abhishreshthaa
Abhijeet S
The commercial banks on the other hand were participating in rural banking only as an alien since they were programmed for meeting the financial requirements of trade and commerce. In a view of the huge gap in rural credit from institutional sources and in a bid to meet the growing needs of financial assistance to modernizing farming, the government adopted the multi-agency approach.
This was intended to increase the farm productivity and thus raise the living standards of the poor farmers. The formation of State Bank Of India which was formed my taking over the Imperial Bank of India by the Government was with a objective of “extension of banking facilities on a large scale more particularly in the rural and semi-urban areas and for other diverse purposes.” This was an important milestone in the banking of rural India. Momentum was gained more prominently after the concept of “Social control” over commercial banks was propagated in 1967.
With the setting up of National Credit Council in 1968 to asses the demand for bank credit for various sectors of economy and to determine priorities for the grant of loans, etc. it came to be felt increasingly that banks should become instruments of economic and social development.
To this effect nationalization of 14 major Indian commercial banks in July 1969 can be described as a major landmark in the history of Indian financial system and a big leap towards rural banking. With emphasis on lending to priority sector—agriculture, rural artisans and handicrafts, small scale industries, small business and retail trade and other weaker sections of the society— rural banking came to the fore.
The step was initiated to utilize effectively the professional skills and acumen developed by the banking system for achieving the basic objective of balanced socio-economic development.
Both the Co-operative and Commercial banks made substantial development in providing credit to agricultural and rural economy. The total share of co-operatives in total borrowing of the rural household grew from 5,204 in july 1964 to 12,065 in Dec 1974. But still it was noticed that two-thirds of the total credit was taken from non-institutional sources. The demand for rural credit was on the increase owing to adoption of modern agriculture, which increasingly required larger amounts of capital both short term & long term.
This was intended to increase the farm productivity and thus raise the living standards of the poor farmers. The formation of State Bank Of India which was formed my taking over the Imperial Bank of India by the Government was with a objective of “extension of banking facilities on a large scale more particularly in the rural and semi-urban areas and for other diverse purposes.” This was an important milestone in the banking of rural India. Momentum was gained more prominently after the concept of “Social control” over commercial banks was propagated in 1967.
With the setting up of National Credit Council in 1968 to asses the demand for bank credit for various sectors of economy and to determine priorities for the grant of loans, etc. it came to be felt increasingly that banks should become instruments of economic and social development.
To this effect nationalization of 14 major Indian commercial banks in July 1969 can be described as a major landmark in the history of Indian financial system and a big leap towards rural banking. With emphasis on lending to priority sector—agriculture, rural artisans and handicrafts, small scale industries, small business and retail trade and other weaker sections of the society— rural banking came to the fore.
The step was initiated to utilize effectively the professional skills and acumen developed by the banking system for achieving the basic objective of balanced socio-economic development.
Both the Co-operative and Commercial banks made substantial development in providing credit to agricultural and rural economy. The total share of co-operatives in total borrowing of the rural household grew from 5,204 in july 1964 to 12,065 in Dec 1974. But still it was noticed that two-thirds of the total credit was taken from non-institutional sources. The demand for rural credit was on the increase owing to adoption of modern agriculture, which increasingly required larger amounts of capital both short term & long term.