Index 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 were mostly established after World War II in both developed and underdeveloped countries. Ø Developed banks do not mobilize savings like other banks but invest resources productively. Ø These banks make significant contribution to industrial development. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get 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 undertakes the task of developing industrial enterprises from its inception to completion. DEFINITION In a general sense, “development banks are those financial institutions whose primary objective (reason) is to finance the primary (basic) needs of the society. Such financing results in the growth and development of the social and economic sectors of the nation. However, the needs of the society vary from region to region due to differences found in its municipal structure, economy and other aspects.” DM Mithani states that: “A development bank can be defined as a financial institution that deals to provide all types of financial assistance (medium and long term) to business units". Regarding the topic of banking (mainly in the Indian context), "development banks are financial institutions established to lend (lending) finance ( money) at subsidized interest rates. Such loans are authorized to promote and develop important sectors such as agriculture, industry, import-export and allied activities." Characteristics of Development Banks It is a specialized financial institution that provides medium and long term lending services. Ø It is a multipurpose financial institution as it also undertakes promotional activities. Ø The development bank provides financial assistance to both public and private institutions. Ø The role of a development bank is to fill the gaps accelerates the growth rate by helping industrialization in specific and economic development in general. Ø The objective of development banks is to serve the public interest rather than earn profits. Ø Development banks react to the socio-economic needs of development development bank is essentially a multipurpose financial institution with broad development prospects THE CONCEPT OF DEVELOPMENT BANK In the field of industrial finance, the concept of development bank is of recent origin. In a country like India, the emergence of development banking is a post-independence phenomenon. In Western countries, however, the development banking system has had a long period of evolution. The origin of development banking can be traced back to the founding of the "Society General Pour Favoriser I'lndustrie Nationale" in Belgium in 1822. But the notable institution was the French "Credit Mobiliser", founded in 1852, which 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 founded. as modern development banks to provide term loansto industry. In 1966, the British government established the Industrial Reorganization Corporation (IRC). In India, the first development bank called 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 both developed and underdeveloped countries of the world. Especially in underdeveloped countries they have become very popular as an effective tool for rapid economic development. It is therefore of great interest to study the theory and practice of development banking. Need for Development Banks Ø Lay the foundation 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: Includes Industrial Finance Corporation of India (IFCI), Industrial Development Bank of India (IDBI) and Small Industries Development Bank of India (SIDBI). 2. Agricultural Development Banks: includes, for example, the National Bank for Agriculture and Rural Development (NABARD). 3. Import-Export Development Banks: includes, for example, the Export-Import Bank of India (EXIM Bank). 4. Housing Development Banks: 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 started the Indian Small Industries Development Bank (SIDBI) to provide medium and long term loans to small scale industries (SSI) units. SIDBI provides direct funding for projects and equipment to SSI units. It also refinance banks and financial institutions that provide start-up capital, equipment financing, etc. to the SSI.2 units. To finance real estate development in India: Development banks provide financing for real estate development. The GOI established the National Housing Bank (NHB) in 1988. The NHB promotes the real estate sector in the following ways: a) Promotes and develops real estate and financial institutions. b)Refinance banks and financial institutions that provide credit to the real estate sector.3. To facilitate the development of large scale industries in India: Development banks promote and develop large scale industries. Development finance institutions such as IDBI, IFCI, etc., provide medium and long-term financing to the corporate sector. They provide business banking services, such as preparing project reports, carrying out feasibility studies, advising on project location, etc.4. To help 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 provide refinancing to banks, which provide credit to the agricultural sector and also for rural development activities. Coordinates the operation of all financial institutions that provide credit to agriculture and rural development. It also provides training to agricultural banks and helps conduct agricultural research.5. To improve India's foreign trade: Development banks help in promoting foreign trade. The Indian government established the Export-Import Bank of India (EXIM Bank) in 1982 to provide medium and long-term loans to exporters and importers from India. It provides credit to foreign buyers to purchase Indian capital goods. It also encourages foreign banks to provide.