Industrial Development Bank of India

Industrial development is a term that refers to the development of any specific Industry of a place or overall industrial development of a country. The banking industry is an inevitable part of any country’s industry that takes a deposit from the investors in terms of low-interest return and loans it to others with high-interest rates. They provide financial assistance through services like fixed loans, gold loans, etc.

Due to technological advancements and deregulation, the banking industry witnessed a huge revolution and has become the global industry’s powerhouse. 

Industrial developments in India

The Industrial revolution of India is a pre-independence concept. Therefore, the study of industrial development can be divided into two parts for better understanding. 

• Pre Independence – The concept of developing an independent financial institution and market was a major part of the post-independence era in India. The Swadeshi and Boycott movement across the country resulted in many small independent financial support pockets or Swadeshi Tahabils, precursors of the banking system in post-independent India.
• Post Independence – Under the act of the Industrial Financial Corporation in 1948, the industrial development bank of India was established. In the post Independence era, RBI concentrated on initializing and regulating the economic system to mobilize savings and build new institutions. Different financial institutions like IDBI, NABARD, SIDBI etc., were established. 

Evolution of IDBI or Industrial development Bank of India

IDBI, or Industrial development bank of India, was established as the sole subsidiary of RBI according to an act of Parliament on July 1, 1964. Later, on February 16, 1976, the Government of India took over the ownership of IDBI, and from then on, its main aim was to provide financial help to industrial entrepreneurs for the development of the industrial scenario of the whole country. 

IDBI  provides help for both industrial and personal development/ growth in India. IDBI offers financial support in the form of both Indian and foreign currencies for Green-field projects focusing on wider reach and modernisation. 

Main objectives of IDBI 

• The main objective of IDBI was to ensure the financial growth of Indian industries by providing financial support and assistance in different ways.

• Making the greater scope of financial assistance of other financial institutions by collecting their resources. 

• Helping in the diversification of industries.

• Supporting the industrial growth that includes the aspects of the Nation’s growth.

• Regulating, Coordinating and assisting the other financial institutions of India like LIC, ICICI, IFCI etc. 

Primary Functions of IDBI

• IDBI engages in promotions of various entrepreneurial activities ranging from small to large scale industries.

• IDBI coordinates with various financial institutions that are primarily focused on promoting and developing different types of industrial sectors.

• Industrial developments Bank of India IDBI works as a catalyst in developing Indian industries. 

• IDBI focuses on the commercialisation of technology and other welfare schemes for the country’s economic development.

Role of Industrial Development Bank of India in Industrial development

Since the ownership transfer of IDBI from RBI to Govt, of India, it has served as a pioneer of Industrial growth in India by providing financial support in various forms. And in 1995, the amendment of IDBI initialized the public right for equal share on the IDBI share, resulting in the reduction of government share to 72.14%. And this offers IDBI more flexibility in working. 

• Small to large scale industries – The primary aim of IDBI was to expand, modernize, and diversify the existing Indian industries and encourage and promote new small to large scale ventures by providing financial support in establishing new projects.

• Project Finance –  From the very beginning, IDBI also helps establish new projects by providing financial help in terms of monetary loans, fixed loans in different currencies, gold loans etc. They also offer loans at fixed and variable interest rates for various industries.
• Non-project Finance – IDBI also offers non-project financial support for reputed and trustworthy business firms. The non-project Finance aid includes providing financial support for capital expansion, installing new equipment, etc. 
• Products – The Industrial Development Bank of India provides numerous financial products not only for industrial sectors but also offers different financial products for the country’s sustainable economic development. One such product is the senior citizen Account scheme. It is an investment plan for the country’s senior citizens the age of 60yrs Or above. IDBI also provides gold loans for business development with low-interest rates.
• Forex service – Forex service refers to the foreign exchange service provided by IDBI for the Industrial development of the entire country. The Forex service includes placing deposits outside the country and spot and forward purchases of currencies for debit and credit. 
• Merchant banking – Through this service, IDBI aims to radically restructure and develop business industries through loans, capital financing, corporate advice, etc. 

Conclusion

The Industrial Development Bank of India IDBI was established to achieve industrial growth in India. It catalyzes the development of Indian industries by providing various financial support in monetary loans, gold loans, loans with fixed or variable interests, professional advice etc. 

IDBI not only supports India’s industrial growth but also plays an important role in the sustainable development of the country.