What is the function of Industrial Development Bank of India?


Functions. Various functions of or types of assistance to be provided by the IDBI are as follows:

(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.

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