Wednesday, 26 September 2012

Discuss the role of industrial development bank in the development of our economy

The IDBP was set up in 1961. Its paid up capital before 1974 was Rs. 50 million. Its 51% was held by the Federal government and 49% by the Provincial governments commercial banks and private sector. After nationalization the private sector share was transferred to Federal government. It is an important source which supplies the funds for industrial development.


1. Its paid up capital is Rs. 157 million. It is the main source of its funds.

2. It provides medium term and long term credit facilities.

3. It provides loans for the establishment of new industrial units.

4. It also provides loan for the replacement needs of the old units.

5. It acts as a merchants banking.

6. It undertakes the commercial banking.

7. It provides consultancy facility to its clients.

8. It provides loan in the form of equity.

9. It encourages the establishment of industries in the less developed areas of the country.

10. It pays due regard to the export oriented industries which are based on domestic raw materials.

11. It is working as an credit agency of the world bank Asian development bank for small scale industry.

Its main objectives is to spread the benefits of industrialization in all  the classes of the people. But the financial condition of the bank is not satisfactory. People borrowed the money from the IDBP adversely. The general investment climate is not favourable in the country. The government has tried its best to recover the loans but still a big amount is recoverable. The present government is paying proper attention to improve its efficiency and now it has focused on commercial banking.
NIT was merged in National bank in 2001, because it was suffering a loss.


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