...Telephone: +91 124 230 9497, 230 9707, 405 0739, 426 8707; Fax: +91 124 230 9520 e-mail: contact@m-cril.com ; website: www.m-cril.com Study Sponsored by Swiss Agency for Development and Cooperation Micro-Credit Ratings International Limited Table of Contents Section Background Executive Summary 1 2 3 4 Introduction The Importance of Rural Banks Recent Performance of the Rural Banking System Reforms and the Rural Banks 4.1 A huge effort to reform the cooperative system 4.2 Sensible proposals for reorienting the Regional Rural Banks but… 5 Will Reforms Enable Inclusion? 5.1 Cooperative reform – is it good money after bad? 5.2 RRB reform – has the inclusion objective been sidelined? 6 Conclusion Page v vii 1 3 7 8 8 12 15 15 17 18 M-CRIL Review of Rural Banking in India Background This study follows from the discussion of issues in the performance of Regional Rural Banks (RRBs) written by Sanjay Sinha, Managing Director, M-CRIL and published in The Economic Times (newspaper) on 17 March 2007. In relation to financial inclusion, many of the issues raised there affect the performance of cooperative banks as well as the RRBs. These issues include • The effect of government ownership of RRBs on their ability to operate efficiently and effectively to fulfil the financial inclusion mandate; the domination of (district) cooperative bank managements by government functionaries and by landed elites with (usually) little interest in financial inclusion. Social control of interest...
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...The Indian Banking Sector On the Road to Progress G. H. Deolalkar G. H. Deolalkar is formerly Managing Director of State Bank of India. 60 A STUDY OF FINANCIAL MARKETS Overview of Banking and Financial Institutions The Banking Sector The banking system in India is significantly different from that of other Asian nations because of the country’s unique geographic, social, and economic characteristics. India has a large population and land size, a diverse culture, and extreme disparities in income, which are marked among its regions. There are high levels of illiteracy among a large percentage of its population but, at the same time, the country has a large reservoir of managerial and technologically advanced talents. Between about 30 and 35 percent of the population resides in metro and urban cities and the rest is spread in several semi-urban and rural centers. The country’s economic policy framework combines socialistic and capitalistic features with a heavy bias towards public sector investment. India has followed the path of growth-led exports rather than the “exportled growth” of other Asian economies, with emphasis on self-reliance through import substitution. These features are reflected in the structure, size, and diversity of the country’s banking and financial sector. The banking system has had to serve the goals of economic policies enunciated in successive fiveyear development plans, particularly concerning equitable income distribution, balanced...
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...Executive Summary 1. Background The urban cooperative banking sector has witnessed phenomenal growth during the last one and a half decades. Certain infirmities have, however, manifested in the sector resulting in erosion of public confidence and causing concern to the regulators as also to the well functioning units in the sector. One of the factors significantly affecting the financial health of the Urban Cooperative Banks (UCBs) is their inability to attract equity / quasi equity investments. At present, UCBs have limited avenues for raising such funds and even their share capital can be withdrawn. Against this backdrop, an announcement was made in the Annual Policy Statement for the year 2006-07 to constitute a Working Group to examine the issue of share capital of UCBs and identify alternate instruments / avenues for augmenting the capital funds of UCBs. Accordingly, a Working Group was constituted under the Chairmanship of Shri N.S. Vishwanathan, Chief General Manager-in-Charge, Urban Banks Department, Reserve Bank of India. 2. Methodology The Group deliberated on the various issues relating to its terms of reference on the basis of presentations made by its members. It also met Chairmen/ CEOs of a few medium/ large UCBs. The areas deliberated included international practices and structures for issue of bonds by cooperatives, adaptability of the provisions of Indian Companies Act, 1956 for issue of preference shares, State Government perspective on the issues...
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...National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India having headquarters based in Mumbai (Maharashtra)[3] and other branches are all over the country. The Committee to Review Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD), set up by the Reserve Bank of India (RBI) under the Chairmanship of Shri B. Sivaraman, conceived and recommended the establishment of the National Bank for Agriculture and Rural Development (NABARD). It was established on 12 July 1982 by a special act by the parliament and its main focus was to uplift rural India by increasing the credit flow for elevation of agriculture & rural non farm sector and completed its 25 years on 12 July 2007.[4] 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". RBI sold its stake in NABARD to the Government of India, which now holds 99% stake.[5] NABARD is active in developing financial inclusion policy and is a member of the Alliance for Financial Inclusion History NABARD was established on the recommendations of Shivaraman Committee, 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...
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...This has meant that there has been an increase in demand for many financial services from different financial firms. The market has responded to this soaring demand with making attractive offers and services for the customers at affordable rates. Since the LPG reforms of 1991, there have been progressive reforms in the financial sector allowing for better and easier facilities and options to the consumer. An increasing financially aware middle class have realized the importance of financial services. Banks have streamlined and rationalized themselves to meet with the changing demands of the people. However, not all the reforms in the financial services sector have still been able to bring in the other half of India’s population who are un-banked. There are many reasons that are obvious for this kind of financial exclusion. Most of the un-banked or financially excluded population of India lives in rural areas; nevertheless, there is also a significant amount of the urban population of India who faces the...
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...the origin of humanity, that is, since the time that human beings started living together on the basis of family unit and or in a community. Co-operation is customary and instinctive solidarity. The first co-operative act of man was when the first human family started gathering food even before agriculture was invented (Mbat, 2000). The more advanced forms of traditional co-operation is demonstrated in saving and lending, joint action, joint possession of land. They did not leave life’s risks and emergence to chances. They developed various patterns of mutual assistance, reduced them to custom, and handed them down as tradition and as a legacy from the past through formal and informal education. 1.2 BACKGROUND TO THE STUDY All over the world, cooperatives are instrumental in social and...
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...or are bound together with mortar. Paving with cobblestones allows a road to be heavily used all year long and not getting muddy in wet weather or dusty in dry weather. Cobblestones set in sand have the environmental advantage of being permeable paving, and of moving rather than cracking with movements in the ground. INTRODUCTION con’t It was in early 2005 that the concept of using cobblestones to construct roads was first introduced to Ethiopia. Faced with fast-growing cities, inadequate urban infrastructure, and a large youthful population in need of employment, the Ethiopian Government turned to an innovative solution: Cobblestone road production throughout the country, driven by community participation and local materials. In recent years, cobblestone road creation has become one of the most successful infrastructure and job creation programmes in the country, with tremendous benefits for the urban poor. It has created hundreds of thousands of jobs, greatly improved urban mobility, and built collaborative relationships between communities and local authorities. INTRODUCTION con’t It is labour-intensive, creating jobs as well as opportunities for construction entrepreneurs. It uses natural and local materials that are plentiful. It is also cost-effective compared to concrete and asphalt roads, easy to maintain and has a much longer lifespan. Moreover, it is easy to replicate elsewhere, because the investment needed is...
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...PRIVATE SECTOR DEVELOPMENT UNIT South Asia Region Document of the World Bank TABLE OF CONTENTS EXECUTIVE SUMMARY I. INTRODUCTION 2 India’s Rural Finance Landscape 4 What are the financial needs of the rural poor? 4 Rural finance service providers 5 II. ACCESS TO RURAL FINANCE IN INDIA: THE EVIDENCE 8 Supply Side Indicators of Access to Finance 8 Access to Rural Finance: Evidence from the Demand Side 12 Access to savings/deposit accounts 14 Payments Services – Limited use, high cash economy 15 Access to Credit 15 Access to Insurance 17 The Importance of Informal Finance 17 III. WHAT CONSTRAINS ACCESS TO FINANCE FOR INDIA’S RURAL POOR? 19 Why Banks Are Reluctant To Lend to Rural Clients 19 Lack of credit information. 20 The tyranny of collateral 20 Weak legal framework and enforcement issues. 21 Government policy 21 Why Do Small, Rural Borrowers Find Rural Banks Unattractive? 26 Absence of flexible products and services 26 Transactions costs 26 Collateral 27 IV. RECENT EFFORTS IN INDIA TO IMPROVE RURAL ACCESS TO FINANCE: THE ROLE OF FORMAL—INFORMAL LINKAGES AND NEW PRODUCTS 28 SHG-bank Linkage Approach: Linking Commercial Banks to Grassroots Borrowers 28 How Effective Has SHG Bank Linkage Been in Targeting the Poor? 30 Impact on vulnerability of poor households 32 Some Lessons from SHG Bank Linkage 33 Key concerns: Limited outreach and scale of lending and issues...
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...Consultative Group to Assist the Poorest (CGAP) Working Group on Savings Mobilization RURAL BANK OF PANABO (RBP), PHILIPPINES (CASE STUDY) Ulrich Wehnert Eschborn, 1999 CGAP Working Group on Savings Mobilization CONTENTS ABBREVIATIONS LIST OF TABLES AND GRAPHS 1 CONTEXT 1.1 1.2 Macroeconomic context iv v 1 1 Context of the financial sector 1 1.2.1 Role of the central bank 1 1.2.2 Regulation and supervision 2 1.2.3 General development and characteristics of the financial sector 3 1.2.4 The impact of the Asian financial and economic crisis on the financial sector4 1.2.5 Outreach and characteristics of state interventions 4 1.2.6 Social security system 5 Social and socio-cultural context Classification of the macroeconomic, financial and socio-cultural context 5 6 7 7 8 8 9 11 11 11 12 1.3 1.4 2 INSTITUTIONAL ANALYSIS 2.1 2.2 General characteristics of the Rural Bank of Panabo Institutional type, governance and organizational structure 2.2.1 Institutional type and governance 2.2.2 Organizational structure 2.2.3 Lessons learned in institutional type, governance and organizational structure 2.2.3.1 Success factors 2.2.3.2 Limitations and risks 2.2.3.3 Possibilities of replication 2.3 Demand-oriented savings products and technologies 12 2.3.1 Characteristics of demand-oriented savings products and savings technologies 12 2.3.2 Design of demand-oriented savings products 13 2.3.3 Procedures to introduce demand-oriented savings products 13 2.3.4 Lessons learned...
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...or are bound together with mortar. Paving with cobblestones allows a road to be heavily used all year long and not getting muddy in wet weather or dusty in dry weather. Cobblestones set in sand have the environmental advantage of being permeable paving, and of moving rather than cracking with movements in the ground. INTRODUCTION con’t It was in early 2005 that the concept of using cobblestones to construct roads was first introduced to Ethiopia. Faced with fast-growing cities, inadequate urban infrastructure, and a large youthful population in need of employment, the Ethiopian Government turned to an innovative solution: Cobblestone road production throughout the country, driven by community participation and local materials. In recent years, cobblestone road creation has become one of the most successful infrastructure and job creation programmes in the country, with tremendous benefits for the urban poor. It has created hundreds of thousands of jobs, greatly improved urban mobility, and built collaborative relationships between communities and local authorities. INTRODUCTION con’t It is labour-intensive, creating jobs as well as opportunities for construction entrepreneurs. It uses natural and local materials that are plentiful. It is also cost-effective compared to concrete and asphalt roads, easy to maintain and has a much longer lifespan. Moreover, it is easy to replicate elsewhere, because the investment needed is relatively...
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...Accounts: A Study Report on Cuddalore District S. Thyagarajan Jayaram Venkatesan S. Thyagarajan is a Member of Faculty at the College of Agricultural Banking, Reserve Bank of India, Pune (http://cab.org.in). Jayaram Venkatesan is a Research Consultant at the Centre for Microfinance (http://ifmr.ac.in/cmf/). The views expressed in this paper are entirely those of the authors and do not in anyway reflect the views of the institutions with which they are associated. S. Thyagarajan & Jayaram Venkatesan: Cost –Benefit & Usage Behaviour Analysis of No Frills Accounts Contents Acknowledgements............................................................................................................. 3 Executive Summary ............................................................................................................ 4 Introduction......................................................................................................................... 5 1. Literature Review............................................................................................................ 7 1.1 Notable Indian Initiatives.......................................................................................... 8 2: Financial Inclusion Project ........................................................................................... 12 2.1 Cuddalore District: A Profile .................................................................................. 12 3: Study Methodology...
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...another in a group or in an organization. This generates different styles of management, values, feelings, beliefs and opinions of the employees. They must be groomed in order to take risks, think innovatively, and handle new problems. In the competitive environment, employees of any business organization are the key factor for deciding the success of the firm, in general, and cooperatives in particular. It is understood that cooperative banks approach human resource management (HRM) from the wrong perspective and their financial performance suffers as a result. Instead of focusing on how to execute strategy through the performance of the employees in many cooperative banks, the first priority is cost control and the focus often begins with the HR function. July-September, 2008 Human Resource Management in Cooperative Banks in India: Issues and Challenges Dr.N.Ramu* Indian cooperative banking movement has passed through hundred years of its existence. At the same time, human resources management has been a neglected field in cooperative banks over a period of time and poor image of cooperative bank employees in the society affects their morale. Only recently has there been a greater recognition of this function. In this paper, an attempt has been made to analyze the practices of human resource management and the challenges faced in recruitment and...
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...and Parsis and want to pursue higher studies i.e. Masters, M.Phil & Ph. D level abroad. 2. What will be the time period for interest subsidy? Answer. Interest subsidy will be granted for the period of moratorium (i.e. course period, plus one year or six months after getting job, whichever is earlier) as prescribed under the Education Loan Scheme of the Indian Banks Association (IBA). 3. What is the procedure to avail the benefit of the Scheme? Answer. Student can avail the benefit of the Scheme by following the given procedure:i) ii) iii) iv) Student should have secured admission in the University Abroad for pursuing Post-graduate Diploma, Masters, M.Phil or Ph. D level courses with the overall family income of not more than Rs. 6.00 lakh per annum. Family income means gross parental income in case of unmarried students and gross income of spouse incase of married students. Student should have to take the loan from any Private Bank, Public Sector Bank, Scheduled commercial Bank and member urban Cooperative Banks etc. who is a member of Indian Banks Association. Student should have the proof of belonging to a minority community (details at Q. No. 10). Student should inform their lending Banks that Ministry of Minority Affairs has launched a new Scheme of Padho Pardesh – interest subsidy on educational loans for pursuing higher studies abroad and he/she is eligible under that particular Scheme. Then the lending Bank will feed the students information...
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...Conlan, From Cooperative to Opportunistic Federalism Case 3 February 12, 2014 This week’s case study concerns the discovery of a contamination problem in Wichita’s downtown commercial and residential area. The case discusses what steps were taken to remedy the situation that were the most efficient and cost effective. The content area addressed by this week’s readings and case are focused on intergovernmental relations. Intergovernmental relationship is important to public administration because different levels of government offices need to work together to fulfill objectives that benefit the public. It is more beneficial to everyone involved for administrations to coordinate and collaborate together to resolve problems. Federalism, in part, is the system where federal government and state governments work together to the same end. The case takes place in Wichita, Kansas, in the summer of 1990. Acting for the Environmental Protection Agency, the Kansas Department of Health and Environment reported the downtown business district was sitting on an underground polluted lake, six square miles in size and fifteen feet below the surface. The area was called the Gilbert-Mosley site because the Gilbert-Mosley intersection was near the center. The lake was full of hazardous, commercial and industrial chemicals that caused cancer and other health issues. This discovery was very problematic for the revitalization of the declining downtown region. Like many urban areas at...
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...families. In spite of its considerable outreach, successful savings mobilization and high repayment rates, as with most other microfinance models, the financial viability of SHG banking has not been clear. SHG federations attempt to provide financial viability and sustainability to SHG banking. This study explores the merits of federating and finds that SHG federations create economies of scale, reduce promotional and transaction costs, enable provision of value added services and increase empowerment of the poor. Acknowledgements This study was done for the South Asia Region Finance and Private Sector Development Unit of the World Bank. The support of Sophie Sirtaine at the World Bank, who helped design the study and took time to read through the different drafts, is gratefully acknowledged. I thank all the organizations visited and individuals interviewed for their cooperation, and participants of the various fora at which the initial drafts were presented for their valuable comments. I also thank Marilou, Director, South Asia Region Finance and Private Sector Development Unit and other members of the unit for their support during the course of the study. Finally, I thank Maya Tudor and Kathryn Gwatkin, my classmates at the Woodrow Wilson School, who read through the final draft and suggested changes that make the report read better. Currency Equivalents (Exchange Rate Effective June 2001) Currency Unit = Rupees (Rs.) US$ = Rs...
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