Development Banks in India

Choose the Correct Answer

Correct Answer : Option a

Explanation
Statement 1 is correct : Development banks are primarily set up to provide long-term financing for capital-intensive projects such as large-scale industrial projects and agricultural development. These banks play a crucial role in supporting the infrastructure and industrial sectors by offering financial assistance for projects that require significant investment over a long period.

Statement 2 is not correct : Development banks do not generally mobilize short-term savings from the public in the same way that commercial banks do. Instead, they raise funds through long-term bonds, government support, and by borrowing from the Reserve Bank of India (RBI) and other financial institutions. They are not reliant on short-term deposits from the public to fund their long-term lending activities. They focus on providing long-term credit and do not collect short-term savings from the public like commercial banks.