तपशीलवार इसे पेज- जम्मू

FIRST PRIZE

Name of the Student: Harshit Bhat
Name of the School: SOS Hermann Gmeiner School, Talab Tillo, Jammu
Category: VI-VIII
Topic: Role of Banks in changing common man’s life
Position Secured: Ist

As the population increases the economic prosperity of a country go on decreasing. The same situation is with India. Some are becoming rich and rich while some are suffering with such poverty that they could not get one time food. The situation comes what to do to end poverty. But not only this the banks also help people in so many ways. The banks provide certain facilities to a person so that he could keep himself and his family happy.

The banks provide loans to needy. But the loans cannot be given without completing certain formalities. When a person takes loan he has to return it with some interest within the time limit. These days people are buying car, television, computer and other appliances by availing loan facilities from banks. A middle class person could never afford to sit in expensive car otherwise.

Education is very costly these days. Banks are providing loans who want to persue higher and other professional degrees. An average family can afford to send his children abroad by availing loans from banks. Banks also help in housing sector. Most of the people are able to construct their houses because of low interests rate offered by banks in their sector. Banks also help in developing infrastructure by investing in Road constructions, bridge, dam etc.

Banks also provide us with other facilities. We can open our account in banks. There are four types of accounts saving bank account, recurring bank account, fixed deposit account and current account. In saving account we can invest and withdraw money anytime. A less interest is given in this type of account. In recurring bank account and fixed deposit account, a fixed deposit of money is deposited for a fixed period of time and better rate of interest is provided by bank. The current account is opened by different offices and business men and other institutions. No interest is given in this account. This is meant for keeping record of all transactions in the offices and other institutions. Other important thing is A.T.M. Through A.T.M. we can take money at any time in any part of world. It is easiest way of withdrawing money.

Banks also offer insurance to its clients and general public. Some are doing insurance directly while others have made tie ups with insurance companies for this purpose. In this way banks also earn a lot of commission from insurance companies and diversifying their business. Banks are also investing money in share market. We see a lot of mutual funds issued by different banks. Many people are preferring to invest in Mutual fund as they offer handsome return and are less risky. Banks are also lending help to people who live below poverty line. Reserve bank of India help in exchange of foreign money and helps in keeping economy of India strong.

Thus banks are life line of a country.

THIRD PRIZE

Name of the Student: Aqif Zaffar
Name of the School: New Delhi Public School,
Bagh-E-Mehtab, Srinagar Category: VI-VIII
Topic: Role of Banks in Common Man’s Life
Position Secured: 3rd

Banking is defined as acceptance of deposits of money from the public for the purpose of lending or investment. Such deposits may be repayable on demand or otherwise and withdrawable by cheques, draft, order or otherwise.

From the very ancient days indigenous banking had been organized in the form of family or individual business. The indigenous banks have been variously called Sharoff’s, Seths, Sahukars, Mahajans, Chettis etc.

Banks has nowadays become the life line of common man. The banking sector has been keeping pace with the increased requirement of the economy.

The key role of banks are:-

1. Borrowing, raising and taking up of money.
2. Lending or advancing of money either upon security or without security.
3. Drawing, making, accepting, buying, selling, collecting and dealing with bills of exchange hundis etc.
4. Buying, selling and dealing in bullions.
5. Buying and selling of foreign currencies.
6. Negotiating of loans and advances.
7. Acting as an agent of the Government or local authorities or person.
8. Insure guarantees.
9. Untakes and executes trusts etc.

Due to modernization in banking sector the life has become more easy. Banks are giving housing loans, consumption loans, vehicle loans, business loans, education loans, consumer loans etc. Due to induction of ATM (Automatic Teller Machine) the whole monetary activities are controlled by ATM cards. The Railway bookings, Air travel tickets, online shopping is possible because of ATM. Now people hardly carry cash with themselves.

The growth of the technology has changed the payment systems world over during the past two decades. The introduction of ATMs and the plastic cards has given the banking customers the facility of round the clock banking.

Today banking customers are most affluent and technologically sophisticated than ever before with less and less time available to conduct routine banking business, more and more of them are comfortable with the idea of using machines for vide range of services and that include banking.

Today people use personal banking, tele banking, corporate banking, rural banking, Anywhere banking, home banking, Electronic banking, Mobile banking, internet banking etc.

With the introduction of bank assurance the banks have put another cap in its diversified functions and facilities. Now people get many facilities under one roof.

In order to improve the flow of credit to the rural sectors, a number of regional rural banks have been set up in the areas where commercial and cooperative banking facilities have been lacking. These banks cater to the credit requirements of the weaker sections.

In short the life without banks will be hard to believe these days.

CONSOLATION PRIZE

Name of the Student:- Rohan Kaul
Class :- VIII A

Role of Banks in Common Man’s life

In a democratic set up like India, banks play a vital role in framing the destiny of the nation, in view of this the decision of Government towards attainment of the objective was taken in the 1970’s and consequently a large number of banks were nationalized. There are various aspects which are covered by the activities undertaken by the banks which include below mentioned:-

(i) India being a large agricultural based country wherein farm sector needed support by providing financial assistance mainly to the deprived small farmers to whom loans and financial assistance could be provided for purpose of agricultural equipments like ploughs, tractors, pumps, manure etc. The small farmers were earlier exploited by the vested interests for their own benefits.

(ii) Banks provide financial assistance to educated youth for employment generating activities like opening of shop, factories and other skilled activities like-fabrication, denting, poultry projects, dairy farms etc.

(iii) Safety of money in banks is ensured through the opening of savings and current accounts besides fixed deposits for various period to enable earning of interest thereon. Saving accounts make people prudent and ensures financial security in times of need.

(iv) New concept of core banking has revolutionized the financial sector. You can deposit money at any place and draw it at any other place through the banking and ATM’s systems.

(v) Banks maintain the accounts of retired people, senior citizens to make their financial security for their deposits.

(vi) The pension payments are also allowed through the banks to retired government servants and defence personnel.

(vii) Banks arrange electronic transfer of money from any part of the world.

(viii) Bank drafts and money transfers is conducted by the banks on the request of a parent to his child studying in any part of the country.

(ix) Home loans, car loans and educational loans are also provided on the financial strength of the person by the bank.

(x) The banks also provide units for Mutual Funds for the people who want to invest their money.

(xi) Government undertakes construction of big projects in the country in which bank can finance and the objective is achieved.

(xii) Credit card facility is introduced which facilitate purchase of various commodities and items without carrying money to such shops, business establishments. For example you have to purchase ornaments for a marriage function, this could be done without carrying huge sums by credit card.

(xiii) Travellers cheques are issued by the banks to people who have to undertake journeys without carrying cash.

(xiv) Student community deposit their fee etc in the banks on their admission or regular monthly fee in the days of their learning in educational institutions/schools/colleges/ universities/technical institutions etc.

(xv) All records are now maintained through computer in the banks and entries in the pass book are also made through these computers. Thus ensuring an automatic system which saves time factor.

(xvi) In the Private Sector employees contribute to P.P.F (Public Provident Fund) account in the banks and get better interest on their quitting service.

(xvii) They have role in maintaining flow of currency and detection of fake currency notes, exchange of worn and torn notes, issuance of coins for the benefit of common people.

There are various types of banks:-

1. Nationalised Banks :- These include SBI( State bank of India), PNB (Punjab National Bank), Canara Bank, Allahabad Bank etc.

2. Private Banks: These include HDFC Bank, ICICI Bank, ABN-Amro Bank, Grindlays Bank etc.

Some of these banks are linked to foreign countries at international levels.
Role of some banks:-

1. J&K Bank :- It is a State bank and all money of government is transacted through this bank.

2. SBI :- It is a Central Government Bank through which all Government transactions are carried. The salary of Central government officials is paid through this.

3. Reserve Bank of India (RBI) :- This bank gives directives to the banks for performance of the banks role in the public like rate of interest on loans, deposits, CRR (Cash Reserve Ratio) etc.

In the conclusion it could be seen that a financial control on the economy of the country is exercised by the banks to arrest black money generation. Payment of interest earnings, deduction of T.D.S (Tax Deducted Source) from the customers, mechanism for payment of Income Tax is done through the banks. Payment of electricity bills, salaries of Government employees, conducting of current accounts of business owners and facilitating secure and safe transactions is done through this medium. In short banks can do various activities as detailed above with the objective to provide lot of facilities for the common people dealing in all activities of financial matters. The activities are governed by the norms laid by the Reserve Bank of India (RBI) which conducts regular inspections of banks for effective check and renders service of a watch dog on the normal life.

Thank You.

Name :- Sakshi Thussu
Class : VIIIth
Jammu.

Banking and Common Masses- Need for financial Inclusions in India

The founders of various banks in our country were visionaries and left behind an institutional setup. For furthering the cause of banking, finances, economics and management to banking professionals, as well as deserving students many training institutions have come up from time to time. It is appropriate to express views on taking banking services to common man for financial inclusions. Though efforts are being made to ensure financial inclusions of poor and disadvantaged as their financial inclusions can truly lift their financial condition and standard of life.

Financial inclusion is delivery of banking services at an affordable cost to vast sections of disadvantaged and low income groups. Unrestrained access to public services is the key to an open and efficient society.

As banking services are for public good. It is essential that availability of banking and payment services to the entire population without discrimination is the prime objective of public policy. The scope of financial inclusions can be expanded in two ways:-

1. Through state intervention by way of legislative enactments.

2. Through voluntary efforts by the banking community for evolving various strategies to bring within the ambit of the banking sectors the large strata of the society.

In India the focus of financial inclusions at present is confined to ensuring a bare minimum access to saving bank accounts without any difficulty at all.

At the other extreme are financially excluded who are denied access even to the basic financial products. And in between are those who use banking services only for deposits and withdrawals of money and have restricted access to the financial system.

Under Indian scenario, bank natioalisation in India, marked a shift in the focus of banking as it was intended to shift the focus from class banking to mass banking. The idea of creating “Regional Rural Banks” (RRB) was also to take banking services to poor people.

The new policy places emphasis on efforts made by banks to achieve financial inclusions and other policy objective.
The initiative taken for extending banking services to common masses, the mode of financial sector development until 1980’s was characterized by :-

1. A hugely expanded bank branch & Co-operative network.

2. A greater focus on credit than other financial services like saving and insurance.

3. Lending targets directed at a range of priority sectors such as agriculture and weaker sections of the society.

4. Interest rate ceiling.

5. Significant government subsidies through banks.

6. The main aim, that finances for rural and poor people was a social obligation and not have potential business opportunity.
Technology can be a viable tool in providing access to banking products in remote areas. ATM cash dispending machines can be modified to make them user friendly. Banks should be prepared to think outside the box.

Declaration:-

I, Sakshi Thussu, a student of Class VIII of KC Public School, declare that the essay “Banking and Common Masses- Need for Financial Inclusions in India” is of original nature and I have prepared it all myself.
Sakshi Thussu.

FIRST PRIZE

Miss Ambreen Ashai, Class-Xth
Oak Hill Institute of Education

Role of Banks in common man’s life

Banks are organizations that carry out business of banking. Banking is the transaction carried on by any individual or firm engaged in providing financial services to consumers, business or government enterprises. In the broadest sense, banking consists of safeguarding and transfer of funds, lending or facilitating loans, guaranteeing credit worthiness and exchange of money. A narrower and more common definition of banking is the acceptance, transfer and most important, creation of deposits. In essence, a bank aims to make a profit by paying depositors a lower rate of interest than the rate the bank charges to borrowers. In accounting terms, deposits are considered liabilities (because they have to be repaid) and loans are considered assets.

When one thinks of a bank, the immediate word striking the mind is money, economy. For a nation to be strong it requires strong economy and the business of banking has shown excellence in this regard. Entrepreneurs, by imaginatively using the services of the banks can make themselves as well as the nation rich and strong in times to come.

By providing loans to individuals or firms, banks have created room for development. In this day and age, loan facility has become as easy as ABC. Ask for home loan and take back a rest in the bedroom of your new house. Ask for a car loan and take back the ease to travel. Ask for an education loan and take back the satisfaction that you have become a well qualified man. Ask for a consumer loan and congratulate yourself for you have just brought home a color television, a washing machine, an air conditioner, and an endless series of products. Thus people are at ease and find it easy to ask for.

Banks have always been coming forward to lend proactively to all good projects. They have generated a lot of employment through their new policies and by opening new branches. They have also granted loans to individuals for setting up their own business. Banks are also encouraging students who excel in sports and games by providing employment.

These days, the appointment of an official in any public sector or private company is accompanied by the opening of a bank account. The salary is transferred to the account and it becomes easy for the person to collect it. With modern banking facilities like telebanking, internet banking, SMS banking, ATM, mobile ATM, credit cards, debit cards, banking has become anywhere and anytime. Automated Teller Machine (ATM) is often confused with All Time Money(ATM). Such is its facility.

The growth of internet worldwide and the development of procedures enabling secure transactions online have created the new field of online banking, where customers deal with their banks chiefly or entirely through internet connections. Since online banking services can be accessed with equal ease from almost anywhere in developed world, this raises the possibility of banking networks operating without regard to national boundaries with consequent dogmatic tribulations. Shopping can also be done online with the help of credit cards.

At least a savings account has become a necessity these days. With no guarantee of theft, people don’t want to keep the money with them. A bank account, people feel safe and sound. Banks also provide lockers for more safety.

One can make payments through cheque/DD and thus no cash to carry along. Further, banks also provide tax advice and investment opportunities. Several banks in India are listed on the National Stock Exchange and the Bombay Stock Exchange and are cost-effective to invest in. Banks are also used to finance government expenditures. The banking system also plays a major role in financing exports.

A number of branches and ATMs have been installed at various tourist places and other places of civic interest to make it handy for visitors to draw out cash as required. Besides, several banks have a joint venture with other companies and sell financial products like insurance.

Keeping banking spaced out, several banks have undertaken the renovation and maintenance of public places like public parks.

Every generation needs a new revolution and banking has quite revolutionized the world. From the World Bank to local cooperative banks, all work for common man’s interest. It is the special task of the banking community to encourage the use of money and instill banking habits among the population.

Thus, banks have always been playing a vital role and continue to do so in the development of the common masses and students and youth in particular, equipping them with the skills, knowledge, proficiency and courage to steer our country successfully as the most powerful nation in the world.

“A satisfied customer is the best business strategy”, and we are quite satisfied.

Ambreen Ashai,
Ashai Manzil,
MET Lane.Baghat Barzulla, Srinagar-190005, Ph: 0194-2434068

SECOND PRIZE

Name of the Student: Shruti Kakkar
Name of the School: Popular Model Academy, Nanak Nagar, Jammu
Category: IX – X
Topic: Role of Banks in Common Man’s Life
Position Secured: 2nd

We have seen that money is something that can act as a medium of exchange in transactions. Before the introduction of coins, a variety of object was used as money. For example, since the very early ages, Indians used grains and cattle as money. Thereafter came the use of metallic coins- gold, silver copper coins- a phase which continued well into the last century. Modern forms of money include currency paper notes and coins. Unlike the things that were used as money earlier, modern currency is not made of precious metals such as gold, silver and copper and unlike grain and cattle, they are neither of everyday use. The modern currency is without any use of its own. Then, why is it accepted by as a medium of exchange? It is accepted as a medium of exchange because the currency is authorised by the government of the country. This is something linked to banks.

Banking dates back to 1786, the first bank established in India, then the nationalisation of banks in 1969 and recently the liberalisation of the same since 1991. In India the banking sector is segregated as public or private sector banks, cooperative banks and regional rural banks. Foreign banks has been given a different head followed by upcoming foreign banks in this section. RBI is the central bank of the country since 1934. It regulates, controls credit, issue licenses and functions as banker of all banks and the government. ABN Amro Bank, HSBC Bank, Allahabad Bank , ICICI Bank, American Bank, IDBI Bank,Oriental Overseas Bank, Andhra Bank, Oriental Bank, Bank of India, Canara Bank, Punjab National Bank, Central Bank of India, State Bank of India (SBI), CITI Bank, Standard Chartered Bank, Corporation Bank, United Bank of India, HDFC Bank and Axis Bank.

Bouquet of services are at customers demand in today’s banking system. Different types of accounts and loans, facilitating with plastic money and money transfer across the globe. This section discusses upon the services provided to the NRI s in India through different dedicated account. FAQ s makes the section more comprehensive. Often overlooked is the importance of banks to revitalization efforts. Financial institutions in a community can form the core of economic development. Although they should n’t be expected to finance revitalization programs single handedly, they should be considered as essential to success.

The other form in which people hold money is as deposits with banks. At a point of time, people need only some currency for their day-to-day needs. For instance, workers who receive their salaries at the end of each month have extra cash at the beginning of the month. What do people do with this extra cash? They deposit it with the banks by opening a bank account in their name. Banks accept rate on the deposits. In this way people’s money is safe with the banks and saved with the banks and it earns an interest. People also have the provision to withdraw the money as and when they require. Since the deposits in the bank accounts can be withdrawn on demand, these deposits are called demand deposits. Demand deposits offer another interesting facility. It is the essential characteristics of money (that of a medium of exchange). You would have heard of payments being made by cheques instead of cash. For payments through cheque, the payer who has an account with the bank, makes out a cheque for a specific amount. A cheque is a paper instructing the bank to payer specific amount from the person’s account to the person in whose name the cheque has been made. Thus we see that demand deposits share the essential features of money. The facility of cheques against demand deposits makes it possible to directly settle payments without the use of cash. Since demand deposits are accepted widely as a means of payment, along with currency, they constitute money in the modern economy. You must remember the role that the banks play here. But for the banks, there would be no demand deposits and no payments by cheques against these deposits. The modern forms of money-currency and deposits- are closely linked to the working of the modern banking system. What do the banks do with the deposits which they accept from the public? There is an interesting mechanism at work here. Banks keep only a small proportion of their deposits as cash with themselves. For example, banks in India these days hold about 15% of their deposits as cash. This is kept as provision to pay the depositors who might come to withdraw money from the bank on any given day. Since, on any particular day, only some of its many depositors come to withdraw cash, the bank is able to manage with this cash. Bank use the major portion of the deposits to extend loans. There is a huge demand for loans for various economic activities. We shall read more about this in the following sections. Banks make use of the deposits to meet the loan requirements of the people. In this way, banks mediate between those who have surplus funds and those who are in need of these funds (the borrowers). Banks charge a higher interest rate on loans than what they offer on deposits. The difference between what is charged from borrowers and what is paid to depositors is their main source of income.

Various loans are:- CAR Loan, Education Loan, Loan to Traders, Personal Loan, Professional Loans, Doctors, Housing Loan, Agriculture Loans . Every loan agreement specifies an interest rate which the borrower must pay to lender along with the repayment of the principal. In addition, lenders may demand collateral (security) against loans. Collateral is an asset that the borrower owns (such as land, building, vehicle, livestock, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid. If the borrower fails to repay the loan, the lender has the right to sell the asset or collateral to obtain payment. Property such as land titles deposits with banks, livestock are some common examples of collateral used for borrowing. Interest rate, collateral and documentation requirement and the mode of repayment together comprise what is called the terms of credit. The terms of credit vary substantially from one credit arrangement to another. They may vary depending on the nature of the lender and the borrower. The next section will provide examples of the varying terms of credit in different credit arrangements. The various types of loans can be conveniently grouped as formal sector loans and informal sector loans. The former are loans from banks and cooperatives. The informal lenders include moneylender, traders, employers, relatives and friends etc. In graph I you can see the various source of credit to rural household in India.

Source of credit for Rural Households in India in 2003

The Reserve Bank of India supervises the functioning of formal sources of loans. For instance, we have seen that the banks maintain a minimum cash balance out of the deposits they receive. The RBI monitors that the banks actually maintain the cash. Similarly RBI see that the banks give loans not just to profit- making businesses and traders but also to small cultivators. Small scale industries, to small borrowers etc. Periodically, banks have to submit information to the RBI on how much they are lending to whom, at what interest rate etc. There is no organisms which supervise the credit activities of lenders in the informal sector. They can lend at whatever interest rate they choose. There is no one to stop them from using unfair means to get their money back. Compared to the formal lenders, most of the informal lenders charge a much higher interest on loans. Thus, the cost to the borrowers of informal loans is much higher. Higher cost of borrowing on loans a larger part of the earnings of the borrowers is used to repay the loan. Hence, borrowers have less income left for themselves. In certain cases, the higher interest rate of borrowing means that the amount to be repaid is greater than the income of the borrower. This could lead to increasing debt and debt trap. Also, people who might wish to start an enterprise by borrowing may not do so because the higher cost of borrowing. For these reasons, banks and cooperative societies need to lend more. This would lead to higher incomes and many people could then borrow cheaply for a variety of needs. They could grow crops, do business set up small scale industries etc. They could set up new industries or trade in good, cheap and affordable credit as crucial for the country’s development. In past days if some one had to send money to some place, he had to buy demand draft by paying bank commission. Then he had to send the draft by spending money on registered post. After 5-6 days, they deposit the draft in the branch which took at least 3 days. But now with anywhere banking one can deposit money at one place and get credited into account in minutes without paying any commission and postage.

Know your customer (KYC) principle relate to the proper identification of depositors/customers, procedure to be adopted and cautions to be exercised while opening Account for the new customers as well as for observance of the conduct of the Accounts so as to prevent misuse of banking system for perpetration of frauds, money laundering etc. Yet banks and other local financial institutions have largely ignored local improvement efforts in recent decades. In an increasing focused effort to satisfy their stockholders, they have looked for investment which provide the highest rate of return. As a result, their investment money has gone elsewhere to others regions of the country or even to other parts of the world. In doing so, often they have ignored their responsibilities to the local community in which they are based, and from which comes most of their business. Local bank need to be reacquainted with their need to be locally involved. Downtown organizations should include local bankers and downtown leaders should feel comfortable including them as integral members of revitalization programs.

To Conclude: One can say that banks are the backbone of our economy and are linked to common man’s each and every niche of life

THIRD PRIZE

Name of the Student: Ayushi
Name of the School: Army School Janglot, District Kathua
Category: IX – X
Topic: Role of Banks in Rural Upliftment
Position Secured: 3rd

Since the beginning of the planning era, one of the main policies has been to streamline and strengthen its rural economy and to uplift the levels of living of the people belonging to weaker sections of the society as well as trodden areas.

To suit the requirements of various rural development programmes, a variety of credit agencies were established with varying degree of success. The history of rural credit in India starts with cooperatives established in 1904. Later on the commercial banks entered into the field.

Though cooperatives have achieved some progress showed considerable unevenness. Particularly the small and marginal farmers were neglected in receiving the due share in the credit. Banks spread their branches in rural areas, they could not bridge the regional jobs in the distribution of rural credit.

Institutional credit has an effective utility particularly in a rural country, like India, where about 80% of the population lives in rural belts and about 69% of the total population of the country depends upon agriculture and about 46% of total national income comes from agricultural sector. Therefore, institutional finance has a great significance because without providing financial aid it would be quite impossible to improve the backward economy of India.

There are various reasons for which rural people demand the credit. Sometimes the credit is required for productive purposes by all sectors of rural society.

There are some reasons for which agriculturists or farmers demand credit. Mostly the credit is required for productive purposes such as purchase of cattle, raw materials, implements, other assests, seeds, manures or to improve land for irrigation and drainage etc. Besides, there are personal reasons and other social obligations for which the credit is required which may be termed as unproductive.

Mrs. Indira Gandhi, the late Prime Minister of India announced a Twenty- point economic programme on July 1, 1975, to uplift the rural poor and other weaker sections of society. These were aimed at relieving the people belonging to weaker sections, from the clutches of the money - lenders. This necessitated the government to seriously consider devising new alternative sources of credit to meet the requirements of the weaker sections, as the loans from private money lenders would be dried up.

The banks have an important role to play in our rural economy as they have to act as alternative agencies to provide institutional credit in rural areas. Those have not been set up to replace cooperative credit societies and banks but to supplement them. As a result, over the period 1951 to 1993, the share of the money lender has declined considerably from 68.6% to a mere 8.9%. This is consistent with the government’s policy of freeing the farmers from the clutches of the money - lenders.

With a view to improving the banking structure of the rural sector and strengthening the co-operative credit system, the Banking Commission recommended the creation of rural banks. Realising that the primary credit society had been the weakest link in the cooperative system, the Banking Commission felt that the primary ties had to be replaced by network of rural banks.

According to the Banking Commission the main object of rural banks was to provide at one place the special types of credit and banking facilities and other related services needed by agriculturists and the other rural producers. In particular following functions of the rural banks were specified

(i) To mobilise local savings

(ii) To provide short term and medium term credit for agriculture and other purposes to rural producers.

(iii) To provide long term loans to agriculturists as agents of the land development bank.

(iv) To implement credit programmes designed to cater the needs of individual farmers.

(v) To provide certain ancillary banking services to local people, such as remittance of funds, acceptance of insurance premia safe deposit lockers etc.

(vi) To undertake the supply of agricultural inputs and equipment to the farmers.

(vii) To provide assistance to the agricultural marketing

(viii) To assist in the overall development of the villages in their area.

The main objective of setting up of banks was to develop the rural economy by providing credit for the development of agriculture, trade, commerce, industry and other productive activities in the rural areas particularly to the small marginal farmers, agricultural labourers, artisans and small entrepreneurs. In addition, the rural banks were also expected to mobilise rural savings, spread banking habits among the rural people and strengthen the rural economy.

The study of the bank reveals that they have largely achieved the objectives for which they were set up. They have made significant progress in all the directions.

The banks have succeeded to a great extent in the extension of their branch network to the unbanked or under-banked centres in the interior rural areas, particularly in the backward states.

The banks have made a significant progress in deposit mobilisation in rural areas. The deposits of the regional rural banks have been increasing. The high percentage of saving deposits in the total deposists and comparatively small amounts of average deposits are indicative of the fact that the rural banks have been able to mop up the savings of the small income group. Thus, they can play an important role in mobilisation of rural household savings.

The banks have also made a significant progress in extension of credit to the weaker sections like small farmers, marginal farmers, landless labourers, rural artisans etc. who have been relatively neglected in the past by the co-operative banks and the commercial banks. Entire credit of the rural banks has gone to the weaker sections of the rural society.

The average amount of loan per account (Rs. 1565.00 in December 1982) indicates that really economically weak persons have been covered by them. They have successfully maintained their image as “small man bank.”

The banks have been playing an important role in the implementation of different special schemes like Integrated Rural Development Programme (IRDP), Differential Rate of Interest Scheme (20 point programme) etc.

The rural banks have been playing a vital role in the field of rural development by advancing credit facilities to the rural people and by working in close conjuction with other development programme.

Credit deposit ratio of rural banks have been deploying more resources locally than deposits mobilised from the rural areas. Hence, they have been playing a very useful role in filling the big credit gap that exist within the rural credit structure in India.

By and large the banks have been correctly following the instructions regarding loan policies, procedures etc. issued to them by the Reserve Bank of India, NABARD.

Hence the banks by design and operation score the extension of the banking facilities to the rural banks in view of their lower cost structure a greater degree of rural orientation due to locally recruited staff, simpler forms and procedures for advancing loans, a higher credit deposit ratio and most important of all, a task of meeting all the credit requirements of the weaker sections of the rural society.

The banks have been experiencing structural and operational problems. The major problems suffering are mounting overdues, accumulated losses, lack of support from existing institutional credit institutions and state governments, lack of infrastructures, limited channels of investment etc. On account of these, they have not been able to achieve financial viability. There is, therefore, an urgent need for reorganising their structure and improving their working in several ways.

CONSOLATION PRIZE

Name of the Student: Alisha Sharma
Name of the School: D.D.P School, Rajpura Mangotrian, Jammu
Category: IX-X
Topic: Role of Banks in Rural Upliftment
Position Secured: Consolation

Flow of Institutional credit to agriculture has been under constant focus. Commercial banks are mandated to earmark as 18% of total annual lending to agriculture sector, or part of priority sector lending. Providing better access to institutional credit for small and marginal farmers and the weaker sections to enable them to adopt modern technology and impose agriculture practice, has been one of the major objective of the government. Apart from substantial expansion in the flow of credit by commercial banks, Regional Rural Banks (RRBs), the co-operative credit institutions continue to be important institution agencies for providing credit support and services of agriculture and rural development, co-operative account for 43% share in the credit flow to agriculture. Government has constituted a Task Force under the Chairmanship of Deputy Governor, the Reserve Bank of India to study the functioning of the Co-operative Bankers and to suggest a patronage for their revival re-structuring. Before Independence, the major sources of agriculture credit was private moneylender which was inadequate and highly expelitative. Since Independence, a multi-agency approach, consisting of co-operative, commercial banks and regional rural bank-known as Institutional Credit has been adopted to provide cheaper and adequate credit to farmers.

State government also provide ‘tacci loans’ to farmers beside extending financial support to State Co-operative Banks (SCBs) and land development banks (LDBs). Primary Agriculture Credit societies (PACS) provide mainly short and medium-term loans and LDBs long term loans. Commercial banks including RRBs provide both short and medium term loans for agriculture and allied activities. National Bank for Agriculture and Rural Development (NABARD), an apex institution at the national level for agriculture credit provides refinances to the above mentioned agencies. The Reserve Bank of India as the Central Bank of country gives overall direction to rural credit and financial support to NABARD for its functioning.

Co-operative movement was initiated in 1904 through the establishment of co-operative credit societies. These societies, formed to relieve the rural people of Indebtedness and promote thrift, are the cheapest and best source of rural credit. The co-operatives in India have a three tier structure lower tier-Primary Agricultural Credit Societies (PACS) at village level, middle tier-District Central Co-operative banks (DCCBs) at district level and uppermost tier State Co-operative banks (SCBs) at State level. These societies usually provide loans for productive purposes. The SCBs advance loans to DCCBs which in turn, provide loans to PACs which are in direct contact with farmers. The SCBs provide link between the RBI and the money market. The progress of cooperatives was tardy before Independence, but progress after Independence has been rapid. The main drawback of these cooperatives is the lack of adequate financial resources.

Land Development Banks (LDBs) were set up for providing long term credit for effecting permanent improvements e.g. making waste land fit for cultivation, digging wells or tubewells etc, purchasing agricultural implement, and repaying old debts. Starting with pure land mortgage banking in 1919, the LDBs have now become agriculture and rural development banks. The LDBs now also grants credit for fulfilling needs of rural cottage industries and small enterprises in rural areas, i.e. non form activities.

The loans of LDBs are generally granted against security of agricultural properties. The LDBs structure is non-uniform in the country. It generally consists of the central land development banks (generally one for each state) and primary land development banks (PLDBs). Since adoption of multi-agency approach in agricultural lending and the entry of commercial banks in the field in a big way, the performance of LDBs has shown a declining trend in respect of their share in agriculture lending.

Commercial banks now extend credit to agriculture both directly and indirectly, direct credit is extended to farmers through financing primary agriculture credit societies. Financing of investment in agriculture is among the major from credit activities of banks. Banks also provide credit for infrastructure such as to units providing services for warehousing processing, marketing, transporting and repairing of tractors etc. For rural lending the banks have now adopted a new strategy called service area approach. They sponsor RRBs to extend credit to small and marginal farmers and rural artisans to save them form the clutches of money lenders. The commercial banks are financing the Integrated Rural Development Programme (IRDP) running throughout the country. These banks are participating in small farmers development agencies (SFDA) scheme set up to identify small farmers and ensure that inputs, services and credits needs are provided to them.

Regional Rural Banks are also important for the upliftment of rural areas. Regional Rural Banks (RRBs) were first set up in 1975. The main objective of RRBs is supplementing the efforts of commercial banks and co-operatives in extending credit and other facilities to weaker sections of the rural community small and marginal farmers, agricultural labourers, artisans and other rural residents of small means so as to develop agriculture, trade commerce, industry and other productive activities in the rural areas. RRBs though basically scheduled commercial banks, different from the latter in following respects. Area of RRB is limited to specified region comprising one or two districts of a state, RRBs grants direct loans only to small and marginal farmers, agricultural and financial assistance at lower rates of interest are RRBs borrowing from sponsor banks.

The National Bank for Agriculture and Rural Development (NABARD), set up in July 1982 took over from RBI all its functions as an apex body, in the field of rural credit NABARD is now the apex bank for rural credit. The Agriculture Refinance and Development Corporation (ARDC), set up in 1963 to meet, the long-term credit needs of the rural areas has been merged with NABARD in 1982. The authorized share capital is Rs. 100 crores (contributed equally by RBI and GOI).

(NABARD) plays a dual role as an apex institution (inherited this role from RBI) and as a refinance institution (inherited this role from ARDC) providing refinance facilities to all banks and financial institutions lending to all banks and financial institutions to agriculture and rural development. The main functions of NABARD are as an apex looks after rural credit requirement. It has authority to oversee the functioning of the cooperative sector through its agriculture credit development provides short term (upto 18 months) credits to SCBs for seasonal agriculture operations (crop loans) marketing of crop, purchase and distributions of fertilizers and working capital requirements of co-operative sugar factory. Provides medium term credit (18 months to 7 years) to SCBs and RRBs for approved agriculture purpose, purchase of shares of processing societies and conversion of short-term loans into medium loans in areas affected by natural calamities. Provides medium and long-term credit (not exceeding 25 years) for investments in agriculture under schematic lending to SCBs, LDBs (now known as state co-operative agricultural and rural development banks RRBs and commercial banks. Provides long term assistance in the forms of loans to state governments (not exceeding 20 years) for contribution to share capital of cooperative credit institutions. Inspection of districts and state cooperative banks and RRBs. Maintains a research and development fund for promoting research in agriculture and rural development maintain a Rural Infrastructure Development Fund (RIDF), set up in 1995, for quicker completion of ongoing rural infrastructure projects. The National Bank is performing various functions smoothly and efficiently like ARDC, NABARD has vigorously continued its efforts in promoting investments in agricultural sector in less developed under banked states. It is strengthening and re organising the cooperative structure in the country. It has formulated a set of guidelines for planning the future development of reorganised societies in a phased manner. It is also working towards an effective integration of cooperative credit institutions. It is constantly reviewing the rehabilitation programme of these Central Co-operative Banks (CCBs) who have been identified as weak and who were being helped to rehabilitate themselves. It is also helping rehabilitate as well as improving the organization of state development bank and primary land development banks.

As an apex organisation, the National Bank is responsible for all matters relating to policy, planning and operational aspects in the flow of credit for development of all types of agriculture and rural (like small scale industries, cottage industries and village industries, handicrafts etc.). Activities NABARD does not deal directly with farmers and other rural people but grants assistances to them through co-operative banks, RRBs etc. It maintains two funds, National Rural Banks Credit (long term operations) Fund and National Rural Credit (stabilization) Fund. The central and state governments contribute to the funds. An evil aspect of our economy is the heavy indebtedness of its rural folk. The Indian farmers borrows year after years for not only agriculture purposes but also non production purpose and is unable to repay the loan because his agriculture output is very small. As a result, such debts go on increasing from generation and is known as rural indebtedness. In the end we can say that banks are very important for the development of rural areas and also encourage the youth of the rural areas.

FIRST PRIZE

Name of the Student: Urvashi Bhat
Class: XI
Name of the School: SOS Herman School, Jammu
Category: XI-XII
Position Secured: Ist
Topic: More Banking More Development

Banking means the business of a bank or banker. It is essentially a craft based on methodology and practices. We have moved a long way from the time when a bank was a mere deposit taking and money lending institution, veiled in conservatism and managed by people whose aim was maximum profits with minimum risks. A banker then was a fair-weather friend, lending an umbrella on sunny days and withdrawing it when it rained. Banking in India has had a thorough shake-up in the 50’s, particularly with the conversion of the Imperial Bank of India into the State Bank of India. The old concepts, attitudes and methods in banking have yielded place to new techniques of viability, need-based finance and marketing. Today banks are participating in the nation-building activities and helping in bringing about socio-economic changes.

Banking system has occupied an important place in a nation’s economy. A banking institution is indispensible in a modern society. It plays a pivotal role in the economic development of a country and forms the core of the money market in an advanced country. In the past several decades there were commercial banks and co-operative banks then in the middle of seventies Regional Rural Banks came into existence, the expansion of banks in such a way has organized the money market in rural areas as well.

Earlier, people used to borrow money from Zamindars and then these Zamindars used to take handsome money from them and charged too much interest that inspite of their whole life labour, they were unable to pay it. As a result these Zamindars occupy their lands, property, jewellary etc. and always try to cheat them in a way they can. But with the introduction of banking the situation was under control. With this poor, rich, daily labours started saving money and then soon the scheme of taking of loans was started, which proved a great boon for farmers. From this very beginning today our farmers have got so freedom to use banks that they can fulfill their every need which may be smaller than the small or bigger than the big one. These banks are always there to provide them their maximum support and guidance. Banks finance farmers in their way to progress in any way. They provide them loans to get advanced machines, fertilizers and many more facilities. The Agriculture Refinance and Development Corporation (ARDC) is the apex institution in the field of agricultural financing. For financing agriculture and allied activities in the rural areas, though co-operative credit societies and Central Co-operative Banks have been participating since long, commercial banks began their active participation after the nationalization of major banks in 1969. The banks have penetrated into the country side by opening their branches in rural and semi-urban areas. They have adapted their lending policies and practices to suit the needs of the rural clientele, the motivational force behind this transition has been the Reserve Bank of India and the government which provided them the operational guidelines, introduced the system of institutional guarantees and reduced the risks involved in financing agriculture. A farmer needs short term credit in the form of crop loans to purchase seeds, fertilizers and pesticides and also to meet the labour cost, irrigation and other expenses of cultivation. Normally, they are repayable within 12 months but for the convenience of farmers it may be extended up to 18 months.

Banks, as social organization, have to go out to the people and assist weaker sections in achieving their aspirations. They are thus, to act as catalytic agents for the development of the country, mobilizing resources whenever these be and channelizing them towards productive purposes. New strategies have been evolved for industrial development, both in small-scale and large-scale sectors and rather than confining to the traditional way of storage and distribution finance of a short-term nature, developmental finance and term lending have to be taken up by commercial banks.

As our country falls in the category of developing countries, the banks are playing a vital role to make it a developed nation. These banks are not only benefitting small-scale and large-scale sectors but providing a guarantee of bright future to our younger generation as they are the future of the country. They provide loans to the students for pursuing graduate and post-graduate studies, for professional courses or job-oriented diploma courses in India or for higher education abroad. The normal rate of interest for the students lies between 15% and 17% but it is 10% in case of advances to indigent students i.e those students whose total annual family income does not exceed Rs. 6,000. It has many HDFC plans for children and their little dreams. In this way it made the countries future strong and efficient enough to reach to the peak.

Banks are also providing housing loans in direct or indirect way. It is providing direct housing loans to scheduled castes/tribes and other economically weaker sections of the society. Amount of loans may be up to Rs. 5,000, interest is charged at the rate of 4% from scheduled castes/tribes and 12.5% from others. These loans may be up to 80% of the total cost of the houses and indirectly housing loans through government agencies for slum clearance and rehabilitation of slum dwellers. In this way banks are proving boon not only for upper class but also for people considered as low class.

For retail traders in fertilizers and mineral oil with an annual turnover up to Rs. 10 lakhs and other retail traders with an annual turnover up to Rs. 4 lakhs are eligible to borrow, for the purpose of acquisition of fixed assets and tools and other equipments required for the trade and short term loan: 12.5% for loans up to Rs. 5, 000; between 12.5% and 15% for loans between Rs. 5,000 and Rs. 25,000 and between 15% and 19.5% for limits above Rs. 25,000.

For even a small businessman individuals or firms managing business enterprises which provide services other than professional services, the cost of their equipments should not exceed Rs. 2 lakhs. These services include cycle hire shops, booking, clearing and forwarding of goods, beauty parlours, hotels, juice vendors, launderers, mobile restaurants and publishers-cum-booksellers, for the purpose of acquisition of fixed assets and tools etc. with the rate of interest as term loans for over 3 years at 15% and short-term advances up to 17.5%. In case of professionals and self-employed persons, any individual or a firm who or every one of whose partners is (i) trained in any art or craft and (ii) holds either a degree or a diploma or is considered to be technically qualified or skilled in his line and is rendering professional service. Firms and joint ventures of professionals and self-employed are also eligible, with the amount of loans up to Rs. 2 lakhs for the purpose (i) for purchase of equipments, repairing or renovating of existing equipments, acquisition or repairing of business premises, purchase of tools and (ii) for working capital requirements at the rate of interest for term loans for 3 years 15% and for short-term loans up to 17.5%. Banks also provide consumption loans to small and marginal farmers with land holding up to two hectares, landless labourers, rural artisans and other people of very small means, like carpenters, barbers and washermen, with the amount for various purposes like Rs. 250 per family for marriage or medical treatment; Rs. 100 for educational purposes and Rs. 75 for funeral, birth or religious ceremonies or general consumption. For two or more purposes loan up to Rs. 500 per family per year may be granted. Against the security of gold and silver ornaments loans up to Rs 1, 000 per family may be sanctioned. These loans are granted mainly on the personal security of one or more individuals or groups of persons. Security of gold and silver ornaments and consumer durables is taken whenever available. The loan should be related to the borrower’s minimum needs and his capacity to repay at the rate of interest of 12.5% per annum.
Indian banks has progressed in every sphere and involved every single individual and even it has many plans for old people.

In the present scenario, the world is changing with a great speed so is the introduction of new schemes in banking. We have ATMs at every corner of our country, we have credit cards, debit cards, anyway banking, insurance policies etc. All this has made life luxurious and comfortable. Now, advancement has reached its peak as we have online banking through which we can conduct almost all our banking activities on the phone, except withdrawal of money. Despite all the advantages of convenience, speed and savings, less than 10% of approximately 47 million bank customers in India have subscribed to net banking. Phone banking is the most popular self banking channel today. They may soon change, as mobile and net banking coverage on a complementary platform.

Branchless banking is much more than banking. It can pervade your entire financial portfolio. You can bank much more than before, but with much less effort and cost. That’s unsurprising. Banks are emerging as financial superstars offering everything from insurance to mutual funds. They are no longer mere wealth accumulators or custodians; they now help in wealth creation and wealth management. Soon, debit and credit cards will be replaced by m-banking. The push and pull factor of branchless banking is too compelling for temporary glitches to become popular. Only, most bankers believe that e-banking’s evolution will not completely replace the bank branch. Even now most customers wish to maintain a traditional banking relationship so banks can’t shed existing infrastructure in a hurry.

Ultimately, e-banking spells more self-reliance and less hand holding. This type of banking not only saves time but also takes our country towards the light of complete development and advancement.

We are passing through a very competitive banking era. Customer satisfaction is must. To meet the competition, the banks have taken many initiatives under Business Process Re-engineering and also taken up an ambitious project for implementation of core banking solutions for providing ‘Anytime Anywhere Banking’. CBS gives us the capability to provide value added services to customers across multiple delivery platforms through integration of channels. The BPR initiatives launched by the Bank would leverage CBS for realizing the intended business benefits. Not withstanding teething problems, the CBS offers a very good platform to us to improve our competitive position. Many new products like CORE POWER, offers many free value added services to the customers of our CBS branches like instant transfer of funds from their accounts to any other account in any other CBS branch and vice versa. Similarly, they can transact their banking business like encashment of cheques, drafts issue, deposit of cheques drawn on any local bank at any other CBS branch. With the advantages of Core Power we can easily experience and appreciate the benefits of new technology. The banks in India are striving hand by making best use of new technology. Today as the competition is increasing so is the tension of students. As most of the students are rushing towards management stream as educational loan is the only alternative for most students opting this stream. Because of good job prospects and little risk in recovery, most government banks readily provide assistance in the form of subsidized loans. With the cost of management courses touching the sky, cobbling resources has become crucial for students. While plenty of banks provide education loans at concessional rates, students need to do extensive research to ensure they get the best deal in upper limits and collateral requirements before they take the plunge.

As the banking in India has reached at the top and trying to become more and more advanced day-by-day. India is developing under its influence. Banking is having a great influence on India and its citizens. Apart from modernization Indian banks have kept its influence on every common man either of small community or rich. Its hands are always ready to help them anyway. The evolution of banking from Zamindars to debit cards has made a huge difference. It has not only proved the progress of country but also the efforts of people in making their country more mobilized and advance. Even a single man who may be a carpenter or juice vendor can enjoy all the benefits of banks. Its insurance policies, ICICI Prudential Fund, online banking, children’s HDFC plans, housing loans etc. has moved our country’s future towards the shining and bright future of developed India.

Its ATM service, credit cards, debit cards, etc. has made it more popular among common man. Now, more and more people are becoming the customers of banks. For a common man he can save money, can take different policies for secured future, can start his own business with the help of loans etc. Even students can get their own account to save their own money from their pocket money. Banks are day-by-day becoming an indispensible part of the country. As the whole country is involved directly or indirectly with the banking.

As we have the Export Import Bank of India, an apex bank which has come into existence in the field of financing the foreign trade of the country. This has led to the maintenance of stronger and good relations with foreign countries. In this way we are able to interact with other countries of the world freely and learn many more things which are needed for more advancement in banking. Many new schemes are taken into consideration by the Government of India to be one of the best banking countries. The day is not far when our country will be counted among one of the developed countries. So, India will be developed with the development in banking. If there is more banking in India then there is more and more development and soon India will be at the top among developed nations.

SECOND PRIZE

Name of the Student: Karandev Singh Kamra
Name of the School: SOS Herman School, Jammu
Category: XI-XII
Position Secured: 2nd
Topic: Role of Banks in Rural Upliftment

Banking in India has its origin as early as the vedic period. It is believed that the transition from money lending to banking must have occurred even before Manu, the great Hindu jurist, who devoted a section of his work to deposits & advances & laid down rules relating to rates of interest. During the Moghul period, the indigenous bankers played a very important role in lending money & financing foreign trade & commerce. The Oudh Commercial bank, the first of limited liability bank managed by Indians was founded in 1881. The Swadeshi Movement in 1906 also led to the formation of a number of commercial banks.

But the Indian banking came of age only with the establishment of Reserve Bank of India, the apex bank of the country, in 1935 with a capital of Rs. 5 crore which was divided into 5 lakh equity shares of Rs. 100 each. It was nationalized on January 1, 1949. When the Indian Banking Act was passed in March 1949, extended powers were granted to it for the inspection of non-scheduled banks, i.e. banks not included in second schedule of RBI Act, 1934. The development in rural areas at that point of time was in a ghastly state of affairs. So for the development of banking facilities in rural areas, the Imperial Bank of India (now, the State Bank of India) was partially nationalized. It also had 8 (at present 7) other banks converted as its associate banks which now constitute the State Bank group.

When the British left the country, the India economy was in tatters. Not only had the British drained a substantial amount of India’s wealth & resources to Britain, their policies had left deep scars on the economic condition of most of the population. The agrarian sector was the worst hit. Productivity was at an all time low & the financial structure was in no condition to alleviate the distress & miseries of the people. The failure of 588 banks in various states during the decade ending 1949 further complicated the problem. The ‘Banking Regulation Act’ was passed to bring the situation under control & regulate Indian banking. The main objective was to consolidate the Indian economy & for this rural areas had to be the top priority. As such many steps were taken for the advent of banking culture in rural areas. The main era in the field of banking was the post-nationalisation period in which one of the main objectives was the widening of branch network of banks particularly in rural & sub-urban areas. It is thus clear that upliftment of rural areas has always been the top most priority of the banking policy in India.

India currently has 72.2% population living in rural areas. 21.1% of that population, i.e, almost one-fourth of the total rural population is below poverty line. Most of these people are illiterate & have agriculture as the only means of livelihood. Agriculture accounted for nearly 18.5% of the total G.D.P (2006-07 economic survey). With such a huge amount of population currently engaged in agriculture, there are about 31 districts in Andhra Pradesh, Karnataka, Kerala where there is high incidence of farmer’s suicides. Apart from agriculture the main occupation of people living in rural areas is the employment in small scale cottage & village industries, handicrafts etc. But here also the condition of petty artisans & craftsmen is deplorable. So there arises a need for some government controlled credit structure. The most significant role in the mobilization & allocation of credit is played by the financial sector. The institutional structure of the financial system, at present, is characterized by banks.

With a view to give a major boost to agriculture & small scale industries, the National Bank for Agriculture & Rural Development (NABARD) was established on July 12, 1982 with the paid-up capital of Rs. 100 crore having 50:50 contribution of the Indian Government & RBI. NABARD makes all policy planning & operations in the field of credit for agriculture & other economic activities in the rural areas. It serves as an apex refinance agency for institutions providing investment & production credit for promoting various developmental activities in the rural areas. NABARD provides refinance to the state land developmental banks, state cooperative banks, scheduled commercial banks & regional rural banks. To meet its loan requirements, NABARD obtains funds from the Government of India, World Bank & other agencies. Besides, it also utilizes the funds of National Rural Credit Fund. During 1996-97, it sanctioned short-term credit limits totaling 789.9 crores. With the help of NABARD, many villages & individuals were able to script their glorious success stories.

Another effort was the establishment of Regional Rural Banks (RRB) in the middle of 1970’s with the specific objective of providing credit & deposit facilities particularly to farmers, agricultural labourers, artisans & small entrepreneurs. They provide institutional credit to weaker sections at concessional rates of interest. The RRB’s have the responsibility to develop agriculture, trade, commerce & industry in rural areas. The RRBs are essentially commercial banks but their area of operation is limited to a district. At the end of June 2004, there were 196 RRBs covering 516 districts with a network of 14507 branches. The establishment of National Rural Bank was proposed by the Parliamentary Committee on agriculture, finance & credit flow under the chairmanship of N. Janardan Reddy in its 55th report. Small Industries Development Bank of India (SIDBI) – another bank for the upliftment of small industries in rural areas was established as wholly owned subsidiary of IDBI.

Credit Co-operatives have also been established under a three-tier structure-Primary Agriculture Credit Societies (PACS) at village level, Central Co-operative Banks (CCB) at district level & the State Co-operative Banks (SCB) at the state level. The flow of loans is from SCB to CCB to PACS. Cooperative finance is the cheapest & the best source of rural credit. The rate of interest is low. Cooperatives have played a significant role in the flow of credit to the agricultural sector, both for production & investment. As on March 31, 2001, there were about 1 lakh primary agricultural credit societies with membership of approximately 10 crore. Nowadays Elaquai Dehati Banks are being set up to help the illiterate poor.

At the international level, the Grameen Bank, established by the Nobel Prize winner. Mohd. Yunus is a glowing example of the fact that banks have contributed so much to uplift the rural areas, pre-dominantly occupied by the poor. The bank provides credit to the poorest of the poor in rural Bangladesh without any collateral. The credit is extended in the form of small loans to entrepreneurs too poor to qualify for traditional bank loans. This scheme called micro credit has proven to be an effective & popular measure in the struggle against poverty & the fact that almost 97% loan recipients are women adds icing on the cake. More than half of Grameen borrowers in Bangladesh have risen out of acute poverty thanks to this micro credit. This phenomenal success story has inspired many other countries to establish similar micro credit financial institutions.
In India also, the Self Help Group (SHG)- Bank Linkage Programme was introduced in 1992 as a mechanism to provide the poor in rural areas, at their door-step, easy & self-managed access to formal financial services on a sustainable basis by enabling them to gain access to banking services in a cost-effective manner.

To provide adequate & timely support from the banking system to the farmers for their cultivation needs, a model Kisan Credit Card Scheme (KCC) was introduced in August 1998. The Co-operative banks & RRBs were advised to cover all farmers under KCC by end-March 2007 & to make the renewal process of KCCs more user friendly. The KCC scheme made rapid progress with cumulatively more than 645 cards issued up to October, 2006. Loans are also given by banks to farmers for different purposes. The financial needs of farmers are classified on the basis of time & purpose. For the purpose of buying seeds, fertilizers & for marketing of agricultural produce, short term loans for 12-15 months are given by co-operatives. For buying cattle & agricultural implements, repair & construction of wells, medium term loans of 15 months-5 years are given by commercial banks & co-operatives. And long term loans of 5 years-20 years for permanent improvement of land, purchase of costly implements are given by co-operatives & land development banks. But still people in rural areas need to be assured that the money deposited in banks is entirely safe & they can withdraw it in their troubled time.

Thus to conclude, banks have been the harbingers of prosperity in rural areas. Though the Indian banking system was bogged down by number of crisis & bank failures which led to its slow progress in the first half of 20th century, yet in the later half of the 20th century & in the current century, the banking system has made rapid strides towards progress. Thus, banks have formed a steel backbone to provide for the upliftment of rural people. With a great spectrum of above mentioned policies they have infused life & blood in the rural economy.

CONSOLATION PRIZE

Name: Arnav Omar s/o Kusum Gupta
Class: XI
Air Force School, Jammu

CONSOLATION PRIZE
ROLE OF BANKS IN RURAL UPLIFTMENT

What is Bank? Bank in literary meaning, is an establishment for guardianship of money to conserve and grow one’s savings. In simple language, it is an institution to store and deposit money and valuables to pay out on customer’s order.
In socio-economic terms, it is a medium for rotation of money and provides financial security as well as help when required. It is difficult to imagine a world without currency. Therefore, it is necessary to establish banks so as to rotate the money to the people and build their capacity.

Rural life plays a major membership towards the society. In fact, the urban class is mainly evolved from rural class. People belonging to rural class are very useful members of society who can bring prosperity to urban class. Though their life is very miserable, these people including peasants, labourers etc. used to depend upon landlords but their conditions of life does not seems to be improved so far.

There are also some poverty-stricken people in rural areas which occupies most of the population. They not only have no access to their basic necessities such as food, clothing and shelter but also can’t enjoy the common man’s life which they are leading with circumstances, which must be uprooted.

Bank provides financial help in the form of loan to the rural people to make them run small scale industries. The loan which is provided to them make them self-sustained and self-dependent in their work. Moreover, it becomes the source for livelihood and employment.

M.K.Gandhi in his autobiography well said-“Villages are the heart of India, When village will progress , India will develop”.
India is a country of trimming millions and the second richest on earth, so far population is concerned. In India during Independence, 13% of the population were living in the cities and 87% of population were living in the towns. The population composition has been changed radically within the last 50 years and as per 2001 census 28% of population are living in villages.

The flowing population from villages to cities is due to several causes out of which the most prominent is to get a job in the towns. Bank is playing a big role to solve the problem of rehabilitation of village people. The various programmes providing loan facilities by banks i.e. NREP, RLEGP, JRY, etc. The role of rural co-operative credit banks provides short-term loans to the village people. The NABARD also provides loans to the people. The development of Kishan credit card and debit card for the farmers facilitates the farming activities and production is increases.

Banks has prominent role in the rural upliftment by providing loans for the rural industrilisation. Since 1969, after nationalization of the major commercial banks, the banks are opening their branches at the village levels to provide loans to the rural people for industrialization and other activities.

The loan carries low rate of interest alternate date to pay and in adverse circumstances like drought, flood and famine they are getting special subsidies. In this way, banks contribute to patronize financial assistance and builds national economic growth. It plays a supportive role in the society.

The material social integration of people through gainful employment is an important aspect. Bank facilitates improvement in economic conditions and made it possible for Indian rural population so that they can cultivate their own source of income and profits from them. Therefore, the role of bank for rural upliftment i.e. for the progress of India is unconditionally applauded.

Bank reduces the widening gap between the rich and the poor in the society. It creates a perfect balance in a nation. But most importantly, it should be noted that it is a great source of their survival. It’s not only a remarkable opportunity provided or sponsored by Rural Planning and Credit Department but also a blessing for them. It reduces misadjustment in population density caused due to the migration of the poor to cities. However, it also conducts peace and harmony in the society among rural and urban as well.

Mohammed Younis, who is a founder of Grameen Bank of Bangladesh is a noble prize awardee for economy. He took the crucial decisive role in rural upliftment through banking.

In India, the bank had drawn up an ambitious plan to expand in rural and agri-credit where it would be adopting the hub and spoke model with one branch catering to surrounding markets with relationship managers interacting with each market.

Microfinance companies in India have grown from their NGO roots to become profit making business. The sector had become mainstream. That means as profits begin to show, more capital would flow into helping the poor. After all they are now bankable.
Banks as Financial institutions have helped in the process by providing credit facilities at concessional rates. The government has implemented a number of schemes for providing low cost capital to small enterprises and self-employed person.

Name: Lalit Bhardwaj
Class: 11th
School: SHIKSH NIKETAN HR. SEC. SCHOOL, JEEVAN NAGAR, JAMMU
Consolation prize

Role of Banks in Rural Upliftment

Introduction- A bank is a financial establishment that uses money deposited by customers for investment and pay it out when required. It provides loan at interest and exchange currency. A bank generate income from difference between the rate of interest it pays for deposits to the people and rate of interest charges from money lenders. It raises funds by attracting people for depositing money in bank and lends out most of the funds to the borrowers. It is worthwhile to mention here that the bank do not lend out all the money kept in the bank but it keep reserve a certain proportion of its funds for depositors who want to withdraw the amount deposited in their bank account. From the very beginning the Reserve Bank of India came into existence and established in the year 1935. During British rule and was functioned as central bank of India. After Independence, with the setting up of first five year plan government of India felt that the private bank may not extend the kind cooperation. The government in the year 1954 set up a committee namely rural credit survey committee for reorganization of bank policy. The committee submitted it’s report with the recommendation of creation of strong state sponsored partnered commercial banking institution with an effective machinery of branches spread all over the country which lead to establishment of first public sector bank in the name of State Bank of India on 1st July 1955 with the part of share capital by Reserve Bank of India also known as Imperial Bank of India. Similarly first five year plan established during 1956-59 as a result of reorganization of princely state the associate bank came into fold of public sector banking but still the unorganized sectors remained untouched by these private banks which controlled and associated by capitalists leading industrial house in the country with the result farmers, small entrepreneurs, transporters, professionals and self employed had to depend on money lenders who used to exploit them by charging higher interest rates.

In the year 1966 a scheme of social control was set up whose main function was to periodically assess the demand for bank credit from various sectors of the economy to determine the priority for grant of loans and advances so as to ensure maximum and efficient utilization of resources. But this scheme did not yield the fruitful results. Though the number of branches were opened in rural area also but the lending activity of private banks were not oriented towards meeting the credit requirements of the weaker sectors. In the year 1969, 14 leading banks were nationalized by the government having paid up capital of Rupees 28500 crores, deposits of Rs 2629 crores, loans of Rupees 1813 crores with 4134 branches accounting for 80% advances. Similarly, 6 more banks were nationalized in the year 1980 having 91% of the deposits and 84% of advances in public sector banking, There are number of banks functioning in the country but Regional Rural Banks has played a significant role in promoting financial inclusion in unbanked remotest rural areas not covered by other banks. Under 20 point economic programme the government is going to emerge 196 Regional Rural Banks and establish Indian National Rural bank out of which the proposal 100 banks is active consideration of the government. With a view to developing the rural economy Regional Rural Banks were established in 1976 under the provision of ordinance promulgated on 26th September 1975 and R.R.B’s Act 1976. The R.R.B. are jointly owned by government of India. The concerned State government and 27 scheduled commercial banks including two private banks namely Bank of Rajasthan, J&K Bank and one state cooperative bank. The issued capital of a RRB is shared by them in the proportion of 50%, 15% and 35% respectively. The area of operation of the majority of RRB is limited to a notified area comprising a few districts in the state. The R.R.B’s has spread it’s branches in 525 districts out of 605 districts in the country and 26 state with a network of 14494 branches as on 31 March 2006. The R.R.B’s have made remarkable achievements during the year 2005-06. The introduction of financial sector reforms and sweeping changes in their functioning have resulted in significant improvement in performance of R.R.B.

The rural bank has established a women development cell to create awareness among the rural women by organizing meetings, camps and motivation of staff at different level as a women comprises of 50% of country’s population and lag behind the rest of the society due to their socially, educationally and economically backwardness and living in depressed conditions.

The efforts are also made for the women to play the role which is required for the development of rural areas and encourage them to show the wisdom and potential. It is not possible that a woman can bring empowerment through discussions and without money but a women need money for their personal, social and emotional needs. In view of the above as per the need of the hours regional rural bank has launched below mentioned schemes for their upliftment. 17 schemes for financing of Dairy activity for women entrepreneurs. 27 schemes for financing cutting and tailoring for purchasing sewing machines. 37 micro-credit scheme for rural embroidery/kashidakari for women entrepreneurs. 47 Micro-credit scheme for Bangle, beauty items store.

The above mentioned scheme go a long way by giving wide publicity so that this neglected strata of the society can get the benefit out of it. It is also pertinent to mention here that men and women have their different needs. Men may be interested in outdoor activities like construction of roads and streets in the village and likewise women may give priority to water top, Balwari etc. Through money self-image of the person can change and he/she enjoys self respect also in the society. This can be possible only through self-help groups. The self-help group completion involve three stages namely.

a) Group formation b) Group stablisation c) micro-credit stages. The important features of Self help Group are as under :-

1) Number of members can be between 10-20. But for irrigation projects there is no ceiling on number of members. For handicap persons group comprises of 5-20 persons

2) Members are generally the persons below poverty line. Members marginally above poverty line normally upto 20% can also be included but they will not be eligible for subsidy.

3) There can be one person from one family in one self-help group.

4) One person cannot be member of more than one self-help group.

5) There have to be regular weekly or fortnightly meetings.

6) The members are to save regularly out of their earnings.

8) Saved funds are meant for lending to members on which decision is to be taken by all members.

9) There should be proper record/book keeping.

10) Registration is optional.

11) Bank linkage by way of saving account-6 months.

Besides this under the initiative for doubling of credit flow to agriculture R.R.B had financed new farmers to the extent of 18.58 lakhs in 2004-05 and 17.03 lakhs in 2005-06 and also financed share-croppers/tenant farmers/Oral lessees etc. Restructuring of loan had also helped the defaulting borrowers to become eligible to borrow afreash. These measures have widened the scope of borrowing and are helping-towards achieving 100% financial inclusions in the rural areas. Customer services in the R.R.B’s is very much in the lines with the practices followed by the sponsor bank. Complaints from the customers are attended to and after redressal of complaint a “letter of satisfaction” is obtained. If the sponsor bank directly receives any complaint the same is taken up with R.R.B and followed up to it’s logical end. The system of attending customer complaints by the R.R.B’s is as follows.

1) Acknowledgement of receipt of complaint to the complainant

2) Investigation in case of need by head office/regional office of the R.R.B.

3) Take necessary steps for redressing the complaint.

4) Inform the competent authority i.e RBI/GOI/NABARD, if they have forwarded the complaint.

5) Advice the complainant and obtain a letter of satisfaction from him/her.

Significant improvement in the performance of R.R.B with a view to provide better customer service, government of India initiated a process for the structural consolidation of R.R.B sponsored by the same bank within a state in the year 2006. The amalgamated RRB will reap benefit of staff rationalization, increased quantum of advances and investment on the increased capital base and the benefit of larger resources and economies of scale.

The increase in branch network of R.R.B’s during the last three years are as under.

March 2004             14446
March 2005             14484
March 2006             14494

The bankwise branch network varied widely from 8 to 680 among the 133 R.R.Bs during the year 2005-06. The network of the 43 amalgamated R.R.Bs is quite diverse, varying from 85 to 680 branches. The Uttar Bihar Kshetriya Gramin Bank and amalgamated R.R.B has the largest branch network among all R.R.Bs with 680 branches followed by Baroda Eastern Uttar Pradesh Gramin bank with a 539 branches. The R.R.B has also opened “No-frill” account with low or nil minimum stipulated balances in order to increase hundred percent (100%) financial inclusion/banking penetration in the country.

Keeping in view the steps taken up by the rural bank in providing facilities in the far flung areas. The 100% financial inclusion is possible and bank services will be reached to common masses who are excluded/deprived of taking of benefit out of the schemes launched by the R.R.Bs.

Certified that the essay has been written by me and these are my own thoughts.

Name: Lalit Bhardwaj
Class: 11th
School: SHIKSH NIKETAN HR. SEC. SCHOOL, JEEVAN NAGAR, JAMMU