The IDBI was established on July 1, 1964 under the Industrial Development Bank of India Act, 1964, as a wholly owned subsidiary of the Reserve Bank of India. In terms of the Public Financial Institutions Laws (Amendment) Act, 1975, the ownership of IDBI has been transferred to the Central Government with effect from February 16, 1976.
The most distinguishing feature of the IDBI statute is that it has been assigned the role of the Principal financial institutions for coordinating, in conformity with the national priorities, the activities of the institutions engaged in financing, promoting or developing industry. IDBI has been assigned a special role to play in the matter of the following:
(i) Planning, promoting and developing industries to fill vital gaps in industrial structure;
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(ii) Providing technical and administrative assistance for promotion, management or expansion of industry and
(iii) Undertaking market and investment research and surveys as also techno-economic studies in connection with development of industry.
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IDBI is also expected to co-ordinate, guide and monitor the entire range of credit facilities offered by the other institutions for the small and cottage sector.
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IDBI is empowered to finance all types of industrial concerns engaged or to be engaged in the manufacture, processing or preservation of goods, or in mining, shipping, transport, hotel industry, generation or distribution of power, fishing or providing shore facilities for fishing or in the maintenance, repairs, fishing or servicing of machinery or vehicles, vessels, etc. or for the setting up of industrial estates. The Bank can also assist industrial concerns engaged in the research and development of any process or product or in providing special or technical knowledge or other services for the promotion of industrial growth.
The IDBI Amendment Act, 1986 has enlarged the definition of industrial concerns eligible for assistance from IDBI to cover diverse range of industrial activities including the activities of services sector of industries like informatics, health care, storage and distributing of energy and other services contributing to value addition.
The Act has also widened the scope of business of the Bank so as to cover consultancy, merchant banking and trusteeship activities. The range of financing instruments has been further enlarged to include lines of credit and letters of credit and IDBI has been permitted to grant loan and advances to individuals for investment in industrial concerns.
Further, the authorised capital of IDBI was raised to Rs. 1,000 crores and it can be raised further upto Rs. 2,000 crores by the Central Government by a notification in the official gazette.
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As an apex development bank, the IDBI has been playing a leading role in the field of industrial finance and promotion. Over the last two and a half decades, the bank has evolved new areas of promotional activities to meet the emerging needs for development of industry.
It has also strengthened the institutional structure of industrial finance in the country with effective and appropriate linkages among the development financing institutions based on co-ordinated policies and practices. It provides resource support to State level institutions by way of refinance facilities and certain special schemes.
Although the direct financing by the IDBI is confined, by and large, to the medium and large-scale units, it has been assisting the small-scale sector through its contribution to several special schemes and resource support to the State level institutions.