of India

OBJECTIVE AND FUNCTIONS OF DEVELOPMENTAL FINANCIAL

INSTITUTION OF INDIA

1. Industrial Investment Bank of India

The Industrial Investment Bank of India (IIBI) was a government of India-owned financial
investment institution that operated from its inception in 1971 until it was closed down by the
Indian government in 2012. It was a type of development bank with the aim of rehabilitating
sick industrial companies in India. IIBI offered a wide range of products and services,
including term loan assistance for project finance, short duration non-project asset-backed
financing, working capital/other short-term
It was established in 1971 by resolution of the Parliament of India u/s 617 of the Companies
Act. The bank was headquartered at Kolkata and had presence in New
Delhi, Mumbai, Chennai, Bengaluru, Ahmedabad and Guwahati.
The Industrial Reconstruction Corporation of India Ltd., set up in 1971 for rehabilitation of
sick industrial companies, was reconstituted as Industrial Reconstruction Bank of India in
1985 under the IRBI Act, 1984.
In 2005, a merger was considered of IIBI with the Industrial Development Bank of
India and Industrial Finance Corporation of India, but IIBI refused.[3] After the merger was
refused by IIBI, the Indian government decided in 2006-2007 to close down the bank instead.
As of 2011, the bank operated from its sole remaining office in Kolkata. Deloitte and
Touche was appointed to dispose of IIBI's Non-Performing assets.[4] The bank's closure was
announced in the Budget 2012.

OBJECTIVES OF IIBI

• To promote industrial growth,

• To develop backward areas,
• To create more employment opportunities,
• To generate more exports and encourage import substitution,
• To encourage modernization and improvement in technology,
• To promote more self-employment projects,
• To revive sick units,
• To improve the management of large industries by providing training,
• To remove regional disparities or regional imbalance,
• To promote science and technology in new areas by providing risk capital,
• To improve capital market in the country.

FUNCTIONS OF IIBI

• Term-loan assistance for project finance.

• Short duration non-project asset – backed financing working capital/ other short term
loans to companies.
• Equity Subscription Asset Credit.
• Equipment finance.
• Investments in Capital Market and Money market instruments.
• To grant loans and advances to industrial concerns,
• To underwrite stocks, shares, bonds and debentures,
• To guarantee loans/deferred payments and performance obligations of any contracts
undertaken by industrial concerns, and
• To act as an agent of Central and State Governments, Reserve Bank, State Bank,
Scheduled Commercial and State Cooperative banks, public financial institutions,
SFCs, etc.
 2. Small industrial Development Bank of India
The SIDBI was established as a wholly owned subsidiary of Industrial Development Bank of
India (IDBI) under a special Act of the Parliament 1988 and started its operations on April 2,
1990. It took over the responsibility of administering Small Industries Development Fund and
National Equity Fund which were earlier administered by IDBI. It is the Principal Financial
Institution for the Promotion, Financing and Development of the Micro, Small and Medium
Enterprise (MSME) sector and for Co-ordination of the functions of the institutions engaged
in similar activities. It is managed by a team of 10 Board of Directors. The authorised capital
of the Bank is Rs. 1000 crore and the Paid up capital is Rs. 450 crore.

FUNCTIONS OF SIDBI
• SIDBI refinances loans extended by the primary lending institutions to small scale
industrial units, and also provides resources support to them.
• SIDBI discounts and rediscounts bills arising from sale of machinery to or manufactured
by industrial units in the small scale sector.
• To expand the channels for marketing the products of Small Scale Industries (SSI) sector
in domestic and international markets.
• It provides services like leasing, factoring etc. to industrial concerns in the small scale
sector.
• To promote employment oriented industries especially in semi-urban areas to create more
employment opportunities and thereby checking migration of people to urban areas.
• To initiate steps for technological up-gradation and modernisation of existing units.
• SIDBI facilitates timely flow of credit for both term loans and working capital to SSI in
collaboration with commercial banks.
• SIDBI Co-Promotes state level venture funds in association with respective state
government.
• It grants direct assistance and refinance loans extended by primary lending institutions for
financing exports of products manufactured by small scale units.

3. National Housing Bank

National Housing Bank (NHB), a wholly owned subsidiary of Reserve Bank of India (RBI),
was set up by an Act of Parliament (National Housing Bank Act) in 1987. NHB is an apex
financial institution for housing. It commenced its operations on 9th July 1988. NHB has
been established with an objective to operate as a principal agency to promote housing
finance institutions both at local and regional levels and to provide financial and other
support incidental to such institutions. The general superintendence, direction and
management of the affairs and business of NHB vest, under the Act, in a Board of Directors.

OBJECTIVES OF NHB
• To integrate housing finance system with the overall financial system of the country.
• To provide affordable housing credit.
• To promote a sound, healthy, viable and cost effective housing finance system to cater to
all segments of the population.
• To regulate and supervise the activities of the housing finance companies.
• To promote dedicated housing finance institutions to adequately serve the needs of
various regions and different income groups.

FUNCTIONS OF NHB
• Regulation and Supervision: NHB exercises regulatory and supervisory authority over the
Housing Finance Companies (HFCs). These Companies are required to obtain Certificate
of Registration (CoR) from NHB for commencing/carrying on the business of a housing
finance institution under Section 29 A of the NHB Act; and are required to comply with
Directions, Guidelines and other directives issued by NHB. For this, National Housing
Bank has been empowered to determine the policy and give directions to the housing
finance institutions and their auditors. National Housing Bank supervises the sector
through a system of on-site and off-site surveillance.
• Promotion and Development: The policies of NHB are directed towards promotion and
development of housing finance institutions and the sector in general.
• Financing: Provides housing refinance to a large set of retail institutions like scheduled
commercial banks, scheduled state cooperative banks, scheduled urban cooperative
banks, specialized housing finance institutions, development banks. In addition, the
Bank has also extended financial support to the housing schemes formulated by Public
Housing Agencies.

4. Export–Import Bank of India

Export-Import Bank of India is the premier export finance institution of the country. It is an
apex institution for coordinating the working of institutions in India engaged in financing
exports and import of goods and services. Exim Bank was established on Jan 01, 1982 (and
started functioning wef March 01, 1982) under Export Import Bank of India Act 1981. It has
its headquarters in Mumbai.
One of the major functions of EXIM bank is to facilitates financing, facilitating and
promoting foreign trade of India. It is wholly owned by the Government of India. It can raise
funds from loans/grants from government, RBI, bonds issued in india and credit from
institutions abroad.EXIM Bank extends Lines of Credit (LOCs) to overseas financial
institutions, regional development banks, sovereign governments and other entities overseas,
to enable buyers in those countries to import developmental and infrastructure projects,
equipment, goods and services from India, on deferred credit terms.
FUNCTIONS OF EXIM BANK
• Financing of exports and imports of goods and services.
• Financing of exports and imports of machinery and equipment on lease basis.
• Financing of joint ventures in foreign countries.
• Providing loans to Indian parties to enable them to contribute to the share capital of joint
ventures in foreign countries
• To undertake limited merchant banking functions such as underwriting of stocks, shares,
bonds or debentures of Indian companies engaged in export or import
• To provide technical, administrative and financial assistance for promotion, management
and expansion of exports.
• Guaranteeing the obligations.
ROLE OF EXIM BANK
EXIM banks provide finance to Indian companies, foreign companies and commercial banks
in the form of Pre-shipment credit, term loans for export production, finance for export
marketing, overseas investment finance, line of credit, export bill rediscounting, and overseas
buyer’s credit.

5. Industrial Finance Corporation of India

Initially established in 1948, the Industrial Finance Corporation of India was converted into a
public company on 1 July 1993 and is now known as Industrial Finance Corporation of India
Ltd. The main aim of setting up this development bank was to provide assistance to the
industrial sector to meet their medium and long-term financial needs. The IDBI, scheduled
banks, insurance sector, co-op banks are some of the major stakeholders of the IFCI. The
authorized capital of the IFCI is 250 crores and the Central Government can increase this as and
when they wish to do so.
 FUNCTIONS OF IFCI

• First, the main function of the IFCI is to provide medium and long-term loans and advances
to industrial and manufacturing concerns. It looks into a few factors before granting any
loans. They study the importance of the industry in our national economy, the overall cost of
the project, and finally the quality of the product and the management of the company. If the
above factors have satisfactory results the IFCI will grant the loan.

• The Industrial Finance Corporation of India can also subscribe to the debentures that these
companies issue in the market.

• The IFCI also provides guarantees to the loans taken by such industrial companies.

• When a company is issuing shares or debentures the Industrial Finance Corporation of India
can choose to underwrite such securities.

• It also guarantees deferred payments in case of loans taken from foreign banks in foreign
currency.

• There is a special department the Merchant Banking & Allied Services Department. They
look after matters such as capital restructuring, mergers, amalgamations, loan syndication,
etc.

• It the process of promoting industrialization the Industrial Finance Corporation of India has
also promoted three subsidiaries of its own, namely the IFCI Financial Services Ltd, IFCI
Insurance Services Ltd and I-Fin. It looks after the functioning and regulation of these three
companies.

6 .National Bank For Agriculture & Rural Development

NABARD is an apex Development Bank authorised for providing and regulating credit
and other facilities for the promotion and development of agriculture, small-scale
industries, cottage and village industries, handicrafts and other rural crafts and other allied
economic activities in rural areas with a view to promote integrated rural development and
prosperity and for matters connected therewith.
Reserve Bank of India (RBI), constituted a committee (Shivaraman committee) to review the
arrangements for institutional credit for agriculture and rural development (CRAFICARD) on 30
March 1979, under the Chairmanship of Shri B.Sivaraman, former member of Planning
Commission, Government of India to review the arrangements for institutional credit for
agriculture and rural development. NABARD was established with an initial capital of 100 cr.,
on 12 July 1982 by a special act of parliament 1981, by transferring the agricultural credit
functions of RBI and refinance functions of the then Agricultural Refinance and Development
Corporation (ARDC).

OBJECTIVES OF NABARD
More than 50% of the rural credit is disbursed by the Co-operative Banks and Regional Rural
Banks. NABARD is responsible for regulating and supervising the functions of Co-operative
banks and RRBs. NABARD works towards providing a strong and efficient rural credit delivery
system, capable of taking care of the expanding and diverse credit needs of agriculture and rural
development.

FUNCTIONS OF NABARD
Credit Functions:

• Framing policy and guidelines for rural financial institutions.

• Providing credit facilities to issuing organizations
• Monitoring the flow of ground level rural credit.
• Preparation of credit plans annually for all districts for identification of credit potential.

Development Functions:

• Help cooperative banks and Regional Rural Banks to prepare development actions plans
for themselves.
• Help Regional Rural Banks and the sponsor banks to enter into MoUs with state
governments and cooperative banks to improve the affairs of the Regional Rural Banks.
• Monitor implementation of development action plans of banks.
• Provide financial support for the training institutes of cooperative banks, commercial banks
and Regional Rural Banks.
• Provide financial assistance to cooperative banks for building improved management
information system, computerisation of operations and development of human resources.

Supervisory Functions:

• Undertakes inspection of Regional Rural Banks (RRBs) and Cooperative Banks (other than
urban/primary cooperative banks) under the provisions of Banking Regulation Act, 1949.
• Undertakes inspection of State Cooperative Agriculture and Rural Development Banks
(SCARDBs) and apex non- credit cooperative societies on a voluntary basis.
• Provides recommendations to Reserve Bank of India on issue of licenses to Cooperative
Banks, opening of new branches by State Cooperative Banks and Regional Rural Banks
(RRBs).
• Undertakes portfolio inspections besides off-site surveillance of Cooperative Banks and
Regional Rural Banks (RRBs).

7. Infrastructure Development Finance Company

IDFC First Bank (formerly IDFC Bank[4]) is an Indian banking company with
headquarters in Mumbai that forms part of IDFC, an integrated infrastructure finance
company. The bank started operations on 1 October 2015.[5] IDFC received a universal
banking licence from the Reserve Bank of India (RBI) in July 2015.[6] On 6 November
2015, IDFC Bank was listed on BSE and NSE. IDFC was incorporated on 30 January,
1997 with its registered office in Chennai[8] and started operations on June 9, 1997. In
1998 the company registered with the Reserve Bank of India (RBI) as a non-banking
financial company and in 1999 it formally became a Public Financial Institution.

To conform with RBI guidelines, IDFC founded a non-operative financial holding

company IDFC Financial Holding Company Limited in 2014 to manage its five
subsidiaries IDFC Bank, IDFC MF, IDFC Alternatives, IDFC IDF & IDFC Securities.
IDFC is the holding company for NOFHC IDFC Projects Ltd and IDFC Foundation.

IDFC Bank started operations in 19 October 2015.[9][10] with 23 branches in Madhya

Pradesh, Delhi, Mumbai, Hyderabad, Bengaluru, Pune, Chennai, Ahmedabad and
Kolkata. 15 branches are in settlements with a population of less than 10,000. IDFC
bank has launched its 100th branch in Honnali, Karnataka in October 2017 [11]

In December 2018, IDFC merged with Capital First Ltd., an NBFC, and renamed itself
as IDFC FIRST Bank. Capital First shareholders to get 139 IDFC Bank shares for every
10 shares held.

FEATURES OF IDFC

• The bank plans to grow the business of Bharat Banking, a rural unit to Rs. 15,000
crore in five years.
• The personal and business banking which focuses on retail, small and medium
enterprises (SMEs) and self-employed professionals will begin its operations from
January 2016.
• The bank’s aim is to increase the customer base from current 400 corporate customers
to 15 million in next five years.
• The bank also aims to get 10-15% net profit growth and will be relying on technology
for customer acquisition instead of opening branches in India.

Demerger
 IDFC Ltd. demerged its bank venture, IDFC Bank, on 1 October 2015. However, the
record date for the demerger was fixed for 5 October 2015. The company issued one
share each in the bank for one equivalent share held by its shareholders. After the
demerger, IDFC now holds 53% stake in the banking venture through IDFC Financial
Holding Co. Ltd., a fully-owned subsidiary holding company. The remainder stake is
with the investors of IDFC.

IDFC Delhi Launch

Prime Minister Narendra Modi and Finance Minister Arun Jaitley launched IDFC Bank
on 19 October 2015 in Delhi. During the inauguration, the PM said that the main
objective of the bank is to venture out to the villages. He added that the villages in India
are the great centres for growth. He also said that the banking sector is seeing changes
these days as mobile banking is being used for most of the transactions. He also said
he has decided to bring improvement in appointment of top officials in banks as this
improves efficiency.

8. Industrial Development Bank of India

IDBI Bank is an Indian government-owned financial service company, formerly known

as Industrial Development Bank of India, headquartered in Mumbai, India. It was established in
1964 by an Act of Parliament to provide credit and other financial facilities for the development
of the fledgling Indian industry. IDBI Bank is on a par with nationalized banks and the SBI Group
as far as government ownership is concerned. It is one among the 27 commercial banks owned by
the Government of India. IDBI bank is considered as government of India owned bank. It is
currently 10th largest development bank in the world in terms of reach. It has an authorised capital
of 3000 cr.
Industrial Development bank of India (IDBI) was constituted under Industrial Development bank
of India Act, 1964 as a Development Financial Institution (DFI) and came into being as on July
01, 1964 as a wholly owned subsidiary of RBI. In 1976, the ownership of IDBI was transferred to
the Government of India and it was made the principal financial institution for coordinating the
activities of institutions engaged in financing, promoting and developing industry in India. It was
regarded as a Public Financial Institution in terms of the provisions of Section 4A of the Companies
Act, 1956. It continued to serve as a DFI for 40 years till the year 2004 when it was transformed
into a Bank.
ROLES OF IDBI
As an apex development bank, the IDBI’s major role is to co-ordinate the activities of other
development banks and term-financing institutions in the capital market of the country.

• Providing technical and administrative assistance for promotion, management and

expansion of industry thus performing promotional and development functions.
• Direct Assistance: The IDBI grants loans and advances to industrial concerns. The bank
guarantees loans raised by industrial concerns in the open market from the State Co-
operative Banks, the Scheduled Banks, the Industrial Finance Corporation of India (IFCI)
and other ‘notified’ financial institutions.
• Indirect Assistance: Providing refinancing facilities to the IFCI, SFCs and other
financial institutions approved by the government. IDBI subscribes to the shares and
bonds of the financial institutions and thereby provide supplementary resources.
• Coordinating the activities of financial institutions for the promotion and development of
industries.
• IDBI is the leader, coordinator and innovator in the field of industrial financing in our
country. Its major activity is confined to financing, developmental, co-ordination and
promotional functions.
• Planning, promoting and developing industries with a view to fill the gaps in the
industrial structure by conceiving, preparing and floating new projects.

FUNCTIONS OF IDBI

• That the IDBI has shown its particular interest in the development of small-scale
industries is demonstrated by the setting up of the Small Industries Development Fund
(SIDF) in May 1986, the National Equity Fund Scheme (NEFS) in 1988, and the
Voluntary Executive Corporation Cell (VECC) for providing support in the nature of
equity to tiny and small-scale industries engaged in manufacturing, cost not exceeding
Rs. 5 lakhs. The scheme is administrated by the IDBI through nationalised banks.
• The IDBI has also introduced the single window assistance scheme for grant of term-
loans and working capital assistance to new, tiny and small-scale enterprises. As per data
available, IDBI has extended about one-third of total industrial assistance to small-sector
alone.
• The scope of business of the IDBI has also been extended to cover consulting, merchant
banking and trusteeship activities.