Page 14 - DMGT303_BANKING_AND_INSURANCE

Unit 1: Indian Banking System

Notes

Notes National Housing Bank operates as a multifunctional development finance
institution for the housing sector.

1.5.4 Housing and Urban Development Corporation Ltd. (HUDCO)

It was set up in 1970 as a Government of India undertaking for financing and undertaking
housing and urban development. It provides loans to public institutions viz. State Housing
Boards, Cooperative Societies etc.

1.5.5 Housing Development Finance Corporation (HDFC)

Background
HDFC was incorporated in 1977 with the primary objective of meeting a social need - that of
promoting home ownership by providing long-term finance to households for their housing
needs. HDFC was promoted with an initial share capital of Rs. 100 million.

Business Objectives

The primary objective of HDFC is to enhance residential housing stock in the country through
the provision of housing finance in a systematic and professional manner, and to promote home
ownership. Another objective is to increase the flow of resources to the housing sector by
integrating the housing finance sector with the overall domestic financial markets.

Organizational Goals
HDFC’s main goals are to a) develop close relationships with individual households, b) maintain
its position as the premier housing finance institution in the country, c) transform ideas into
viable and creative solutions, d) provide consistently high returns to shareholders, and e) to
grow through diversification by leveraging off the existing client base.
HDFC is a professionally managed organization with a board of directors consisting of eminent
persons who represent various fields including finance, taxation, construction and urban policy
and development. The board primarily focuses on strategy formulation, policy and control,
designed to deliver increasing value to shareholders.

1.5.6 Industrial Development Bank of India (IDBI)

It is India’s premier Development Financial Institution (DFI) and the 10th largest development
bank of the world. It was established on 1.7.64 as a wholly owned subsidiary of RBI. Its ownership
was transferred to Government of India on 16.2.76, which now holds 72% of shares. Its authorized
capital is Rs. 1000 crores which can be further increased to 2000 crores. During 1995-96, it issued
17.31 lakh shares to the public at a premium of Rs.120 per share.

Developmental Activities of IDBI

Promotional activities

In fulfilment of its developmental role, the bank continues to perform a wide range of promotional
activities relating to developmental programmes for new entrepreneurs, consultancy services

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