Objectives & Functions of IDBI
Industrial Development Bank of India (IDBI) Established under the Industrial Development Bank of India Act of 1964, it is the primary financial organization for providing loans and other facilities to developing enterprises and aiding development institutions.
Until 1976, IDBI was a subsidiary bank of the RBI. In 1976, it was split from the RBI and entrusted to the Government of India. IDBI is the world’s tenth biggest bank in terms of development. IDBI has developed many institutions, including the National Stock Exchange (NSE), National Securities Depository Services Ltd. (NSDL), and Stock Holding Corporation of India (SHCIL).
Organization and Management
IDBI’s Board of Directors consists of a chairman and Managing Director selected by the Government of India, a Deputy Governor of the RBI recommended by that bank, and 20 other Directors nominated by the Central Government.
The board formed an Executive Committee comprised of ten directors, including the Chairman and Managing Director. The executive committee is authorized to approve financial aid.
The headquarters of IDBI is in Mumbai. The bank has five regional offices: one each in Kolkata, Guwahati, New Delhi, Chennai, and Mumbai. Besides, the bank has 21 branch offices.
Objectives of IDBI
IDBI’s primary goal is to act as India’s premier institution for term financing for industry. Its aims include the following:
Coordination, regulation, and supervision of the operations of other financial institutions, including IFCI, ICICI, UTI, LIC, commercial banks, and SFCs.
Supplementing the resources of other financial institutions, so expanding the extent of their support.
Planning, promoting, and developing essential industries, as well as diversifying industrial growth.
Developing and enforcing an industrial development system that aligns with national interests.
Functions of IDBI
(i) Offer financial help to industrial firms.
(ii) Encouraging institutions for industrial growth.
(iii) Provide technical and administrative help for industry development, management, and growth.
(iv) Conduct market and investment research and surveys related to industry development.
IDBI Assistance
The IDBI offers financial support either directly or via certain financial institutions:
(i) Direct Assistance.
The IDBI provides loans and advances to industrial companies. There are no maximum or lower restrictions for assisting any particular problem. The bank guarantees loans made by industrial enterprises in the open market to State Co-operative Banks, Scheduled Banks, the Industrial Finance Corporation of India (IFCI), and other ‘notified’ financial institutions.
(ii) Indirect Assistance.
The IDBI can refinance term loans to industrial concerns from IFCI, State Financial Corporation, and other financial institutions, as well as SIDCs (State Industrial Development Corporations), Commercial banks, and Co-operative banks with terms of up to 10 years. IDBI subscribes to financial institutions’ shares and bonds, providing additional resources.
Developmental Activities at IDBI
Promotional Activities:
As part of its developmental role, the bank continues to conduct a wide range of promotional activities relating to developmental programs for new entrepreneurs, consultancy services for small and medium-sized businesses, and programmes designed for accredited voluntary agencies for the economic upliftment of the underprivileged.
These include entrepreneurial development, self-employment, and wage employment in the industrial sector for the most vulnerable members of society via volunteer organizations, support for Science and Technology Entrepreneurs’ Parks, energy conservation, and Common Quality Testing Centers for small businesses.
Technical Consultancy Organizations
IDBI, in collaboration with other All-India Financial Institutions, has established a network of Technical Consultancy Organizations (TCOs) across the country with the goal of making consultancy and advisory services available to entrepreneurs at a reasonable cost, particularly to new and small entrepreneurs. TCOs provide a wide range of services to small and medium-sized businesses, including project selection, formulation, and evaluation, as well as implementation and review.
Entrepreneurship Development Institute
Recognizing that entrepreneurship development is critical to industrial growth, IDBI played a vital role in establishing the Entrepreneurship Development Institute of India to promote entrepreneurship in the nation. It has also set up comparable institutions in Bihar, Orissa, Madhya Pradesh, and Uttar Pradesh. IDBI also provides financial assistance to numerous entities doing research or surveys related to industrial growth.