Note on Development Bank

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Societe Generale de Belgique
Societe Generale de Belgique

The bank which facilitates the economic sectors such as industrial, agricultural, rural, etc. by providing capital and technical assistance for their development is known as a development bank. They mainly fulfil a financial, administrative and technical requirement for the development of infrastructure facilities like transportation, electricity, communication, health, education, agriculture, industry, and mining in the country.

The oldest development bank named Societe Generale de Belgique was established in 1822 AD in Belgium. In Nepal, development banks are established under the provision of Development Bank Act, 2052 A.D. Nepal Industrial Development Corporation (NIDC), Agricultural Development Bank and other private development banks already have been established in Nepal under this Act.

Functions of Development Bank

The functions performed by the development banks are divided into the following two groups:

Development Functions

  1. Establishment of industries, promotion and research of technology
    The development bank looks forward to the technology required for the new industries, analyses the market, identifies the priority sector, and provides managerial and administrative skill and knowledge. It helps in collecting capital and establishing such new industries in the feasible locations.

  2. Helps an industrial organization
    Development bank helps the industries directly or indirectly for the preparation of plans and policies and implementing. It also helps to manage capital items like land, furniture, vehicle, machinery, etc. as well as raw materials required for the smooth running of the industries.y

  3. Identifies priority sector
    Development bank identifies and selects the priority sector of the country. After selecting them, it provides the necessary resources to carry out the selected development works.

  4. Maintains proper environment for investment
    Development Bank encourages and attracts national and international investors. For this, it maintains a proper environment for investment and gives the guarantee of security for their investment.

  5. Analysis of product
    Development Bank analyses the possible market in the agricultural and industrial sectors before launching the product. It analyses the product considering the availability of resources, labours, market, condition, product demand, transportation, etc. After these analyses, it provides information to the public.

Banking Functions

  1. Grants loan
    It provides short-term, mid-term, and long-term loans in agricultural and industrial sectors against the security deposit. It grants a loan to purchase improved seeds, fertilizers, agricultural tools, machinery and equipment as well as to expand and develop industries.

  2. Remits money
    Remitting Money
    Remitting Money

    Development bank helps in remittance of money which is its important functions. It issues bank draft, letter of credit, telegraphic transfer (TT), credit cards, etc. for remittance of money from one place to another.

  3. Accepts deposits
    It accepts the deposits from various sources and public under the current account, saving account and fixed deposit account. It also provides withdrawal facilities to its depositors. It utilizes such deposits in development sectors like agriculture, industries, trade, etc.

  4. Purchases and sales of shares and debentures
    The shares, debentures, bill of exchange, etc. issued by different industries are purchased and sold by development bank. In case of a bill of exchange, the concerned party should pay its value within 3 months.

  5. Serving with agency functions
    The agency function performed by a development bank are payment to the creditors, water and electricity bills, subscription, insurance premium, etc. and collection from debtors, receiving dividends, interest and commission, etc. on the behalf of the clients as per outstanding instructions.

  • The bank which facilitates the economic sectors such as industrial, agricultural, rural, etc. by providing capital and technical assistance for their development is known as a development bank. 
  • The oldest development bank named Societe Generale de Belgique was established in 1822 AD in Belgium. 
  • Development bank helps the industries directly or indirectly for the preparation of plans and policies and implementing them. 
  • Development Bank encourages and attracts national and international investors.
.

Very Short Questions

The development functions of development bank are as follows:

  1. Establishment of industries, promotion and research of technology:
    The development bank looks forward to the technology required for the new industries, analyses the market, identifies the priority sector, and provides managerial and administrative skill and knowledge. It helps in collecting capital and establishing such new industries in the feasible locations.
  2. Helps an industrial organization:
    Development bank helps the industries directly or indirectly for the preparation of plans and policies and implementing. It also helps to manage capital items like land, furniture, vehicle, machinery, etc. as well as raw materials required for the smooth running of the industries.
  3. Identifies priority sector:
    Development bank identifies and selects the priority sector of the country. After selecting them, it provides the necessary resources to carry out the selected development works.
  4. Maintains proper environment for investment:
    Development Bank encourages and attracts national and international investors. For this, it maintains a proper environment for investment and gives the guarantee of security for their investment.
  5. Analysis of product:
    Development Bank analyses the possible market in the agricultural and industrial sectors before launching the product. It analyses the product considering the availability of resources, labours, market, condition, product demand, transportation, etc. After these analyses, it provides information to the public.

The banking functions of development bank are as follows:

  1. Grants loan:
    It provides short-term, mid-term, and long-term loans in agricultural and industrial sectors against the security deposit. It grants a loan to purchase improved seeds, fertilizers, agricultural tools, machinery and equipment as well as to expand and develop industries.
  2. Remits money:
    Development bank helps in remittance of money which is its important functions. It issues bank draft, letter of credit, telegraphic transfer (TT), credit cards, etc. for remittance of money from one place to another.
  3. Accepts deposits:
    It accepts the deposits from various sources and public under current account, saving account and fixed deposit account. It also provides withdrawal facilities to its depositors. It utilizes such deposits in development sectors like agriculture, industries, trade, etc.
  4. Purchases and sales of shares and debentures:
    The shares, debentures, bill of exchange, etc. issued by different industries are purchased and sold by development bank. In case of a bill of exchange, the concerned party should pay its value within 3 months.
  5. Serving with agency function:
    The agency function performed by a development bank are payment to the creditors, water and electricity bills, subscription, insurance premium, etc. and collection from debtors, receiving dividends, interest and commission, etc. on the behalf of the clients as per outstanding instructions.

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  • The bank which facilitates the economic sectors such as industrial, agricultural, rural, etc. by providing capital and technical assistance for their development is known as ______.

    development bank
    commercial bank
    Nepal Rastra Bank
    central bank
  • Development banks mainly fulfil financial, administrative and technical requirement for the development of infrastructure facilities like ______.

    all the options are correct
    electricity
    transportation and communication
    health and education
  • The oldest development bank named Societe Generale de Belgique was established in ______in Belgium.

    1842 AD
    1835 AD
    1856 AD
    1822 AD
  • The full form of NIDC is ______.

    Nepal Ice-cream Delication Corporation
    National Industrial Development Co-operatives
    Nepal Industrial Development Corporation
    Nepal Investment Development Corporation
  • Which one of them is the function of development bank?

    helps industrial organization
    identifies priority sector
    All the options are correct
    grants loan
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