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What is an Industrial Bank?

Malcolm Tatum
Updated May 16, 2024
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An industrial bank is a financial institution that grants loans to individuals and companies that are associated with specific industry types. This example of a limited service bank is often owned by a non-financial corporation, and is usually subject to the same regulations and protections that are offered though banks owned by financial corporations. While the general idea of the industrial bank is found in various countries around the world, the term itself is used almost exclusively in the United States.

The exact model for an industrial bank will vary somewhat, depending on the sector of the consumer market that serves as the target audience for the operation. The bank may focus on granting loans to individuals who work within a given industry, with many of those being simple short-term loans that make it possible to purchase a vehicle or make minor repairs to the home. Some will extend mortgages and other long-term loans to individuals, but it is more common to reserve these types of loans for businesses.

Another focus of an industrial bank may be to provide loans for specific purposes that are related to the owner of the institution. For example, a furniture manufacturer may establish an industrial banks as a means of handling the financing of the purchase of their products, either by furniture stores or by individuals who meet the credit requirements set by the institution. This approach can sometimes simplify the process of obtaining financing, and may even provide the customer with slightly better interest rates and other repayment terms than could be obtained elsewhere.

It is important to note than an industrial bank does not always offer the same range of services as other banks. Most will focus on lending activities only, and do not provide other types of accounts for their customers. For this reason, any individual or company who does business with a lending institution of this kind will also maintain bank accounts at other institutions, including checking and savings accounts.

In the United States, an industrial bank can have branches located in multiple states, with the institution chartered in one of the states where it has a presence. Not every state in the USA allows for the chartering of an industrial bank, although there is speculation that the number will increase over the next few decades. Of all the states currently allowing the charter of industrial banks, the majority are chartered in the state of Utah. Other states that currently permit the chartering of these types of banks include California, Hawaii, Minnesota, and Indiana.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum , Writer
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.

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Malcolm Tatum

Malcolm Tatum


Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
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