Question

Development banks have not achieved the goals for which they were established. Discuss this statement.

Answer 1

A Development bank may, thus, be defined as a financial institution concerned with providing all types of financial assistance (medium as well as long-term) to business units, in the form of loans, underwriting, investment and guarantee operations, and promotional activities-economic development in general, and industrial development, in particular. In short, a development bank is a development-oriented bank. The main objectives of Development Banks are:

• They promote industrial growth.

• To develop backward areas.

• To create more employment opportunities.

• The generate more exports and encourage import substitution.

• To encourage modernization and improvement in technology.

• To promote more self-employment projects.

• The revive sick units.

• To improve the management of large industries by providing training.

• To remove regional disparities or regional imbalance.

• They promote science and technology in new areas by providing risk capital, and.

• To improve the capital market in the country.

If we will discuss the primary goal of developmental bank it is a multi-tasking financial institution to cover all medium and longrun financial requirement of different segments. When it is coming to fulfilling the objective it is been bounded with limitation a d complexity of central bank operation. Again it is only following the task of general commercial bank approach. Different goal and objectives could not meet the objective. The operational activity and promotional activities are limited with government decision. So in overall assessment of development bank is not reached its primery goal.