Full Form of IDBI – Industrial Development Bank of India
The full form of IDBI is the Industrial Development Bank of India. It is a Development Financial Institution constituted in 1964, as a wholly-owned subsidiary of the Reserve bank of India, for providing financial aid to industries and assisting the development institutions (like NSE, NSDSL, SIDBI, etc.) in India post-Independence.
It is constituted as a Development Financial Institution in the year 1964 by a parliamentary Act. In 1976, the Reserve Bank of India transferred the ownership of IDBI to India’s Government, and it became the prominent financial institutionFinancial InstitutionFinancial institutions refer to those organizations which provide business services and products related to financial or monetary transactions to their clients. Some of these are banks, NBFCs, investment companies, brokerage firms, insurance companies and trust corporations. for promoting industrial development in India. It also played a key role in the development of national importance institutions like the National Stock Exchange, National Securities Depository Services Limited, Stock Holding Corporation of India, Small Industrial Development Bank of India, Exim Bank, and Entrepreneurship development institute of India.
Following are the main functions of IDBI Bank –
- Providing financial support for the industries: The long term financial assistance say for 25 years.
- Undertake market study and research for finding the investment opportunity relate to industrial development.
- Promoting institutions working for industrial development.
- Providing technical and administrative assistance for the promotion and expansion of industries.
- Coordinating and supervising the activities of the institutions working in the financing sector.
- Facilitate balanced industrial development across India.
In 2003, IDBI converted to a commercial bank under the act Industrial Development Bank (Transfer of undertaking and Repeal) Act, 2003. The bank gained its new status as a part of reforms in the financial sector. Later on, in 2004, it was incorporated as a scheduled bank. The bank was renamed IDBI Ltd.
In January 2019, the Reserve Bank of India reclassified IDBI bank as a private sector bank for regulatory purposes after the 51% acquisition of stake by the Life Insurance Corporation of India. Now the government holding is 46.46% stake in the bank.
The headquarters of the bank is located in Mumbai, with 5 regional offices. Apart from that, the bank has branches in different locations. The organization and management consist of Chairman and Managing Director appointed by India’s government and 20 other directors nominated by the govt. The board has formed an executive committee consisting of 10 members, including the chairman and Managing director, responsible for financial assistance approval.
Following are the subsidiaries of IDBI Bank –
- IDBI Capital Market Services Ltd(ICMS)
- IDBI Asset Management Ltd (IAML)
- IDBI MF Trustee Company Ltd(IMTCL)
- IDBI Federal Life Insurance Company Ltd(IDBI Federal)
- IDBI Intech Ltd.(IIL)
ICMS, IAML, IMTCL, and IIL are the wholly-owned subsidiariesWholly-owned SubsidiariesWhen a company’s almost all of the outstanding shares are owned by another company (parent) then it can be said that it is a wholly-owned subsidiary of that company and it is controlled by the parent company. For example, Walt Disney Entertainment owns 100% of Marvel Entertainment which produces movies. of IDBI Bank. Whereas IDBI federal is a joint ventureJoint VentureA joint venture is a commercial arrangement between two or more parties in which the parties pool their assets with the goal of performing a specific task, and each party has joint ownership of the entity and is accountable for the costs, losses, or profits that arise out of the venture. of IDBI Bank, Federal Bank, and Ageas insurance international. IDBI has a 48% stake, and other companies have 26% each.
Products and Services of IDBI
Like every other bank, IDBI also provides various products and services to its customers. The most important factor is the bank is providing products and services to the Agriculture sector also. The products and services provided under Personal, Corporate, MSME, Agri, and NRI Banking.
#1 – Personal Banking
Under this category, the bank provides normal banking products like preferred banking, loans, fixed deposit and lockers, cards, 24-hour banking, Flexi current account, etc. apart from that, the bank provides
- Kutumb-Family banking
- Pradhan Mantri Social Security Scheme
- Trusteeship through ITCL
- Sukanya Samriddhi Account
#2 – Corporate Banking
The main product in this banking is the financial assistance to the corporate. The assistance is based on the requirement like long term, short term, working capitalWorking CapitalWorking capital is the amount available to a company for day-to-day expenses. It's a measure of a company's liquidity, efficiency, and financial health, and it's calculated using a simple formula: "current assets (accounts receivables, cash, inventories of unfinished goods and raw materials) MINUS current liabilities (accounts payable, debt due in one year)", channel financing, Bill discounting, etc.
- Non-fund based assistance like bank guarantee, letters of credit, and buyer’s credit.
- Cash managementCash ManagementCash Management refers to the appropriate collection, handling, & disbursement of cash for ensuring financial stability & avoiding insolvency risk. services
- Treasury both domestic and forex
- Trade FinanceTrade FinanceTrade Finance is the funding of trade transactions (both domestic and international). It is conducted in the presence of both buyer and seller and can be facilitated with the help of various intermediaries like banking and financial institutions.
- Govt Business
- Corporate Schedule of Facilities
#3 – MSME Banking
This category mainly focuses on the development of Micro Small Medium Enterprises.
- Financial assistance to MSMEs: It includes a full range of banking solutions to MSME entrepreneurs.
- Loan against Property: Providing loan against self-owned commercial and residential properties
- IDBI Dhanvantari Loan: Loan facility offered to doctors for running a clinic or hospital.
- Loan to small road water transport operators: They play a key role in society’s socio-economic development. This is the financial assistance for buying vehicles or vessels for running their business.
- Sulabh Vyapar Solutions: This is for small traders, retailers, and wholesalers.
- Vendor FinancingVendor FinancingVendor Financing, also known as trade credit, is lending of money by the vendor to its customers who in turn use the money to buy products/services from the same vendor. Vendor Financing is when the borrower uses the borrowed amount for goods/services from the lender itself. The vendor gives a line of credit to its customer based on their goodwill and rapport..
- Laghu Udhyami Credit Cards: This is for the existing customers belonging to micro and small individual unit
- IDBI loan for Service Sector: The assistance for those involved in the manufacturing and supply of goods and services to corporates.
- IDBI Mudra Loan: This facility is focused on those who involved in nonfarm business activities under Pradhanmantri Mudra YojanaMudra YojanaMUDRA (Micro Units Development and Refinance Agency) is a Non-Banking Financial Corporation involved in uplifting the Micro Small and Medium Enterprises. The government of India has proposed mudra loan in the Finance Budget of 2015.
#4 – Agriculture Banking
This is the most important and distinct service by IDBI –
- Short term Agricultural finance: Crop Loans, Gold finance, and warehouse receipt finance scheme
- Long term finance like farm mechanization, dug wells, minor irrigation, land purchase for agriculture purpose, land development, Horticulture, and forestry development loans, purchase of bullock and carts, biogas plants
- Loans for allied activities like poultry farming, dairy farming, fisheries, sericulture, sheep and goat rearing, Beekeeping.
- Indirect financings like loans to construction and running of storage facilities and development of Agri clinics and agribusiness centers
#5 – NRI Banking
This is the service providing to NRIs like NRI account, NRE account, Remittance services, and FCNR deposits.
IDBI bank provides innovative services as well to its customers like –
Real-time monitoring System: enable the customers to scan the transactions to identify fraud transactions.
Abhay Card Limit Control App: It an app allows the customers to control their debit and credit cards
Mini Enterprise Service Bus: It helps to reduce the solution development time
Facebook and Twitter Banking: It helps to carry out the transactions through social media platforms in a safe and secure way.
IDBI is now a universal bank operated by cutting-edge core banking platforms,. It is one of the largest commercial banks in India, with more than 50 years of glorious expertise in the financing industry. The journey started as DFI, and now it continues as a private sector bank by holding its vision “To be the most preferred and trusted bank enhancing value for all stakeholders.”
This has been a guide to the Full Form of IDBI and its definition. Here we learn the functions and subsidiaries of IDBI along with its products and services. You may refer to the following articles to learn more about finance –