Characteristics / Features of a Bank ?

1. Dealing in Money

Bank is a financial institution which deals with other people's money i.e. money given by depositors.

2. Individual / Firm / Company

A bank may be a person, firm or a company. A banking company means a company which is in the business of banking.

3. Acceptance of Deposit

A bank accepts money from the people in the form of deposits which are usually repayable on demand or after the expiry of a fixed period. It gives safety to the deposits of its customers. It also acts as a custodian of funds of its customers.

4. Giving Advances

A bank lends out money in the form of loans to those who require it for different purposes.

5. Payment and Withdrawal

A bank provides easy payment and withdrawal facility to its customers in the form of cheques and drafts, It also brings bank money in circulation. This money is in the form of cheques, drafts, etc.

6. Agency and Utility Services

A bank provides various banking facilities to its customers. They include general utility services and agency services.

7. Profit and Service Orientation

A bank is a profit seeking institution having service oriented approach.

8. Ever increasing Functions

Banking is an evolutionary concept. There is continuous expansion and diversification as regards the functions, services and activities of a bank.

9. Connecting Link

A bank acts as a connecting link between borrowers and lenders of money. Banks collect money from those who have surplus money and give the same to those who are in need of money.

10. Banking Business

A bank's main activity should be to do business of banking which should not be subsidiary to any other business.

11. Name Identity

A bank should always add the word "bank" to its name to enable people to know that it is a bank and that it is dealing in money. -----------------------------------------------------------------------------------------------------------------------Type 1. Saving Banks

Saving banks are established to create saving habit among the people. These banks are helpful for salaried people and low income groups. The deposits collected from customers are invested in bonds, securities, etc. At present most of the commercial banks carry the functions of savings banks. Postal department also performs the functions of saving bank.

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Type 2. Commercial Banks

Commercial banks are established with an objective to help businessmen. These banks collect money from general public and give short-term loans to businessmen by way of cash credits, overdrafts, etc. Commercial banks provide various services like collecting cheques, bill of exchange, remittance money from one place to another place. In India, commercial banks are established under Companies Act, 1956. In 1969, 14 commercial banks were nationalised by Government of

India. The policies regarding deposits, loans, rate of interest, etc. of these banks are controlled by the Central Bank.

Type 3. Industrial Banks / Development Banks

Industrial / Development banks collect cash by issuing shares & debentures and providing long-term loans to industries. The main objective of these banks is to provide long-term loans for expansion and modernisation of industries. In India such banks are established on a large scale after independence. They are Industrial Finance Corporation of India (IFCI), Industrial Credit and Investment Corporation of India (ICICI) and Industrial Development Bank of India (IDBI).

Type 4. Land Mortgage / Land Development Banks

Land Mortgage or Land Development banks are also known as Agricultural Banks because these are formed to finance agricultural sector. They also help in land development. In India, Government has come forward to assist these banks. The Government has guaranteed the debentures issued by such banks. There is a great risk involved in the financing of agriculture and generally commercial banks do not take much interest in financing agricultural sector.

Type 5. Indigenous Banks

Indigenous banks means Money Lenders and Sahukars. They collect deposits from general public and grant loans to the needy persons out of their own funds as well as from deposits. These indigenous banks are

popular in villages and small towns. They perform combined functions of trading and banking activities. Certain well-known indian communities like Marwaries and Multani even today run specialised indigenous banks.

Type 6. Central / Federal / National Bank

Every country of the world has a central bank. In India, Reserve Bank of India, in U.S.A, Federal Reserve and in U.K, Bank of England. These central banks are the bankers of the other banks. They provide specialised functions i.e. issue of paper currency, working as bankers of government, supervising and controlling foreign exchange. A central bank is a non-profit making institution. It does not deal with the public but it deals with other banks. The principal responsibility of Central Bank is thorough control on currency of a country.

Type 7. Co-operative Banks

In India, Co-operative banks are registered under the Co-operative Societies Act, 1912. They generally give credit facilities to small farmers, salaried employees, small-scale industries, etc. Co-operative Banks are available in rural as well as in urban areas. The functions of these banks are just similar to commercial banks.

Type 8. Exchange Banks

Hong Kong Bank, Bank of Tokyo, Bank of America are the examples of Foreign Banks working in India. These banks are mainly concerned with financing foreign trade. Following are the various functions of Exchange Banks :-

Remitting money from one country to another country, Discounting of foreign bills, Buying and Selling Gold and Silver, and Helping Import and Export Trade.

Type 9. Consumers Banks

Consumers bank is a new addition to the existing type of banks. Such banks are usually found only in advanced countries like U.S.A. and Germany. The main objective of this bank is to give loans to consumers for purchase of the durables like Motor car, television set, washing machine, furniture, etc. The consumers have to repay the loans in easy installments ----------------------------------------------------------------------------------------------------------------------I INTRODUCTION Agricultural production in India is an important determinant of overall economic growth and a huge employer of the rural populace. Total food grain production, for instance, in 2004/2005 (April-March) amounted to 206.4 million tones, including 87.8 million tones of rice and 73.0 million tones of wheat (Country Report, 2005). However, yields per hectare remain low by international standards. Other major crops grown include oilseeds, cotton, pulses, sugar, tea, coffee, rubber, jute and potatoes. The recent slowdown in the sector is a cause for concern and calls for a change in the government's agricultural policy. Some academic research suggests that in order for India to sustain GDP growth of around 7 percent or more, agriculture has to grow at, or in excess of, 4 percent (India Economic Survey, 2004; Sinha, 2005; Nilekani, 2006). The following management report attempts to analyse the agriculture sector in India, assessing the affect of external and internal factors on the industry. SWOT analysis framework is employed to give a more in-

depth strategic insight into the sector's current development, emphasising its internal strengths, weaknesses, and external opportunities and threats. The application of PEST analysis involves the assessment of industry's external environment of political, economic, social and technological conditions that have a direct impact on the performance of the industry and its future development. The significant part of the report is also devoted to the critical evaluation of ecological factors impacting the agricultural sector, examining industry's responses and improvements for its sustainable growth. I INTRODUCTION 2.0 Indian Agriculture Industry Overview 2.1 SWOT Analysis 2.1.1 Strengths The Indian agriculture is large, competitive and well developed, offering products at low prices. The sector experiences a constant demand, as Indians have a strong preference for fresh rather than processed foods and for local spices and ingredients (The World Bank, 1997). Provides employment for a large Indian population, living in rural territories. Recent advances in technology and government initiatives support the development of the sector. In pursuance of the government policy to strengthen and promote IT led governance, the department of agriculture and cooperation has been taking various measures to promote the use and application of technology with the aim of making agriculture online for the use of farmers, exporters, and traders, etc. 2.1.2 Weakness One of the major weaknesses present for the agricultural sector in India is in the lack of government support. Unlike in East Asian countries, the shift of the labour force from agriculture to non-agriculture in India is peculiarly slow, largely attributable to rigid labour laws in both the agricultural and industrial sectors. Gliessman (1989) also highlights the need for pressing on with reforms in agriculture, in particular, trade

liberalisation and export promotion strategies. Becker and et al. (1992) also claim that though India spends on agriculture nearly twice as much as some East Asian economies, this level of spending on agriculture does not translate into a significantly higher sectoral performance. Inadequate road linkages also remain a major constrain for the development of well-functioning agricultural markets. A continuing fragmentation of land-holdings, poor maintenance of existing irrigation systems and declining soil fertility in some areas are other factors. Another weakness is based on seasonality and the fact that agricultural sector output heavily depends on the annual monsoon, as less than onethird of cropland is irrigated. The main foodgrain crops, for example, and some cash crops (oilseeds, cotton, jute and sugar) depend on the southwest monsoon (This brings 80% of India's rain, usually within a threemonth period from June to mid-September. The 2002 south-west monsoon was disastrous, causing the autumn grain harvest to fall by 18% year on year. In 2004 the sector stagnated in comparison to the previous year when the best monsoon rains in a decade generated growth of around 10% in the agricultural sector. Excessive rainfall in 2005 caused severe flooding in Maharashtra (The Economist Intelligence Unit Report, 2005a)). 2.1.3 Opportunities A growing population, rapid economic development, and political and social demands exceed the mandate and capabilities of any corporation in an emerging economy (Bhagwati, 1998), and India is no exception to this. A growing population has made industrial development one of the Indian government's highest policy priorities; it is an i mportant element of economic development as it assists in raising national income at a more rapid pace. It is also a precondition for continued agricultural development. Palmer-Jones and Sen (2003) state that the government continues to play a major role in assisting farmers through agricultural credits, subsidies, price support schemes and extension services. Although there are no food security concerns at present, better agricultural productivity will hold the key to stable growth in food production, given the limits of the resource base. There is an opportunity for the economic

growth to benefit more people only if the country raises agricultural productivity, improves its system of general education to help the millions who must leave farming, and encourages labor intensive manufacturing industries. 2.1.4 Threats About one-fifth of the country, 69m ha, is covered by forests and woodland, and one-half of this area is reserved for the production of timber and other forestry products (Varshney, 1998). However, there are increasing concerns from environmentalists and local government over the rapid depletion of forest areas, ecological factors, and scarcity of natural resources. As income rises, India is becoming an increasingly important market for processed foods, especially in the cities and among young people. Aware of quality and international brands, consumers are less likely to support national products, and are more vulnerable to pay premium prices for foreign products of better quality. This represents a potential substitution to the local products, impacting the production levels of agriculture sector. Food support prices for wheat and rice have given farmers little incentive to diversify and have filled government storage facilities to overflowing, while keeping the market price of foodgrains artificially high. Current agricultural policy, which supports cereal production, is exceedingly expensive and will be unable to deal with the likely scenario of a shift in consumption from cereal food towards non-cereal food. A lack of market infrastructure also hampers the movement of crops, leading to sudden shortages. India has considerable potential as an exporter of rice, cotton, many types of fruit and even flowers, but this has so far not been tapped (Yeoh and Siang, 2006). The introduction of high-yield crop varieties and new fertilising and irrigation techniques over recent decades the so-called Green Revolution dramatically increased productivity in some regions. India has been self-sufficient in food since the mid-1970s, maintaining buffer stocks adequate to meet demand despite failed harvests and seasonal fluctuations (Ramakrishnan, 1993; The World Bank, 1997).

----------------------------------------------------------------------------------------------------------------------nabard

Introduction

NABARD is set up as an apex Development Bank with a mandate for facilitating credit flow for promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts. It also has the mandate to support all other allied economic activities in rural areas, promote integrated and sustainable rural development and secure prosperity of rural areas. In discharging its role as a facilitator for rural prosperity NABARD is entrusted with

1.

Providing refinance to lending institutions in rural areas

2.

Bringing about or promoting institutional development and

3.

Evaluating, monitoring and inspecting the client banks

Besides this pivotal role, NABARD also:

Acts as a coordinator in the operations of rural credit institutions

Extends assistance to the government, the Reserve Bank of India and other organizations in matters relating to rural development

 Offers training and research facilities for banks, cooperatives and organizations working in the field of rural development

Helps the state governments in reaching their targets of providing assistance to eligible institutions in agriculture and rural development

Acts as regulator for cooperative banks and RRBs

Extends assistance to the government, the Reserve Bank of India and other organizations in matters relating to rural development

Offers training and research facilities for banks, cooperatives and organizations working in the field of rural development

Helps the state governments in reaching their targets of providing assistance to eligible institutions in agriculture and rural development

Acts as regulator for cooperative banks and RRBs

Some of the milestones in NABARD's activities are:

Refinance disbursement under ST-Agri & Others and MTConversion/ Liquidity support aggregated Rs.19452 crore during 200910.

 Refinance disbursement under Investment Credit to commercial banks, state cooperative banks, state cooperative agriculture and rural development banks, RRBs and other eligible financial institutions during 2009-10 aggregated Rs.12009.08 crore.

Through the Rural Infrastructure Development Fund (RIDF) Rs.12387.54 crores were disbursed during 2009-10. With this, a cumulative amount of Rs.86939.74 crore has been disbursed as on 31 March 2010 covering irrigation, rural roads and bridges, health and education, soil conservation, drinking water schemes, flood protection, forest management and the Bharat Nirman Project (BNP).

Under Watershed Development Fund with a corpus of Rs.1102 crore as on 31 March 2008, 513 projects in 14 states have benefited.

Farmers now enjoy hassle free access to credit and security through 906.40 lakh Kisan Credit Cards that have been issued through a vast rural banking network.

Under the Farmers' Club Programme, a total of 54805 clubs covering 104648 villages in 587 districts have been formed, helping farmers get access to credit, technology and extension services. ======================================================= =============================================== NABARD is set up by the Government of India as a development bank with the mandate of facilitating credit flow for promotion and development of agriculture and integrated rural development. The mandate also covers supporting all other allied economic activities in

rural areas, promoting sustainable rural development and ushering in prosperity in the rural areas.

With a capital base of Rs 2,000 crore provided by the Government of India and Reserve Bank of India , it operates through its head office at Mumbai, 28 regional offices situated in state capitals and 391 district offices at districts. Contact NABARD It is an apex institution handling matters concerning policy, planning and operations in the field of credit for agriculture and for other economic and developmental activities in rural areas. Essentially, it is a refinancing agency for financial institutions offering production credit and investment credit for promoting agriculture and developmental activities in rural areas.

NABARD today

Initiates measures toward 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.

Coordinates the rural financing activities of all the institutions engaged in developmental work at the field level and maintains liaison with the government of India , State governments, the Reserve Bank of India and other national level institutions concerned with policy formulation

 Prepares, on annual basis, rural credit plans for all the districts in the country. These plans form the base for annual credit plans of all rural financial institutions

Undertakes monitoring and evaluation of projects refinanced by it

Promotes research in the fields of rural banking, agriculture and rural development

Functions as a regulatory authority, supervising, monitoring and guiding coopefrative banks and regional rural banks

NABARD's Roles and Functions are summarized below:

Credit Functions

Developmental and Promotional Functions

Supervisory Functions

Institutional and Capacity building

Role in Training

+++++++++++++++++++++++++++++++++++++++++++++++++++++++ +++++++++ The Reserve Bank of India today published a Study entitled Agricultural Growth in India since 1991. The Study is co-authored by Prof. Pulapre Balakrishnan, Senior Fellow, Nehru Memorial Museum and Library, New Delhi, along with research staff members from the Reserve Bank (Shri Ramesh Golait and Shri Pankaj Kumar). The Study was undertaken under aegis of the Development Research Group.

Indian economy witnessed the slowing of agriculture at a time when the rest of the economy is growing at unprecedented rates. The slow growth of agriculture has been explicitly noted as a matter of concern in the Approach Paper to the Eleventh Plan. Further, accelerating the rate of growth of agricultural production is seen as central to a more inclusive growth.

The Study addresses slow growth of the agricultural sector since 1991. The Study documents the movement of the factors that have been recognised as determining agricultural growth during this period with a view to identifying the proximate causes of the slowdown. The focus in this Study is exclusively on crop agriculture. Factors, such as, relative price movement at the aggregate and at the disaggregated (crop-wise) level, import penetration, shrinking farm size, investment in agriculture, research and extension and agriculture credit have been investigated to ascertain their impact on agricultural growth in India since 1991.

The major findings of the Study are :

The Study does not find evidence to the contention that relative price movement might have played a determining factor in explaining slow growth of agriculture since 1991. The profile of relative prices over the past 15 years indicates too mild a shift, if at all, to consider relative price

movements as central to understanding the slowing of agricultural growth since 1991. The role of import liberalisation in determining this price movement appears to be marginal too, except perhaps for some crops in some periods. The Study finds that smaller farm holding-size, by making it more difficult for the majority of Indian farms to access new technology and adopt more efficient forms of farm production organisation, may have adversely affected agricultural growth. The Study reveals that among the factors likely to be responsible for slow growth is stagnation of public investment for almost a quarter of a century, along with a slowing of irrigation expansion since 1991. The Study observes that production is increasingly being carried out in a more open economy, even though import penetration is very low currently for most crops. The Study suggests the need for expansion of publicly-provided research and extension to support farming under a changed environment. The Study documents, public expenditure on research and extension, historically low as a share of agricultural output in India by international standards, has registered a slower growth in real terms since 1990. The Study cautions against the reading that greater spending alone is the solution to the current impasse in Indian agriculture. The Study provides evidence, intended as an illustrative case, that steady growth of real expenditure since 1991 has actually coincided with a slowing rate of expansion of the percentage area irrigated. This indicates a declining efficiency of public investment and suggests that governance is as much an issue as greater allocation of funds. +++++++++++++++++++++++++++++++++++++++++++++++++++++++ ++++++++++++++++++++++++