Development banks are established for the development of a special sector of the economy. Nepal Industrial development Corporation was established in 1956 with the objective of providing medium and long-term loans for the establishment, development, and modernization of private sector industries. Besides providing loans, other objectives were to participate in shares, underwrites shares and debentures, transfer and deal in shares and establish industries. Small industry development corporation was established in 1960 to provide loans to small scale industries and it was merged with NIDC in 1971.
After the introduction of Development of bank Act 1995, there was ruh to establish Development banks which brought many development banks and regional development banks in operation. The main objective was to improve the living standard of people by providing credit to poor and small entrepreneurs. The bank and financial Institutions Act 2063 categorizes Developments Banks into class-B category’s licensed institutions.
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