Indian Financial System

Indian banking system: Development banks: National Bank of Agriculture and Rural Development (NABARD)

National Bank of Agriculture and Rural Development (NABARD) was set up on July 12, 1982 under Act of parliament as a central or apex institutions for financing agricultural and rural sectors.

National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India. It has been accredited with “matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India”.

NABARD was established by an act of Parliament on 12 July 1982 to implement the National Bank for Agriculture and Rural Development Act 1981. It replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India and Agricultural Refinance and Development Corporation (ARDC).… Read the rest

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Indian banking system: Development banks: Export-import bank of India (EXIM Bank)

The Export-import bank of India (EXIM Bank) was set up in January 1982 as a statutory corporation wholly owned by central government. Its paid up capital in 1988-89 was Rs 220.50 crores.

Activities performed by EXIM Bank:

  • It grants direct loans in India and outside for the purpose of imports and exports;
  • Refinances loans to banks and other notified financial institutions for the purpose of international trade ;
  • Rediscounts usance export bills for banks;
  • Provide overseas investment finance for Indian companies toward their equity participation in joint venture abroad and guarantees, along with banks, obligations on behalf of project exporters;
  • It is also a co-coordinating agency in the field of international finance and it undertakes development of merchant banking activities in relation to export oriented industries;

Thus it provides fund based as well as non fund based assistance in the foreign trade sector.… Read the rest

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Indian banking system: Development banks: Small scale Industrial Development Bank of India (SIDBI)

The Small scale Industrial Development Bank of India (SIDBI) was set up in October 1989 under the Act of parliament as a wholly owned subsidiary of the IDBI. It is the central or apex or principal institution which oversees, co-ordinates and further strengthens various arrangements for providing financial and non-financial assistance to small-scale, tiny, and cottage industries.

SIDBI objectives are:

  • To initiate steps for technological up gradation and modernization of existing units
  • To expand channels for marketing of SSI sector products in India and abroad
  • To promote employment-oriented industries in semi-urban areas and to check migration of population to big cities.
… Read the rest
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Indian banking system: Co-operative banks

Co-operative banks in this country are a part of vast and powerful structure of co-operative institutions which are engaged in tasks of production, processing, marketing, distribution, servicing and banking in India. The beginning co-operative banking in this country dates back to about 1904, when official efforts were made to create a new type of institution based on principles of co-operative organization & management, which were considered to be suitable for solving the problems peculiar to Indian conditions.

In rural areas, as far as the agricultural and related activities are concerned, the supply of credit was inadequate, and money lenders would exploit the poor people in rural areas providing them loans at higher rates.… Read the rest

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Role and Functions of Reserve Bank of India (RBI)

The Reserve Bank of India is the central bank of India, was established on April 1, 1935 during the British-Raj in accordance with the provisions of the Reserve Bank of India Act, 1934. The Reserve Bank of India was set up on the recommendations of the Hilton Young Commission. The commission submitted its report in the year 1926, though the bank was not set up for nine years. The Central Office of the Reserve Bank was initially established in Kolkata, Bengal, but was permanently moved to Mumbai in 1937. Though originally privately owned, the RBI has been fully owned by the Government of India since nationalization in 1949.… Read the rest

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The Reserve Bank of India (RBI): Objectives and Functions

The Reserve Bank of India (RBI) is the apex financial institution of the country’s financial system entrusted with the task of control, supervision, promotion, development and planning. RBI is the queen bee of the Indian financial system which influences the commercial banks’ management in more than one way. The RBI influences the management of commercial banks through its various policies, directions and regulations. Its role in bank management is quite unique. In fact, the RBI performs the four basic functions of management, viz., planning, organizing, directing and controlling in laying a strong foundation for the functioning of commercial banks.

History  of Reserve Bank of India (RBI)

In 1921, the Imperial Bank of India was established to perform as central bank of India by the British Government.… Read the rest

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