IDBI Bank Ltd: IDBI Bank Ltd is a LIC subsidiary that provides banking and financial services. It began as the Indian Industrial Development Bank, a development financial institution that offered financial services to the industrial sector, in 1964.
IDBI merged with the commercial section
In 2005, the organisation combined its commercial section, IDBI Bank, to form the current banking company, which was classified as “other public sector banks.” Later that month, in March 2019, the RBI reclassified it as a private bank. IDBI is the parent company of many national institutions, including SIDBI, India Exim Bank, the National Stock Exchange, and the National Securities Depository Ltd.
As of March 31, 2016, the bank’s total balance sheet was 3.74 trillion. As of February 1, 2020, it had 3,683 ATMs, 1,892 branch offices, with one branch in overseas Dubai, 58 e-lounges, and 1,407 centers. Since about September 2021, LIC has owned 49.24% of the bank, while the Union government owns 45.48%, with LIC controlling the bank’s management.
History of IDBI Bank
Overview of Indian Development Banking
Following World War II and the Economic Depression of the 1930s, development banking evolved. The demand for rehabilitation financing for impacted nations necessitated the establishment of national reconstruction institutions. India had a reasonably developed financial system at its independence in 1947.
Implementing a bank-dominated financial development plan was intended to address the credit demands of specific sectors, mainly agriculture and industries. For that purpose, the Reserve Bank focused on regulating and providing mechanisms for institutional development.
The establishment of the Indian Industrial Development Bank
IDBI was created as a complete and utter branch of the Reserve Bank of India by an Act of Parliament in 1964. IDBI’s ownership was passed to the Union finance minister in 1976. It was designated as the primary banking institution for directing the activities of participating firms in the financing, promoting, and expanding industry in India.
IDBI provides financial assistance in rupees and international currencies for new projects and development, modernization, and diversification.
IDBI’s transformation toward a commercial bank
A committee constituted by the RBI proposed that the IDBI broaden its activities and unify the roles of economic financing and banking operations by moving away from the traditional division between corporate finance and development banking.
IDBI shifted its role from a development finance organization to a commercial institution to stay up with financial sector reforms. IDBI became a limited corporation under the Economic Development Bank Act of 2003.
The Indian Reserve Bank designated IDBI as a “scheduled bank” under the RBI Act of 1934 in September 2004.
LIC Strategic Disinvestment
In January 2019, LIC of India finished the purchase of a 51% majority interest in the bank, making it the largest stakeholder. Following the increase in equity position by LIC of India, the Reserve Bank of India clarified through a press release on March 14, 2019, that IDBI Bank has been reclassified as a privately held bank, with a retroactive impact from January 21, 2019.