Development banks in India are classified into following four groups:

A. Industrial Development Banks : It includes, for example, Industrial Finance Corporation

of India (IFCI), Industrial Development Bank of India (IDBI), and Small
Industries Development Bank of India (SIDBI).
i.

IFCI: The IFCI was the 1st specialised financial institution setup in India to provide term
finance to large industries in India. It was established on 1st July, 1948 under The
Industrial Finance Corporation Act of 1948.
Objectives of IFCI:
The main objective of IFCI is too provide medium and long term financial assistance to
large scale industrial undertakings, particularly when ordinary bank accommodation does
not suit the undertaking or finance cannot be profitably raised by the concerned by the
issue of shares.

Functions of IFCI:
1) For setting up a new industrial undertaking.

2) For expansion and diversification of existing industrial undertaking.

3) For renovation and modernisation of existing concerns.
4) For meeting the working capital requirements of industrial concerns in some
exceptional cases.

ii.

IDBI: Industrial Development Bank of India (IDBI)

The Industrial Development Bank of India (IDBI) was established on 1 July 1964 under
an Act of Parliament as a wholly owned subsidiary of the Reserve Bank of India. The
main objective was to promote and finance the development of industries. In 16 February
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 the country. Although Government
shareholding in the Bank came down below 100% following IDBIs public issue in July
1995, the former continues to be the major shareholder.

iii.

SIDBI: Small Industries Development Bank of India is an independent financial

institution aimed to aid the growth and development of micro, small and medium-scale
enterprises in India. Set up on April 2, 1990 through an act of parliament, it was
incorporated initially as a wholly owned subsidiary of Industrial Development Bank of
India. Current shareholding is widely spread among various state-owned banks, insurance
companies and financial institutions. 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. Mr. Sushil Mahnot is the chairman of SIDBI since April 4, 2012.
B. Agricultural Development Banks: It includes, for example, National Bank for Agriculture
& Rural Development (NABARD).

Role:

National Bank for Agriculture and Rural Development (NABARD) is an apex

development bank in India having headquarters based in Mumbai (Maharashtra) and
other branches are all over the country. It was established on 12 July 1982 by a special act
by the parliament and its main focus was to uplift rural India by increasing the credit flow
for elevation of agriculture & rural non farm sector. NABARD is the apex institution in
the country which looks after the development of the cottage industry, small industry and
village industry, and other rural industries.

Undertakes monitoring and evaluation of projects refinanced by it.

NABARD refinances the financial institutions which finances the rural sector.
It regulates the institution which provides financial help to the rural economy.
It provides training facilities to the institutions working in the field of rural upliftment.
It regulates the cooperative banks and the RRBs.

C. Export-Import Development Banks: It includes, for example, Export-Import Bank of

India (EXIM Bank).

The Export-Import Bank of India (Exim Bank) is a public sector financial institution
created by an Act of Parliament, the Export-import Bank of India Act, 1981. The business
of Exim Bank is to finance Indian exports that lead to continuity of foreign exchange for
India. The Exim Bank extends term loans for foreign trade.

D. Housing Development Banks: It includes, for example, National Housing Bank (NHB).

National Housing Bank: The National Housing Bank (NHB) is a state owned bank and
regulation authority in India, created on July 8, 1988 under section 6 of the National
Housing Bank Act (1987). The headquarters is in New Delhi. The institution, owned by
the Reserve Bank of India, was established to promote private real estate acquisition. The
NHB is regulating and re-financing social housing programs and other activities like
research etc. Its vision is promoting inclusive expansion with stability in housing finance
market.