Role of Commercial Banks in Development
Role of commercial banks in development.
INTRODUCTION
A commercial bank is something with which every one of us is well known. However different bankers and economists have defined it in a different way:
According to Kent:
“An organization whose principal operations are concerned with the accumulation of the temporarily idle money of the general public for the purpose of advancing to others for expenditure.”
According to Banking Companies Ordinance 1962:
“Banking means the accepting for the purpose of lending or investing of deposits of money from the public repayable in demand or otherwise and withdraw-able by cheque, draft order or otherwise.”
Various economists have different views about the role of commercial banks in economic development. Schumpeter says, “It is the banking system which serves as a key agent along with the entrepreneur in the process of economic development”. According to Prof. Cameron in his “Banking and Economic Development”, “a banking system may make a positive contribution to economic growth and development.”
Evolution of Commercial Banks
The foundation for building a broad base of agricultural credit structure was laid by the Report of the All-India Rural Credit Survey (AIRCS) of 1954. The provision of cultivator credit in 1951-52 was less than 1% for commercial banks. In the report it was observed that agricultural credit fell short of the right quantity, was not of the right type, did not fit the right purpose and often failed to go to the right people. With a view to give an impetus to commercial banks, particularly, in the sphere of investment credit, the nationalization of the Imperial Bank of India and its re-designation as the State Bank of India (SBI) was recommended.
Growth in Outreach 1951-91
From the position prevalent in 1951-52, commercial banks came a long way with a substantial spread of 32,224 branches in rural and semi-urban areas comprising 68% of their total outlets as on
INTRODUCTION
A commercial bank is something with which every one of us is well known. However different bankers and economists have defined it in a different way:
According to Kent:
“An organization whose principal operations are concerned with the accumulation of the temporarily idle money of the general public for the purpose of advancing to others for expenditure.”
According to Banking Companies Ordinance 1962:
“Banking means the accepting for the purpose of lending or investing of deposits of money from the public repayable in demand or otherwise and withdraw-able by cheque, draft order or otherwise.”
Various economists have different views about the role of commercial banks in economic development. Schumpeter says, “It is the banking system which serves as a key agent along with the entrepreneur in the process of economic development”. According to Prof. Cameron in his “Banking and Economic Development”, “a banking system may make a positive contribution to economic growth and development.”
Evolution of Commercial Banks
The foundation for building a broad base of agricultural credit structure was laid by the Report of the All-India Rural Credit Survey (AIRCS) of 1954. The provision of cultivator credit in 1951-52 was less than 1% for commercial banks. In the report it was observed that agricultural credit fell short of the right quantity, was not of the right type, did not fit the right purpose and often failed to go to the right people. With a view to give an impetus to commercial banks, particularly, in the sphere of investment credit, the nationalization of the Imperial Bank of India and its re-designation as the State Bank of India (SBI) was recommended.
Growth in Outreach 1951-91
From the position prevalent in 1951-52, commercial banks came a long way with a substantial spread of 32,224 branches in rural and semi-urban areas comprising 68% of their total outlets as on
Bibliography: * Samuelson Norhaus, economics, 18th edn, Tata McGraw Hill Publishing Co. Ltd., 2008 * Xam idea, economics, F K Publication, 2009 * Chitta Ranjan Basu, Commercial Banking in the Planned Economy of India, Mittal Publications, 1991 * N. Gregory Mankiw, Principles of Economics, cengage learning, 2012 * www.preservearticles.com [ 6 ]. N. Gregory Mankiw, Principles of Economics, cengage learning, 2012 [ 7 ]