Development Financial Institutions (DFIs) in India are specialized financial institutions that were established to provide long-term financing for the development of the industrial and infrastructure sectors in the country. These institutions play a critical role in promoting economic development and growth in India. In this answer, we will discuss the classification of Development Financial Institutions in India in detail.
- All-India Development Financial Institutions (DFIs): All-India DFIs are national-level institutions that provide long-term financing for large-scale projects across the country. These institutions were established to meet the long-term financing needs of the industrial and infrastructure sectors. Examples of All-India DFIs in India include the Industrial Finance Corporation of India (IFCI), the Industrial Development Bank of India (IDBI), and the National Bank for Agriculture and Rural Development (NABARD).
- State-level Development Financial Institutions (DFIs): State-level DFIs are institutions that provide long-term financing for projects within a specific state or region. These institutions were established to promote regional development and support local businesses. Examples of State-level DFIs in India include the Tamil Nadu Industrial Investment Corporation (TIIC), the Gujarat State Financial Corporation (GSFC), and the Kerala State Industrial Development Corporation (KSIDC).
- Sector-specific Development Financial Institutions (DFIs): Sector-specific DFIs are institutions that provide long-term financing for specific sectors such as housing, infrastructure, and agriculture. These institutions were established to support the growth of specific sectors that are critical for the economic development of the country. Examples of Sector-specific DFIs in India include the National Housing Bank (NHB), the Power Finance Corporation (PFC), and the Small Industries Development Bank of India (SIDBI).
- Microfinance Institutions (MFIs): Microfinance Institutions (MFIs) are institutions that provide small loans to low-income individuals and micro-entrepreneurs who do not have access to traditional banking services. These institutions were established to promote financial inclusion and provide access to credit for the poor and marginalized sections of society. Examples of MFIs in India include Bandhan Bank, Ujjivan Small Finance Bank, and Bharat Financial Inclusion Limited.
- Non-Banking Financial Companies (NBFCs): Non-Banking Financial Companies (NBFCs) are institutions that provide financial services such as loans, leasing, and hire-purchase finance. These institutions were established to fill the gap in credit availability for businesses and individuals who do not have access to traditional banking services. Examples of NBFCs in India include Bajaj Finserv, Mahindra & Mahindra Financial Services, and Shriram Transport Finance Company.
In conclusion, Development Financial Institutions in India can be classified into All-India DFIs, State-level DFIs, Sector-specific DFIs, Microfinance Institutions, and Non-Banking Financial Companies. These institutions play a critical role in promoting economic development and growth in the country by providing long-term financing, promoting financial inclusion, and filling the gap in credit availability for businesses and individuals.