Financial Banking Institutions in India

Financial Institutions for Industries

The financial institutions in India are developed keeping in mind the need of the specific sectors. There specific role of financial institutions for agriculture, export-import, insurance, currency exchange, etc. Similarly, there are financial institutions for Industries. Let us study them in detail. 

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Role of Financial Institutions for Industries

 Financial institutions help the small as well as the medium size industries financially by providing them loans. Thus, these industries can survive in the long run and have the basic infrastructure to develop their industry.

role of financial institutions

Like for agriculture, industries approach these financial institutions for any monetary help. Besides this, these institutions also help keep the policies and rules in check for the industries. One such institution that works in India is Small industries development bank ok India. This is also known as SIDBI.


The headquarters of SIDBI is in Lucknow, Uttar Pradesh and its chairman is Mohammad Mustafa. The institution was established in April 1990.

It was set-up under the Act of Indian parliament. Also, this parliament currently acts as a principal financial institution for financing, promoting, and developing the small, micro, and medium-sized enterprises.

These enterprises are MSMEs. The institution provides support for refinancing through a network. So, this network is made up of eligible members that are lending institutions for onward lending for MSMEs. Thus, the direct assistance for any size industry is through the bank’s branch offices.

Further, SIDBI also extends its financial help in the form of grants, loans, and equity to nongovernment organizations (NGOs) and microfinance institutions. Thus, it helps these organizations to support the micro-enterprises and financially weak sections of the society.

So, it helps these institutions take up the activities that are income generating and that too on a regular basis. Also, there are many schemes that are initiated by SIDBI for the upliftment of the MSME section. It is one of the primary lending institutions for the MSME sector.

Learn more about Financial Institutions in Agriculture here in detail

Some of the associates of SIDBI includes

  • Rating agency in India for SME
  • Credit guarantee fund trust for the small and micro enterprises
  • Financial Corporation of Delhi
  • SME technology services Pvt. Ltd. India
  • India small medium enterprise reconstruction company for assets limited

SIDBI is a financially independent institution which helps in the growth of small, micro, and medium-sized enterprises. Also, it helps them in the policy makings along with the fundings. It provides them with the fundings at a nominal rate as compared to the banks.

Thus, it refinances the loans and advances that are the existing institution provides to smaller size units. Likewise, another fund is a debt fund which is called as a SIDBI make in India loan for the enterprises. It is also popular as a SMILE.

In 2015 Union budget in February announced this firm. Also, this fund provides short-term loans of quasi-equity nature to MSMEs. Thus, it ensures that the MSMEs meet the debt to equity criteria and thereby pursue the growth pattern.

Subsidiaries of SIDBI 

  1. Mudra/SIDBI bank
  2. SIDBI venture capital limited
  3. SIDBI trustee co. limited

Practice Questions on Financial Institutions for Industries

Q. From the given options, which financial institution is specifically for small and medium-size industries?

A. NABARD                B. IDBI                   C. SIDBI                   D. None

Answer:  C. SIDBI

Q. Industrial developmental bank of India a subsidiary of which bank?

A. SIDBI                    B. SBI                     C. Industrial credit and investment bank                   D. IDBI

Answer: A. SIDBI

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