Role of development banks in a planned economy

The difficulty in obtaining adequate funds to meet long-term requirements, and the lack of appropriate institutional arrange ments to provide such funds were two of the many problems which industrial units in the corporate sector faced in the pre independence era. The users of long-term funds and other interest ed parties were persistently seeking the solution to these problems. Reports of many government committees and commissions had been suggesting, from time to time, the establishment of specialized institutions to take care of the long-term financial needs of industrial units. The German and Japanese success in their experiments with specialized institutions for the provision of long-term finance appeared fascinating to Indian businessmen, industrialists, and financiers. Consequently, frequent demands for the establishment of such institutions were put forward for the consideration of the government and industry. In response to such demands, modest attempts were made to organize prototype industrial banks, which failed without making any worthwhile contribution.