Page 41 - DCOM208_BANKING_THEORY_AND_PRACTICE

Banking Theory and Practice

Notes Jammu & Kashmir Bank
Karnataka Bank
Karur Vysya Bank

Kotak Mahindra Bank
SBI Commercial and International Bank
South Indian Bank
United Western Bank

UTI Bank
YES Bank

3.2.5 Cooperative Banks

Cooperative banks in India have come a long way since the enactment of the Agricultural Credit
Cooperative Societies Act in 1904. It is an important instrument of banking access to the rural
masses and is a vehicle for democratization of the Indian financial system.
The RBI regulates these banks since 1st March, 1966. In light of the liquidity and insolvency
problems experienced by some cooperative banks in fiscal year 2001, the RBI undertook several
interim measures to address the issues, pending formal legislative changes, including measures
related to lending against shares, borrowings in the call market and term deposits placed with
other urban cooperative banks.

Self Assessment

Fill in the blanks:

5. The cooperative sector banks are related with ………… areas and serve ………… people
mainly.
6. The Reserve Bank of India (RBI) owns the ………………. share of SBI and some Associate
Banks of SBI.
7. There is only one board for each …………………. bank and meetings are less frequent
(generally, once a month).

3.3 Present Scenario of Banking System in India

The rate at which banking industry of India has shown an enormous growth over the last
decade. When the whole world was on spin during the global financial crisis, banking sector of
India has been able to maintain its elasticity providing growth opportunities simultaneously
which is an unlikely feat to be compared to other developed markets of the world. The world
economy has developed severe problems in terms of lapse of various banking and financial
institutions and dipping demand in the recent times. Prospects became very unsure causing
recession in major economies. However, amidst all this topsy-turvy India’s banking sector has
been amongst the few to maintain resilience. A progressively growing balance sheet, higher
rate of credit expansion, expanding profitability and productivity akin to banks in developed
markets, lower incidence of non-performing assets and focus on financial inclusion have
contributed to making Indian banking vibrant and strong. Indian banks have commenced to
revise their growth approach and reassess the prospects on hand to keep the economy wheeling.

36 LOVELY PROFESSIONAL UNIVERSITY