Development bank again and projects get concreted in certain areas


A development bank, again, is likely to be faced with all or any
one of the following problems: (a) its appraisal criteria may be sound but
it may find that these criteria have not much significance for the appropriate
choice of technology or product-mix as most projects are designed by foreign
consultants or companies, in the light of technology in use in advanced
countries; (b) it may find that terms and conditions of foreign technical or
financial collaboration are onerous and the negotiating ability of project
promoters vis a vis their foreign partners is not adequate; (c) really worth
while projects are not identified and designed because of lack of entrepreneurial talents in the public as well as the private sector; (d) potential entrepreneurs get frustrated as they do not get the required assistance for giving
shape to their project ideas

; (e) projects get concentrated in certain
geographical areas or certain fields, as infra-structure facilities including
technical and financial assistance are not evenly spread across the country or
across different industrial fields.
These are some of the problems with which a development bank is
likely to be faced at one time or the other and,if it is to perform its social
function, its has to take action towards their solution. This implies that
along with financial assistance, a development bank has to be prepared to
provide managerial and technical assistance. This really means that it cannot
possibly wait for projects to come to it for assistance; it has to create
projects that are consistent with the overall -- explicit or implicit --
national development strategy. 

If there are institutions in the field of project identification
and formulation, it has to develop living contact with them for the solution
of some of these problems. If there are none, it has to take the initiative
in establishing them in cooperation with the relevant institutions, including
state agencies.
A development bank cannot perform these different tasks unless it
is financially viable. It is inherent in its tasks to experiment with
innovative ways of fulfilling its social function; and for this purpose, it
has to commit key men and resources to new tasks. It cannot do this unless
(a) it withdraws resources from less vital md growingly less important tasks
-- tasks that can well be performed by the other institutions; (b) it shares
in the profits of really viable and successful projects by devising appropriate
flexibility in its terms and conditions governing assistance; (c) it attracts
new resources from institutions which mobilize saving by designing such
financial instruments that would appeal to them; (d) it mobilizes resources
from state agencies for specific mutually agreed tasks, and (e) it attracts
foreign resources from other countries and international agencies.
All these are top management functions: (a) devising selection
criteria; (b) interacting with state agencies for modifying development
strategy and policies; (c) interacting with other financial institutions in
the country as well as abroad for mobilizing resources as well as for performing
common tasks; (d) interacting with institutions in the field of project identification and formulation; (d) initiating the establishment of relevant institutitions required to provide technical and managerial assistance to entrepreneurs,
and establishing organic links with them; (f) devising new ways of mobilizing
resources; and (g) attaining financial viability for creating the right setting
for survival and growth.
The performance of these tasks requires a top management team -- a
task-focussed approach to management structure rather than the usual functionfocussed hierarchical organization approach. It has to be a team with a
leader of four to five persons with specific responsibility assigned to each,
but yet, working as a team for decision making. These tasks are so basic
and fundamental that this team would not have enough time and energy to
devote to them if its members get tied up with operational jobs. Further,
they would not be able to take an overall view about the functioning of a
development bank if they tie themselves to secific operational jobs.
Anything that pertains to the performances of the institution as a whole
and that which others cannot do are their responsibilities.
However, the selection of persons for key management jobs has to
be their responsibility; for it is this team which has to create the one that
can in time replace it. Otherwise, the institution cannot be perpetuated.
For this purpose, they have to be in formal and informal contact with potential
and actual managers, devise ways and methods of testing and training them and
finally selecting the really best to succeed them in the top management team.
A top management team that considers itself indispensable for the institution
has really not performed its top management task; such a. team needs to be
changed by a well-functioning Board, whose only functions can be to (a) reinforce
top management in its tasks with advice, counseling and review; (b) replace the
team with a successor team in good time and, (c) perform the ceremonial functions
that can project the right public image about the institution. A Board is not
a substitute for top management; its functions are similar to those of a
constitutional monarch in the United Kingdom. 1

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