Page 27 - Banking Finance July 2022

ARTICLE

Small Scale Industries (SSI): Agriculture and Rural Development:
Development banks play an important role in the promotion Development banks like the National Bank for Agriculture
and development of the small scale sector. The Government &Rural Development (NABARD) help in the development of
of India (GOI) started the Small Industries Development agriculture. NABARD started in 1982 to provide refinance
Bank of India (SIDBI) to provide medium and long-term loans to banks, which provides credit to the agriculture sector and
to Small Scale Industries (SSI) units. SIDBI provides direct also for rural development activities. It coordinates the
project finance and equipment finance to SSI units. It also working of all financial institutions that provide credit to
refinances banks and financial institutions that provide seed agriculture and rural development. It also provides training
capital, equipment finance, etc., to SSI units. to agricultural banks and helps to conduct agricultural
research.
Large Scale Industries (LSI):
Enhance Foreign Trade:
The development bank promotes and develops large-scale
industries (LSI). Development financial institutions like IDBI, Development banks help to promote foreign trade. The
IFCI, etc., provide medium and long term finance to the government of India started the Export-Import Bank of India
corporate sector. They provide merchant banking services, (EXIM Bank) in 1982 to provide medium and long-term loans
such as preparing project reports, doing feasibility studies, to exporters and importers from India. It provides Overseas
advising on the location of a project and so on. It promotes Buyers Credit to buy Indian capital goods. Also, encourages
and develops housing and financial institutions. It refinances abroad banks to provide finance to the buyers in their
banks and financial institutions that provide credit to the country to buy capital goods from India. Development banks
housing sector. help to promote foreign trade by providing medium and
long-term loans to exporters and importers from India.
Review of Sick Units: Development banks would encourage exports which are
must to achieve the target.
Development banks help to revive sick-units. The government
of India (GOI) started the Industrial Investment Bank of India
(IIBI) to help sick units. IIBI is the main credit and Regional Development:

reconstruction institution for a revival of sick units. It The development bank facilitates rural and regional
facilitates modernization, restructuring, and diversification development. They provide finance for starting companies
of sick-units by providing credit and other services. in backward areas. Also, they help companies in project
management in such less-developed areas.
Entrepreneurship Development:
Many development banks facilitate entrepreneurship Contribution to Capital Markets:
development. NABARD, State Industrial Development Banks, The development bank contributes to the growth of capital
and State Finance Corporations provide training to markets. They invest in equity shares and debentures of
entrepreneurs in developing leadership and business
management skills. They conduct seminars and workshops
for the benefit of entrepreneurs.

Development of Housing Sector:
Development banks provide finance for the development of
the housing sector. GOI started the National Housing Bank
(NHB) in 1988. NHB promotes the housing sector in the
following ways:
It promotes and develops housing and financial
institutions.
It refinances banks and financial institutions that provide
credit to the housing sector.

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