INTRODUCTION

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A bank is a financial institution that provides banking and other financial services to their
customers. A bank is generally understood as an institution which provides fundamental
banking services such as accepting deposits and providing loans. There are also nonbanking
institutions that provide certain banking services without meeting the legal definition of a
bank. Banks are a subset of the financial services industry.
A banking system also referred as a system provided by the bank which offers cash
management services for customers, reporting the transactions of their accounts and
portfolios, throughout the day. The banking system in India should not only be hassle free but
it should be able to meet the new challenges posed by the technology and any other external
and internal factors. For the past three decades, Indias banking system has several
outstanding achievements to its credit. The Banks are the main participants of the financial
system in India. The Banking sector offers several facilities and opportunities to their
customers. All the banks safeguards the money and valuables and provide loans, credit, and
payment services, such as checking accounts, money orders, and cashiers cheques. The
banks also offer investment and insurance products. As a variety of models for cooperation
and integration among finance industries have emerged, some of the traditional distinctions
between banks, insurance companies, and securities firms have diminished. In spite of these
changes, banks continue to maintain and perform their primary roleaccepting deposits and
lending funds from these deposits.









CENTRAL BANK
A central bank is the apex financial institution in the banking and financial system of a
country. It is regarded as the highest monetary authority in the country. It acts as the leader of
the money market. It supervises, control and regulates the activities of the commercial banks.
It is a service oriented financial institution.
Indias central bank is the Reserve Bank of India established in1935. A central bank is
usually state owned but it may also be a private organization. For instance, the Reserve Bank
of India (RBI), was started as a shareholders organization in 1935, however, it was
nationalized after independence, in 1949. It is free from parliamentary control.

Reserve bank of India
The reserve bank of India is a central bank and was established in April 1, 1935 in
accordance with the provisions of reserve bank of India act 1934. The central office of RBI is
located at Mumbai since inception. Though originally the reserve bank of India was privately
owned, since nationalization in 1949, RBI is fully owned by the Government of India. It was
inaugurated with share capital of Rs. 5 Crores divided into shares of Rs. 100 each fully paid
up. RBI is governed by a central board (headed by a governor) appointed by the central
government of India. RBI has 22 regional offices across India. The reserve bank of India was
nationalized in the year 1949. The general superintendence and direction of the bank is
entrusted to central board of directors of 20 members, the Governor and four deputy
Governors, one Governmental official from the ministry of Finance, ten nominated directors
by the government to give representation to important elements in the economic life of the
country, and the four nominated director by the Central Government to represent the four
local boards with the headquarters at Mumbai, Kolkata, Chennai and New Delhi. Local Board
consists of five members each central government appointed for a term of four years to
represent territorial and economic interests and the interests of cooperative and indigenous
banks.
The RBI Act 1934 was commenced on April 1, 1935. The Act, 1934 provides the statutory
basis of the functioning of the bank. The bank was constituted for the need of following:
To regulate the issues of banknotes.
To maintain reserves with a view to securing monetary stability
To operate the credit and currency system of the country to its advantage.

Functions of RBI as a central bank of India are explained briefly as follows:
Bank of I ssue: The RBI formulates, implements, and monitors the monitory policy.
Its main objective is maintaining price stability and ensuring adequate flow of credit
to productive sector.
Regulator-Supervisor of the financial system: RBI prescribes broad parameters of
banking operations within which the countrys banking and financial system
functions. Their main objective is to maintain public confidence in the system, protect
depositors interest and provide cost effective banking services to the public.
Manager of exchange control: The manager of exchange control department
manages the foreign exchange, according to the foreign exchange management act,
1999. The managers main objective is to facilitate external trade and payment and
promote orderly development and maintenance of foreign exchange market in India.
I ssuer of currency: A person who works as an issuer, issues and exchanges or
destroys the currency and coins that are not fit for circulation. His main objective is to
give the public adequate quantity of supplies of currency notes and coins and in good
quality.
Developmental role: The RBI performs the wide range of promotional functions to
support national objectives such as contests, coupons maintaining good public
relations and many more.
Related functions: There are also some of the related functions to the above
mentioned main functions. They are such as, banker to the government, banker to
banks etc.
Banker to government performs merchant banking function for the central and
the state governments; also acts as their banker.
Banker to banks maintains banking accounts to all scheduled banks.

Controller of Credit: RBI performs the following tasks:
It holds the cash reserves of all the scheduled banks.
It controls the credit operations of banks through quantitative and qualitative
controls.
It controls the banking system through the system of licensing, inspection and
calling for information.
It acts as the lender of the last resort by providing rediscount facilities to
scheduled banks.

Supervisory Functions:
In addition to its traditional central banking functions, the Reserve Bank performs certain
non-monetary functions of the nature of supervision of banks and promotion of sound
banking in India. The Reserve Bank Act 1934 and the banking regulation act 1949 have given
the RBI wide powers of supervision and control over commercial and co-operative banks,
relating to licensing and establishments, branch expansion, liquidity of their assets,
management and methods of working, amalgamation, reconstruction and liquidation. The
RBI is authorized to carry out periodical inspections of the banks and to call for returns and
necessary information from them. The nationalisation of 14 major Indian scheduled banks in
July 1969 has imposed new responsibilities on the RBI for directing the growth of banking
and credit policies towards more rapid development of the economy and realisation of certain
desired social objectives. The supervisory functions of the RBI have helped a great deal in
improving the standard of banking in India to develop on sound linesand to improve the
methods of their operation.

Promotional Functions:
With economic growth assuming a new urgency since independence, the range of the Reserve
Banks functions has steadily widened. The bank now performs a variety of developmental
and promotional functions, which, at one time, were regarded as outside the normal scope of
central banking. The Reserve bank was asked to promote banking habit, extend banking
facilities to rural and semi-urban areas, and establish and promote new specialized financing
agencies.

ADVANCES TO PRIORITY SECTORS AND CREDIT GUARANTEE SCHEMES
As far back as in 1967-68, the RBI in its credit policy has introduced the concept of PSL to
tide over the severe imbalances, existed then both in agricultural and industrial fronts. In
order to channelise the flow of credit to the priority sectors RBI had enunciated a credit
policy. The major impediment before the introduction of the concept of PSL was that for
various historical reasons, the bulk of bank advances was directed towards medium and large
scale industries and big business houses, whereas, sectors like culture, small scale industries
and export were languishing for want of funds. The concept of PSL was evolved to ensure the
flow of adequate credit from banks to certain prioritised segments of the economy, as
enunciated in the national planning priorities To give incentive to banks for lending to small
borrowers under priority sector. the RBI in January 1971, has set up the Credit Guarantee
Corporation of India Limited . now known as the Deposit Insurance and Credit Guarantee
Corporation . The idea was to administer a comprehensive credit guarantee scheme for loans
by banks to the individual small borrowers under the priority sector.
During the period of social control of banks, major banks did make an attempt to assist the
agricultural sector by providing credit for marketing of agricultural products. Despite
commercial banks' lending to agriculture under (a) direct financing and (b) indirect financing,
the lending towards agriculture did not exceed two per cent of the total credit. It was in the
post-bank nationalisation period only the PSL and mass banking concepts were crystalized
for the purpose of credit deployment. After the bank nationalisation in July, 1969, RBI has
adopted lending to the following broad segments under priority sector: (a) agriculture, (b)
small scale industries and (c) exports.
The composition of the priority sector remained somewhat vague even after the bank
nationalisation. There was wicle variation as far as compiling PSL data are concerned among
various banks. Later a more comprehensive classification of categories under PSL was
evolved and adopted on the basis of a report submitted by Informal Study Group on statistics
relating to priority sectors constituted by RBI.
1









1
Reserve Bank of India, Annual Report, 1976-77, Bombay.

COMMERCIAL BANKS
An outline of commercial Banking system in India
1. Indian Scheduled Commercial Banks.
i. State Bank of India and its associate banks.
ii. Twenty nationalized banks.
iii. Regional rural banks.
iv. Other scheduled commercial banks.
2. Foreign Banks
3. Non-scheduled banks.
4. Co-operative banks

The commercial banks in India play a major role in the development of the country itself.
These banks are primarily concerned with providing loans and accepting deposits. Several ot
her facilities are also provided by the commercial banks in India. At the same time, the
commercial banks in India have the opportunity to develop manifold in the future because the
economy of India is developing at a good pace and thus the financial institutions of the
country are bound to develop with this growth. The name commercial banking may suggest a
number of things, but the term is used to differentiate the other forms of banking from this
particular form. The commercial banks in India generate funds for the purpose of financing
their various financial requirements through a definite process. The commercial banks in
India accept deposits from different sources like businesses and individuals. A wide range of
financial products have been developed by these banks to encourage the savings habit of the
clients. There are savings deposits, term deposits and many more to attract the investors.
These deposits are recycled in the economy through the loans and other credit products.
Banks play a very useful and dynamic role in the economic life of every modern state. A
study of the economic history of western country shows that without the evolution of
commercial banks in the 18th and19th centuries, the industrial revolution would not have
taken place in Europe. The economic importance of commercial banks to developing
countries may be viewed thus:
1. Promoting capital formation
2. Encouraging innovation
3. Monetsation
4. Influence economic activity
5. Facilitator of monetary policy
6. Promote growth with stability
7. Promote balanced regional development
8. Financing the priority sectors

The role and functions of the following institutional banks are discussed below:
1. They constitute an important source of long-term finance to industry. Over a period of
time, there has been a steady growth in the number of industrial units assisted, and in
the amount of loan sanctioned and distributed by SFIs.
2. SFIs have played an important role in the development of (a) Small scale industry,
and (b) Projects in backward areas.
3. They have helped new and small entrepreneurs in setting up industry.
4. Through their operations involving underwriting of and direct subscription to the
issue of shares and debentures, they have been important players in the capital market.
These operations have a favourable impact on the ability of industrial concerns to
raise funds from capital market.
5. These institutions have improved the allocation of funds to industry and thus, have
aided in better use of the available resources for the economic development of the
country.
6. SFIs have been a source of technical and managerial advice to the industry. They have
also helped in identification, evaluation and execution of new investment projects.
7. These institutions have been helpful in the establishment of concerns which required
extra-ordinarily large amounts of finance for their projects with a long gestation
period

Regional Rural Bank:
The government of India set up Regional Rural Banks (RRBs) on
October 2, 1975. The banks provide credit to the weaker sections of the rural areas,
particularly the small and marginal farmers, agricultural labourers, and small enterpreneurs.
Initially, five RRBs were set up on October 2, 1975 which was sponsored by Syndicate Bank,
State Bank of India, Punjab National Bank, United Commercial Bank and United Bank of
India. The total authorized capital was fixed at Rs. 1 Crore which has since been raised to Rs.
5 Crores. There are several concessions enjoyed by the RRBs by Reserve Bank of India such
as lower interest rates and refinancing facilities from NABARD like lower cash ratio, lower
statutory liquidity ratio, lower rate of interest on loans taken from sponsoring banks,
managerial and staff assistance from the sponsoring bank and reimbursement of the expenses
on staff training. The RRBs are under the control of NABARD. NABARD has the
responsibility of laying down the policies for the RRBs, to oversee their operations, provide
refinance facilities, to monitor their performance and to attend their problems.
NABARD (National Bank for Agriculture and Rural Development)
NABARD is an apex institution accredited with all matters concerning policy, planning and
operations in the field of credit for agriculture and other economic activities in rural areas. It
is an apex refinancing agency for the institutions providing investment and production credit
for promoting the various developmental activities in rural areas
It takes measures towards institution building for improving absorptive capacity of the credit
delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of
credit institutions, training of personnel, etc. It co-ordinates the rural financing activities of all
the institutions engaged in developmental work at the field level and maintains liaison with
Government of India, State Governments, Reserve Bank of India and other national level
institutions concerned with policy formulation. It prepares, on annual basis, rural credit plans
for all districts in the country; these plans form the base for annual credit plans of all rural
financial institutions. It undertakes monitoring and evaluation of projects refinanced by it. It
promotes research in the fields of rural banking, agriculture and rural
Development NABARD also offers various credit facilities like:
1. Short-term/ Medium term/ Long-term refinance for various types of
production/marketing/ procurement activities at attractive interest rates to various
organizations, societies, Govts etc. Investment Credit (Medium and Long Term)
Refinance with a mission of Accelerating Private Capital Formation to Promote
Sustainable and Equitable Agriculture and Rural Prosperity with Refinance as Lever
2. Rural Infrastructure Development Fund (RIDF) is a fund to promote the
investment in infrastructure for agriculture. State Governments as well as Panchayat
Raj Institutions (PRIs), Non-Governmental Organisations, Self-Help Groups, etc. are
eligible to borrow out of RIDF for their schemes like ongoing Irrigation, Flood
Protection, Watershed Management projects, rural Road & Bridge projects, Primary
and Secondary Schools, Primary Health Centers, Village Haats, Joint Forest
Management, Terminal and Rural Market/Godowns, Rain Water Harvesting,
Watershed development, flood protection, drainage, Cold Storage, Riverine Fisheries,
Fishing Harbour & Jetties, Mini/Small Hydel Projects in Power Sector, Rural
Drinking Water Supply Schemes, Citizen Information Centres, Modern abottoir,
Seed/Agri./Hori. Farms, etc.
3. Rural Farm and Non Farm Sector Schemes
4. Refinance for Rural Housing Facilities scheme provides Credit to the Individuals,
Co-operative Housing Societies, Public Bodies, Housing Boards/ Housing
Development Authorities/ Improvement, Trusts, Local Bodies, Voluntary agencies
and NGOs, Housing Finance Companies registered, with NHB for finance extended
by them to housing projects in the 'rural' areas only. The finance is provides for
Construction of New Houses as well as Repairs/Renovation of existing houses in rural
areas/ Rainwater Harvesting Structures/ Sanitary Latrines, etc.
5. Under the Micro Credit Innovation scheme, NABARD facilitates sustained access
to financial services for the unreached poor in rural areas through various
microFinance innovations in a cost effective and sustainable manner
6. NABARD has been designated the Implementing Agency for implementing the
Revival Package in all the states. The Department for Cooperative Revival and
Reforms (DCRR) has been constituted in NABARD for this purpose. NABARD is
providing dedicated manpower at the national, state and district levels for
implementing the Package.
7. Loans to State Governments for funding equity of Co-operative Credit Institutions.
8. NABARD has formulated a Model scheme for issue of Kisan Credit Cards to
farmers, on the basis of their land holdings, for uniform adoption by banks, so that the
farmers may use them to readily purchase agricultural inputs such as seeds, fertilisers,
pesticides, etc. and also draw cash for their production needs. Farmers have to get in
touch with Authorised banks to use this facility not normally eligible for assistance
under the this fund.
9. SWAROJGAR CREDIT CARD SCHEME aims at providing adequate and timely
credit ie. working capital or block capital or both to small artisans, handloom weavers,
service sector, fishermen, self employed persons, rickshaw owners, other micro-
entrepreneures, SHGs, etc from the banking system in a flexible, hassle free and cost
effective manner. Borrowers in urban areas can be covered under SCC Scheme.
10. NABARD Consultancy Services (Nabcons) is engaged in providing consultancy in
all spheres of agriculture, rural development and allied areas. Nabcons leverages on
the core competence of the NABARD in the areas of agricultural and rural
development, especially multidisciplinary projects, banking, institutional
development, infrastructure, training, etc., internalized for more than two decades.
Export-import bank of India (EXIM Bank)
The EXIM bank was set up in January 1982 as a statutory corporation wholly owned by
central government. Its paid up capital in 1988-89 was Rs 220.50 crores. Activities performed
by EXIM Bank:
1. It grants direct loans in India and outside for the purpose of imports and exports
2. Refinances loans to banks and other notified financial institutions for the purpose
of international trade ;
3. Rediscounts usance export bills for banks;
4. Provide overseas investment finance for Indian companies toward their equity particip
ation in joint venture abroad and guarantees, along with banks, obligations on behalf
of project exporters;
5. It is also a co-coordinating agency in the field of international finance and it
undertakesdevelopment of merchant banking activities in relation to export oriented
industries;Thus it provides fund based as well as non fund based assistance in the
foreign tradesector.
The main objective of Export-Import Bank (EXIM Bank) is to provide financial assistance
to promote the export production in India. The financial assistance provided by the EXIM
Bank widely includes the following:
Direct financial assistance
Direct financial assistance
Foreign investment finance
Term loaning options for export production and export development
Pre-shipping credit
Buyer's credit
Lines of credit
Re-loaning facility
Export bills rediscounting
Refinance to commercial banks
The Export-Import Bank also provides non-funded facility in the form of guarantees to the
Indian exporters
Various Stages of Exports Covered by EXIM Bank-
Development of export makers
Expansion of export production capacity
Production for exports
Financing post-shipment activities
Export of manufactured goods
Export of projects
Export of technology and softwares

DEVELOPMENT BANKS
Development Banks should be understood as institutions whose primary interest lies in
financing or they may (and they do mostly) undertake development utilities as well. In other
words, institutions undertaking financial and developmental functions are considered as
development banks. Structure of Development Banks/ Development Financial Institutions
During the post-independence period, India is well-served by a network of development
banks, at the national as well as state levels. At present, there are seven all India industrial
development banks, viz.
(1)The Industrial Development Bank of India (IDBI)(2)The Small Industries Development
Bank of India (SIDBI
(3)National Bank for Agriculture and Rural development of India (NABARD)(4)Export
Import Bank of India (EXIM)

Small scale Industrial Development Bank of India (SIDBI)
The SIDBI was set up in October 1989 under the Act of parliament as a wholly owned
subsidiary of the IDBI. It is the central or apex or principal institution which oversees co-
ordinates and further strengthens various arrangements for providing financial and non-
financial assistance to small-scale, tiny, and cottage industries.
SIDBI objectives are:
To initiate steps for technological up gradation and modernization of existing units
To expand channels for marketing of SSI sector products in India and abroad
To promote employment-oriented industries in semi-urban areas and to check
migration of population to big cities. It operates two funds:
a) Small Industries Development Fund and
b) Small Industries Development Assistance Fund.

The operation of the former and of National Equity Fund which were earlier looked by IDBI
is now handled by the SIDBI. Its financial assistance is channeled through the existing credit
delivery system comprising NSIC, SFCs, SIDCs, SSIDCs, commercial banks, co-operative
banks and RRBs. The total number of institutions are eligible for assistance from SIDBI is
900. It discounts and rediscounts bills arising from the sale of machinery to small units;
extends seed capital/soft loan assistance through National Equity Fund and through seed
capital schemes of specialized lending institutions; refinance loans; and provide services like
factoring, Leasing and so on. The union budget 1996-97 envisaged a number of measures to
develop small-scale sector with SIDBI as the focal point. They include:
1. SIDBI will now refinance the SFCs and commercial banks for modernization projects
upto Rs 50 lakhs from unutilized corpus of about Rs 75 crore;
2. SIDBIs refinance ceiling of Rs 50 lakhs for single window scheme of SFCs etc.
for composite loans will be doubled to Rs 100 lakhs
3. SIDBI will participate in venture capital funds set up by public sector institutions as
well as private companies up to 50 percent of the total corpus of the fund, provided
such fund is dedicated to the financing of small-scale industry;
4. SIDBI will provide refinance lending institutions which are now permitted to lend to
SSI units seeking ISO certification of quality. Since its inception SIDBI has
provided assistance to the entire SSIs sector including tiny, village, and cottage
industries through suitable schemes tailored to meet the requirement of setting up
of new products, expansions, diversifications, modernization, and rehabilitation. It has
provided equity capital, domestic and foreign currency term loans, working capital
finance, etc.

Industrial Development Bank of India (IDBI):
The IDBI was set up as a wholly-owned subsidiary of the RBI on July 1, 1964 under the Act
of parliament, and by merging the Industrial Refinance Corporation (IRC) which, in turn,
was setup by the government earlier in June 1958. In February 1976, the IDBI was delinked
from the RBI and since then, it has become a separate and independent entity wholly owned
by the government. It is now the central or apex institution in the field of industrial finance
.
Its main objective is to provide credit, term finance and financial services for the
establishment of new projects as well as expansion, diversification, modernization and
technology up gradation of the existing industrial enterprise in order to bring about industrial
development in the country. It also provides several diversified financial products of non-
project nature such as equipment finance, asset credit and equipment leasing, merchant
banking, debenture trusteeship and Forex services to corporate. It functions as a development
financing agency in its own right, in addition to its work of co-coordinating, supplementing,
and monitoring the operations of other term
lendinginstitutions in the country. It also provides indirect assistance in the form of discounti
ng/rediscounting long term bills/promissory notes of term loans given by SFCs, banks and so
on and subscribing to resources of notified financial institutions such as SFCs, ICICI,IRBI,
and so on. There are more than 850 primary lending institutions which are eligible
for refinancing facilities of the IDBI. It also takes up various promotional activities such
as balance development of regions, entrepreneurship development, technology development,
and so on.
During the four decades of its existence, IDBI has been instrumental not only in establishing
a well-developed, diversified and efficient industrial and institutional structure but also
adding a qualitative dimension to the process of industrial development in the country. IDBI
has played a pioneering role in fulfilling its mission of promoting industrial growth through
financing of medium and long-term projects, in consonance with national plans and priorities.
Over the years, IDBI has enlarged its basket of products and services, covering almost the
entire spectrum of industrial activities, including manufacturing and services. IDBI provides
financial assistance, both in rupee and foreign currencies, for green-
field projects as also for expansion,modernization and diversification purposes. In the wake
of financial sector reforms unveiled by the government since 1992, IDBI evolved an array of
fund and fee-based services with a view to providing an integrated solution to meet the entire
demand of financial and corporate advisory requirements of its clients. IDBI also provides
indirect financial assistance by way of refinancing of loans extended by State-level financial
institutions and banks and by way of rediscounting of bills of exchange arising out of sale of
indigenous machinery on deferred payment terms. IDBI has played a pioneering role,
particularly in the pre-reform era (1964-91),in catalyzing broad based industrial development
in the country in keeping with its Government-ordained development banking charter.
In pursuance of this mandate, IDBIs activities transcended theconfines of pure long-
term lending to industry and encompassed, among others, balancedindustrial growth through
development of backward areas, modernization of specific industries, employment
generation, entrepreneurship development along with support services for creating
adeep and vibrant domestic capital market, including development of apposite institutionalfra
mework.The migration to the new business model of commercial banking, with its gateway
to low-cost current, savings bank deposits, would help overcome most of the limitations of
the current business model of development finance while simultaneously enabling it to
diversify its client/asset base. IDBI Bank, with which the parent IDBI was merged, was a
vibrant new generation Bank. The Private Bank was the fastest growing banking company in
India. The bank was pioneer in adapting to policy of first mover in tier 2 cities. The Bank also
had the least NPA and the highest productivity per employee in the banking industry
Main Functions of IDBI:
1. IDBI coordinates between various financial institutions who are highly involved in pr
oviding financial assistance, promoting, and developing various industrial units
2. IDBI is also engaged in a variety of promotional activities such as development
programs for the fresh entrepreneurs, planning of consultancy services for both the
small scale enterprises and the medium sized industrial units
3. IDBI works for the advancement of technology and other welfare schemes to ensure
economic development.
4. Industrial Development Bank of India acts as a catalyst in various industrial
development programs
5. IDBI provides financial assistance to all kinds of industrial units which comes under
the provisions of the IDBI Act
6. IDBI has served various industrial sectors in India for about three years and has
grown leaps and bounds in its size and operating units
CO-OPERATIVE SOCIETIES
Co-operative banks in this country are the part of vast and powerful structure of cooperative
institution which are engaged in task of production, processing, marketing, distribution,
servicing and banking in India. The cooperative banking system in this country were started
around 1904, when official efforts were made for create new type of institution based on
principle of co-operative organisation and management, which were considered to be suitable
for solving the problem peculiar to Indian conditions.
In rural areas, as far as agriculture and related activities are concerned, supply of credit was
inadequate and money lenders would exploit the poor people in rural areas providing them
loans at higher rates.
Co-operative banks in India are registered under cooperative societies act. The co-operative
banks are also regulated by RBI and governed by Banking Regulation Act 1949 and Banking
Laws (Co-operative Societies) Act, 1965.
Establishments:
1. Co-operative bank performs all the main banking functions of deposit mobilisation,
supply of credit and provision of remittance facilities.
2. Co-operative Banks belong to the money market as well as to the capital market.
3. Co-operative Banks provide limited banking products and are functionally specialists
in agriculture related products. However, co-operative banks now provide housing
loans also.
4. UCBs provide working capital loans and term loan as well.

Functions
1. Co-operative Banks are organised and managed on the principal of co-operation, self-
help, and mutual help. They work on the basis of no profit no loss. Profit
maximization is not their goal.
2. Cooperative banks do banking business mainly in the agriculture and rural sector.How
ever, UCBs, SCBs, and CCBs operate in semi-urban, urban, and metropolitan areas
also.
3. The State Co-operative Banks (SCBs), Central Cooperative Banks (CCBs) and Urban
Co-operative Banks (UCBs) can normally extend housing loans up to Rs 1 lakh to an
individual. The scheduled UCBs, however, can lend up to Rs 3 lakh for housing
purposes. The UCBs can provide advances against shares and debentures

A. Cooperative banks in India finance rural areas under:
Farming
Cattle
Milk
Hatchery
Personal finance
B. Cooperative banks in India finance urban areas under:
Self-employment
Small scale units
Home finance
Consumer finance
Personal finance

Some facts about Cooperative banks in India:
Some cooperative banks in India are more forward than many of the state and private sector
banks. According to NAFCUB the total deposits & lending of Cooperative Banks in India is
much more than Old Private Sector Banks & also the New Private Sector Banks. This
exponential growth of Co operative Banks in India is attributed mainly to their much better
local reach, personal interaction with customers, and their ability to catch the nerve of the
local clientele.
















CONCLUSION
___________________________________________________________________________
We can conclude that the financial sector is a nerve system
of Indian economy. Banking plays an important role in development of economy. For steady
growth in economy innovations and development in financial sector is very important.
Economy of any country faces lots of challenges and problems. To tackle those problems
financial sector plays a vital role. The financial sector makes the economy efficient to the
extent where it can rival other developed economies in the world.
Financial sector also faces lots of problems but it should develop certain strategies to come
out of these problems which is very important for healthy growth of economy
The banking system in India has undergone significant changes during last 16 years. There
have been new banks, new instruments, new windows, new opportunities and, along with all
this, new challenges. While deregulation has opened up new vistas for banks to augment
incomes, it
hasalso entailed greater competition and consequently greater risks. India adopted prudential
measures aimed at imparting strength to the banking system and ensuring its
safety andsoundness, through greater transparency, accountability and public credibility.Bank
ing sector reform has been unique in the world in that it combines a comprehensive
reorientation of competition, regulation and ownership in a non-disruptive and cost-effective
manner. Indeed banking reform is a good illustration of the dynamism of the public sector in
managing the overhang problems and the pragmatism of public policy in enabling the
domestic and foreign private sectors to compete and expand. There has been no banking
crisis in India. The Government took steps to reduce its ownership in nationalised banks and
inducted private ownership but without altering their public sector character. The underlying
rationale of this approach is to assure that the salutary features of public sector banking were
not lost in the transformation process. On account of healthy market value of the banks
shares, the capital infusion into the banks by the Government has turned out to be profitable
for the Government.




BIBLIOGRAPHY
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BOOKS


WEBSITE:
http://www.scribd.com/doc/9669980/Indian-Banking-and-Economy
http://www.scribd.com/doc/21923483/ROLE-OF-BANKS-IN-INDIAN-ECONOMY
http://download.nos.org/srsec319/319-20.pdf
http://shodhganga.inflibnet.ac.in/bitstream/10603/2031/10/10_chapter%201.pdf







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