Industrial Development Bank of India

INTROUCTION

The Industrial Development Bank of India Limited, was established as wholly-owned subsidiary of Reserve Bank of India. The foundation of bank was laid down under an Act of Parliament, in July 1964. The main aim behind the setting up of IDBI was to provide credit and other facilities for the Indian industry, which was still in the initial stages of growth and development. In February 1976, the ownership of IDBI was transferred to Government of India.

After the transfer of its ownership, IDBI became the main institution, through which the institutes engaged in financing, promoting and developing industry were to be coordinated. In January 1992, IDBI accessed domestic retail debt market for the first time, with innovative Deep Discount Bonds, and registered path-breaking success. The following year, it set up the IDBI Capital Market Services Ltd., as its wholly-owned subsidiary, to offer a broad range of financial services, including Bond Trading, Equity Broking, Client Asset Management and Depository Services.

In September 1994, in response to RBI's policy of opening up domestic banking sector to private participation, IDBI set up IDBI Bank Ltd., in association with SIDBI. In July 1995, public issue of the bank was taken out, after which the Government's shareholding came down (though it still retains majority of the shareholding in the bank). In September 2003, IDBI took over Tata Home Finance Ltd, renamed ‘IDBI Home finance Limited', thus diversifying its business domain and entering the arena of retail finance sector.

The year 2005 witnessed the merger of IDBI Bank with the Industrial Development Bank of India Ltd. The new entity continued to its development finance role, while providing an array of wholesale and retail banking products (and does so till date). The following year, IDBI Bank acquired United Western Bank (which, at that time, had 230 branches spread over 47 districts, in 9 states). In the financial year of 2008, IDBI Bank had a net income of Rs 9415.9 crores and total assets of Rs 120,601 crores.

The Present

Today, IDBI Bank is counted amongst the leading public sector banks of India, apart from claiming the distinction of being the 4th largest bank, in overall ratings. It is presently regarded as the tenth largest development bank in the world, mainly in terms of reach. This is because of its wide network of 688 branches, 1139 ATMs and 457 centers. Apart from being involved in banking services, IDBI has set up institutions like The National Stock Exchange of India (NSE), The National Securities Depository Services Ltd. (NSDL) and the Stock Holding Corporation of India (SHCIL).

Products & Services

Personal Banking

• Deposits
• Loans
• Payments - Tax Payments, Stamp Duty Payments, Easy Fill, Bill Payment, Card to Card Money Transfer, PayMate, Online Payments
• Mutual Fund
• Demat Account
• IPO
• Insurance - FamilyCare, Weathsurance
• Cards - Debit Card, Credit Card, Cash Card, Gift Card, International Debit-cum-ATM Card, World Currency Card
• Institutional Banking
• Lockers
• India Post
• NRI Services
• Phone Banking
• SMS Banking
• Account Alerts
• Internet Banking

Corporate Banking

• Project Finance
• Infrastructure Finance
• Syndication, Underwriting & Advisory Services
• Carbon Credits Business
• Working Capital
• Cash Management Services
• Trade Finance
• Tax Payments
• Derivatives
• Technology Upgradation Fund Scheme (TUFS)
• Film Financing Scheme
• Direct Discounting Bills
• Rehabilitation Finance

Others

• SME Finance
• Agri-business Products

Main Functions of IDBI-

• IDBI coordinates between various financial institutions who are highly involved in provide financial assistance, promoting, and developing various industrial units
• IDBI is also engaged in a variety of promotional activities such as development programs for the fresh entrepreneurs, planning of consultancy services for both the small scale enterprises and the medium sized industrial units
• IDBI works for the advancement of technology and other welfare schemes to ensure economic development.
• Industrial Development Bank of India acts as a catalyst in various industrial development programs.
• IDBI provides financial assistance to all kinds of industrial units which comes under the provisions of the IDBI Act.
• IDBI has served various industrial sectors in India for about three years and has grown leaps and bounds in its size and operating units.

IDBI's role as a catalyst

IDBI's role as a catalyst to industrial development encompasses a wide spectrum of activities. IDBI can finance all types of industrial concerns covered under the provisions of the IDBI Act. With over three decades of service to the Indian industry, IDBI has grown substantially in terms of size of operations and portfolio.

Developmental Activities of IDBI

Promotional activities

In fulfillment of its developmental role, the Bank continues to perform a wide range of promotional activities relating to developmental programmes for new entrepreneurs, consultancy services for small and medium enterprises and programmes designed for accredited voluntary agencies for the economic upliftment of the underprivileged. These include entrepreneurship development, self-employment and wage employment in the industrial sector for the weaker sections of society through voluntary agencies, support to Science and Technology Entrepreneurs' Parks, Energy Conservation, Common Quality Testing Centres for small industries.

Technical Consultancy Organizations

With a view to making available at a reasonable cost, consultancy and advisory services to entrepreneurs, particularly to new and small entrepreneurs, IDBI, in collaboration with other All-India Financial Institutions, has set up a network of Technical Consultancy Organizations (TCOs) covering the entire country. TCOs offer diversified services to small and medium enterprises in the selection, formulation and appraisal of projects, their implementation and review.

Entrepreneurship Development Institute

Realising that entrepreneurship development is the key to industrial development, IDBI played a prime role in setting up of the Entrepreneurship Development Institute of India for fostering entrepreneurship in the country. It has also established similar institutes in Bihar, Orissa, Madhya Pradesh and Uttar Pradesh. IDBI also extends financial support to various organisations in conducting studies or surveys of relevance to industrial development.

IDBI Lending Process, Institutional Structure, Training, Information and Data Needs

IDBI was established in 1964 under an Act of Parliament for providing credit and other facilities for the development of industry. It also acts as the principal financial institution for coordinating the activities of institutions engaged in the finance, promotion, or development of industry. The Government of India's shareholding in IDBI amounts to 72% and the rest of the shares are owned by the general public.

IDBI has also offered specialised schemes for energy conservation viz. Equipment Finance for Energy Conservation and Energy Audit Subsidy Scheme. Presently, IDBI provides rupee and foreign currency term loans for the acquisition and installation of energy conservation equipment, and for pollution control and prevention projects in highly polluting industrial sectors, funded inter alia, out of World Bank's Industrial Pollution Prevention Project (IPPP) or the US Agency for International Development-funded Greenhouse Gas Pollution Prevention (GEP) Project. Besides, finance is made available for EE/EM out of the on-going Industrial Energy Efficiency Project of the ADB of which the TA forms a part. Under this project, finance is given to industrial units in rupee as well as in foreign currency. Additional funding needs left unmet by the ADB funds are supplemented by IDBI's own funds as well.

3.1 IDBI Institutional Structure

IDBI is governed by a Board of Directors and its operation is carried out under the supervision of the Chairman and Managing Director assisted by four Executive Directors and one Adviser. With its head office in Mumbai, IDBI has 43 additional offices throughout India. As of November 1998, IDBI was structured into 33 departments, which are organized into five groups to facilitate proper distribution of responsibility. Among these departments, the ones relevant to the efficient lending for ee/em activities are briefly described below.

3.1.1 Project appraisal department

The Project Appraisal Department (PAD) appraises all the industrial project proposals. PAD projects constitute the majority of projects sanctioned by IDBI in terms of value. Besides a number of smaller projects are funded at the branch level.

3.1.2 Corporate finance departments

The three Corporate Finance Departments (CFDs) follow up on the projects that have already been sanctioned, in order to ensure their timely implementation and proper utilization of funds. In addition, a new concept of a Relationship Manager was instituted within the CFDs. These managers will be dedicated to manage IDBI's interactions with a major industrial (ownership) group, such as Reliance Industries, the Tata Group, etc.

While the relationship manager system works well from the perspective of consolidating knowledge about an industry group, it may not work as well where the focus has to be on an aspect of technology within an industry sector. For example, a relationship manager cannot be expected to be an expert on energy efficiency in every industry sector that forms a part of the industry group being dealt with by him/her. Hence, in order to develop some expertise in some of the industries, which are not necessarily dominated only by a few major industry groups, industry-sector-wise approach is also adopted. Thus the organization of a CFD is a workable mix of industry group and industry sub-sector, with the expertise of one Dealing group drawn upon by another.

3.1.3 Forex services and treasury departments:

The Treasury and Funding Division contracts, decides on utilization and monitors all lines of credit from multi-lateral institutions like the World Bank (WB) and the Asian Development Bank (ADB). It manages the various specialized loans and grants for energy and environmental technology projects, including this TA project.

Organizational Structure

IDBI's organization structure is driven by its business objectives of offering the best services to the major industry groups. At the same time it is so organised to have industry specialists in important industrial sub-sectors as well. The organisational structure is geared to provide the best products and services in the present competitive environment while simultaneously attempting to meet its developmental role governed by “issue-based” lending.

Following financial sector liberalisation, the environment has turned highly competitive compelling IDBI to organise itself in a manner to prioritise the objective of offering the best

services to the major industry groups over focus exclusively for energy efficiency and environmental activities. There is a need to create a “home or center” for energy and environmental technical activities. This center needs to be located at the highest level within IDBI in order to ensure visibility, and to provide a resource base, which could be accessed by all the concerned departments described above.

IEEP and other such lines of credit are being managed by the FSD, which is not directly engaged in either project appraisal or in implementation. Hence its role is one of being a facilitator and co-ordinator for giving the needed focus to the ee/em activities. It is quite possible for this Section to be upgraded to be the “home” suggested above with appropriate technical staff for policy making, facilitation of the lines of credit, developmental activities, etc. in ee/em issues. This will help clarify the varied roles of CFD and FSD and avoid duplication of effort, better coordination and communication between the FSD and the CFD.

A system of built-in incentives for co-operation and co-ordination between the concerned departments will also aid the organisation in playing a more effective role in ee/em activities

relating to policy formulation, loan approvals and subsequent disbursement.

3.3 IDBI Lending Procedure

The current procedure for lending at IDBI includes: (1) an inquiry stage, (2) an application stage, (3) site visits, (4) preparation of an appraisal note, (5) an evaluation by IDBI committee, (6) the issuance of a Letter of Intent, and (7) preparation of a legal agreement for lending for suitable projects.

IDBI also operates special credit lines for the mitigation of pollution, implementation of the Montreal Protocol commitments, modernization and expansion of energy intensive industry, etc. The technical norms for these lines were determined individually, but the lending procedure is the same as that for other IDBI projects.

The lending procedure followed by IDBI is comprehensive, based on accepted methods of evaluation and collective wisdom, and is transparent. The procedure, however, does not provide for a serious attempt to evaluate the energy and environmental components of any lending proposal. At each stage of the application for a loan, a company is required to provide information on energy consumption, along with that of other utility services. Energy consumption information is disaggregated into fuels and electricity categories. The company is not required to provide indicators of energy use to IDBI, which makes the information difficult to evaluate. Indicators could link the energy (fuel and electricity) consumption to physical activity levels and permit comparison with best practice in India and abroad. IDBI could also ask for additional information on technical indicators in the loan application that industries are required to complete.

Conclusions and Recommendations

Our evaluation of IDBI's institutional structure, lending procedures, and training and information needs revealed that there is a clear need for greater focus towards ee/em activities, by strengthening the existing institutional structure and capability in this area. This strengthening can be accomplished through the creation and establishment of a “resource center” that will provide the necessary technical backup for IDBI officers at all levels. The center resources will include access to technical experts, handbooks, and databases. The technical experts will assist in the organization of seminars, workshops, and training programs.

Role of Financial Institutions in industrial development

To accelerate the process of industrialization, immediately after independence, Government of India took appropriate steps to create a network of financial institutions to fill the gaps in the supply of long-term finance to industry. IFCI was the first institution which was set-up in 1948 followed by SFCs established by different States/Union Territories under the SFCs Act.1951.

The NIDC (1954), ICICI (1955), NSIC (1955), and RCI (1958) were established.

IDBI was established in 1964 as the apex institution in the field of industrial finance. UTI was also established in the same year. LIC came into existence in 1956 and GIC in 1972. SIDCs/SIICs strengthened institutional set-up at regional level. IRCI was set-up in 1971 which was later renamed as IRBI. Reserve Bank has played an important role in creation of all these institutions. Thus, structure of financial institutions in India has become so greatly diversified

and strengthened that it has the ability to supply finance to a variety of enterprises in diverse forms.

In this , an attempt has been made to analyze the role of specialized financial institutions in meeting the term-requirements of our growing industrial sector. For this purpose, an effort has been made to ascertain the extent and rapidity of financial assistance granted by financial institutions to industrial sector in general and private sector in particular. Apart from analyzing purpose wise, industry wise and state wise assistance granted by financial institutions, special attention has been given to evaluate their role in removal of regional imbalances through provision of finance to projects located in identified backward areas of the country. In order to make an in depth study, three financial institutions of diverse nature namely, IDBI, ICICI and SFCs have been chosen which together provided about two-third of the total financial requirements of the industrial sector.

During 1970-90 assistance sanctioned and disbursed by IDBI has increased at an annual average growth rate of 32.3 per cent and 27.7 per cent respectively, which were higher than the growth rate of sanctions and disbursements of all financial institutions. IDBI has granted 37.4 per cent of its total assistance by way of direct assistance and remaining 62.6 per cent indirectly through other financial institutions. Loans were major form of direct assistance with 88.7 per cent share, while refinance of industrial loans with 59.5 per cent share was the major form of indirect assistance.

Private sector has been the largest beneficiary of IDBI's assistance followed by public, joint and cooperative sectors. IDBI has taken keen interest in granting finances to small scale sector which received 30 per cent of the total assistance sanctioned by IDBI. More than half of its assistance has gone to basic and capital goods industries while consumer goods and services have got a little more than one-third of total assistance of IDBI. It has paid equal attention to new and existing projects in its financing operations. Though IDBI's assistance is spread over all State and Union Territories, but its substantial proportion is concentrated among few relatively developed and large states. Similarly, a major part of its total assistance granted to projects

located in identified backward areas, which formed about two-fifth of its total assistance, has gone to few developed and large states.

In chapter five, the contribution of ICICI in meeting the financial requirements of the industrial sector has been analysed. During 1970-90 assistance sanctioned by ICICI increased at a rate of 26.5 per cent per annum while disbursements increased 23.1 per cent. In accordance with its objective, ICICI has sanctioned 35.7 per cent of its total assistance in the form of foreign currency assistance. Rupee loans constituted 37.5 per cent of total assistance sanctioned by ICICI. More than four-fifth of its total assistance has gone to private sector. ICICI has granted greater part of its assistance (61.7 per cent) to existing projects for their expansion, modernisation, etc. while new projects accounted for 38.3 per cent of total assistance. More than

two-third of ICICI's assistance has gone to non-traditional growth oriented industries like chemicals and chemical products, Iron and Steel, Machinery, etc. Assistance of ICICI is basically concentrated among few relatively developed states despite some reduction during eighties. Over the years, ICICI has been granting an increasing proportion of its total assistance to backward areas of the country, but its major part has gone to backward areas of few developed

states. Household sector has contributed an increasing share in the total financial resources of ICICI, while government's share has declined.

SFCs which are state level development banks set-up for financing small and medium scale industries in their respective states. Till about 1970, operations of all SFCs grew at a slow pace but during seventies there was rapid growth in their operations and the pace has been sustained during eighties also. During 1970-90 sanctions of SFCs increased at a rate of 20.5 per cent per annum while disbursements increased by a marginally higher rate of 21.2 per cent. Performance of different SFCs has varied from one another and from year to year. In accordance with their basic objective, 76.1 per cent of total assistance sanctioned and 91.4 per cent of the total number of units assisted by SFCs were in the small scale sector.

Services have been the largest beneficiary of SFCs' assistance followed by chemicals and chemical products, food products, textiles, etc. SFCs have, by and large, confined their assistance to new projects which accounted 84.4 per cent of total assistance. SFCs have granted more than half of their assistance to projects located in identified backward areas of their respective states. An important feature is that SFCs of relatively backward states have performed better in this regard than that of developed states. However, SFCs depend heavily on government sources for their financial requirements.

The aggregative role of all financial institutions in the industrial development of the country. It clearly reveals that industrial concerns in India depend more on financial institutions to finance their ventures than raising funds directly from the capital market.

Conclusions of this study have been given in the last chapter. Major findings of this study are summarised below:

• During the last twenty years assistance granted by financial institutions has increased at a significantly high rate leading industrial concerns to depend more and more on them.
• In terms of growth rate of sanctions, IDBI and ICICI have outstripped the average growth rate of sanctions of all financial institutions, but SFCs have fallen behind this trend.
• The gap between assistance sanctioned and disbursed is more pronounced in case of IDBI and ICICI but it is relatively narrower in case of SFCs.
• Private sector has been the largest beneficiary of assistance of financial institutions followed by public sector. Proportion of investment-savings gap filled up by financial institutions has increased in private and public sector both during eighties.
• Financial institutions have provided assistance to new as well as existing projects. However, SFCs have confined their financing operations basically to new projects.
• IDBI and ICICI have granted major part of their assistance to basic and capital goods industries but SFCs have paid greater attention on consumer goods industries.
• Statewise break-up of assistance provided by financial institutions reveals considerable concentration among few developed and large states despite some reduction during eighties. North-Eastern states have been almost completely neglected by all financial institutions.
• A significant part of the total assistance granted by financial institutions has gone to projects located in identified backward areas of the country, but its statewise distribution has helped to reduce intra-state disparities in industrial development and increased inter-state disparities between developed and backward states.
• Finally, IDBI and ICICI have generated a significant part of their resources from the household sector but SFCs are largely dependent upon the government sources.

Role of Financial Institutions in Foreign Investment in India

Financial Institutions plays a significant role in Foreign Investment in India. There are various financial institutions in India which undertake significant initiatives to ensure foreign investment inflows in the industrial units in India.

The main role of the financial institutions in India in respect to foreign investments is to aid foreign investors in investment activities in India. The funds from overseas countries come in two forms: Foreign direct Investments and Joint Ventures of the foreign companies with Indian companies.

Foreign direct investments inflows are approved through automatic route or through government route. Those units that require government approval to get funds require the FIPB approval. Foreign Direct Investment through automatic route, on the other hand, does not require FIPB approval. All these allocation of financial assistance to various industrial units in India are guided by the financial institutions set up in various parts of India. Some of the leading financial institutions in India that play an important role in foreign investments in India are RBI, IDBI Bank, IFCI Bank, ICICI Limited and EXIM Bank.

RBI in Foreign Investment-

RBI works through automatic route and government route in allocating funds in various sectors of the Indian industry. Its mandatory for all the foreign investors to get approvals from RBI in order to carry out invest activities in the industrial units in India. FDI is allotted up to 100 percent under automatic route and it does not require approval from FIPB.

IDBI in Foreign Investment-

IDBI acts as a financial institution which allots financial assistance to the industrial sectors which are mainly involved in manufacture or processing of goods, mining, transport generation and distribution of power both in private and public sectors. Industrial Development Bank of India (IDBI) has been a fully owned subsidiary bank of the Reserve Bank of India till February 1976 after which it was disconnected from RBI.

ICICI Limited in Foreign Investment-

ICICI Limited was set up in the year 1994 and ICICI Bank is a entirely owned subsidiary of ICICI Limited. ICICI Limited is known as one the best financial institutions in India as it offers a wide spectrum of services to its customers. ICICI bank offers a wide array of banking products and financial services to corporate and retail customers through various delivery channels, specialized subsidiaries and affiliated firms, venture capital units, non-life insurance sectors, and so on.

EXIM Bank in Foreign Investment-

EXIM Bank plays a pivotal role in providing financial assistance to encourage the export production in India. Direct financial assistance, Foreign investment finance, Term loaning options for export production and export development, Pre-shipping credit, Export bills rediscounting, and Refinance to commercial banks are some of the services that EXIM Bank has specialized in.

Role of IDBI in Foreign Investment

The role of IDBI in Foreign Investment is mainly to provide financial assistance on a consortium basis to various industrial units in India which are mainly involved in manufacturing or processing of goods, mining, transport generation and distribution of power.

Industrial Development Bank of India (IDBI) has been a fully owned subsidiary bank of the Reserve Bank of India till February 1976.

It was then disconnected from RBI and was made an autonomous corporation owned by the Government of India. IDBI is known to be the tenth largest bank in the world in terms of carrying out developmental activities. Some of the financial institutions set up by IDBI to carry out the activities are The National Stock Exchange (NSE), The National Securities Depository Services Ltd. (NSDL), and Stock Holding Corporation of India (SHCIL).

Role of IDBI in Foreign Investment

• It manages various financial institutions working under IDBI bank
• Provides financial assistance to various industrial units in terms of developments
• It also offers refinancing options including term loans to the suitable financial institutions
• It provides funding to the industrial units that are involved in manufacture or processing of goods, mining, transport generation and distribution of power both in private and public sectors
• It also provides finance to various projects, expansion of any project, diversifications, or even developing the projects which will exceed Rs. 30 million and it also provides funding to those projects which cost less than Rs. 30 million through indirect means as it offers refinancing to the main financial institutions such as SFC/Commercial Banks etc

OBJECTIVES OF IDBI

IDBI is the apex institution in the area of long term industrial finance. It was established under the IDBI Act 1964 as a wholly owned subsidiary of RBI and started functioning on July 01, 1964. Under Public Financial Institutions Laws (Amendment) Act 1976, it was delinked from RBI. IDBI is engaged in direct financing of the industrial activities as well as in re-finance and re-discounting of bills against finance made available by commercial banks under their various schemes.

The objectives of this institution are to create a principal institution for long term finance, to coordinate the institutions working in this field for planned development of industrial sector, to provide technical and administrative support to the industries and to conduct research and development activities for the benefit of industrial sector.

It raises funds by way of market borrowing by way of bonds and deposits, borrowing from Govt. and RBI, borrowing abroad in foreign currency and lines of credit.

Its functions include:

-direct loans (rupee as well as foreign currency) to industrial undertakings as defined in the Act to finance their new projects, expansion, modernisation etc.

-soft loans for various purposes including modernisation and under equipment finance scheme

-underwriting and direct subscription to shares/debentures of the industrial companies.

-sanction of foreign currency loans for import of equipment or capital goods.

-short term working capital loans to the corporates for meeting their working capital requirements.

-refinance to banks and other institutions against loans granted by them.

Of late, with the reforms in the financial sector, IDBI has taken steps to re-shape its role from a development finance institution to a commercial institution. It has floated its own bank IDBI Bank as also a Mutual Fund.

During the financial year 1999-2000 IDBI's total sanctions were Rs.28308 cr (19.2% increase), the total assets were Rs.72169 cr, net worth at Rs.9025 cr, capital adequacy ratio of 14.5%, DER 6.8:1 and PBT Rs.1027 cr (1301 cr previous years). To meet emerging challanges, it has been introducing new products, setting up Mergers & Acquistions Divn, increasing fee based business such as corporate advisory services, credit syndication, debenture-trushtee ship etc., setting up of IT sector subsidiary-IDBI Intech Ltd, venture capital fund, joint ventures and transfer of not less than 51% of IDBI's share capital in SIDBI to PSBs as a result of SIDBI (Amendment) Act 2000 effective from 27.03.2000.

IDBI scouting for buyouts, two banks on radar

After acquiring United Western Bank three years ago, IDBI Bank is at it once again and has identified two domestic lenders as possible targets. Disclosing this, the public sector bank's Chairman and Managing Director Yogesh Agarwal told reporters here today that talks were on with the two banks.

He did not divulge the identities of the two banks.

IDBI's move is in line with the central government's thinking favoring a consolidation in the Indian banking sector.

IDBI does not need to raise funds for the acquisitions but may look at capital raising to finance its business growth. The bank has dropped its earlier plan to sell its Pune-based home loan subsidiary, IDBI Home Finance (IHFL).

Review of Progress (Operations)

IDBI has given special attention to better regional development and innovational and promotional activities. It has conducted surveys of backward regions. It has given special help to backward regions on concessional terms. IDBI is playing a more dynamic role in promoting growth of industries as an innovator in the area of industrial finance. The financial resources are being diverted into socially more desirable channels. Emphasis is being placed on assistance to small and new entrepreneurs and units located in underdeveloped regions in the country.

IDBI is the major source of industrial finance. Its sanctioned and disbursed amount is 37% and 40% respectively of the total sectioned and disbursed amount of all the term-lending institutions. In the field of company promotion, IDBI has set up technical consultancy organisation which helps in the preparation of feasibility studies, project reports, guidance in the economic, financial and managerial aspects of the new prospect.

Refinance of export credit is offered at a lower rate of interest. In the field of export financing, it was acting as an export bank. It is due to the fact that IDBI is the apex bank in the world of industrial finance and it must act primarily as a residual lender of last resort and fill up the gaps in industrial finance which are left out by other financial institutions.

Critical Evaluation

The IDBI, during 35 years of its working has done commendable job in different areas. It has given special attention to better regional development and innovational and promotional activities. It has conducted surveys of backward regions. It has provided special help to backward areas of the country on concessional terms. The financial resources of IDBI are being directed into socially more desirable channels, refinance of export credit is offered at the lower rate of interest. It sanctioned and disbursed amounts are nearly 37% and 40% respectively of the total sanctioned and disbursed amount of all the term lending institutions of India. Thus, under the able leadership of IDBI, the specialized term financial institutions of our country are poised to play a vital and dynamic role in the process of industrial development of our country.

Investment & Industrial Scenario:

The rising trends in gross domestic investment and savings, as depicted in figure 1, augur well for the sustainable development of the economy.

Trends in Investments & Savings (as % of GDP):

Year Gross Domestic Investment Gross Domestic Savings

2003-04 27.5 29.8

2004-05 32.1 31.7

2005-06 35.5 34.2

2006-07 36.9 35.7

2007-08 39.1 37.7

During the fiscal year 2008-09, Index of Industrial Production (IIP) recorded a growth of 2.4% as compared to a growth of 8.5% achieved during 2007-08. As per use-based classification, growth in IIP was largely driven by capital goods (7.0%) and consumer goods (4.4%).

Sectoral Growth of IIP (%):

2007-08 2008-09

Basic Goods 7.0 2.7

Capital Goods 18.0 7.0

Intermediate Goods 8.9 -2.7

Consumer Goods 6.1 4.4

IIP (General) 8.5 2.4

The index of six infrastructure industries (accounting for a weightage of 26.7% in IIP) viz. electricity, crude oil, petroleum refinery products, coal, finished steel and cement witnessed a growth rate of 2.7% during 2008-09 (5.9% during 2007-08).

Foreign Exchange Reserves & Exchange Rates:

As at March 31, 2009, India's foreign exchange reserves stood at USD 251.99 billion, which were lower by USD 57.74 billion compared to end-March 2008. During 200809, forex market exhibited turbulent features owing to failure of globally active banks. Exchange rate for USD as at end-March 2009 stood at Rs.50.95 as compared to Rs.39.97 as at end-March 2008.

IDBI provide financial assistance to industrial development

IDBI Bank provides financial assistance to industrial concerns by way of a variety of products and services which include project finance, equipment finance, asset credit, equipment lease, technology upgradation fund scheme, refinance for medium scale industries and bills finance. It provides project-related finance for the establishment of the new industrial projects as well as for expansion, diversification and modernization of existing industrial enterprises. In response to the changing financial needs of industries, IDBI Bank has also designed other products to meet the short term funding, core working capital and other short term requirements of industrial units. It also offers fee-based services in the areas of merchant banking, corporate advisory services, forex services, etc. IDBI Bank has also set up subsidiaries and associates to offer banking products & services, capital market and trusteeship services, as also registrar and transfer services structured to meet customized client requirements.

For meeting the fund requirements thereof as well as towards its various other business operations, IDBI Bank raises resources directly from the market (at market - related interest rates) from retail as well as institutional investors - both within India and abroad, through a variety of investor-friendly instruments. IDBI Bank's resource raising efforts have brought it closer to all sections of society.

Resource Raising

IDBI Bank has been mobilizing resources through a combination of debt and equity. It made a public issue of equity shares in 1995 in terms of the Offer Document approved by SEBI. IDBI Bank's shares are listed on National Stock Exchange and Mumbai Stock Exchange. The shares can be held in dematerialised (demat) form in National Securities Depository Ltd. (NSDL) or Central Depository Services (India) Ltd. (CDSL). NSDL/CDSL are depositories where the securities of an investor are held in electronic form through the medium of Depository Participants (DPs). This facility obviates the difficulties of loss, signing of transfer deeds, delay in transfer, etc. and offers scope for paperless trading.

IDBI Bank also raises funds from the public through public issues of unsecured bonds. The objective of various bond issues is to part finance funding requirement of IDBI Bank and at the same time provide appropriate investment opportunities for the retail investors. The three Registrars appointed by IDBI Bank for various public issues have also been retained for servicing the public issues of IDBI Bank.

Code of Business Principles

Business Partners

IDBI Bank is committed to establishing mutually beneficial relations with its customers and business partners. It also expects its partners to adhere to business principles consistent with its own, in all its business dealings.

Business Integrity

IDBI Bank shall not give or receive, whether directly or indirectly, bribes or other improper advantages for business or financial gain. No employee may offer, give or receive any gift or payment, which is, or may be construed as being, a bribe. Any demand for, or offer of, a bribe must be rejected immediately and reported to management.

Community Involvement

IDBI Bank strives to be a trusted corporate citizen and, as an integral part of society, to fulfil its responsibilities to the societies and communities in which it operates.

REFINANCING OPTIONS OF IDBI

Education loans

IDBI Bank aim at providing financial support to deserving/ meritorious students for pursuing higher education in India and abroad. With an array of courses to choose from and easy repayment options, IDBI Bank makes sure you get complete financial backing.

Home loans:

Home, sweet home, built out of your dreams. A place where you return after a hard day's work and relax, a place where you share precious moments with your family. A place that gives you a sense of belonging. IDBI Bank helps you realize your long cherished dream of owning your home through hassle free and customer friendly home loans.

Loan against property:

We realize how important it is to raise money in the face of exigencies. We help you through these difficult situations through our customer friendly loans against property (residential & commercial) product.

Business loan:

IDBI Bank offers Business Loan to business people for their short or long term financial needs. A lot of times it is important for businessmen to acquire a certain amount of money for running their enterprise. It is well known that without the required capital no business can run.

Personal loan:

You don't have to wait till you save enough money to fulfill a dream that's just a step away with a Personal Loan from IDBI you can go ahead and have all the things you've been dreaming of without even worrying how to repay it. Personal Loans from IDBI comes with an insurance cover. You can also transfer your existing loan to IDBI and save up to Rs 50,000

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