DEVLOPMENT FINANCIAL INSISTUTION
IN INDIA
Prepared By:- PURNENDU SHEKHAR
16MBA010(SU)

DEVELOPMENTFINANCIALINSISTUTION?
• These are the institutions who involved in
financing of industrial and infrastructure projects
that usually have long gestation period.
• A DFI is defined as "an institution promoted or
assisted by Government mainly to provide
development finance to one or more sectors or
sub-sectors of the economy.
• A DFI is on long-term finance and on assistance
for activities or sectors of the economy where the
risks may be higher than that the ordinary
financial system is willing to bear.

HISTORYOFDFI
• Developing countries set up DFIs to resolve market
failures, especially in regard to financing of long-term
investments.
• The DFIs played a very significant role in rapid
industrialization of the Continental Europe. Many of
the DFIs were sponsored by national governments
and international agencies.

• The first government sponsored DFI was created in
Netherlands in 1822.
• In France, significant developments in long-term
financing took place after establishment of DFIs, such
as, Credit Financier and Credit Mobiliser, over the
period 1848-1852.
• In Asia, establishment of Japan Development Bank
and other term-lending institution fostered rapid
industrialization of Japan.
• The success of these institutions provided strong
impetus for creation of DFIs in India after
independence.

WhyDFIrequiredinIndia?
• India is a growing country.
• For making funds available for entrepreneurial
activity.
• To eliminate poverty both directly and indirectly.
• To maintain the availability of long-term finance for
infrastructure and industry, finance for agriculture
and Small and Medium Enterprises (SME)
development and financial products for certain
sections of the people.

ObjectivesofDFIs
• Lay Foundations for Industrialization.
• Meet capital Needs.
• Need for promotional Activities.
• Help MSMEs Sectors.

FUNCTIONS:-
• Financial gap fillers.
• Joint finance.
• Refinance facility.
• Credit guarantee.
• Underwriting Securities.
• Take entrepreneurial Development Initiatives.

ROLEOFDFIsINFINANCIALSYSTEM
• Providing funds for long-term Development.
• Accelerating Industrialisation.
• Development of backward areas.
• Infrastructural financing.
• Planned Development.

FunctionsofDFIs
• Increase loans and equity investments to its
developing associate countries (DMCs) for their
monetary and social development.
• Provides technical help for the planning and
implementation of development projects and
programs and for advisory services.
• Promotes and facilitates speculation of public and
private capital for growth and development.

DFIs Types:-
A group composed of Development Finance Institutions
(DFI) and Investment Institutions forms. All India
Financial Institutions (AIFI) .
1. National Level.
2. State Level

NATIONALLEVELINSISTUTE
• National Bank For Agriculture And Rural
Development (NBARD).
• Industrial Finance Corporation of India.
• Small Industries Development Bank Of India
[SIDBI].
• Industrial Development Bank of India.
• ICICI
• EXIM Bank.
• NHB.

NABARD
• National Bank for Agriculture and Rural
Development (NBARD) was approved by the
Parliament through Act 61 of 1981.
• NABARD came into existence on 12 July 1982
by transferring the agricultural credit functions of
RBI and refinance functions of the then
Agricultural Refinance and Development
Corporation (ARDC).

• It was dedicated to the service of the nation by the
late Prime Minister Smt. Indira Gandhi on 05
November 1982.
• It was set up with an initial capital of Rs.100 crore.
• Its’ paid up capital stood at Rs. 5,000 crore as on 31
March 2016.
• The Government of India holds Rs. 4,980 crore
(99.60%) while Reserve Bank of India holds Rs.
20.00 crore (0.40%).
• Headquarter:- Mumbai, India.
• Chairman:- Harsh Kumar Bhanwala.

ROLEOFNBARD
• Serves as an apex financing agency for the
institutions providing investment and production
credit for promoting the various developmental
activities in rural areas.
• Takes measures towards institution building for
improving absorptive capacity of the credit delivery
system, including monitoring, formulation of
rehabilitation schemes, restructuring of credit
institutions, training of personnel, etc.

Cont.
• Co-ordinates the rural financing activities of all institutions
engaged in developmental work at the field level and
maintains liaison with GOI, SG and RBI.
• Undertakes monitoring and evaluation of projects refinanced
by it.
• NABARD refinances the financial institutions which finances
the rural sector.
• NABARD partakes in development of institutions which help
the rural economy.
• NABARD also keeps a check on its client institutes.
• It regulates the institutions which provide financial help to
the rural economy.
• It provides training facilities to the institutions working in the
field of rural upliftment.

IFCI(IndustrialFINANCIALCORPORATIONOFINDIA)
• The Industrial Finance Corporation of India
established on July 1, 1948,(Headquarter-New Delhi).
• It is the first Development Financial Institution in the
country to cater to the long-term finance needs of the
industrial sector.
• Earlier it was known as Industrial Finance
Corporation of India and Ltd. Has been added.
• Until the establishment of ICICI Bank, IFCI remained
solely responsible for implementation of the
government's industrial policy initiatives.

IFCI’sFUNCTIONS

IDBI(INDUSTRIAL DEVELOPMENT BANK OF
INDIA)
• It was established in 1964 by an Act of Parliament
IDBI Act-1964.
• Earlier it was wholly owned subsidiary of the
Reserve Bank of India.
• In 1976, the ownership is transferred to IDBI.
• Headquarter:- Mumbai, India.
• On October 1,2004 it was converted in a banking
company.

FUNCTIONS:-
• To provide financial assistance to industrial
enterprises.
• To promote institutions engaged in industrial
development.
• To provide technical and administrative
assistance for promotion management or
expansion of industry.

ICICI(IndustrialCreditInvestmentCorporationofIndia)
• ICICI was formed in 1955 at the initiative of the World
Bank, the Government of India and representatives of
Indian industry.
• The principal objective was to create a development
financial institution for providing medium-term and long-
term project financing to Indian businesses.
• In the 1990s, ICICI transformed its business from a
development financial institution offering only project
finance to a diversified financial services group offering a
wide variety of products and services, both directly and
through a number of subsidiaries and affiliates like ICICI
Bank, (But officially It happened in 1994).

Objectives
• Expansion of enterprises.
• Modernisation of enterprises
• Encouraging and promoting the participation of
private capital
• Encouraging and promoting private ownership

FUNCTIONS:-

SIDBI
• SIDBI set up on April 2, 1990 under an Act of Indian
Parliament.
• Objective: Promotion, Financing &Development of
MSMEs and Co-ordinating Functions of institutions
engaged in similar activities.
• Ownership : Public sector banks/FIs/Insurance Cos
owned or controlled by the Government of India.
• Structural Linkage: With Ministry of Finance .
• Headquarter in Lucknow, UP.

EXPORT&IMPORTBANK
• It was founded on 1 Jan. 1982.
• It was established under Export-Import Bank of
India Act-1981.
• Its key player in promotion of cross-border trade
and promotion.
• Headquarter:- Mumbai, India.
• Managing Director:-David Rasquinha.

Functions:-
• Financing of export and import of goods and service
both out of India and outside of India.
• Provide finance for joint-ventures in foreign
countries.
• Undertaking merchant banking functions of
companies engaged in foreign trade.
• Providing technical & administrative assistance to
clients.
• Provide advance information and advisory service to
Indian exporters.

NHB
• It was established on 9 July 1988.
• It was established under NHB Act-1987.
• It is an apex financial institution in Housing
Development.
• Its headquarted in New Delhi, India.
• CEO:- Shriram Kalyanaraman.

StateLevelInstitutions
• State Financial Corporations (SFCs)
• State Industrial Development Corporations
(SIDCs).

State Industrial Development Corporations
• These institutions are established for industrial
finance with in a state and controlled by state
Government.

THANK-YOU