ITNRODUCITON TO BANKING

1. Banking which caters specially to
thedevelopment needsof poor

2. Objectives of Social Banking
⚫Toprovide credit facilities to the small farmers ,small
traders, cottage industriesand self employed persons.
⚫Togive priority to industrieswhich produceessential
goods
⚫Toprovide financial resources for thewelfare
objectives.

3. Features of Social bank
• SBs are values based organisations,
• SBs are grounded in communities, serving the real economy
and enabling new business models to meet the needs of people
and planet,
• SBs do not strive for profit maximisation, but for a fair profit
– their objectives are in line with the triple bottom line
approach (people – planet – profit),
• SBs have a pro-active dialogue with stakeholders and an
engagement in the public discourse,
• transparency of business activities is extremely important to
SBs,
• SBs focus on core banking activities such as savings and
loans, and reject speculative activities

4. Cont..
, • SBs promote gift money as this is seen as another
way to make money work for society,
• SBs encourage relationship banking instead of
transaction banking – they want long-term
relationships with their clients,
• SBs have clear sustainability criteria, especially for
lending/investing,
• Solidarity plays an important role for SBs,
• SBs have a clear ownership structure preventing
dependency upon dominant individual interests,
potentially leading to take-overs that could potentially
jeopardise the mission of the bank

5. Major Social banking schemes
⚫Lead Bank Scheme
⚫Service Area Approach(SAA)
⚫Village Adoption Scheme
⚫Differential Rateof Interest Scheme(DIR Scheme)
⚫Prioritysector lending
⚫Micro Financevia SHG-Bank Linkage Programme

6. LEAD
BANK
SCHEME
Introduced in
1969

7. What is Lead
Bank?
A bank which
co-ordinate the
banking
institutions in
thedistrict
Acts as a
‘consortium
leader’
Lead
bank
Banks
Credit
Agencies
A bank in each district is
selected asa key instrument

8. Activities of a lead bank
1. To survey thecredit needs of thedistrict
2. Toevolvea creditaction plan for thedistrict
3. Towork with thegovernment in thedevelopment
process
4. To make sure thatsmall borrowers are served
effectively by the business
5. Assisting primary lending services
6. Survey the resourcesand potential for banking
development in thedistrict

9. 7. Helps in marketing theagricultural and industrial
products
8. Recruiting and training staff, for offering advice to
small borrowers and farmers, in the prioritysectors.
9. Setting thedistrictconsultative Committee in co-
ordination with other banks and financial
institutions

10. To bring about an orderly and planned
developmentof rural and semi-urban areas of the
country

11. Scheduled Banks
Rural banks
Semi Urban Banks
Service
Area
Allocate Specific Villages

12. Stages of SAA
Identificationof theservicearea foreach bank
Survey for assessing the lending potential of villagers
Preparation of annual credit plans for each service area
Co-ordination of credit institution and variousagencies
Continuous monitoring

13. Advantages of SAA
⚫Improving economic statusof people
⚫Helping banks by focuson small areas
⚫Making lending activityeasilyamenable tosupervision
and control
⚫Developmentof each area through micro level
planning
⚫Ensuring co-ordination among financial banksand
otherdevelopmentagencies
⚫Encouraging peopleparticipationand involvement in
credit planning and dispensation

14. Development of selected villages in an integrated manner

15. Main Activities
⚫Meeting credit need of poor
⚫Watershed development/livelihood based activities
⚫In tribal dominantvillages, development through
“wadi” approach
⚫Assessmentof credit needs/formulation of projects for
agriculture/rural development
⚫Creationof infrastructure in co-ordination with the
government

16. ⚫Marketing related intervention
⚫Environmental/ecological related interventions
⚫Valuechain management
⚫Implementationof developmentprogrammeas
envisaged undergovernmentplan

17. Introduced in March 1972
Provideconcessional rate of interest to low income
group forproductivepurposes

18. Features of DRI Scheme
⚫Lending at lowerrate.
⚫Main objective is upliftmentof backward strata in the
society.
⚫Banks monitorthe utilizationof loans.
⚫Short term ,medium term and long term loansare
provided underthis scheme.

19. Introduced in 1967-68
To provideadequate
and timely financial
supportat reasonable
rate to prioritysectors

20.  Agriculture
 Small Scale
Industries
 Small Road
and Water
operators
 Irrigation……
………

21. RBI stipulates banks to provide credit under
Priority sector as follows
Banks
Domestic
Banks
40%
Foreign
Banks
32%
Agriculture – 18%
Weaker Sections – 10%

22. Government give much importance to Priority
Sector Lending

23. Microcredit is the
provision of thrift,
credit and other
financial servicesand
products of very
small amount to the
poor.

24. Introduced by Nobel Laureate and
founder of Grameen Bank
Muhammad Yunus
“The poorare like “bonsai", which could have grown
into taller trees if given propersoil. Micro Creditcan
unleash the hidden energy of the poor so that they
can take careof themselves”

25. In India Micro Finance is linked to
Self Help Groups(SHG)
⚫A SHG is a registered orunregistered groupof micro
entrepreneurs having homogeneous social and
economic backgrounds. They save money, to
contribute to a common fund and to meet their
emergency needson the basisof mutual help.

26. Functioning of SHG-bank linkage program
1. NGOsand banks interactwith the poor, especially
women, to form small homogenousgroups.
2. Theyare taughtsimpleaccounting methods to
maintain theiraccounts.
3. They meet frequentlyand collectsmall amountof
savings from their members.
4. This pooled savingsenable them toopen a formal
bank account in the nameof thegroup.
5. This is the first step in establishing link with the
formal banking system
6. Outof the pooled savings theygive small loans to
members for meeting theirsmall emergent needs.

27. 7. Empowerment is achieved through group
dynamics, decision-making, and funds management.
8. When the pooled thrift grows they can receive
external funds in multiplesof theirgroupsavings.
9. Bank loansenable thegroup members toundertake
incomegenerating activities.

28. Challenges of social banking

30. Thank You