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IDBI Bank: Objectives and Functions

IDBI was established as the apex institution for term finance for Indian industry. Its main objectives are to coordinate other financial institutions, supplement their resources, promote key industries, and ensure industrial growth conforms to national priorities. IDBI functions include granting loans and refinancing to other financial institutions and industrial concerns, underwriting shares and debentures, and providing consultancy services. It provides direct financial assistance through loans and investments, as well as indirect assistance by refinancing loans made by other institutions. IDBI also undertakes promotional activities like research, surveys and advice to support industry.

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Rohit Pandey
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2K views2 pages

IDBI Bank: Objectives and Functions

IDBI was established as the apex institution for term finance for Indian industry. Its main objectives are to coordinate other financial institutions, supplement their resources, promote key industries, and ensure industrial growth conforms to national priorities. IDBI functions include granting loans and refinancing to other financial institutions and industrial concerns, underwriting shares and debentures, and providing consultancy services. It provides direct financial assistance through loans and investments, as well as indirect assistance by refinancing loans made by other institutions. IDBI also undertakes promotional activities like research, surveys and advice to support industry.

Uploaded by

Rohit Pandey
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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  • Objectives and Functions of IDBI
  • Types of Financial Assistance

IDBI

Objectives and Functions of IDBI


Objectives
The main objectives of IDBI is to serve as the apex institution for term finance for industry in
India. Its objectives include:
Co-ordination, regulation and supervision of the working of other financial institutions
such as IFCI , ICICI, UTI, LIC, Commercial Banks and SFCs.
Supplementing the resources of other financial institutions and there by widening the
scope of their assistance.
Planning, promotion and development of key industries
and diversification of industrial growth.
Devising and enforcing a system of industrial growth that conforms to national priorities.
Functions
The IDBI has been established to perform the following functions-
To grant loans and advances to IFCI, SFCs or any other financial institution by way of
refinancing of loans granted by such institutions which are repayable within 25 year.
To grant loans and advances to scheduled banks or state co-operative banks by way of
refinancing of loans granted by such institutions which are repayable in 15 years.
To grant loans and advances to IFCI, SFCs, other institutions, scheduled banks, state co-
operative banks by way of refinancing of loans granted by such institution to industrial
concerns for exports.
To discount or re-discount bills of industrial concerns.
To underwrite or to subscribe to shares or debentures of industrial concerns.
To subscribe to or purchase stock, shares, bonds and debentures of other financial
institutions.
To grant line of credit or loans and advances to other financial institutions such as IFCI,
SFCs, etc.
To grant loans to any industrial concern.
To guarantee deferred payment due from any industrial concern.
To guarantee loans raised by industrial concerns in the market or from institutions.
To provide consultancy and merchant banking services in or outside India.
To provide technical, legal, marketing and administrative assistance to any industrial
concern or person for promotion, management or expansion of any industry.
Planning, promoting and developing industries to fill up gaps in the industrial structure in
India.
To act as trustee for the holders of debentures or other securities.
The functions can also be categorized into the following heads:
(i) Direct Financial Assistance:
The IDBI provides direct financial assistance to the industrial concerns in the form of (a)
granting loans and advances; and (b) subscribing to, purchasing or underwriting the issues of
stocks, bonds or debentures.
(ii) Indirect Financial Assistance:
The IDBI provides indirect financial assistance to the small and medium industrial concerns
through other financial institution, such as, State Finance Corporations, State Industrial
Development Corporations, Cooperative banks, regional rural banks, commercial banks. The
Assistance to these institutions include :(a) refinancing of loans given by the institutions;
subscribing to their shares and bonds; (c) rediscounting of bills.
(iiI) Development Assistance:
The creation of the Development Assistance Fund is the special feature of the IDBI. The Fund is
used to provide assistance to those industries which are not able to obtain funds in the normal
course mainly because of heavy investment involved or low expected rate of returns. The
financial resources of the Fund mainly come from contributions made by the government in the
form of loans, gifts, donations, etc; and from other sources. Assistance from the Fund requires
the prior approval by the government.
(iv) Promotional Function:
Besides providing financial assistance, the IDBI also undertakes various promotional activities
such as marketing and investment research, techno- economic surveys. It provides technical and
administrative advice for promotion, expansion and better management of the industrial
concerns.

IDBI Objectives and Functions of IDBI Objectives The main objectives of IDBI is to serve as the apex institution for term
(i) Direct Financial Assistance: The IDBI provides direct financial assistance to the industrial concerns in the form of (a)

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