Rural banking in india essay

But the commercial banking in systematic form was initiated in the early part of nineteenth century when the Presidency Banks were established. In , 18 such commercial banks were functioning.

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The Imperial Bank of India was set up in with the merger of three Presidency banks. Since then the Imperial Bank was reigning vigorously throughout the country until when this bank was nationalized and renamed as the State Bank of India. The banking business in India was seriously affected during the depression of s and also after partition of the country.

In , the Banking Regulation Act, , was passed and as per this Act Reserve Bank was awarded with extensive regulatory power over the commercial banks. In , there were nearly commercial banks in India. But the number of such banks declined later on due to amalgamation of small banks with big banks. Accordingly, in , there were nearly such small non-scheduled banks. Gradually all these banks were merged with bigger banks.

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In , 14 major commercial banks were nationalized. At present there are 27 such nationalized banks including the SBI groups working in India. In , total number of scheduled commercial banks operating in the country was With the introduction of banking sector reforms, in recent years, the composition of the banking system in India has also recorded considerable change.

At the end of March , the commercial banking system in India consisted of scheduled banks and four non-scheduled banks.

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Over the period March to January , the number of scheduled banks has increased by new 47 banks and the number of non- scheduled banks remained unchanged at two. Of the scheduled banks, are in the public sector and all these banks account for nearly 80 per cent of deposits of all scheduled banks. In this public sector banking system, there are regional rural banks which are specially set up so as to increase the flow of credit to small borrowers in the rural areas.

These RRBs are having specified areas of operations which are normally limited to two to three districts.

These banks also undertake some other commercial banking business. Remaining 27 banks in the public sector New Bank of India since merged with Punjab National Bank in September are all regular commercial banks and they are all involved in different types of business and transactions. The following table shows the progress of commercial banking in India during the post-nationalisation period. For based on census, to based on census, to based on census and for , and mid-year population estimates.

For and population estimate relate to 1 March , based on Economic Survey, Based on estimated mid-year population figures supplied by the Office of the Registrar General, India. During the post-nationalisation period, commercial banking in India experienced considerable changes. Accordingly, total number of commercial banks increased from 89 in June to in March Out of which total number of scheduled commercial banks also increased from 73 in June to in March and total number of non-scheduled commercial banks, however, declined from 16 in June to 4 in March Again total number of branches of all commercial banks increased considerably during the post-nationalisation period, i.

Accordingly, the population per bank offices declined from 64, in June to 12, in March Both the aggregate deposit and aggregate credit of all scheduled commercial banks reached the level of Rs 64,77, crore and Rs 50,27, crore. As a result of which the per capita deposit of these banks increased from a mere Rs 88 in June to Rs 53, in March and the per capita credit also increased considerably from Rs 68 to Rs 41, in March Again the deposits as percentage of national income at current prices also increased from mere Indian Banking Sector Length: words 4.

Open Document Click the button above to view the complete essay, speech, term paper, or research paper. Need Writing Help? Indian Banking Sector Essay - Introduction Graphics Not Included This report aims to provide an overview of banking sector in India for the purpose of expansion planning.

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Search Term:. In , the largest public sector bank is the State Bank of India. Though there are three types of commercial banks, their functions as commercial banks are very similar. The primary functions of Indian commercial banks include: 1. Accepting of deposits of money from the public for the purpose of lending or investment. The secondary functions include: 1.

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Issuing letters of credit, travellers cheque, etc. Providing safe deposit vaults or lockers. Providing customers with facilities of foreign exchange dealings 4. Transferring money from one account to another 5.

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Collecting and supplying business information 6. Providing reports on the credit worthiness of customers 7.

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Granting educational loans to students at reasonable rate of interest for higher studies, especially for professional courses 8. Providing consumer finance for individuals by way of loans on easy terms for purchase of consumer durables The last two secondary functions are provided by Indian commercial banks to cater for the needs of the community. Any cooperative society has to obtain a license from the Reserve Bank of India before starting banking business and has to follow the guidelines set and issued by the Reserve Bank of India.

Currently, there are 68 co-operatives banks in India. There are three types of co-operatives banks with different functions: 1. Primary Credit Societies: Primary Credit Societies are formed at the village or town level with borrower and non-borrower members residing in one locality. The operations of each society are restricted to a small area so that the members know each other and are able to watch over the activities of all members to prevent frauds.

Central Co-operative Banks: Central co-operative banks operate at the district level having some of the primary credit societies belonging to the same district as their members. These banks provide loans to their members i. State Co-operative Banks: These are the highest level co-operative banks in all the states of the country. They mobilize funds and help in its proper channelisation among various sectors. The money reaches the individual borrowers from the state co-operative banks through the central co-operative banks and the primary credit societies.

These banks were established on realizing that the benefits of the co-operative banking system were not reaching all the farmers in rural areas. Currently, there are regional rural banks in India. Regional rural banks perform the following two functions: 1.

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Granting of loans and advances to small and marginal farmers, agricultural workers, co-operative societies including agricultural marketing societies and primary agricultural credit societies for agricultural purposes or agricultural operations or related purposes. Granting of loans and advances to artisans small entrepreneurs engaged in trade, commerce or industry or other productive activities. These banks also undertake other development measures like subscribing to the shares and debentures issued by companies, in case of under subscription of the issue by the public 1.

They engage themselves in some specific area or activity and thus, are called specialized banks. There are three important types of specialized banks with different functions: 1. It also gives guidance about the opportunities for export or import, the risks involved in it and the competition to be faced, etc. Small Industries Development Bank of India This specialized bank grant loan to those who want to establish a small-scale business unit or industry. It also finances modernization of small-scale industrial units, use of new technology and market activities. National Bank for Agricultural and Rural Development This specialized bank is a central or apex institution for financing agricultural and rural sectors.