Development banks represent an institutional arrangement ideally suited to the policies and operational procedures of foreign sources of financing. This chapter covers some of the varied considerations relating to development banks: the need for them, their form, their scope, their relation to other institutions, and some special problems which they face and which they generate. All development banks to a greater or lesser degree attempt to undertake some entrepreneurial or promotional functions. In many countries, the ideal set of development financing institutions might include both a government-owned and a privately-owned development bank which can complement each other's activities. One of the most important initial tasks for a new development bank will be to establish satisfactory relations with other important agencies with which it must work. The bank must be responsive to a number of masters, some within the country and some outside.