Role of banking sector in Indian industrial development

Finance, is, infact, the most important institutional and functional resource for economic transformation. So, finance plays an important role to maintain proper regulation of economic and financial system of any economy. For the proper utilization of finance, financial institutions in India provide many financial services like banking, stock marketing, insurance and deal-out. Banking is the most popular, widest and oldest financial service in India. Around five decades has elapsed since Indian mutiny and social, industrial and other infrastructure has improved. Industry is the base of any economy. Since last few decades banking plays an important role in the development in industrial sector. First time in the second five year plan, importance is given to industrialization by laying emphasis on basic and heavy industries to expand the employment opportunities. With the industrial development, capital goods and consumer goods are manufactured and the basic needs of economy can be satisfied. But for the development of industry, capital formation is necessary and capital formation is possible with the help of banking. Banks provide financial assistance and non-financial assistance to the industrial sector. There are different types of bank like commercial banks, development banks and specialized banks provide many loans, grants and services for the development of industry. Especially development banks play a significant role in industrial development. Development banks provide all development oriented services such as provision of risk capital, provision for technical services and identification of investment projects. These banks help in raising the speed of economic development through the promoting investment in industry, agriculture and international trade but the main objective is the rapid industrialization, particularly in the private sector. So as to development of entrepreneurial skills and provide additional employment opportunities as well as higher production. Particularly finance the small scale and rural industries for the development of region of Indian economy. Development banks subscribe and underwrite the issue of stock, shares, bonds and development of industrial concerns and provide assistance for the setting up new industrial projects and expansion of existing units. Commercial banks also play an important role for industrial development. The main purpose of this paper is to highlight the role of banking sector in industrial development in India.