Development Bank

Contents
• Introduction
• Evolution of development banks.
• Objectives .
• Roles of development banks .
• Function's of development banks .
• Types of development banks in India .
• Agricultural development banks .
• Housing development banks .
• Industrial development banks .
• Export - Import development banks .
• Conclusion: Present stage of development bank in India.
Introduction : What is meant by 
development banks?
• They are specialised financial institutions.
• Lend finance in subsidice interest rate.
• Provide medium and long term finance to
industrial and agricultural sector.
• Provide finance to both public and private
sectors.
 Types of development banks in India

Agricultural Industrial
development banks development banks
Housing development Export-Import
banks development banks
Agricultural development banks
• To provide financial service for the
unreached poor in rural areas through
various Micro Finance Innovations in a
cost effective and sustainable manner .
• Eg : National Bank for Agriculture &
Rural Development (NBARD) :
• Set up year : 1982
• Committee recommend : Mr. B. Sivaraman .
• Owned by : Government of India & RBI .
• Headquarter : Mumbai , Maharashtra .
Housing development banks
• For developing a market - oriented
housing finance system in the
Country .
• Eg : National Housing Bank (NBH) :
• Set up year : 1988 ( under the National
Housing Bank Act, 1987) .
• Owned by : RBI .
• Headquarter : New Delhi .
 Industrial development banks
• To contribute to the process of economic growth ,
employment generation and balanced regional development .
• Eg : (1) Small Industries Development Bank of India ( SIDBI ) .
• It is for the growth of Micro , Smart and Medium
Enterprises ( MSME ) sector .
• Set up year : 1989 .
• Owned by : Government of India ( earlier by IDBI ) .
• Headquarter : Lucknow , Uttar Pradesh .
• (2) The Industrial Credit and Investment Corporation of
India ( ICICI ) :
• First Indian Bank to launch on New York Stock
Exchange .
• India's second largest bank classified as SIB (
Systemically Important Bank ) .
• It is a private bank .
• Set up year in India : 1995 .
 Exp t - Imp t development banks
• Enhance exp ts and catalyst in e promotion of cross b der trade
and investment .
• Promote Sma and Medium Enterprises (SME) finances .
• Eg : Exim Bank :
• Set up year : 1982 (under Exp t - Imp t Bank of India
Act , 1981 .)
• Owned by : Government of India .
• Headquarter : Mumbai , Maharashtra .
 Conclusion : Present stage of development
bank in India
• Refoms of financial sect from 1998 has ought significant changes in
development banks like :
• Deregulation of interest rate .
• Emergence of disintermediation process out of a liberalised capital market .
• Participation of banks in project financing .
• Development bank intum making f ays into w king capital financing .

• Wi ese ref ms e RBI of India prepared a discussion paper in

January 1999 to address various issues concerning e Universaisation of
banks and elimination of e specific functional role of specialised financial
institutions . One of e maj issues addressed in e discussion paper
relates to conversion of development banks ei er into Universal banks
NBFI's .
Universal Banks
• It is a combination of Commercial banking , Investment
banking , Development banking , Insurance and many
other financial activities . It is a place where all
financial products are available under one roof .
• So, a Universal bank is a bank which offers commercial
bank function's plus other functions such as Merchant
Banking, Mutual Funds, Factoring, Credit Cards,
Housing finance, Auto loans, Retail loans, Insurance,etc.
Merits & Demerits of Commercial banks

• Merits:
• Greater economic efficiency in the form of lower coast,
higher output,better product .

• Demerits:
• Changes of gaining monopoly,which could have
undesirable consequences on economic efficiency .
• Conflict of interest.
Non Banking Financial Institutions

• A non-banking financial institution is a financial

institution that does not have a full banking licence or
is not supervised by a national or international
banking regulatory agencies
• Non Banking financial institutions are financial
institutions that provide banking services but do not
hold a banking licence . These institutions are not
allowed to take deposits from the public .
Non Banking Financial Institutions(NBFI)

• An institution which carried on as it's business or part of its business the

following activities:
• Financing .
• Acquisitionof securities .
• Hire purchase .
• Insurance .
• Chit fund .
• Mutual benefit company .
• But does not include institutions which carried on as it's principle business:
• Agricultural operations .
• Industrial activities .
• Scale and purchase of goods .
• Providing of services .
• Purchase, sale and construction of immoveable properties .