Page 12 - DMGT303_BANKING_AND_INSURANCE

Unit 1: Indian Banking System

RRBs are specialized rural financial institutions for catering to the credit requirements of the Notes
rural sector. Sponsor Banks have been advised by the Reserve Bank Of India to provide support
to their sponsored RRBs in matters relating to efficient management, training of staff,
computerization and networking of their activities. Sponsor banks have been made accountable
for the performance of RRBs.
In order to enlarge resources available for a variety of purposes especially in the context of
programme of financial inclusion, general credit card etc. Reserve Bank of India in January 2006
has advised the sponsor banks to provide them lines of credit at a reasonable rate of interest.
Further, it has permitted RRBs to borrow from/or place funds with other RRBs , including those
sponsored by other banks, subject to counter -party credit risk and limits. RBI has also directed
its own training centres and NABARD training centres to conduct training programmes for
RRBs staff in keeping with the requirements of the day.

Did u know? RRBs are specialized rural financial institutions for catering to the credit
requirements of the rural sector.

!
Caution RBI has also directed its own training centres and NABARD training centres to
conduct training programmes for RRBs staff in keeping with the requirements of the day.

Self Assessment

Fill in the blanks:

1. ........................................... defined a banker as “One who in the ordinary course of business
honours cheques drawn upon by persons from and for whom he receives money on
current account”.
2. ...........................................banks in India have come a long way since the enactment of the
Agricultural Credit Cooperative Societies Act in 1904.
3. In order to enlarge ........................................... available for a variety of purposes especially
in the context of programme of financial inclusion, general credit card etc.
4. Cooperative banking structure in India encompasses ........................................... cooperative
banks and rural cooperative credit institutions.
5. On the recommendations of FKF ........................................... Committee, the Lead Bank Scheme
was introduced in December 1969.

1.5 Some Financial Institutions

1.5.1 National Bank for Agriculture and Rural Development (NABARD)

Established on 12th July, 1982 as an apex bank for agriculture and rural development in accordance
with the recommendations of the Committee to Review Arrangements for Institutional Credit
for Agriculture and Rural Development (CRAFICARD), NABARD is accredited with all matters
concerning policy, planning and operations in the field of credit for agriculture and other
economic activities in rural areas. Its paid-up capital as on 31.3.96 of 500 crores was doubled in
1996-97, thereby making it Rs. 1,000 crores.

LOVELY PROFESSIONAL UNIVERSITY 7