Page 25 - Banking Finance July 2022

COVER STORY

DEVELOPMENT

BANKS: AN

OVERVIEW

evelopment banks are the financial institutions activities, economic development in general, and industrial
D that provide long-term credit for capital- development, in particular. In short, a development bank is
a development-oriented bank.
intensive investments spread over a long period
and yielding low rates of return, such as
infrastructure projects, mining, heavy industry and irrigation In our country development banks were started with the
systems. Development Banks are the financial institutions objective of increasing the pace of industrialization. To help
that provide funds and financial assistance to new and all round industrialization development banks were made
upcoming business enterprises. Development banks like IDBI, multipurpose institutions. Besides financing, they were
SIDBI, and IFCI etc. were setup to meet long term capital assigned promotional work also. The traditional financial
requirements of the industry. They help in accelerating institutions could not take up this challenge because of their
industrial and economic growth. limitations.

These are the financial institutions concerned with providing An outstanding financial development of the post-
all types of financial assistance (medium as well as long- independence period has been the rapid growth of
term) to business units, in the form of loans, underwriting, development banks in the country. These banks are
investment and guarantee operations, and promotional specialized financial institutions which perform the twin
functions of providing medium and long-term finance to
About the author private entrepreneurs and of performing various

promotional roles conducive to economic development. As
Dhaneshwar P Pawar
the name clearly suggests, they are development-oriented
Senior Manager (Faculty)
STC Hyderabad banks. As banks, they provide finance. But they are unlike
Union Bank of India ordinary commercial banks.

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