Development banking as a theory and practice does not have a very long history. Yet, the yearning for all round economic development, together with the realization that autonomous growth is generally dichotomous in nature, led to the ubiquitous growth of development banks, particularly in the Third World countries and largely after the World War II. This led to the countries around the globe to evolve a system of banking and finance exclusively for the purpose of industrial development.
The economic growth in India has assumed greater dimension through the instantaneous growth of regional economy as well. Hence, the State Level developing institutional financing agencies were created for all the regions. The APSFC is one of such regional agencies catering to the needs of individual finance in the small and medium scale sectors. The role of SFCs is however, limited in the sense that they are not participating in the risk capital of the business concerns. The development financial corporations, on the other hand, like State Industrial Development Corporations and State Industrial Investment Corporations have been participating in the risk capital of the business concerns they have been promoting.
The APSFC has been instrumental in administering and disbursing the development finance provided by the IDBI/SIDBI. But the agency function assigned to the APSFC for disbursing the assistance out of funds provided by the Government of Andhra Pradesh has not at all been successful.
The role and operational performance of DFIs in economic development in general is elaborately described in this book, supported by the case study of APSFC in particular.