Page 162 - DCOM304_INDIAN_FINANCIAL_SYSTEM

Unit 8: Financial Institutions

The apex banking body is Reserve bank of India which governs all banking and monetary Notes
functions in India. Apart from this, there are two types of banks:
(1) Commercial Banks (2) Development Banks

Now under the Commercial Banks there are two sub-types (1) Scheduled Banks, it has four sub
types: (i) Public Sector Banks (State Bank of India and other government Banks), (ii) Foreign
Banks, (iii) Private Sector Banks (like HDFC, ICICI), (iv) Co-operative Banks and (2) Non-
scheduled Banks.
Under the Development Banks, there are three sub types: (1) IFCI (Industrial Finance Corporation
of India), (2) IRBI (Industrial Reconstruction Bank of India), (3) SIDBI (Small Industries
Development Bank of India).

There are three apex bodies: (1) NHB (National Housing Bank), (2) EXIM (Export Import Bank of
India), (3) NABARD (National Bank for Agriculture and Rural Development).
Apart from above, there are credit guarantees Institutions in India that are involved with banking:
Deposit Insurance & Credit Guarantee Corporation secondly, Export Credit Guarantee
Corporation of India Limited.

The development banks in India can be further classified according to their functions and activities:
1. All India Development Banks: Industrial Finance Corporation of India Ltd (IFCI), Industrial
Development Bank of India (IDBI), Small Industries Development Bank of India (SIDBI),
and Industrial Investment Bank of India (IIBI), Industrial Credit and Investment Corporation
of India Ltd. (ICICI Ltd.) has ceased to be a bank after its merger with ICICI Bank with
effect from March 30, 2002. IDBI was converted into a bank on October 11, 2004.
2. Specialised Development Banks: Export-Import Bank (EXIM Bank), IFCI Venture Capital
Fund (IVCF, formerly RCTC) Ltd., ICICI Venture Ltd. (formerly TDICI Ltd.), Tourism
Finance Corporation of India Ltd., and Infrastructure Development Finance Company
Ltd. (IDFC) Ltd.
3. Refinance Development Banks: National Housing Bank (NHB), and National Bank for
Agriculture and Rural Development (NABARD).

4. State Level Development Banks: These include, State Financial Corporations (SFCs), and
State Industrial Development Corporations (SIDCs).
5. Other Development Banks: Some other banking institutions are: Export Credit and
Guarantee Corporation of India Ltd. (ECGC) and Deposit Insurance and Credit Guarantee
Corporation (DICGC).

Of all the above nine institutions only nine (IDBI, IFCI, EXIM Bank, NABARD, SIDBI, IDFC, IFCI,
IIBI and NHB) fall within the regulatory and supervisory domain of the Reserve Bank of India.

Functions of Development Banks in India

In India, development banks have been established and funded by the Government to develop
and promote certain strategic sectors of the economy, and to achieve social goals. The important
sectors of the economy currently supported by the development banks are to promote
industrialization, particularly the high-technology industries, export-oriented industries,
infrastructure development and highly capital-intensive investments and the agriculture sector.
The Development banks also play a crucial role in the development of industries and housing
sectors.

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