IDBI Bank Full Form refers to Industrial Development Bank of India. IDBI is a financial service company belongs to the Govt. of India and has its headquarters in Mumbai. IDBI has been one of the best and leading banks of the Indian Government which is also said to be the 10th largest bank in the world.
IDBI has been considered to have good reach as it has around 3000 ATMs and 1746 branches (one branch in Dubai), more than 1285 centers (including 2 overseas centers in Beijing and Singapore) across India. IDBI was established as a subsidiary of the RBI (Reserve Bank of India) in 1964.
Though it was established for developmental services, later it was converted into a commercial bank under the chairmanship of S.H.Khan who supported for the harmonization of developmental banking and commercial banking in India. Thus, IDBI obtained ‘Ltd’ status. Later it rescued the United Western Bank Satara and acquired the same in 2006 which contributed to the exponential increase in the number of branches of IDBI.
IDBI Full Form – Additional Information
For the purpose of our discussion, we have the Industrial Development Bank of India Bank, also known by its popularly used abbreviated form IDBI Bank as our subject. In this article, we shall explore certain aspects of the Bank in great elaboration but before we move towards them, we shall discuss briefly what IDBI is.
Industrial Development Bank of India Bank (hereinafter it will be referred to by its abbreviated form IDBI) is one of the most prominent banks in the country. It is basically an Indian finance service company, which is owned by the government of India. The Bank is headquartered in Mumbai city, India. The Bank was founded in the year 1964 vide a Parliamentary Act. The Act was enacted with the purpose of facilitating credit and other financial services for ensuring the development of the Indian finance industry.
It is to be noted that the IDBI Bank is actually the tenth biggest bank in the world, as far as the reach of the bank is concerned. The Bank operates about 3203 Automated Teller Machines (abbreviated as ATMs), and about 1809 branches that are spread across national and international regions. In the international sphere, the branch has one branch in Dubai and two branches at Singapore and Beijing. Additionally, the IDBI Bank is also among the 27 commercial banks which the government of India owns.
In the Financial year of 2012-2013, the IDBI Bank has reportedly attained a business amounting to Rs. 25.64 crore per every employee of IDBI and the net profit has been reported at Rs. 12.17 lacs per every employee. The company also incurred a sum of Rs. 1,538 crore, which was directed toward various expenses relating to employee benefits in the same financial year of 2012-2013. Now that we have discussed some of the brief information about the IDBI, we shall now move to different aspects of the IDBI, which will enlighten the readers about more elaborative issues.
History behind the foundation of IDBI:
Before we discuss the history of IDBI, it would be pertinent to discuss briefly the emergence of development banks. In the Second World War, the development banks became prominent. Their prominence was especially felt during the time of Great Depression in the 1930s. These two events caused great damage to the participating nations, resulting in severe damage to infrastructure and other areas. The demand to have institutions, supplying funds for the reconstruction of the affected infrastructure was on the rise and many affected nations were compelled to establish national development institutions for the same purpose. India, too, was suffering developmental shortages at the time of independence gained in the year 1947.
By this time, however, India has a moderately developed banking system. The banking system was aimed at providing credit dispensation facilities to the society particularly in the areas concerning industry and agriculture. In the meantime, the central Reserve Bank of India (abbreviated as RBI) came up with certain formulations to promote developmental mechanisms for institutional construction. This lead to the foundation of many developmental banks, which were termed as Specialized Development Financial Institutions (abbreviated as DFIs). These banks were IDBI Bank, National Bank for Agriculture and Rural Development (abbreviated as NABARD), National Housing Board (abbreviated as NHB), and Small Industries Development Bank of India (abbreviated as SIDBI).
The IDBI Bank was founded in the year 1964 vide an Act of Parliament. The Bank was founded as a wholly owned subsidiary of the central bank of India, which is and as mentioned before The RBI. In the year 1976, the ownership to IDBI was moved to the Government of India. In the same year, the Bank was announced as a main financial institution that will coordinate various activities of those institutions, which have been engaged in financing and promoting developmental projects in the country. The IDBI undertook functions wherein it provided financial help to many green field projects and also in projects focused on modernization and other developmental purposes.
The Bank provided such assistance in both rupee and foreign currencies. When new reforms were introduced in the year 1992, the Bank has started to provide financial assistance indirectly by means of a refinancing of loans given by financial institutions at the state level. IDBI also provides such financial assistance by means of rediscounting of bills of exchange which come out of sale of indigenous machines. In the year 1995, the IDBI bank entered into Initial Public Offering (abbreviated as IPO) and due to that the shareholding of the Government of India came down from 100 percent to 75 percent.
The IDBI Bank is particularly known for its main role during the pre-reform era (which was from between 1964 to 1991 and focused its activities on industrial development in the country. The activities focused on developing banking sector. Many financial institutions collaborated with the IDBI Bank such as the National Securities Depository Limited (abbreviated as NSDL), the Exim Bank (India), the Sock Holding Corporation of India Limited (abbreviated as SHCIL), the Small Industries Development Bank of India (abbreviated as SIDBI), national Stock Exchange (abbreviated as NSE), the Credit Analysis & Research Limited, and the Entrepreneurship Development Institute of India. These institutions were keys to the developmental aims of the government of India.
Conversion of the IDBI Bank into commercial bank
Conversion of the IDBI Bank into the commercial bank was a big event that happened in the history of the bank. Under the chairmanship of S.H. Khan, the RBI had constituted a committee. The committee made many suggestions, of them one suggestion was to establish the Development Financial Institution (abbreviated as IDBI). The recommendation was made with the purpose of diversifying the activities and harmonizing the functions of development financing institutions by removing the traditional difference between the development banking system and commercial banking system. Following the recommendation, the IDBI was transformed from a mere development bank to commercial bank. The Industrial Development Bank (Transfer or Undertaking and Repeal) Act 2003 was enacted and passed. The Act gave the IDBI Bank a status of a limited company. The Bank became to be known as the IDBI Limited.
Eventually in the year 2004, the RBI caused the incorporation of the DIBI bank as a scheduled bank under the Reserve Bank of India Act 1934. The bank finally ventured into the banking business as a limited company in the year 2004. In the year 2005, a merger happened between IDBI Bank and IDBI. In the year 2006, the IDBI Bank entered into a major acquisition agreement. The Bank acquired the United Western Bank Satara, which resulted in the doubling of the number of branches from 195 to 425.
Awards and Recognitions of the IDBI
IDBI Bank has played a key role in the developmental projects as well as in commercial banking system. Being one of the largest development banks in the world, the bank certainly has something different to offer. Under this segment, we shall discuss some of the awards and recognitions received by the Bank.
The Forbes Global 2000 released a list in the year 2013 in which the IDBI bank was listed at 1197. The Bank has received the awards for ‘Overall Best bank’ and ‘Best Public Sector bank’ in the Dun & Bradstreet Banking Awards organized in the year 2011. In the same year, the IDBI Bank also received the Banking Technology Award and credited the bank for best possible use of business intelligence. It also received the Best Risk Management from the Indian Banks Association.
IDBI Federal Life Insurance
IDBI Federal Life Insurance is a leading life insurance company in the country. This insurance company offers a variety of services such as management of wealth, retirement solutions, etc. The company is basically a joint venture involving IDBI Bank, Federal Bank (which refers to one of the leading private sector banks in the country) and finally, Ageas, which refers to an international insurance company that is headquartered in Europe. The insurance company has a great presence in the country, particularly due to the extensive network of branches of the Federal Bank and IDBI Bank. The insurance company facilitates distribution of its services and products through Insurance Brokers, Bancassurance, and Insurance agents, etc.
Let us dwell on certain historical facts behind the foundation of the IDBI Federal Life Insurance. The IDBI Bank, Fortis Insurance International NV, and federal Bank entered into a Memorandum of Understanding (abbreviated as MoU) in the year 2006. The MoU was entered into for the purpose of establishing an insurance company in the country. In December 2007, the regulatory authority Insurance Regulatory and Development Authority of India (abbreviated as IRDAI) granted a license to the newly founded life insurance company.
In the year 2008, the IDBI Fortis Insurance Co. Ltd. started its official operations in the month March. By the month of August in the same year, the company is slated to have collected a premium of more than 100 crores within a short span of five months, which was a major achievement. This made the company the fastest growing insurance company in the country, particularly in the private sector. The company has also ventured into sponsorships and has sponsored the India-Sri Lanka ODI match of the year 2009. In the year 2010, the company’s name was changed to IDIBI Federal Life Insurance Company. For the period 2012-13, the company was the fasted growing insurance company yet again. Ever since then the company has maintained its position.
IDBI Intech Ltd. (abbreviated as IIL)
For the subject of discussion, we have IDBI Intech Ltd. (also known by its abbreviated form IIL). IDBI Intech Ltd. is a subsidiary of the IDBI Bank, which the latter owns wholly. The IIL was founded in the year 2000. The IIL is founded with the purpose of providing Information technology related services in various areas such as System Integration, System Support, Consultancy, and System Implementation, hosting of Applications & server, etc. Thus, the IIL is engaged in providing specialized training services. The IIL has the ISO 9001:2000 certification for various IT services it provides such as Call Center and Data center management. It also has a certificate as an IT Security Audit Organization along with CERT-in, which stands for the Indian Computer Emergency Response Team.