Page 11 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes 2. Lead Bank Return - 2 (service area operation scroll): It is a monthly return submitted by
all rural and semi-urban branches giving details of priority sector credit disbursement
made each day during the month. It is submitted by the branch to the Lead District Manager.
3. Lead Bank Return U2: It is the modified version of LBR-2 and is required to be submitted
by semi-urban/urban branches once in a quarter.

4. Lead Bank Return - 3 (service area recovery and outstanding statement): This consists of
three types of returns Part A, Deposit and Advance Position - to be submitted on a quarterly
basis, Part B, Outstanding under various Priority Sector Advances, to be submitted on a
half yearly basis, Part C, Statement of recovery of Priority Sector Advances giving details
of demand, collection and balances, to be submitted on an annual basis.

1.4.2 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.
Cooperative banks mobilize deposits and purvey agricultural and rural credit with a wider
outreach and acts as facilitators for upliftment of the weaker sections, particularly carrying out
of the subsidy programmes for the poor.
Cooperative banking structure in India encompasses urban-co-operative banks and rural
cooperative credit institutions. Urban Cooperative consists of a single tier viz, primary
cooperative banks, commonly referred to as urban cooperative banks (UCBs).

The RBI regulates these banks since 1st March, 1966. In light of the liquidity and insolvency
problems experienced by some cooperative banks in fiscal 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. The RBI is currently responsible for supervision and regulation
of urban cooperative societies, the National Bank for agriculture and Rural Development, state
cooperative banks and district central cooperative banks. The Banking Regulation (Amendment)
and Miscellaneous Provisions Bill, 2003, which was introduced in the Parliament in 2003, proposed
the regulation of all cooperative banks by the RBI. The Bill has not yet been ratified by the
Parliament and is not in force.

Notes The RBI regulates these banks since 1st March, 1966.

1.4.3 Regional Rural Bank (RRB)

On the recommendation of Narasimham Committee, the concept of Regional Rural Bank (RRB)
was introduced in India. Initially, 5 RRBs were started in UP, Rajasthan, Haryana, Bihar and West
Bengal on 2nd October, 1975. Each RRB has a maximum authorized capital of Rs. 5 crore and an
issued capital of minimum Rs. 25 lacs and maximum Rs. 1 crore. The share capital of an RRB is
subscribed by the Central Government, the State Government and the sponsoring bank in the
ratio of 50:15:35 respectively. There are 196 RRBs operating in 26 states across 518 districts with
a network of 14,446 branches as on March 31,2004. Majority of the branches of RRBs are located
in rural areas. RRBs combine the local feel and familiarity with rural problems, which the
cooperatives possess, and the degree of business organisation as well as the ability to mobilize
deposits, which the commercial banks possess.

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