Table of Contents Meaning of Development Banks Characteristics of Development Banks Functions of Development Banks Objectives of Development Banks Development banks are specialized industrial financial institutions. Ø These banks are mostly created after the Second World War in developed and underdeveloped countries. Ø Developed banks do not mobilize savings like other banks but invest resources productively. Ø These banks make a significant contribution to industrial development. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get the original essay Meaning of Development Banks Development banks are the institutions engaged in the promotion and development of industrial, agricultural and other key sectors. Ø A development bank is a financial institution that takes on the task of developing industrial enterprises from start to finish. DEFINITION In a general sense, “development banks are financial institutions whose main objective (motivation) is to finance the primary (basic) needs of society. Such financing results in the growth and development of the social and economic sectors of the nation. The needs of society vary from region to region due to differences in its community structure, economy and other aspects. DM Mithani states that “A development bank can be defined as a financial institution responsible for providing all types of financial assistance (medium and long term) to a business unit. » According to the subject of banking (mainly in the Indian context), “development banks are financial institutions established to lend (lend) finance (money) at subsidized interest rates. Such loans are authorized to promote and develop important sectors such as agriculture, industry, import-export. and related activities. "Characteristics of development banks. It is a specialized financial institution that provides medium and long term loan facilities. Ø It is a multi-purpose financial institution as it also undertakes promotional activities. Ø Development bank provides financial assistance to public and private institutions Ø The role of a development bank is that of filling the gaps Ø Development bank accelerates the rate of growth by helping in industrialization in particular and. economic development in general Ø The objectives of development banks are to serve the public interest rather than to make profits Ø Development banks respond to the socio-economic needs of development. versatile with broad development prospects. THE CONCEPT OF DEVELOPMENT BANKIn the field of industrial finance, the concept of development bank is of recent origin. In a country like India, the emergence of development banks is a post-independence phenomenon. In Western countries, however, development banks have undergone a long period of evolution. The origin of development banks can be traced to the creation of the “Societe Generale pour Favoreur l'Industrie Nationale” in Belgium in 1822. But the most notable institution was the “Credit Mobilisator” of France, established in 1852 , who acted as an industrial financier. In 1920, Japan established the Industrial Bank of Japan to meet the financial needs of its industrial development. In the post-war period, the Industrial Development Bank of Canada(1944), the Finance Corporation for Industry Ltd. (FCI) and the Industrial and Commercial Finance Corporation Ltd. (ICFC) of England (1945), etc., were established. as modern development banks to provide term loans to industry. In 1966, the British government established the Industrial Reorganization Corporation (IRC). In India, the first development bank called the Industrial Finance Corporation of India was established in 1948. The development bank is an important institutional mechanism intended to help accelerate the pace of economic development of a country. They have been established in developed and underdeveloped countries of the world. Especially in underdeveloped countries, they have become very popular as an effective instrument for rapid economic development. It is therefore of great interest to study the theory and practice of development banks. Need for development banks Ø Lay the foundations for industrialization. Ø Help small and medium sectors. Ø Need for promotional activities. Meet capital needs. Development Banks in India Development banks in India are classified into the following four groups: 1. Industrial Development Banks: They include Industrial Finance Corporation of India (IFCI), Industrial Development Bank of India (IDBI ) and the development of small industries. Bank of India (SIDBI). 2. Agricultural Development Banks: These include the National Bank for Agriculture and Rural Development (NABARD). 3. Export-Import Development Banks: These include, for example, the Export-Import Bank of India (EXIM Bank). 4. Housing development banks: This includes, for example, the National Housing Bank (NHB). Functions of development banks1. Promote and develop small scale industries in India: Development banks play an important role in promoting and developing the small scale sector. The Government of India has established the Small Industries Development Bank of India (SIDBI) to provide medium and long term loans to Small Industries Units (SSIs). SIDBI provides direct project financing and equipment financing to SSI units. It also refinances banks and financial institutions that provide seed capital, equipment financing, etc. to SSI.2 units. To finance the development of the housing sector in India: Development banks finance the development of the housing sector. The Government of India established the National Housing Bank (NHB) in 1988. The NHB promotes the housing sector in the following ways: a) It promotes and develops housing and financial institutions. b)It refinances banks and financial institutions that provide credit to the housing sector.3. To facilitate the development of large-scale industries in India: Development banks promote and develop large-scale industries. Development financial institutions like IDBI, IFCI, etc. provide medium and long term financing to the corporate sector. They provide merchant banking services, such as preparing project reports, conducting feasibility studies, advising on the location of a project, etc.4. To help in the development of agriculture sector and rural India: Development banks like National Bank for Agriculture and Rural Development help in the development of agriculture. NABARD started in 1982 to refinance banks, which provide credit to the agricultural sector as well as rural development activities. It coordinates the operation of all financial institutions that grant credit to agriculture and rural development. It also offers training to banks.