bcom iv national is at ion of banks

8/2/2019 Bcom IV National is at Ion of Banks

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NATIONALISATION OF BANKS

BACKGROUND:

Socialistic pattern of society.

Functioning of joint sector- public & privatesector.

Imperial Bank of India was nationalised i.e.

SBI 1955. Nationalisation of SBI subsidiaries 1959.


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Economic Imbalance.

Hazari Committee Report, 1967.

National Credit Council in 1968.Study report under the Chairmanship of

Dr.D.R.Gadgil recommended the

nationalisation of banks.


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Banking Laws (Amendments) Act, 1968

(1-2-1969). (known as social control).

Dy PM Mr. Morarji Desai

to regulate our social and economic life so

as to attain the optimum growth rate forour economy and to prevent at the sametime monopolistic trend, concentration of

economic power and misdirection ofresources.


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Stage One 14 banks on 14th July, 1969.

Taken over by Govt. under BC(A&TOU)Act,1969.

Stage Two 6 banks on 15th April, 1980.

Under BC(A&TOU) Act, 1980.


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OBJECTIVES/REASONS

VIEWS:

The then PM Smt. Indira Gandhithepresent decision to nationalise majorbanks is to accelerate the achievements ofour objectives. The purpose is to expandbank credit to priority areas which have

hitherto been somewhat neglected .


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1. The removal of control by a few.

2. Provision of adequate credit facilities toagri, small industries and exports.

3. The giving of professional bent to bank

management.4. The provision of adequate training as well

as reasonable terms of service for bank

staff.5. The encouragement of new classes of

entrepreneures.


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Prof. Sayers

1. Efficiency issue2. Monetisation issue

3. Integration issue

4. Socialisation issue


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Others Views

1. Preventing concentration of economicpower.

2. Social control was not adequate.

3. Channel the bank finance to plan

priority sector.4. Greater mobilisation of deposits.


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5. Helps to agriculture.

6. Balanced regional development.

7. Greater control by the RBI.8. Stability of banking structure.

9. Service to staff.

10. Towards socialism.11. New schemes.


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PRIORITY SECTOR LENDING

Introduction:

The imbalanced development process ofIndian economy during pre and postindependence has badly affected thepublic at large.


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The object of banking is balanceddistribution of savings and investmentsequally to all the areas and persons.

Agri sector accounted less than 2 percentof bank credit & small, cottage and tinybusiness units, retail traders in rural areaswere far away from bank credit.


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Priority Sector:

The term priority means preferential or astep early to others.

The sector which is preferred while providing

facilities is called a priority sector.


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Priority Sector includes

Primary sector Agriculture and alliedactivities.

Secondary sector Industries.

Tertiary sector Services.


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Primary sector Agri finance

Direct Finance

Short Term loans

a) Crop Loans

b) Working Capital Term loans

c) Agri Jewel Loansd) Agri Produce Loans


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Medium & Long Term Loan

a) Minor Irrigation Projects

b) Land Improvements

Indirect Finance

Loans are given to those assisting the agriallied activities.


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Secondary sector Industries

Direct Finance

Indirect Finance

Tertiary sector ServicesIt includes retail trading, education, housing,

transportation etc.


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Village Adoption Scheme

Introduced in the year 1973.

A survey of the village proposed to beadopted is done.

SBI rural branches adopted the villages

that will receive the integrated financialneeds.


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Upto the year 1985, 85000 villages wereadopted by SBI branches and the financeprovided was around .760 cr to 23 lakh

farmers.


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Criteria:

Short radius from the branch. Irrigation.

Not financed by co-operative sector.

Large number of small & medium farmers.


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Lead Bank Scheme

Introduction:

To remove regional imbalance.

Nationalisation of banks in 1969. The concept of social banking was

introduced.

GOI - study group National CreditCouncil - Prof. D.R. Gadgil.


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RBI appointed a committee F.K.M.Nariman.

Recommended the scheme called Lead

Bank Scheme in the year 1969.


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It is a scheme in which a bank will lead ortake the responsibility of developingbanking activities in a specified area i.e.

district.

Lead bank is called Consortium Leader.

As on march- 2002, a total of 580 districtsall over the India have been convertedunder the LBS.


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Functions:

It has to conduct surveys, identify therequirements, potentials etc.

Preparation of service area credit plansand annual plans etc.

Monitoring the progress.

Monitoring the progress of theimplementation of the special programmeslike IRDP.


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Convening of meetings districtconsultative committee, district levelreview committee, standing committee etc.

Co-ordination of the efforts of thegovernment and other agencies.

Rapid bank expansion.


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Service Area Approach

It was first introduced in the year 1989by RBI.

On the recommendation of Dr.P.D.Ojha

former governor of RBI. Orderly and planned development of

villages.

The main objective was to assign specificareas of villages to rural/semi-urbanbranches and ask the banks to provide

adequate credit for productive purposes.


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Objectives:

Creation of employment opportunities.

Planning for the balanced growth.

Upliftment of poor sections.

Framing annual credit plans.

Continuous evaluation of plans.


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Components:

Identification of villages.

Survey report.

Annual credit plans. Co-ordination.

Monitoring of the scheme branch wise,

district wise & state wise.


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Differential Rate of InterestScheme (DRI)

Commercial banks introduced a specialscheme called DRI in 1972.

Objective:

The main purpose of the scheme was toprovide bank finance to the economicallybackward section of the society.

Concessional rate of interest 4% p.a.


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Area of operation:

Throughout the country.

Eligibility Criteria:

Income ceiling Rs. 7200 p.a. inurban/semi urban areas and Rs. 6400 p.a.in rural areas.

Size of land not exceed one acre ofirrigated land and 2.5 acres of unirrigatedland under the scheme are SCs/STs.


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The banks are required to lend under thescheme at least one percent of their

aggregate advances.Loan Amount:

Rs.6500 for productive activities.

Security:

No collateral security.

Repayment:

Not exceeding 5 years.

Reservation:

40 % reserved for SCs/STs.


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Self Employment Schemes

bcom iv national is at ion of banks

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