IDBI Bank

A development finance institution, IDBI Bank Limited (IDBI Bank or IDBI), is owned by the Life Insurance Corporation of India and the Indian government. The Industrial Development Bank of India was founded in 1964 as a development finance organization that offered financial services to the industrial sector. The organization was classified as an “other development finance institution” when it combined its commercial component, IDBI Bank, to establish its current banking company in 2005. Due to substantial NPA and capital adequacy difficulties, the Indian government later in March 2019 instructed Life Insurance Corporation to inject capital into the bank. They also directed LIC to manage the bank to comply with regulatory standards. The RBI immediately corrected IDBI, and on March 10, 2021, IDBI was released from PCA. The Government of India currently owns a direct and indirect 95% stake in IDBI Bank. In a communication dated December 17, 2019, the Government of India (GoI) clarified this situation and instructed all Central and State Government departments to take IDBI Bank into consideration when allocating government business. Many national institutions, including SIDBI, EXIM, the National Stock Exchange of India, SEBI, and National Securities Depository Limited, have their roots in IDBI. As of March 31, 2016, the bank’s total balance sheet was 3.74 trillion. As of 1 February 2020, it has 3,683 ATMs, 1,892 branches, one overseas in Dubai, 58 e-lounges, and 1,407 centers. In September 2021, Life Insurance Corporation owned 49.24% of the shares, compared to the Government of India’s 45.48%, and LIC controlled the bank’s management.

History

Following World War II and the Great Depression in the 1930s, development banking was born. The establishment of national organizations for rebuilding was necessitated by the need for finances for reconstruction in the afflicted countries. When India gained its independence in 1947, its financial system was already reasonably advanced. The adoption of a financial development plan dominated by banks was intended to address the sectoral credit demands, notably of industry and agriculture. The Reserve Bank focused on regulating and creating systems for institution creation in order to achieve this goal. To satisfy the needs of general banking as well as the short-term working capital requirements of business and agriculture, the commercial banking network was extended. The establishment of specialized development financial institutions (DFIs), including the IDBI, NABARD, NHB, and SIDBI.