Industrial Development Bank of India (IDBI)

At the beginning of post-independence, the role of commercial banking in India was limited to working capital financing on a short-term basis, so the thrust of DFIs was on long-term finance to the industry and infrastructure sector in India. The role of DFIs was to recognize the gaps in institutions and markets in our financial sector and act as a gap-filler which was made due to the incapability of commercial banks to finance big infrastructure projects for the long-term and support them to attain growth and financial steadiness. Therefore, Govt. of   India set up specialized DFIs in India to fulfill long-term project financing requirements of industry and agriculture. The financial institutions in India were set up under the full control of both Central and State Governments. The Government used these institutions for the achievements in planning and development of the nation as a whole.

Industrial Development Bank of India (IDBI) was constituted under the Industrial Development Bank of India Act, 1964 as a Development Financial Institution (DFI) and came into being on July 01, 1964, vide GoI notification dated June 22, 1964. It is the principal financial institution that provides credit and other facilities for developing industries and assisting development institutions.  In June 1958, the Refinance Corporation for Industry was established, which was later taken over by the Industrial Development Bank of India (IDBI).  Until 1976, IDBI was a subsidiary bank of RBI. Later it was made into an autonomous institution and its ownership passed from RBI to the Government of India.

IDBI as a development institution started offering assistance to SSIs through its scheme of refinance and, to a limited extent, through its bills rediscounting scheme. Given it is not feasible for the IDBI to reach a large number of small­scale industries scattered all over the country, the flow of its assistance to this vast number has been indirect in the form of refinancing of loans granted by the banks and the State Financial Corporations (SFCs).

The IDBI has shown particular interest in the development of small-scale industries. It set up the Small  Industries   Development   Fund   (SIDF)   in   May   1986   to facilitate the development and extension of small-scale industries. In 1988, the IDBI also launched the National Equity Fund Scheme (NEFS) to provide support in equity to tiny and small ­scale   industries engaged in manufacturing,   with a cost not exceeding   Rs   5   lakh.   The scheme is administered by the IDBI through nationalized banks. The IDBI has also introduced the ‘single window assistance scheme’ for the grant of term­loans and working capital assistance to new tiny and small-scale enterprises. Last, the IDBI has also set up a Voluntary Executive Corporation Cell (VECC) to utilize the services of experienced professionals for counseling small units, tiny and cottage units and for providing consultancy support in specific areas. IDBI   being a financial institution is involved in funding viable projects in different sectors.   It has exposure to the textile sector, which is the largest after the steel sector.

IDBI has been providing the following assistance for the development of industries.

1.  Direct assistance to industrial concerns in the form of underwriting of shares debentures.

2. Soft loans for modernization, renovation, and replacement of existing industry.

3. Rediscount bills arising out of the sale of indigenous machinery on payment.

4.  Financing export­oriented industries.

On October 1, 2004, the IDBI was transformed into a banking company viz. IDBI Bank Ltd to reflect its widened business functions. After this merger the is bank actively involved in project financing like a Development Financial institution (DFI) along with commercial bank products like SB accounts, Current accounts, term deposits, credit cards, personal and business banking products and services, etc. Desirous of fuelling its business growth, IDBI Ltd. merged its subsidiaries – the erstwhile IDBI Home Finance Ltd., IDBI Gilts, and erstwhile United Western Bank Ltd., with itself over some time.

As a universal bank, IDBI Bank Ltd offers a wide array of banking products and services. Besides, the Bank has an established presence in associated financial sector businesses including capital market, investment banking, and mutual fund business. The Bank’s very business philosophy is characterised by the commitment to provide relevant financial solutions and ensure maximum customer convenience through easy access to branches and ATMs as well as digital offerings and excellence in customer service.

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