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CONTENTS
FOREIGN BANKS
NATIONALISED
Spheres of activities
NABARD provides refinance for short ,medium and long term loans
under farm and non-farm sector.
Contd
Short term refinance facilities under non-farm sector include
credit limit to SCBs, DCCBs for meeting working capital requirements.
Functions of NABARD
Serves as an apex refinancing agency for institution
promoting various development activities in rural areas.
Contd..
NABARD shall be responsible for development relating to
rural credit.
It will take inspections in co-oprative banks and RRBs. Co-ordinate rural financing activities of all institutions
engaged in development work.
Undertake monitoring and evaluation of projects. It will maintain research and development fund to promote
research in agricultural an rural development.
Functions of RRBs
RRBs are mainly required to open branches & spread
their network in remote rural areas. They are required to mobilize deposits & to promote saving habits among rural people. They are required to dispense credit in favor of economically weaker sections of population. To provide banking facilities. avoid competition with other banks in rural areas. To
Problems of RRBs
Inadequate Deposit Mobilization.
Poor recovery of loans. More losses and less profit. Rate of vested interest group.
Contd.
Poor development of rural areas.
Lack of co-ordination. uncertain future of RRBs.
Measures to improve
Uniform policies.
Promote recovery. Support of government. Equipped with latest data.
Contd.
National rural bank.
Rationalize credit supply. proper coordination.
RRBs
The Regional rural Banks Act,1976 governs all the RRBs.
Commercial Banks
Whereas Commercial banks are governed by Banking Regulation Act 1949.
The area of operation of RRBs is restricted to a region comprising of one or more districts in a state. RRBs is required to maintain 3%.
(3)Cash reserves
Contd
Basis of Difference
RRBs
The RRBs are required to maintain 25% of SLR.
Commercial Banks
Whereas Commercial banks are required to maintain 37% of SLR.
(4) liquidity
The RRBs are expected to The cost of operation of work at lower cost. commercial banks are much higher.
Contd
Basis of Difference
RRBs
The RRBs recruit local people to ensure the local feel and familiarity.
Commercial Banks
Whereas Commercial banks recruit their staff on all India basis.
But the commercial banks have to pay corporate tax on interest earnings and other earnings.
Whereas the RBI performs the statutory inspection of commercial banks.
(9) Inspections
The NABARD has been authorized to have statutory inspection of the RRBs.
Conclusion
Rural banking has travelled long way since the first
nationalization of banks.