Wednesday, 14 May 2014

Functions of Industrial Development Bank of India (IDBI)

The Industrial Development Bank of India (IDBI) was set up in July 1964, as a wholly-owned subsidiary of the Reserve Bank of India. It was given complete autonomy in February 1976.
Today, the IDBI is regarded as an apex institution in the arena of development banking. The IFCI and the UT1 are the subsidiaries of the IDBI. As an apex development bank, the IDBI’s major role is to co-ordinate the activities of other development banks and term-financing institutions in the capital market of the country.
The main functions of the IDBI may be stated as follows:
1. Planning, promoting and developing industries with a view to fill the gaps in the industrial structure by conceiving, preparing and floating new projects.
2. Providing technical and administrative assistance for promotion, management and expansion of industry.
3. Providing refinancing facilities to the IFCI, SFCs and other financial institutions approved by the government.
4. Coordinating the activities of financial institutions for the promotion and development of industries.
5. Purchasing or underwriting shares and debentures of industrial concerns.
6. Guaranteeing deferred payments due from industrial concerns and for loans raised by them.
7. Undertaking market and investment research, surveys and techno-economic studies helpful to the development of industries.
In short, the IDBI is the leader, coordinator and innovator in the field of industrial financing in our country. Its major activity is confined to financing, developmental, co-ordination and promotional functions.
With the passing of the IDBI (Amendment) Act, 1986, the IDBI has been empowered to provide assistance to diverse range of industrial activities including the activities of services sector of industries like informatics, health care, storage and distribution of energy and other services contributing to value addition. The scope of business of the IDBI has also been extended to cover consulting, merchant banking and trusteeship activities.
Under the 1986 Amendment, the authorised capital of the IDBI has been raised to Rs. 1,000 crores (with the possibility of further increasing it to Rs. 2,000 crores by the Central Government’s notification) for sustaining the growing tempo of its operations.
During the year 1986-87, the IDBI provided Rs. 929 crores of direct industrial assistance by way of project loans, including assistance under the modernisation scheme, technical development fund scheme, equipment finance scheme and underwriting of and direct subscriptions to shares and debentures of industrial firms.
It however, sanctioned Rs. 65 billions and disbursed Rs. 40 billions of loans in the aggregate. The cumulative assistance sanctioned and disbursed by the IDBI 1964-1987 aggregated to Rs. 227 billions and Rs. 165 billions respectively. During 1995-96, the IDBI’s financial assistance sanctioned amounted to Rs. 19,469 crore of which Rs. 10,636 crore were disbursed.
In recent years, the IDBI has started providing assistance to backward areas and small-scale industries remarkably well.