{"id":35436,"date":"2024-03-22T06:29:19","date_gmt":"2024-03-22T06:29:19","guid":{"rendered":"https:\/\/edukemy.com\/blog\/?p=35436"},"modified":"2024-03-22T06:29:20","modified_gmt":"2024-03-22T06:29:20","slug":"development-banks-in-india-upsc-economy-notes","status":"publish","type":"post","link":"https:\/\/edukemy.com\/blog\/development-banks-in-india-upsc-economy-notes\/","title":{"rendered":"Development Banks in India &#8211; UPSC Economy Notes"},"content":{"rendered":"\n<figure class=\"wp-block-image size-full\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-economy?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=Blog+Economy\" target=\"_blank\" rel=\"noreferrer noopener\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1280\" height=\"300\" src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/17.png\" alt=\"\" class=\"wp-image-42386\" srcset=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/17.png 1280w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/17-1170x274.png 1170w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/17-585x137.png 585w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/><\/a><\/figure>\n\n\n\n<p>Development banks play a pivotal role in shaping the economic landscape of India, serving as crucial financial intermediaries focused on fostering sustainable development and growth. These institutions are designed to provide long-term financial assistance and expertise to various sectors, including infrastructure, agriculture, small and medium-sized enterprises (SMEs), and rural development. With a mandate to address market failures, promote innovation, and support inclusive growth, development banks in India have emerged as key drivers of economic transformation, facilitating capital mobilization, risk mitigation, and capacity building. Through their strategic interventions, these institutions contribute significantly to addressing developmental challenges and advancing the nation&#8217;s socioeconomic objectives, thereby playing an integral part in India&#8217;s journey towards prosperity and equitable progress.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_73 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-69ec7730a49d5\" class=\"ez-toc-cssicon-toggle-label\"><p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-cssicon\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69ec7730a49d5\"  \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/edukemy.com\/blog\/development-banks-in-india-upsc-economy-notes\/#Development_Banks_in_India\" title=\"Development Banks in India:\">Development Banks in India:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/edukemy.com\/blog\/development-banks-in-india-upsc-economy-notes\/#Evolution_and_Purpose\" title=\"Evolution and Purpose:\">Evolution and Purpose:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/edukemy.com\/blog\/development-banks-in-india-upsc-economy-notes\/#Recommendations_and_Transformations\" title=\"Recommendations and Transformations:\">Recommendations and Transformations:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/edukemy.com\/blog\/development-banks-in-india-upsc-economy-notes\/#Union_Budget_2021-22_and_Development_Financial_Institution_DFI\" title=\"Union Budget 2021-22 and Development Financial Institution (DFI):\">Union Budget 2021-22 and Development Financial Institution (DFI):<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/edukemy.com\/blog\/development-banks-in-india-upsc-economy-notes\/#FAQs\" title=\"FAQs\">FAQs<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/edukemy.com\/blog\/development-banks-in-india-upsc-economy-notes\/#Q_What_is_a_development_bank\" title=\"Q: What is a development bank?\">Q: What is a development bank?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/edukemy.com\/blog\/development-banks-in-india-upsc-economy-notes\/#Q_What_role_do_development_banks_play_in_Indias_economy\" title=\"Q: What role do development banks play in India&#8217;s economy?\">Q: What role do development banks play in India&#8217;s economy?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/edukemy.com\/blog\/development-banks-in-india-upsc-economy-notes\/#Q_What_are_some_prominent_development_banks_in_India\" title=\"Q: What are some prominent development banks in India?\">Q: What are some prominent development banks in India?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/edukemy.com\/blog\/development-banks-in-india-upsc-economy-notes\/#Q_How_do_development_banks_differ_from_commercial_banks\" title=\"Q: How do development banks differ from commercial banks?\">Q: How do development banks differ from commercial banks?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/edukemy.com\/blog\/development-banks-in-india-upsc-economy-notes\/#Q_What_are_the_key_challenges_faced_by_development_banks_in_India\" title=\"Q: What are the key challenges faced by development banks in India?\">Q: What are the key challenges faced by development banks in India?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/edukemy.com\/blog\/development-banks-in-india-upsc-economy-notes\/#In_case_you_still_have_your_doubts_contact_us_on_9811333901\" title=\"In case you still have your doubts, contact us on 9811333901.&nbsp;\">In case you still have your doubts, contact us on 9811333901.&nbsp;<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/edukemy.com\/blog\/development-banks-in-india-upsc-economy-notes\/#Visit_our_YouTube_Channel_%E2%80%93_here\" title=\"Visit our YouTube Channel &#8211;&nbsp;here\">Visit our YouTube Channel &#8211;&nbsp;here<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Development_Banks_in_India\"><\/span><strong>Development Banks in India:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ol class=\"wp-block-list\"><li><strong>Industrial Finance Corporation of India (IFCI):<\/strong><ul><li>Established in 1948.<\/li><li>Provides long-term capital for industries.<\/li><\/ul><\/li><li><strong>Industrial Development Bank of India (IDBI):<\/strong><ul><li>Initially a development bank, later transformed into a universal bank.<\/li><li>Resulted in the formation of IDBI Bank.<\/li><\/ul><\/li><li><strong>Industrial Credit and Investment Corporation of India (ICICI):<\/strong><ul><li>Merged with ICICI Bank in 2000.<\/li><li>Evolved into a universal bank.<\/li><\/ul><\/li><li><strong>Industrial Investment Bank of India (IBI):<\/strong><ul><li>Focus on providing long-term capital for industries.<\/li><\/ul><\/li><li><strong>Small Industries Development Bank of India (SIDBI):<\/strong><ul><li>Focuses on providing long-term capital to small industries.<\/li><\/ul><\/li><li><strong>National Bank for Agriculture and Rural Development (NABARD):<\/strong><ul><li>Established to provide long-term capital for agriculture and rural development.<\/li><\/ul><\/li><li><strong>Export-Import Bank of India:<\/strong><ul><li>Focus on financing and promoting international trade.<\/li><\/ul><\/li><li><strong>National Housing Bank (NHB):<\/strong><ul><li>Focuses on providing long-term capital for housing projects.<\/li><\/ul><\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Evolution_and_Purpose\"><\/span><strong>Evolution and Purpose:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Development banks address the long-term financing requirements of industries and agriculture.<\/li><li>Established to fill the gap left by commercial banks, which primarily address short-term working capital needs.<\/li><li>Evolution includes the transformation of some development banks into universal banks (IDBI Bank, ICICI Bank).<\/li><li>Aim to provide concessional financing to promote industrial and agricultural growth.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Recommendations_and_Transformations\"><\/span><strong>Recommendations and Transformations:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>S.H. Khan committee recommended transforming development finance institutions (DFIs) into universal banks.<\/li><li>Resulted in the formation of IDBI Bank and ICICI Bank, which expanded their services beyond traditional development finance.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Union_Budget_2021-22_and_Development_Financial_Institution_DFI\"><\/span><strong>Union Budget 2021-22 and Development Financial Institution (DFI):<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Proposal:<\/strong> The Union Budget proposed the creation of a Development Financial Institution (DFI) to accelerate investment in the infrastructure sector.<\/li><li><strong>Need for DFI:<\/strong> Infrastructure projects require long-term debt financing, and a professionally managed DFI is considered necessary to provide, enable, and catalyze infrastructure financing.<\/li><li><strong>Corpus:<\/strong> The proposed DFI will have a corpus of Rs 20,000 crores.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Q_What_is_a_development_bank\"><\/span>Q: <strong>What is a development bank?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A: A development bank is a financial institution that provides long-term capital for economic development projects. These projects typically aim to enhance infrastructure, industrialization, and overall economic growth.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Q_What_role_do_development_banks_play_in_Indias_economy\"><\/span>Q: <strong>What role do development banks play in India&#8217;s economy?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A: Development banks in India play a crucial role in facilitating economic development by providing financial assistance to various sectors such as agriculture, industry, infrastructure, and small and medium-sized enterprises (SMEs). They offer long-term loans, equity financing, and technical assistance to support sustainable growth and employment generation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Q_What_are_some_prominent_development_banks_in_India\"><\/span>Q: <strong>What are some prominent development banks in India?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A: Some notable development banks in India include the Industrial Development Bank of India (IDBI), the Small Industries Development Bank of India (SIDBI), and the National Bank for Agriculture and Rural Development (NABARD). Each of these institutions focuses on specific sectors and plays a vital role in fostering inclusive and sustainable development.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Q_How_do_development_banks_differ_from_commercial_banks\"><\/span>Q: <strong>How do development banks differ from commercial banks?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A: Development banks primarily focus on providing long-term financing for development projects and promoting economic growth, whereas commercial banks focus on traditional banking services like deposits, loans, and other financial products for profit-making purposes. Development banks often operate with a broader developmental mandate rather than solely profit maximization.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Q_What_are_the_key_challenges_faced_by_development_banks_in_India\"><\/span>Q: <strong>What are the key challenges faced by development banks in India?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A: Development banks in India encounter various challenges such as balancing financial sustainability with their developmental objectives, managing non-performing assets (NPAs), adapting to changing economic conditions, ensuring effective governance and transparency, and meeting the evolving financing needs of priority sectors amidst global uncertainties. Overcoming these challenges requires continuous innovation, strategic planning, and robust regulatory frameworks.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-essay?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=Essay\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" data-src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/UPSC-Essay-Course-1280\u00d7300-1-3.svg\" alt=\"\" class=\"wp-image-42688 lazyload\" width=\"781\" height=\"182\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 781px; --smush-placeholder-aspect-ratio: 781\/182;\" \/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"block-a89a3d67-2417-45cd-a2fb-0111b244b0c1\"><span class=\"ez-toc-section\" id=\"In_case_you_still_have_your_doubts_contact_us_on_9811333901\"><\/span><strong>In case you still have your doubts, contact us on 9811333901.<\/strong>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p id=\"block-69a62278-baf6-4ddd-a549-0ddd2778f323\">For UPSC Prelims Resources,&nbsp;<a href=\"https:\/\/edukemy.com\/upsc-cse-prelims-resource-centre\" target=\"_blank\" rel=\"noreferrer noopener\">Click here<\/a><\/p>\n\n\n\n<p id=\"block-c56c7fb3-ec87-4e90-b054-6f51ec4c67f5\">For Daily Updates and Study Material:<\/p>\n\n\n\n<p id=\"block-b119f379-961e-41a3-8289-c115ec5ee6e2\">Join our Telegram Channel &#8211;&nbsp;<a href=\"https:\/\/t.me\/WithEdukemy4IAS\" target=\"_blank\" rel=\"noreferrer noopener\">Edukemy for IAS<\/a><\/p>\n\n\n\n<ul class=\"wp-block-list\" id=\"block-b3874375-be5a-4d16-856f-48851f19bc36\"><li>1. 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Mains Answer Writing Practice &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3mZuVxl\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"block-fecb2f6f-20a7-4f52-8c9d-10509a066c20\"><span class=\"ez-toc-section\" id=\"Visit_our_YouTube_Channel_%E2%80%93_here\"><\/span>Visit our YouTube Channel &#8211;&nbsp;<a href=\"https:\/\/www.youtube.com\/@EduKemyforIAS\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n","protected":false},"excerpt":{"rendered":"<p>Development banks play a pivotal role in shaping the economic landscape of India, serving as crucial financial intermediaries focused on fostering sustainable<\/p>\n","protected":false},"author":17,"featured_media":35438,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[209],"tags":[2790,235,232,213,140],"class_list":["post-35436","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy-notes","tag-development-banks","tag-economy-notes","tag-upsc","tag-upsc-notes","tag-upsc_preparation_strategy"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/35436","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/comments?post=35436"}],"version-history":[{"count":1,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/35436\/revisions"}],"predecessor-version":[{"id":35439,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/35436\/revisions\/35439"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/media\/35438"}],"wp:attachment":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/media?parent=35436"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/categories?post=35436"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/tags?post=35436"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}