CHANAKYA NATIONAL LAW UNIVERSITY

The Final draft for the fulfilment of project of “Banking Laws”

On

“INDUSTRIAL DEVELOPMENT BANK OF INDIA”

Submitted to:- Dr. Prof. Ajay Kumar

Faculty of Banking Laws

Submitted by: - Vicky Kumar

Roll no.1574

4th Year B.A.L.L.B (Hons)

 CONTENTS

ACKNOWLEDGEMENT.........................................................................................................2

DECLARATION.......................................................................................................................3

RESEARCH METHODOLOGY...............................................................................................4

AIMS AND OBJECTIVES........................................................................................................4

SCOPE AND LIMITATION.....................................................................................................4

INTRODUCTION......................................................................................................................5

HISTORY..................................................................................................................................6

SERVICES AND FUNCTIONS................................................................................................8

ROLE IN DEVELOPMENT....................................................................................................16

CONCLUSION........................................................................................................................19

BIBLIOGRAPHY....................................................................................................................20

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 ACKNOWLEDGEMENT

Writing a project is one of the most difficult academic challenges I have ever faced. Though
this project has been presented by me but there are many people who remained in veil, who
gave their support and helped me to complete this project.

First of all I am very grateful to my subject teacher without the kind support of whom and
help the completion of the project would have been a herculean task for me. He took out time
from his busy schedule to help me to complete this project and suggested me from where and
how to collect data.

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 DECLARATION

I hereby declare that the work reported in the B.B.A.LL.B (Hons.) Project Report entitled
“INDUSTRIAL DEVELOPMENT BANK OF INDIA” submitted at Chanakya National
Law University, Patna is an authentic record of my work carried out under the supervision
of Mr. Ajay kumar. I have not submitted this work elsewhere for any other degree or
diploma. I am fully responsible for the contents of my Project Report.

Vicky kumar

4th year

B.A.LL.B

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 RESEARCH METHODOLOGY

The researcher will emphasize and use the doctrinal method for this project topic.

The researcher will be collecting valuable data from library which includes the written works
and from the field. All these data will help the researcher to solve his research problem. All
the books, journals, articles published in newspapers, bodies, reports. The researcher will
make use of doctrinal. The doctrinal process includes the use of literary source.

AIMS AND OBJECTIVES

 To understand the regulatory regime of IDBI.

 To understand the role of IDBI in industrial development and foreign exchange

SCOPE AND LIMITATION

This project is limited in its scope due to paucity of time, multiplicity of areas to be covered
due to inherent vastness of the subject matter and limited financial resources. However, the
reasearcher has aimed to keep a fairly broad scope in order to gain a complete picture of the
topic.

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 INTRODUCTION

The Industrial Development Bank of India Limited, now more popularly known as IDBI
Bank, was established as a wholly-owned subsidiary of Reserve Bank of India. The
foundation of the bank was laid down under an Act of Parliament, in July 1964. The main
aim behind the setting up of IDBI was to provide credit and other facilities for the Indian
industry, which was still in the initial stages of growth and development. In February 1976,
the ownership of IDBI was transferred to Government  of India.1 After the transfer of its
ownership, IDBI became the main institution, through which the institutes engaged in
financing, promoting and developing industry were to be coordinated. In January 1992, IDBI
accessed domestic retail debt market for the first time, with innovative Deep Discount Bonds,
and registered path-breaking success.
The following year, it set up the IDBI Capital Market Services Ltd., as its wholly-owned , to
offer a broad range of financial services, including  Bond Trading, Equity Broking, Client
Asset Management and Depository Services.
In September 1994, in response to RBI's policy of opening up domestic banking sector to
private participation, IDBI set up IDBI Bank Ltd., in association with SIDBI. In July 1995,
public issue of the bank was taken out, after which the Government's shareholding came
down (though it still retains majority of the shareholding in the bank). In September 2003,
IDBI took over Tata Home Finance Ltd, renamed ‘IDBI Home finance Limited’, thus
diversifying its business domain and entering the arena of retail finance sector
The year 2005 witnessed the merger of IDBI Bank with the Industrial Development Bank of
India Ltd. The new entity continued to its development finance role, while providing an array
of wholesale and retail banking products (and does so till date). The following year, IDBI
Bank acquired United Western Bank (which, at that time, had 230 branches spread over 47
districts, in 9 states). In the financial year of 2008, IDBI Bank had a net income of Rs 9415.9
crores and total assets of Rs 120,601 crores.
The Present Today, IDBI Bank is counted amongst the leading public sector banks of India,
apart from claiming the distinction of being the 4th largest bank, in overall ratings. It is
presently regarded as the tenth largest development bank in the world, mainly in terms of
reach. This is because of its wide network of 509 branches, 900 ATMs and 319 centers. Apart
from being involved in banking services, IDBI has set up   institutions like The National

1
www.idbibank.com
5|Page
Stock Exchange of India (NSE), The National Securities  Depository Services Ltd. (NSDL)
and the Stock Holding Corporation of India (SHCIL).

HISTORY

1. Year 1964 A parliamentary act setup IDBI as a subsidiary of RBI. IDBI has played a
pioneering role, particularly in the pre-reform era(1964-91),in catalyzing broad based
industrial development in the country in keeping with its Government-ordained
'development banking' charter. In pursuance of this mandate, IDBI's activities transcended
the confines of pure long-term lending to industry and encompassed among others,
balanced industrial growth through development of backward areas, modernization of
specific industries, employment generation, entrepreneurship development along with
support services for creating a deep and vibrant domestic capital market, including
development of apposite institutional framework.
2. Year 1976 Ownership of IDBI transferred to the GOI from RBI.
3. Year 1992 IDBI accessed domestic retail debt market for the first time, with innovative
Deep Discount Bonds, and registered path –breaking success. The following year, it set
up IDBI CAPITAL Market Services Limited, as it whollyowned subsidiary to offer a
broad range of financial services, including Bond Trading, Equity Broking, Client Asset
Management and Depository Services2
4. Year 1994 The RBI Act is amended to permit40% private Ownership IDBI set up IDBI
BANK LIMITED in association ship with SIDBI
5. Year 1995 Public issue of the bank was taken out and GOI stake was reduced.
6. Year 2003 IDBI took over Tata Home Finance Limited, renamed IDBI HOME
FINANCE LIMITED, this diversifying its business domain and entering the arena of
retail finances.
7. Year 2004IDBI moves from its DFI status into a commercial bank along with a mandate
or development financing under the name of RBI.
8. Year 2005 IDBI's transformation into a commercial bank would provide a gateway to
low-cost deposits like Current and Savings Bank Deposits. This would have a positive
impact on the Bank's overall cost of funds and facilitate lending at more competitive rates
to its clients. The new entity would offer various retail products, leveraging upon its

2
http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=500116
6|Page
 existing relationship with retail investors under its existing Suvidha Flexi-bond schemes.
In the emerging scenario, the new IDBI hopes to realize its mission of positioning itself as
a one stop super-shop and most preferred brand for providing total financial and banking
solutions to corporate and individuals, capitalizing on its intimate knowledge of the
Indian industry and client requirements and large retail base on the liability side.
9. Year 2005 Amalgamation of IDBI Bank Ltd. With IDBI LIMITED. Merger of IDBI bank
Ltd. with IDBI Ltd. towards achieving the faster inorganic growth of the Bank, IDBI
Bank Ltd., a wholly owned subsidiary of IDBI Ltd. was amalgamated with IDBI Ltd. in
terms of the provisions of Section 44A of the Banking Regulation Act, 1949 providing for
voluntary amalgamation of two banking companies. 3 The merger became effective from
April 02, 2005.
10. Year 2006Acquired United Western Bank {which, at that time, had 230branches Change
of name of IDBI Ltd. to IDBI Bank Ltd. in order that the name of the Bank truly reflects
the functions it is carrying on, the name of the Bank was changed to IDBI Bank Limited
and the new name became effective from May 07, 2008 upon issue of the Fresh
Certificate of Incorporation by Registrar of Companies, Maharashtra. The Bank has been
accordingly functioning in its present name of IDBI Bank Limited. Branches spread over
47 districts, in 9 states.
11. Year 2010opens the first Overseas Branch at DIFC, Dubai.

3
 "List of Top 5 India's Public Sector Banks". Articlesbase.com. Retrieved 2010-07-26.
7|Page
 SERVICES AND FUNCTIONS

The major participants of the Indian financial system are the commercial banks, the financial
institutions (FIs), encompassing term-lending institutions, investment institutions, specialized
financial institutions and the state-level development banks, Non-Bank Financial Companies
(NBFCs) and other market intermediaries such as the stock brokers and money-lenders. The
commercial banks and certain variants of NBFCs are among the oldest of the market
participants. The FIs, on the other hand, are relatively new entities in the financial market
place.

Indian banking and financial systems in the new millennium is facing a series of new
challenges. Indian banking systems have several outstanding achievements on the basis of its
different functions. Indian banking is no longer confined to metropolitan cities and large
towns, in facts; Indian banks are now spread out in the remote areas of our nation. This
project facilitate us to know about the functioning of banks i.e. different types of a/c’s in
banks, different systems of banks, types of banks, etc. and also it includes millennium
changes in banking system such as internet banking, credit cards, etc.4

Banks are among the main participants of the financial system in India. Banking offers
several facilities & Opportunities. This section provides comprehensive and updated
information, guidance and assistance on all areas of banking in India.

Bank of Hindustan, set up in 1870, was the earliest Indian Bank . Banking in India on modern
lines started with the establishment of three presidency banks under Presidency Bank's act
1876 i.e. Bank of Calcutta, Bank of Bombay and Bank of Madras. In 1921, all presidency
banks were amalgamated to form the Imperial bank of india .The commercial banking
structure in India consists of: Scheduled Commercial Banks & Unscheduled Banks. Banking
Regulation Act of India, 1949 defines Banking as "accepting, for the purpose of lending or
investment of deposits of money from the public, repayable on demand or otherwise
and withdrawals by cheques, draft, order or otherwise."

The arrival of foreign and private banks with their superior state-of-the-art technology-based
services pushed Indian Banks also to follow suit by going in for the latest technologies so as
to meet the threat of competition and retain customer base. In addition, Banks are allowed to
perform certain activities, which are ancillary to this business of accepting deposits and

4
"IDBI Bank". Business.mapsofindia.com. Retrieved 2010-07-26.
8|Page
lending. A bank's relationship with the public, therefore, revolves around accepting deposits
and lending money. Another activity that is assuming increasing importance is transfer of
money - both domestic and foreign - from one place to another. This activity is generally
known as "remittance business" in banking parlance. The so-called forex (foreign exchange)
business is largely a part of remittance albeit it involves buying and selling of foreign
currencies.5

The law governing Banking Activities in India is called "Negotiable Instruments Act 1881".

The traditional banking activities can be classified as:

Accepting deposits is one of the two major activities of the Banks:Banks are also called
custodians of public money. Basically, the money is accepted as deposit for safekeeping. But
since the Banks use this money to earn interest from people who need money, Banks share a
part of this interest with the depositors. However, accepting deposits and keeping track of the
money involves a lot of book-keeping and other operations.

Lending money to the public: Lending money is one of the two major activities of any
Bank. In a way, the Bank acts as an intermediary between the people who have the money to
lend and those who have the need for money to carry out business transactions.This activity
places its own requirements on the resources of the Bank.

Transferring money from one place to another: Apart from accepting deposits and lending
money, Banks also carry out, on behalf of their customers the act of transfer of money - both
domestic and foreign. - From one place to another. This activity is known as "remittance
business”. Banks issue Demand Drafts, Banker's Cheques, Money Orders etc. for transferring
the money. Banks also have the facility of quick transfer of money also know as Telegraphic
Transfer or Tele Cash Orders.

Trustee Business: Banks also act as trustees for various purposes. For example, whenever a
company wishes to issue secured debentures, it has to appoint a financial intermediary as
trustee who takes charge of the security for the debenture and looks after the interests of the
debenture holders. Such entity necessarily have to have expertise in financial matters and also
be of sufficient standing in the market/society to generate confidence in the minds of
potential subscribers to the debenture.

5
"IDBI bank buys 10% in UCX for Rs 10 crore". economictimes.indiatimes.com.
9|Page
Keeping valuables in safe custody: Bankers are in the business of providing security to the
money and valuables of the general public. While security of money is taken care of through
offering various type of deposit schemes, security of valuables is provided through making
secured space available to general public for keeping these valuables. These spaces are
available in the shape of LOCKERS. The latter are small compartments with dual locking
facility built into strong cupboards. These are stored in the Bank's Strong Room and are fully
secure. The hirer or the Bank can neither open lockers individually. Both must come together
and use their respective keys to open the locker.

Government business: Earlier Government business used to be exclusively carried out by

Government Treasuries where all type of transactions took place. However, now Banks act
on behalf of the Government to accept its tax and non tax receipts. Most of the Government
disbursements like pension payments and tax refunds also take place through banks. While
the Banks carry out this business for a fee to be paid by the Government, providing this
service requires a lot of effort and organisation.

  The modern banking activities can be classified as:

Merchant banking:

Merchant banking may be defined as, "an institution, which covers a wide range of activities
such as management of customer services, portfolio management, credit syndication,
acceptance credit, counselling, insurance, etc.

The notification of the Ministry of Finance defines a merchant banker as, "any person who is
engaged in the business of issue management either by making arrangements regarding
selling, buying or subscribing to the securities as managers, consultant, adviser or rendering
corporate, advisory service in relation to such issue management."6

Consumer loans:

Banks has personal loan scheme under which consumer durable items can be purchased.
Loans are given to salaried employees and professional for periods ranging from 12 to 48
months. No guarantee is insisted upon for consumer credit. Many other banks have different
versions of consumer finance schemes. The general features of these schemes are more or
less the same with minor variations in the rate of interest or repayment period or insistence on
a third party guarantee. Consumer finance has many advantages for banks. Credit expansion
6
  "IDBI bags best bank award". Indiavision news.
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is fast, substantial and diversified. Consumer credit is only for short and medium periods,
thereby facilitating smooth asset liability management.

Venture capital: -

Venture capital is long-term risk capital to finance high technology projects, which involve
risk, but at the same time has strong potential for growth. Venture capitalist pool their
.resources  including managerial abilities to assist new entrepreneurs in the early yean of the
project.A venture capital company is defined as "a financing institution, which joins an
entrepreneur as a co-promoter in a project and shares the risks and rewards of the enterprise".

Banking Mutual Funds:-

The Securities and Exchange of Board of India Regulations, 1993 defines a mutual fund as "a
fund established in the form of a trust by a sponsor, to raise monies by the trustees, through
the sale of units to the public, under one or more schemes, for investing in securities in
accordance with these regulations".

According to Weston J. Fred and Brigham, Eugene F., Unit Trusts are "corporations which
accept dollars from savers and then use these dollars to buy stocks, long term bonds, short
term debt instruments issued by business or government units; these corporations pool funds
and thus reduce risk by diversification.

Corporate functions
Project Finance Scheme:
Under the Project Finance scheme IDBI Bank provides finance to the corporates for projects.
The Bank provides project finance in both rupee and foreign currencies for Greenfield
projects as also for expansion, diversification and modernization. IDBI Bank follows the
Global Best Practices in project appraisal and monitoring and has a well-diversified industry
portfolio. IDBI Bank has signed a Memorandum of Understanding (MoU) with LIC in
December 2006 for undertaking joint and take-out financing of long-gestation projects,
including infrastructure projects.7
Infrastructure Finance:
IDBI Bank has been actively participating in structuring and financing of infrastructure
projects in the areas of power, telecom, roads, seaports, railways and logistics as well as
Special Economic Zones. The Bank has also taken initiatives in funding modernization of

7
"Narasimham panel moots IDBI corporatisation". Expressindia.com. 1998-05-05.
11 | P a g e
airports, besides part-financing development of international airports and seaports under the
Public-Private Partnership route. The Bank is also a member of the Core Committee of the
Government set up for finalisation of the Ultra Mega Power Projects. IDBI Bank interacts
with Government and other stakeholders and market participants, on policy and operational
issues, facilitating smooth flow of funds to infrastructure sector.
Working Capital finance:
Working Capital facility is provided to the industry to finance day-to-day production & sales.
For production, funds are generally required for purchase of raw materials, stores, fuel, for
payment of labour, power charges, for storing finished goods till they are sold out & for
financing the sales by way of sundry debtors / receivables. Cash Credit facility is granted to
the customers to bridge working capital gap. The Bank also provides short term loan facility
for a period of up to 1 year for the purpose of bridging temporary cash flow mismatches
arising due to various reasons like non-realization of receivables in time, routine capex etc.
Cash Management Services:
IDBI Bank is a technology-led & service driven, financial services company managed with
intellectual integrity. IDBI Bank Cash Management Services (CMS) has achieved the ISO
9000 certification for its strong product and technology background. Cash Management
Service offers three products – Collections, Payments & Cashweb – the online product
offering.8
The key product features of IDBI Bank CMS are :-
i. Confirmed arrangements
ii. Outsourced logistics
iii. Enhanced clearing network
iv. Pooling / Single Payout Account
v. Customised Reporting
vi. Detailed information capturing
The technology advantage helps us in consistently delivering superior products, convenient
access channels and efficient service to customers.Cash Management is the process of
optimizing receivable and payables while ensuring predictability in the cash flows. Efficient
Cash Management is about getting funds in time, quick transfers, quick realization of local
and outstation cheques, easy disbursements, account reconciliation, controlled processes and

8
Our Banking Bureau / Mumbai 26 October 2004 (2004-10-26). "IDBI aims at Rs 1 lakh cr
assets by year-end". Business-standard.com.
12 | P a g e
customized MIS. Thus Cash Management Services (CMS) eliminates the inherent delays of a
funds transfer mechanism, thus enhancing liquidity and ensuring optimum planning and
utilization of funds.
IDBI Bank Cash Management Services include the following basic components:
1.     Collection or Receivables Management
2.     Payment or Payables Management
Trade Finance
IDBI Bank has set up dedicated trade sales teams for product offerings at key locations to
have a focused and specialized approach to trade services. IDBI Bank carries out Trade
Finance operations through designated branches, which provide Trade Finance Products viz.,
Letters of Credit, Bank Guarantees, Collections, Remittances, Forward Contracts, Packing
Credit, Post Shipment Finance, Maturity Factoring, Invoice Discounting and Trade Advisory
Services. It is noteworthy that IDBI Bank was among the select banks under the auspices of
Indian Banks' Association (IBA) to test, pilot and implement Structured Financial Messaging
System (SFMS) for domestic trade transactions. 9 IDBI Bank also entered into a tie-up with
Export Credit Guarantee Corporation (ECGC) for financing the export receivables under the
full-fledged factoring facility of ECGC.
Tax Payments
 IDBI Bank offers an wide array of services under the umbrella of Central and State
Government agency business (both direct and indirect taxes). IDBI Bank is the first bank to
offer payment facility of direct taxes through Internet and is also the first bank to offer online
payment of Central Excise Duty and Service Tax through the Internet. IDBI Bank has the
mandate to collect direct taxes at several branches and extension counters across the country
and also to collect Excise Duty and Service Tax at select branches. Additionally, IDBI Bank
has the mandate to collect sales tax and stamp duty for certain State Governments and
import/export license fees over the Internet.
Direct Discounting of Bills
For financially sound machinery / equipment manufacturer, who wish to promote sales, IDBI
Bank provides deferred credit facility for sale / purchase of indigenous machinery /
equipment under its easy to operate direct discounting scheme. Assistance would be 100% of
the total value (including insurance, taxes & freight). Interest rate / discount rate would be as
prevalent at the time of discounting of bills, depending on monthly / quarterly / half-yearly/
yearly payments and according to temporal profile of bills.
9
Keith, Kelley. "Banks in India – Web Listings". Business.com.
13 | P a g e
 SME FINANCE
IDBI Bank has been actively engaged in providing a major thrust to financing of SMEs. With
a view to improving the credit delivery mechanism and shorten the Turn Around Time
(TAT), IDBI Bank has developed a special business model to serve the SMEs in India. The
Bank has set up 24 City SME Centres (CSCs) across India in Mumbai, Delhi, Kolkata,
Chennai, Bangalore, Hyderabad, Pune to name a few. These CSCs are the Bank's hubs while
dedicated SME desks have been set up in several branches across these cities. These branches
serve as front offices for sales delivery and customer service.10
IDBI Bank has a wide variety of products and services catering to the needs of different
segments within small business. Long years of experience in being the trusted partner of large
and mid corporate has translated into deeper understanding of needs of business and
industries. The Bank has parameterised products for transporters, dealers, traders, and
vendors. In addition, it has a separate Transaction Banking Group that has expertise in
products like cash management services, letter of credit, bank guarantees and treasury
products”

Following SME Finance products are offered by the IDBI Bank:

• SulabhVyapar Loan

• Dealer Finance

• Funding under CGFMSE

• Direct Credit Scheme - SIDBI

• Preferred customer scheme - IDBI Bank / SIDBI

• Vendor financing (Pre - Sale)

• Vendor financing (Post - Sale)

• Lending Against the Security of Future Credit Card Receivables

• Working Capital Financing - Software Development Entities

• Finance to Medical Practitioners

10
 "Mega Merger Of IDBI, IFCI And IIBI Under Consideration". Financialexpress.com.
2003-04-05.
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• Loan to SRWTO

• SME Hosiery Special Current Account

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 ROLE IN DEVELOPMENT

IDBI have been playing a significant role in dynamic industrial development of country. The
Industrial Development Bank of India (IDBI) has had a pioneering role in fulfilling its
mission of promoting industrial growth in tune with national plans and priorities. Its support
was instrumental in establishing a well-developed, diversified and efficient industrial
structure in the country. Since inception, the bank besides meeting the increasing and diverse
financial requirements of industries, added a qualitative dimension to the process of industrial
development in the country.

Critical role played by IDBI in encouraging industrial development reflected in its flows of
assistance over the years. It has played an apex role in helping create the industrial &
infrastructural base in the country. Total investment generated – 4000 billion (approx.)(over
USD 80billions. Total credit exposure as on March 31, 2010 to Top 20 industry was
Rs.206990crore in which Rs.137246.73crore well Fund base & Rs.69743.27crore was non
fund base. 11

IDBI was established in 1964 to meet the rapid pace of industrialization with wider functions
and much larger resources. The bill of IDBI passed in the Parliament by the finance Minister
Mr. T.T. Krishnama Chari on April 30, 1964. While introducing the bill he said, “whereas a
long term view is necessary and a certain amount of risk has to be taken, the existing
institutions tend, by reason of their Statutory- Obligations and traditions, to be conservative
and cannot in any way to be very helpful. We are envisaging the new Industrial Development
Bank as a Central co-coordinating agency, which ultimately will be concerned, directly or
indirectly, will all problems or questions relating to the long and medium term financing of
industry and be in position , if necessary to adopt and force a system of priorities, in
promoting future industrial growth”.12

Total credit exposure as on March 31 2010 to Top 20 industry was Rs.206990crore in which
Rs.137246.73crore well Fund base & Rs.69743.27crore was non fund base. Among the Top
20 industries, the first 5 are as follows 1) Retail Industry, 2) Power Industry, 3) Iron and Steel
Industry, 4) Construction Industry, 5) Telecom Services Industry. IDBI is the principal
financial organization for co-coordinating the working of institutions engaged in financing,

11
Press Trust Of India / New Delhi 17 December 2005 (2005-12-17). "IDBI rules out IFCI,
IIBI acquisition". Business-standard.com.
12
"IDBI chairman to the rescue". Rediff.com.
16 | P a g e
promoting or developing industry, assisting the development of such institutions and
providing credit and other facilities for the development of industry. As an apex organization
for development of industry, it coordinates the working of the financial institutions engaged
in industrialization of country. It assists in the development of other financial institutions for
the rapid growth of industry. IDBI Provides direct credit to many Industries. IDBI vested
with the responsibility of coordinating the working of institutions engaged in financing,
promoting and developing industries. It has evolved an appropriate mechanism for this
purpose.

IDBI also undertakes/supports wide-ranging promotional activities including

entrepreneurship development programs for new entrepreneurs, provision of consultancy
services for small and medium enterprises, up gradation of technology and program for
economic up liftmen of the underprivileged IDBI has been an institution builder too. It
developed financial institutions such as Export-Import Bank of India, SIBI Small Industries
Bank of India, North-Eastern Development Finance Corporation and Asset Reconstruction
Company (India) Ltd. All the above mentioned endeavors aimed faster Industrialization and
Industry growth.

It also played a role in developing many capital market related agencies; the Securities and
Exchange Board of India (SEBI), the National Stock Exchange of India, the Stock Holding
Corporation of India, the Credit Analysis and Research Ltd., the National Securities
Depository Ltd., the IDBI Trusteeship Services Ltd and the Clearing Corporation of India.

"IDBI's activities were not confined merely to long-term project lending to industry; instead
these covered a host of services undertaken in pursuit of broader development goals aligned
to the Central Government's varied socio-economic objectives in the realm of industry.''

Various assistance to be provided by the IDBI for the growth of industry are as follows:

(1) Direct Financial Assistance: The IDBI provides direct financial assistance to the industrial
concerns in the form of (a) granting loans and advances; and (b) subscribing to, purchasing or
underwriting the issues of stocks, bonds or debentures.

(2) Indirect Financial Assistance: The IDBI provides indirect financial assistance to the small
and medium industrial concerns through other financial institution, such as, State Finance
Corporations, State Industrial Development Corporations, Cooperative banks, regional rural
banks, commercial banks. The Assistance to these institutions include: (a) refinancing of

17 | P a g e
loans given by the institutions; (b) subscribing to their shares and bonds; (c) rediscounting of
bills.13

(3) Development Assistance: The creation of the Development Assistance Fund is the special
feature of the IDBI. The Fund is used to provide assistance to those industries which are not
able to obtain funds in the normal course mainly because of heavy investment involved or
low expected rate of returns. The financial resources of the Fund mainly come from
contributions made by the government in the form of loans, gifts, donations, etc.; and from
other sources. Assistance from the Fund requires the prior approval by the government.

(4) Promotional Activities: Besides providing financial assistance, the IDBI also undertakes
various promotional activities such as marketing and investment research, techno- economic
surveys. It provides technical and administrative advice for promotion, expansion and better
management of the industrial concerns.

13
An Analytical Study of Development Financial Institutions in Capital Market of India
(With Special Reference to IDBI 2005-2010)
http://shodhganga.inflibnet.ac.in/bitstream/10603/98506/5/chapter-4.pdf
18 | P a g e
 CONCLUSION

India is well positioned to become the fourth largest economy in the world by 2025.GDP
growth rates of 7-8% in a year will be sustainable if key enabling factors have been put in
place. One of the robust economic growths is a banking sector that is adequately sufficient to
meets the needs of growing economy. The shape of banking in 2010 will be the result of
interplay between the decisions taken by policy makers and actions of bank management.

As the market conditions remained under pressure and volatile, growth of the economy is
expected to remain above 5.5% during FY 2009-10. Such growth momentum and the revival
plan would bestow sufficient platform to commercial banks in order to enlarge their business
level. IDBI Bank is currently well poised in terms of its infrastructure and policy directions,
to play a larger role in the growth story of the economy and optimise its performance
indicators.

IDBI Bank provides complete solution catering to financial requirements of corporate. It is

one among the leaders in project finance. The Bank also offers a wide array of corporate
banking products. Bank has achieved impressive growth of more than 80% in Trade Finance
business covering Letter of Credit and Bank Guarantee products. The Bank has also
improved export credit disbursement by 17%. It continues to remain a prominent player in
infrastructure financing.

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 BIBLIOGRAPHY

 www.idbibank.com
 http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?
scripcode=500116
 "List of Top 5 India's Public Sector Banks". Articlesbase.com. Retrieved 2010-07-26.
 "IDBI Bank". Business.mapsofindia.com. Retrieved 2010-07-26.
 "IDBI bank buys 10% in UCX for Rs 10 crore" . economictimes.indiatimes.com.
Retrieved 2011-07-06.
 "IDBI bags best bank award". Indiavision news. Sep 06, 2011.
 "Narasimham panel moots IDBI corporatisation" . Expressindia.com. 1998-05-05.
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 Our Banking Bureau / Mumbai 26 October 2004 (2004-10-26). "IDBI aims at Rs 1
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