Industrial Development Bank of India (IDBI)

The Industrial Development Bank of India or IDBI was established on 1st July, 1964 as an apex bank (the counterpart of Reserve Bank) in the field of industrial finance and capital market. However, it was de-linked from Reserve Bank on 16th February, 1976 and was given a separate independent entity under Central Government. It has completed 35 years on 30th June, 1999.


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It is the apex institution to co-ordinate, supplement, and integrate the activities of all existing specialized financial institutions. It is a re-financing and re-discounting institution operating in the capital market to re-finance term loans and export credits. It is in charge of conducting lechno-economic studies. It offers loans on purpose and not merely on the security of property as mortgage or pledge.


In the beginning it was a subsidiary of the Reserve Bank of India and both had common board of directors. But since 1976 (Feb.) it has been de-linked from RBI. It has now its independent board representing the Government, Commercial Banks, Financial Institutions and industries. As an independent institution, it can now play much more effective role in rendering financial assistance. Thus, now we have evolved an integrated capital market structure for industrial finance functions. The IDBI undertakes:

  • Refinancing of loans granted by other special financial institutions, banks and cooperatives.
  • Granting of loans to industrial units.
  • Rediscounting of bills of exchange.
  • Guaranteeing of loans and deferred payments.
  • Planning and promoting industries.
  • Investment in other financial corporations.
  • Underwriting the issue of shares and debentures of industrial units.

Financial Resources, (i) Share Capital. The Present authorized capital of IDBI is Rs. 1,000 crores (Increased from Rs. 500 crores to Rs. 1,000 crores). It can be increased up to Rs. 2,000 crores.

  • The paid-up capital in 1998-99 stood at Rs. 660 crores as against Rs. 659 crores in 1977-78.
  • Bonds: The IDBI is authorized to issue bonds.
  • Loan from Central Government: The IDBI is empowered to take loan from the central government.
  • Loan from Reserve Bank: The IDBI is authorized to take loan from the Reserve Bank on its securities for a period of 90 days.
  • Loan in Foreign Currency: The IDBI is empowered to take loan in foreign currency.
  • Reserve Fund: The reserve fund during 1998-99 stood at Rs. 8,033 crores as against Rs. 8003 crores in 1997-98.
  • Other Sources: Other financial sources of IDBI includes public deposits, grants etc.

The IDBI is managed by a board of directors. The maximum number of directors in the board is twenty two only. At present there are in all eighteen directors in the board of directors. The head-office of IDBI is situated in Mumbai. It has five regional offices situated in New Delhi, Kolkata, Chennai and Guwahati. Besides the regional office, the IDBI has 20 branch offices situated in different parts of the country.

Review of Progress (Operations)
IDBI has given special attention to better regional development and innovational and promotional activities. It has conducted surveys of backward regions. It has given special help to backward regions on concessional terms. IDBI is playing a more dynamic role in promoting growth of industries as an innovator in the area of industrial finance. The financial resources are being diverted into socially more desirable channels. Emphasis is being placed on assistance to small and new entrepreneurs and units located in underdeveloped regions in the country.


IDBI is the major source of industrial finance. Its sanctioned and disbursed amount is 37% and 40% respectively of the total sectioned and disbursed amount of all the term-lending institutions. In the field of company promotion, IDBI has set up technical consultancy organisation which helps in the preparation of feasibility studies, project reports, guidance in the economic, financial and managerial aspects of the new prospect.

Refinance of export credit is offered at a lower rate of interest. In the field of export financing, it was acting as an export bank. It is due to the fact that IDBI is the apex  bank in the world of industrial finance and it must act primarily as a residual lender of last resort and fill up the gaps in industrial finance which are left out by other financial institutions.

Critical Evaluation
The IDBI, during 35 years of its working has done commendable job in different areas. It has given special attention to better regional development and innovational and promotional activities. It has conducted surveys of backward regions. It has provided special help to backward areas of the country on concessional terms. The financial resources of IDBI are being directed into socially more desirable channels, refinance of export credit is offered at the lower rate of interest. It sanctioned and disbursed amounts are nearly 37% and 40% respectively of the total sanctioned and disbursed amount of all the term lending institutions of India. Thus, under the able leadership of IDBI, the specialized term financial institutions of our country are poised to play a vital and dynamic role  in the process of industrial development of our country.

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