Industrial banks are financial institutions with limited services which sell certificates called investment5 shares and also accept customer deposits5 and then invest the funds in installment loans for consumers and small enterprises.
There are a few industrial banks in India. But in some other countries, notably Germany and Japan, these banks perform the function of advancing loans to industrial undertakings. Industries require capital for a long period for buying machinery and equipment. Industrial banks provide this type of Mock capital. Industrial banks have a large capital of their own. They also receive deposits for longer periods. They are thus in a position to advance long-term loans.
In India, the Central Government set up an Industrial Finance Corporation of India (IFCI) in 1948. Its activities have since then been greatly enlarged. Further the States have also set up State Financial Corporations. The Central Government has also established the Industrial Credit and Investment Corporation of India (ICICI) and the National Industrial Development Corporation for the financing and promotion of industrial enterprises. In 1964 the Industrial Development Bank of India (IDBI) was established as the apex or top term-lending institution. These new institutions fill important gaps in our system of industrial finance.