Banking System In India- An Indigenous Bankers

Introduction 1. Plays a vital role in economic development of country. 2. The structure of banking system consist of 2 parts- Unorganized Sector Organized Sector. Unorganized Sector Comprises of- Money lenders Indigenous Bankers.

Organized Sector consist of – Commercial Banks Co-operative Banks Regional Rural Banks Post office saving bank which is an another segment of the banking system. RBI, the central bank of the country is at apex of banking structure in India.

Commercial Banks consists of- 1.Schedule Banks Schedule Banks Indigenous Bankers. Commercial Banks consists of- 1.Schedule Banks Schedule Banks Scheduled Commercial Banks (283) Scheduled Co-operative Banks (71) SBI Group (8) Public Sector Banks (20) RRBs (196) Private Banks (28) Foreign Banks (31) 2.Non- Schedule Banks Bank which is not included in the Second Scheduled of the RBI is Known as Non-Scheduled Bank. As at

Scheduled Co-operative Banks (71) consist of End March, 2005 there were 4 Non-Scheduled Banks. Scheduled Co-operative Banks (71) consist of 1.Scheduled State Co-operative Banks(16) 2.Scheduled Urban Co-operative Banks (55)

Co-operative Banks It is another component of Indian Banking System. Originated with the enactment of Co-operative Credit Societies Act of 1904. The Act provided for the establishment of credit societies for financing agriculturists. Under the Act number of co-operative credit societies were started. Co-operative banks mobilize deposits and purvey agricultural and rural credit with a wider outreach. They also have been an important instrument for various development schemes, particularly subsidy –based programmes for the poor.

Co-operative Credit Institutions Urban Co-operative Banks (1872) Rural Co-operative Credit Institutions (1,06,919) Short term Structure (1,06,131) Long- Term Structure (788) State Central Primary State Primary Co-operative Co-operative Agricultural Co-operative Co-operative Banks Banks Credit Societies Agriculture & Agriculture (31) (365) (1,05,735) Rural Development And Rural Banks (20) Development Banks (786)

Land Development Banks 1 Land Development Banks 1.Besides short term and medium term advances, agriculturists require long term loans for effecting permanent improvement in land, for purchase of pump sets, tractors, digging up of wells etc. 2. Land Development Banks meet long term credit requirements of the agriculturists. 3. It is two tier structure with central land development banks at state level and primary land development banks at taluka or district level. 4. The Banks of Tamil Nadu, Mumbai, Andra Pradesh and Karnataka are of this type.

5. In the states like Gujarat, Uttar Pradesh and Jammu and Kashmir there is a unitary structure, i.e. the Apex Land Development Banks operate directly through their own branches at district or taluka level. 6. The land development banks obtain funds mainly by the issue of long-term debentures. 7. Such debentures carry the guarantee of the state government and are subscribed by the central & state govt., commercial banks, LIC and RBI. 8. Special debentures are floated for which resources are provided by the state government and NABARD.

Regional Rural Banks 1. RRBs form an integral part of the banking system with focus on serving the rural sector. 2. RRBs combine the local feel and familiarity with rural problems, which the co-operative possess, and the degree of business organization as well as the ability to mobilize deposits, which the commercial banks possess. 3. RRBs are specialized rural financial institutions for catering to the credit requirements of the rural sector.

Objectives:- The main objective of the RRBs was to provide credit and other facilities mainly to small and marginal farmers, agricultural laborers who had , by and large , not been adequately served by the existing credit institutions. Organization:- 1.The RRBs are established by ‘sponsor bank’ usually a public sector bank. 2. The steering committee on RRB’s identifies the districts requiring RRBs. 3. Later the central govt., with the consultation of the state government and the sponsor bank setup RRBs.

4. Each RRBs is separate body corporate with perpetual succession and common seal. 5. But it is closely linked with sponsor bank. 6. It operates in local limits. 7.The head office of the RRB will be within local limits with such name as may be specified by the central govt. 8. The rural bank may establish its branches or agencies at any place within he notified area. Capital:- Authorized capital of each RRB- 1 crore. Paid up capital- Rs. 25 Lacs

Of this 50% is subscribed by the central govt. , 15 % by state govt Of this 50% is subscribed by the central govt., 15 % by state govt. and 35% by sponsor bank. At present formula for subscription to RRBs has been fixed at 60:20:20.(Central: State: Sponsor) Central govt. contribution is made through NABARD. Resources of RRBs. Share Capital Deposits from public Borrowing from sponsor bank Refinance from NABARD.

Operations :- Granting of loans and advances to small and marginal farmers, agricultural laborers.

Vidharbha Konkan Gramin Bank Vidharbha Konkan Gramin Bank came into existence on 28th February, 2013 through amalgamation of erstwhile Wainganga Krishna Gramin Bank, Solapur and Vidharbha Kshetriya Gramin Bank, Akola, Maharashtra State. The objectives of the Bank are to improve the economy of the rural, semi-urban/urban centers by providing financial and other support for agriculture, trade, commerce, industry and other productive activities through extension of timely and adequate credit and other facilities and

Create Employment Opportunities in the villages and small towns; inculcating the habit of savings amongst the rural poor through banking channels and complete the goal of Financial Inclusion as envisaged by Government of India and Reserve Bank of India. The authorized capital of the Bank is Rs.1000 Lakhs and the paid up capital is Rs.700 Lakhs. Governments of India, Government of Maharashtra and Bank of India have contributed 50%, 15% and 35% shares respectively in the share capital of the Bank. 

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