ISBN: 978-93-94174-93-1

Development Banks Plays an Important Role in the Trade & Transaction

Assistant Professor, Department of Commerce, Srm Institute Of Science And Technology, Vadapalani, Chennai 6000024, India

Development banks play a pivotal role in driving industrialization, fostering economic development, and bridging long-term financial gaps that conventional banks are unable to fill. As specialized financial institutions, they provide medium and long-term credit, equity support, underwriting, guarantees, and technical assistance to industrial, agricultural, and infrastructural sectors. This chapter explores the conceptual foundations, evolution, operational mechanisms, and national significance of development banks, with a particular focus on the Indian context. It highlights how institutions such as IFCI, IDBI, SIDBI, EXIM Bank, and NABARD contribute to industrial growth, entrepreneurship promotion, rural development, export expansion, and technology advancement. Unlike commercial banks, development banks serve as development catalysts—supporting new enterprises, reviving sick units, strengthening capital markets, and promoting balanced regional development. The chapter also examines the structural features, capitalization patterns, functions, and policy frameworks that enable these institutions to serve public interest while maintaining financial sustainability. Despite challenges related to resource mobilization and risk exposure, development banks continue to play an indispensable role in India’s socio-economic progress. By filling critical financing gaps, promoting innovation, and supporting small and medium enterprises, development banks remain a cornerstone of national development strategy.

*Corresponding author; e-mail: shenbaskar@gmail.com

Cite this Chapter: Shenphgavalli, S. 2025. Development Banks Plays an Important Role in the Trade & Transaction. In: Dr. Lubna Suraiya Dr. P. Kanchana (Eds.). Commerce Reimagined: The Future of Trade and Transactions. Excellent Publishers, India. pp. 123-132. doi: https://doi.org/10.20546/978-93-94174-93-1_2_9