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The Industrial Development Bank of India (IDBI) was formally established in 1964 through an Act of Parliament, initially operating as a wholly-owned subsidiary of the Reserve Bank of India (RBI). Conceived as India's principal Development Finance Institution (DFI), its primary mandate was to provide long-term credit and financial assistance to catalyze industrial growth and development across the country. In 1976, ownership was transferred from the RBI to the Union Government, solidifying its role as the coordinating financial institution for the industrial sector. In a significant structural shift in the post-reform era, IDBI transitioned from a DFI to a commercial institution, culminating in its 2005 merger with its commercial banking subsidiary, IDBI Bank, and its reclassification as a 'scheduled bank' to offer universal banking services.

IDBI Bank's status in the Indian financial system has undergone a pivotal change in recent years. While it was once categorized as a Public Sector Bank, the Life Insurance Corporation of India (LIC) acquired a controlling stake in 2019, leading the Reserve Bank of India (RBI) to reclassify it as a private sector bank. Despite this change in categorization, the bank maintains profound historical significance, having played a pioneering role in building much of India's modern financial architecture. IDBI was instrumental in the establishment and support of major institutions, including the Securities and Exchange Board of India (SEBI), the National Stock Exchange of India (NSE), the National Securities Depository Limited (NSDL), and the Small Industries Development Bank of India (SIDBI), underscoring its historical importance as an institution builder in the Indian economy.