either owned by the government or by charitable institutions to finance

infrastructure projects that are of national importance (economic, social

and environmental) but may or may not meet commercial return
standards

The development finance institutions or development finance companies

are organizations owned by the government or charitable institution to
provide funds for low-capital projects or where their borrowers are unable
to get it from commercial lenders.

Development financial institution (DFI), also known as a Development

bank, is a financial institution that provides risk capital for economic
development projects on a non-commercial basis

Development finance is the invisible glue that connects public and private
financing for projects that have social, economic and environmental
outcomes..
 Objectives of Development Finance Institutions

 The prime objective of DFI is the economic development of the country

 These banks provide financial as well as the technical support to various sectors

 DFIs do not accept deposits from people

 They raise funds by borrowing funds from governments and by selling their bonds to the general

public

 It also provides a guarantee to banks on behalf of companies and subscriptions to shares,

debentures, etc
 Underwriting enables firms to raise funds from the public. Underwriting a financial institution
guarantees to purchase a certain percentage of shares of a company that is issuing IPO if it is
not subscribed by the Public.
Some Important DFIs (Sector Specific)
Industry
IFCI – 1st DFI in India. Industrial Corporation of India was established in 1948.
ICICI – Industrial Credit and Investment Corporation of India Limited established in 1955 by an
initiative of the World Bank.
•It established its subsidiary company ICICI Bank limited in 1994.
•In 2002, ICICI limited was merged into ICICI Bank Limited making it the first universal bank
of the country.
Universal Bank – Any Financial institution performing the function of Commercial Bank +
DFI
•It was established in the private sector and is still the Only DFI in the private sector.
IDBI – Industrial Development Bank of India was set up in 1964 under RBI and was granted
autonomy in 1976
•It is responsible for ensuring adequate flow of credit to various sectors
•It was converted into a Universal Bank in 2003
IRCI – Industrial Reconstruction Corporation of India was set up in 1971.
•It was set up to revive weak units and provide financial & technical assistance.
SIDBI – Small Industries development bank of India was established in 1989.
•Was established as a subsidiary of IDBI
•It was granted autonomy in 1998
Foreign Trade
EXIM Bank – Export-Import Bank was established in January 1982 and is the apex
institution in the area of foreign trade investment.
•Provides technical assistance and loan to exporters
Agriculture Sector
NABARD – National Bank for agriculture and rural development was established in
July 1982
•It was established on the recommendation of the Shivraman Committee
•It is the apex institution in the area of agriculture and rural sectors
•It functions as a refinancing institution
Housing
NHB- National Housing Bank was established in 1988.
•It is the apex institution in Housing Finance
IDBI – Industrial Development bank of India
Established : 1st July, 1964 (1.07.1964)

Under aegis of : The industrial Development Bank of India Act

Status : As subsidiary of RBI

Feature : It has been assigned of the role of principal financial institutions for
coordinating, in conformity with national priorities, the activities of the
institutions engaged in financing, promotion or developing industry. It has
been assigned a special role to play in regard to industrial development
ICICI - Credit and Investment Corporation of India – Industrial

Established : Parent company formed in the year 1955 as a joint venture of the world
bank, India Public sector banks and public sector insurance companies. The
parent company merged with ICICI bank in 2002

Status : Second largest bank in India by Assets while third largest bank by market
capitalization

Feature : It offers a wide range of banking products and financial services to

corporate and retail customers through a variety of delivery channels and through its
specialized subsidiaries in the area of investment banking, life and non life insurance,
venture capital and asset management
IFCI - Industrial Finance Corporation of India
Established : set up as a Statutory Corporation “then Industrial Finance Corporation
of India” in 1948
Status :
Features :It provides medium and long-term finance to industry. In 1993, after repeal
of the Industrial Finance Corporation Act, IFCI became a Public Limited Company,
registered under the Companies Act, 1956. IFCI is also registered with the
Reserve Bank of India (RBI) as a Systemically Important Non-Deposit taking
Non- Banking Finance Company (NBFC-ND-SI) and is also a notified Public
Financial Institution under Section 2(72) of the Companies Act, 2013.
It plays a pivotal role in transforming the government development
priorities to reality.
NABARD - National Bank For Agriculture And Rural Development - it came into existence on 12 July
1982

NABARD is a Development Bank with a mandate for providing and regulating credit for the development
of agriculture, small-scale industries, cottage and village industries, handicrafts and other allied economic
activities in rural areas to promote prosperity of rural areas.

What is the NABARD scheme?

The Department's core function is implementation of various farm sector initiatives aimed at
conservation and management of natural resources, creating credit absorption capacity of farmers for
accelerating ground level credit flow by the rural financial institutions, enhancing agricultural production
and productivity
A Regional Rural Bank (RRB) is a financial institution that provides credit and other services to rural and semi-urban
areas in India. RRBs were established in 1975 to help develop the rural economy and bridge the credit gap in rural
areas:

Purpose
RRBs provide credit and other services to small and marginal farmers, agricultural laborers, artisans, and small
entrepreneurs. They also aim to reduce regional imbalances, increase rural employment, and check the outflow of
rural deposits to urban areas.

Ownership
RRBs are jointly owned by the Government of India, the state government, and sponsor banks. The equity is held in
the proportion of 50:15:35, respectively.

Regulation
RRBs are regulated by the Reserve Bank of India (RBI) and supervised by the National Bank for Agriculture and
Rural Development (NABARD).

First RRB
The first RRB, Prathama Grameen Bank, was established on October 2, 1975
 DEVELOPMENT BANK

Development banks in India are financial institutions that provide funds to the public and private sectors
to help the country's economic development.
Here are some examples of development banks in India:

 Industrial Development Bank of India (IDBI): Established in 1964 as a subsidiary of the Reserve Bank
of India (RBI)
 Industrial Finance Corporation of India (IFCI): Considered India's first development bank, IFCI finances
industrial investments
 Small Industries Development Bank of India (SIDBI): A development bank in India
 National Bank for Agriculture and Rural Development (NABARD): An agricultural development bank
 Export-Import Bank of India (EXIM Bank):
 A public sector bank that finances Indian exports and imports, and also provides technical and
financial assistance to businesses involved in international trade
 National Housing Bank (NHB): A housing development bank that provides financial assistance to
eligible bodies in the housing sector
 Industrial Investment Bank of India (IIBI): Helps sick units modernize, restructure, and diversify their
operations