Indian Banking System

Introduction
Banking regulation act passed in 1949 Nationalised the imperial bank of india in 1955 and renamed it State Bank of India Nationalized 14 major commercial banks in 1969 and another 6 in 1970

Salient Features
Establishment Ownership Capital requirements Capital adequacy norms Mixed banking Increased credit to private sector Control over the banks Maintenance of CRR Maintenance of SLR Reserve Banks Monopoly of Note Issue Uniform Accounting Policy Technological Changes Inernet Banking Diversification of Banking Operations Cleaning NPAs from Banks Balance Sheet

Money Lenders
It is defined as an indigenous banker as an individual or private firm receiving deposits, dealing in hundis and lending money. According to the committee on indigenous banker, he is a person who does not accept deposit.

The distinguishing point between the indigenous banker and the money lender is acceptance of deposits.

Types of money lenders

Professional money lenders Non professional money lenders Resident money lenders Non Resident or Mobile money lenders

Importance of Money Lenders

Loans without security No or less security Flexibility Unhindered service - time

Criticism of money lenders working

Charging very high rate of interest Cheating the borrower Exploitation Inadequate financial resources Encourage unproductive loans

Regulation of Money Lenders

States have passed money lenders acts
They are required to obtain licenses They are also required to keep proper book of accounts Maximum rate of interest that can be charged Courts are empowered to reopen the accounts Courts are empowered to regard interest rates even below the prescribed rate as excessive Land Alleviation Acts and Usurious Loans acts have been passed in various states, which imposes heavy penalties for violation of law.