As per VNSGU Syllabus 2017-18

1. Schemes of Banking
Development
Lead Bank
Deposit insurance scheme
Mutual fund
Modernization of banking industry
Characteristics of non banking financial companies

2. A. LEAD BANKS
• The National Credit Council was set up in Dec. 1967 to determine the priorities of
bank credit among various sectors of the economy. The NCC appointed a study
group on the organizational framework for the implementation of social objectives
in Oct. 68 under the Chairmanship of Prof. D R Gadgil. The study group found that
the Commercial Banks had penetrated only 5000 villages as of June 67 and out of
the institutional credit to agriculture, at 39%, the share was negligible at 1%, the
balance being met by the co-operatives. The Banking needs of the rural areas in
general and backward in particular were not taken care of by the Commercial
Banks. Besides, the credit needs of Agriculture, SSI and allied activities remained
neglected. Therefore, the group recommended the adoption of an area approach
for bridging the spatial and structural credit gaps. Later, All India Rural Credit
Review Committee 1969 endorsed the view that CBs should increasingly come
forward to finance activities in rural areas.

3. Objectives of Lead Bank Scheme
1. Eradication of unemployment and under employment
2. Appreciable rise in the standard of living for the poorest of the poor
3. Provision of some of the basic needs of the people who belong to
poor sections of the society
4. To conduct surveys in the allotted districts for the potentials of the
development of banking
5. To set up the branches in a phased manner
6. To study local problems
7. To provide assistance to other primary lending agencies
8. To recruit an train banking staff for counselling the small borrowers
and farmers in the priority sectors and the follow up and inspection
of the end use of bank credit

4. Benefits of Lead bank scheme
1. Whole country is served by a well-organized system of commercial
and cooperative banking.
2. Branch expansion, supervision and guidance have become much
more effective.
3. A dynamic relationship is evolved among the commercial banks,
cooperative banks, financial institutions and government agencies.
4. A close integration of banking business with other activities has
emerged.
5. Major obstacle to the development of the district have been
identified and appropriate agencies are motivated by the lead
banks to take remedial measures.

5. Implementation of the Scheme
• Lead Bank as Consortium: Leader Under the Scheme, each district had been
assigned to different banks (public and private) to act as a consortium leader to
coordinate the efforts of banks in the district particularly in matters like branch
expansion and credit planning. The Lead Bank was to act as a consortium leader
for coordinating the efforts of all credit institutions in each of the allotted
districts for expansion of branch banking facilities and for meeting the credit
needs of the rural economy.
• Allotment of districts: All the districts in the country excepting the metropolitan
cities of Mumbai, Kolkata, Chennai and Union Territories of Chandigarh, Delhi
and Goa were allotted among public sector banks and a few private sector
banks. Later on, the Union Territories of Goa, Daman and Diu as also the rural
areas of the Union Territories of Delhi and Chandigarh have been brought within
the purview of LBS.

6. • District Consultative: Committees (DCCs) the next important development in the
history of LBS was the constitution of DCCs in all the districts, in the early seventies to
facilitate co-ordination of activities of all the Banks and the financial institutions on
the one hand and Government departments on the other. The DCCs were constituted
in the lead districts during 1971– 73.
• District Credit Plan (DCP): The second and most important phase of the LBS was
formulation of DCPs and their implementation. Although certain structural credit gaps
were identified earlier, positive measures were introduced only after nationalization
of the banks. Certain sectors which were hitherto neglected were given a priority
status and banks were asked to provide credit to these sectors in a more concerted
way.
• Village adoption scheme (VAS): Under this, bank adopted some villages in their
command area for intensive lending. The area approach was not so much aimed at
development of a chosen area as for avoiding the pitfalls of scattered and
unsupervised lending. In the initial stages of VAS, RBI has encouraged banks to adopt
villages as well as to avoid scattered lending.

7. Points for Critical Examination (Weaknesses)
1. There is a strong need to revamp and revitalize the Lead Bank Scheme so as to make it an effective
instrument for bringing about meaningful co-ordination among banks operating in a district.
2. This can bring about greater participation among banks and financial institutions in achieving full
financial inclusion.
3. The Operation problems are the major hurdles of the Lead bank Scheme. Obviously, financial
inclusion calls for united action on the part of all banks and financial institutions operating in a
district.
4. An approach on the lines of area approach can be adopted and in each area or location a particular
bank can be given responsibility for achieving meaningful financial inclusion.
5. Full computerization and data management in all banks must be in order and the banks involved
should be able to periodically prepare and review reports, yearly draft plans, and financial
inclusion plans, from time to time.
6. There is a need for revamping the District-level Consultative Committees (DLCC) and it should be a
result oriented rather than a titular organization.
7. Lead bank Scheme should be an effective instrument in bringing about full and active involvement
of all member banks in all efforts and schemes.

8. B. Deposit Insurance Corporation
Origin of Deposit Insurance Scheme:
• The underdeveloped nature of the banking sector in India had been the
cause of bank failures and wiped out the savings of the depositors.
• The loss born by the depositors were deterrent to the growth of banking
habit.
• The idea of bank deposit created a question in the minds of the people
and they lost the confidence in bank investment or banking system.
• In 1950 the Rural Banking Enquiry Committee considered the question of
deposit insurance.
• In 1953, the committee for finance for private sector submitted a draft
scheme for setting up deposit insurance corporation.

9. • In 1960, two banks in India (Laxmi bank ltd. and Palai central bank
ltd.) failed to fulfill the demand of their customers for the payments
of their deposits.
• The Government of India and RBI then realized the importance of
setting up a Deposit Insurance Corporation.
• The Deposit Insurance Corporation bill was introduced in August
1961, and the Deposit Insurance Corporation Act 1961 was enacted.
• After that the Deposit Insurance Corporation was established on 1st
January 1962 as a fully owned subsidiary of the RBI.

10. • Objectives:
1. To give protection to depositors, particularly the small depositors, from the
risk of loss of their deposits in the event of bank failure.
2. To create confidence in the minds of depositors.
3. To enhance the banking habit among the people.
4. To impart stability to the banking system and give more importance to the
process of deposit mobilization.
• Capital:
• The corporation has an initial capital of Rs. 1 cr. Which was fully subscribed by
RBI. Consequent upon the extension of insurance scheme to the co-operative
banks, the activities of the corporation expanded greatly. So the capital was
increased to Rs. 2 cr. on 31st Dec. 1975 and the entire amount was
contributed by RBI.

11. • Resources:
I. General fund: The entire share capital has been invested in Central
Government Securities and it is held in General Fund. The interest earned
from these investments is used for meeting the establishment and other
expenses of the corporation. The general fund at the end of march 2004
was Rs. 91.52 crs.
II. Deposit Insurance Fund: The insurance premium received from fund is kept
in this fund and the amount is invested in Central Government Securities.
The payment of clams of depositors are met from this fund. The interest
earned on investment and insurance premium are the two sources of
income fro the fund. The Deposit Insurance fund at the end of March 2004
was Rs. 7079.09 crs.

12. • Management:
• The chairman of the corporation is the governor of the RBI.
• The corporation is managed by BOD consisting of 5 members
including Chairman. The other 4 members are;
i. A deputy governor of RBI or any other officer of RBI.
ii. An officer of central government.
iii. Two non-official directors, nominated by central government. (having
special knowledge of commerce, industry and finance)
• Deposit Insurance:
• The deposit insurance scheme covers all the scheduled banks, co-
operative banks and regional rural banks. These banks are registered
as insured banks. The no. of banks insured as on march 2009 were
2307. (80 commercial banks, 87 RRBs 4 local urban banks and 2137
co-operative banks)

13. • Rate of Insurance Premium:
• The insured banks are required to pay the premium on the assemble
deposits. The rate of premium was initially fixed at 5 paisa per annum
for every Rs. 100. the Act permits premium up to 15 paisa per Rs. 100
per annum. The premium is collected quarterly from the insured
banks. From june 1971 – june 1993 it was 4 paisa. And from 2004-05
it has been required to 8 paisa and from 2005-06, it is increased to 10
paisa per Rs. 100.
• Insurance Cover: Starting from 1962 Deposit insurance scheme has
been providing cover to the depositors and the limit has chaged over
a period of time.
• 1962 - 1500 Rs., 1968 – 5000 Rs., 1970 – 10000 Rs., 1976 – 20000 Rs., 1980 –
30000 Rs., and at present (from 1993-94) the limit of insurance cover to the
depositors is 100000 Rs.

14. • Payment of Claims: The corporation's liability in respect of insured
deposit will arise in event of liquidation, reconstruction or
amalgamation of a bank. When a bank liquidates the corporation pays
to every depositor to the amount due under insurance scheme
directly or through the liquidator.
• Protected Deposits: The amount of assembled deposits at the end of
June 1989 was 1,40,746 crs. and the insured deposit was Rs. 90,192
crs. (72.2%). The number of fully protected accounts was 3059 lac
which is 97.4% of the total deposit accounts in all the protected
banks.
• The total amount of calims paid under the scheme since 2004 is 1044.32 crs.
• It is high time to raise the limit of insurance cover from 1 lac to 3 to 5 lac to
infuse confidence in minds of the depositors.

15. C. Mutual Funds
• These days you are hearing more and more about mutual funds as a
means of investment. If you are like most people, you probably have
most of your money in a bank savings account and your biggest
investment may be your home. Apart from that, investing is probably
something you simply do not have the time or knowledge to get
involved in. You are not the only one. This is why investing through
mutual funds has become such a popular way of investing.
• What is a Mutual Fund?
• A mutual fund is a pool of money from numerous investors who wish
to save or make money just like you. Investing in a mutual fund can be
a lot easier than buying and selling individual stocks and bonds on
your own. Investors can sell their shares when they want.

16. • Professional Management: Each fund's investments are chosen and
monitored by qualified professionals who use this money to create a
portfolio. That portfolio could consist of stocks, bonds, money market
instruments or a combination of those.
• Fund Ownership: As an investor, you own shares of the mutual fund,
not the individual securities. Mutual funds permit you to invest small
amounts of money, however much you would like, but even so, you
can benefit from being involved in a large pool of cash invested by
other people. All shareholders share in the fund' s gains and losses on
an equal basis, proportionately to the amount they've invested.
• Mutual Funds are Diversified: By investing in mutual funds, you could
diversify your portfolio across a large number of securities so as to
minimize risk. By spreading your money over numerous securities,
which is what a mutual fund does, you need not worry about the
fluctuation of the individual securities in the fund's portfolio.

17. Mutual Fund Objectives
• There are many different types of mutual funds, each with its own set of goals. The investment
objective is the goal that the fund manager sets for the mutual fund when deciding which
stocks and bonds should be in the fund's portfolio.
• For example, an objective of a growth stock fund might be: This fund invests primarily in the
equity markets with the objective of providing long-term capital appreciation towards meeting
your long-term financial needs such as retirement or a child' s education.
• Aggressive growth means that you will be buying into stocks which have a chance for dramatic
growth and may gain value rapidly. This type of investing carries a high element of risk with it
since stocks with dramatic price appreciation potential often lose value quickly during
downturns in the economy. It is a great option for investors who do not need their money
within the next five years, but have a more long-term perspective. Do not choose this option
when you are looking to conserve capital but rather when you can afford to potentially lose the
value of your investment.

18. • A combination of growth and income funds, also known as balanced funds, are those that
have a mix of goals. They seek to provide investors with current income while still offering
the potential for growth. Some funds buy stocks and bonds so that the portfolio will
generate income whilst still keeping ahead of inflation. They are able to achieve multiple
objectives which may be exactly what you are looking for. Equities provide the growth
potential, while the exposure to fixed income securities provide stability to the portfolio
during volatile times in the equity markets. Growth and income funds have a low-to-
moderate stability along with a moderate potential for current income and growth. You
need to be able to assume some risk to be comfortable with this type of fund objective.
• That brings us to income funds. These funds will generally invest in a number of fixed-
income securities. This will provide you with regular income. Retired investors could
benefit from this type of fund because they would receive regular dividends. The fund
manager will choose to buy debentures, company fixed deposits etc. in order to provide
you with a steady income. Even though this is a stable option, it does not go without some
risk. As interest-rates go up or down, the prices of income fund shares, particularly bonds,
will move in the opposite direction. This makes income funds interest rate sensitive. Some
conservative bond funds may not even be able to maintain your investments' buying
power due to inflation.

19. • As with aggressive growth, growth seeks to achieve high returns; however, the
portfolios will consist of a mixture of large-, medium- and small-sized companies. The
fund portfolio chooses to invest in stable, well established, blue-chip companies
together with a small portion in small and new businesses. The fund manager will
pick, growth stocks which will use their profits grow, rather than to pay out dividends.
It is a medium - long-term commitment, however, looking at past figures, sticking to
growth funds for the long-term will almost always benefit you. They will be relatively
volatile over the years so you need to be able to assume some risk and be patient.
• The most cautious investor should opt for the money market mutual fund which aims
at maintaining capital preservation. The word preservation already indicates that
gains will not be an option even though the interest rates given on money market
mutual funds could be higher than that of bank deposits. These funds will pose very
little risk but will also not protect your initial investments' buying power. Inflation will
eat up the buying power over the years when your money is not keeping up with
inflation rates. They are, however, highly liquid so you would always be able to alter
your investment strategy.

20. Role of Mutual Funds in the Indian Economy
1. Mutual funds are acting as a stabilizer in financial system and bringing efficiency in Resource
allocation.
2. Mutual funds have opened new vistas for the investors and imparted much needed liquidity to
the system.
3. It has emerged as a critical institutional linkage among various financial sectors such as
savings, capital market and capital sector.
4. They provide much needed impetus to the money market and stock market.
5. They also provide direct and indirect support to the corporate sector.
6. The gap between demand and supply of financial resources of the private sector (being a
deficit sector in India) is met by funds raised trough loans and advances in issuance of
securities.
7. Mutual funds have also widened the private placement market for corporate securities.
8. All mutual funds in India (except UTI) are governed by SEBI (Mutual funds) Regulation, 1993.

21. Advantages of Mutual Funds
• Professional management: Qualified professionals manage your money,
but they are not alone. They have a research team that continuously
analyses the performance and prospects of companies. They also select
suitable investments to achieve the objectives of the scheme. It is a
continuous process that takes time and expertise which will add value to
your investment. Fund managers are in a better position to manage your
investments and get higher returns.
• Diversification: The truism, "don't put all your eggs in one basket" really
applies to the concept of intelligent investing. Diversification lowers your
risk of loss by spreading your money across various industries and
geographic regions. It is a rare occasion when all stocks decline at the same
time and in the same proportion. Sector funds spread your investment
across only one industry so they are less diversified and therefore generally
more volatile.

22. • Affordability: As a small investor, you may find that it is not possible to
buy shares of larger corporations. Mutual funds generally buy and sell
securities in large volumes which allow investors to benefit from lower
trading costs. The smallest investor can get started on mutual funds
because of the minimal investment requirements. You can invest with a
minimum of Rs.500 in a Systematic Investment Plan on a regular basis.
• Tax benefits: Investments held by investors for a period of 12 months or
more qualify for capital gains and will be taxed accordingly. These
investments also get the benefit of indexation.
• Liquidity: With open-end funds, you can redeem all or part of your
investment any time you wish and receive the current value of the
shares. Funds are more liquid than most investments in shares, deposits
and bonds. Moreover, the process is standardized, making it quick and
efficient so that you can get your cash in hand as soon as possible.

23. • Transparency: The performance of a mutual fund is reviewed by various publications
and rating agencies, making it easy for investors to compare fund to another. As a unit
holder, you are provided with regular updates, for example daily NAVs, as well as
information on the fund's holdings and the fund manager's strategy.
• Regulations: All mutual funds are required to register with SEBI (Securities Exchange
Board of India). They are obliged to follow strict regulations designed to protect
investors. All operations are also regularly monitored by the SEBI.
• Rupee-cost averaging: With rupee-cost averaging, you invest a specific rupee amount
at regular intervals regardless of the investment's unit price. As a result, your money
buys more units when the price is low and fewer units when the price is high, which can
mean a lower average cost per unit over time. Rupee-cost averaging allows you to
discipline yourself by investing every month or quarter rather than making sporadic
investments.
• More choice: Mutual funds offer a variety of schemes that will suit your needs over a
lifetime. When you enter a new stage in your life, all you need to do is sit down with
your financial advisor who will help you to rearrange your portfolio to suit your altered
lifestyle.

24. Disadvantages of Mutual Funds:
• High Expense Ratios and Sales Charges: If you're not paying attention to mutual fund expense
ratios and sales charges, they can get out of hand. Be very cautious when investing in funds
with expense ratios higher than 1.20%, as they will be considered on the higher cost end. Be
weary of 12b-1 advertising fees and sales charges in general. There are several good fund
companies out there that have no sales charges. Fees reduce overall investment returns.
• Management Abuses: churning, turnover and window dressing may happen if your manager
is abusing his or her authority. This includes unnecessary trading, excessive replacement and
selling the losers prior to quarter-end to fix the books.
• Tax Inefficiency: Like it or not, investors do not have a choice when it comes to capital gain
payouts in mutual funds. Due to the turnover, redemptions, gains and losses in security
holdings throughout the year, investors typically receive distributions from the fund that are
an uncontrollable tax event.
• Poor Trade Execution: If you place your mutual fund trade anytime before the cut-off time for
same-day NAV, you'll receive the same closing price NAV for your buy or sell on the mutual
fund. For investors looking for faster execution times, maybe because of short investment
horizons, day trading, or timing the market, mutual funds provide a weak execution strategy.

25. D. Modernization of Banking Industry:
• The committee on technological issues in the banking industry, under the
Chairmanship of W.S. Saraf submitted its report in December 1944. In
that report the recommendations for changes in Payment System,
Cheque Clearing, Security Settlement Technology and training were
made.
• In 1996, Shere Committee made a suggestion of Electronic Fund Transfer
(EFT) system.
• The RBI called upon all nationalized banks to prepare themselves for the
introduction of EFT system.
• Today many of the services are provided with the use of Electronic
Devices. These facilities can be enumerated as follows:

26. 1. Credit Cards: The card holder gets credit limits on per day basis, upto which limit
he/she can avail credit and make purchase of goods and services. The credit limit is
set on the basis of worth of the card holder.
2. Debit Cards: here the amount of the transaction will be debited from the Bank
account of Card holder as soon as the transaction is notified to the issuer (bank). If
the balance is insufficient to cover the debit, the difference becomes payable
immediately or else the service fee is levied.
3. MICR Cheque: MICR is the abbreviation from the word ‘Magnetic Ink Character
Recognition’. For speeding up the cheque clearing process, RBI has introduced MICR
technology. Error are minimized and the transfer of funds through cheques are made
faster and easy. The manual work of the staff has reduced.
4. ATM: ATM is the abbreviation of “Automated Teller Machine”. It allows the
customers with ATM card to withdraw cash at their convenience from the nearest
ATM. This facility is available to the customers 24*7, so that the withdrawal can be
made available to the customers.

27. 5. Tele Banking: Tele banking service is based on the voice processing facility available
with the bank computers. The customers can call bank anytime and can inquire
balance or transactions record and to transfer funds between accounts. Some banks
are also having telephone answering system which enroute the customer’s call directly
to the concerned department of the bank.
6. Home Banking: Home banking facility provides facility to the customers to collect
banking information right at home or office. With adoption of electronic system and
with the connectivity between the computers of a bank and a customer by means of
telecommunications and modems, it has become possible for a customer to interact
with the bank round the clock without coming to the bank personally.
7. Interlinked Branch Banking: banks have tried to link up their branches via an internet
connection as the part of modernization activities of banking services. The bank uses
VSAT (via satellite) system for providing banking services to the customers. Since all the
branches of a bank are interlinked on an internet, each can get the information
speedily of any other sister branch. Hence customer of any branch can transact his
account dealings from any branch of the bank.

28. 8. On-line Banking:
 Advantages:
• The operating cost per unit services is lower for banks.
• It offers convenience to customers as they are not required to go to the bank’s
premises.
• There are very less incidents of errors.
• The customers can obtain funds at any time from ATM machines.
• The credit cards and debit cards enables the customers to obtain discounts from
retail outlets.
• The customers can easily transfer the funds from one place to another place
electronically.
 Disadvantages:
• It takes time to set up and get used to an online accounts.
• Some banks only offer online banking in a limited area.
• Some services that traditional banks offer are difficult or impossible for online
banks to offer, such as traveler’s cheques ad cashier’s cheques.

29. 9. Social Banking: It describes the provision of baking and financial services that
consequently pursue, as their main objective, a positive contribution to the potential
of all human beings, today and in the future.
The focus is on satisfying existing needs in the real economy and the society whilst
simultaneously taking into account their social, cultural, ecological and economical
sustainability.
In social banking emphasis is given on;
• Human rights and solidarity,
• Equal treatment of genders,
• Organizational structures based on participation,
• Ownership structure preventing dependency of dominant individual interest,
• Promotion of giving as a central ingredient t renewal and development
• Rejection of the profit maximization principle and of speculative activities,
• Self protection as an intermediary service provider to depositors and borrowers,
• Transparency in all business conduct.

30. 10. Computerization of Banking Field: the internal set up of banks have now been
computerized. On each and every counter you will find a computer. All these computers
are also interlinked too. The computers are also used in foreign exchange dealings of
the banks. In foreign exchange cell, computers keep the following records:
• Position of currency
• Position of foreign exchange
• Particulars of forward dealings
• Maturity gap
• Country wise position of foreign exchange, etc.
11. Electronic Fund Transfer (EFT): Different modes are made available for transferring the
fund online under EFT. These are NEFT, RTGS and IMPS. These modes can be availed by
any customer having access to his/her online banking. By just adding the beneficiary’s
account details, we can transfer funds to that accounts anytime.
12. Elecronic Clearing Service (ECS): this scheme facilitates faster credit of interest and
dividends to investor’s accounts directly by the companies and thus avoids delays and
frauds.

31. Non Banking Financial Companies
• Non banking financial companies or loan companies have emerged as important players of
the Indian Financial System. They have undergone quantitative changes through financial
specialization . The role of these institutions as effective financial intermediaries has been
well recognized as they have inherent ability to make quicker decisions, assume greater
risks and customize their services and charges more according to the needs of their
clients.
• Definition:
• A non banking financial company can be classified into two types:
A. Miscellaneous non banking company
B. Residuary non banking company
A. Miscellaneous non banking company: A Company carrying on all or any type of
following business is said to be Miscellaneous non banking company.

32. • Business (a) – managing, conducting or supervising as a promoter, foreman or agent
of any transaction or arrangement by which the company enters in to an agreement
with a specific number of subscribers that everyone of them shall subscribe a certain
sum in installments over a definite period and that everyone of such subscribers shall
in his turn, as determined by lot or by auction or by tender or in such manner as may
be provided for in the agreement by entitled to the price amount.
• Business (b) – conducting any other form of chit which is different from the type of
business (a)
• Business (c) – undertaking or carrying on or engaging in or executing any other
business referred to in business (a) and business (b).
• Residuary non banking company: A company which receives any deposit under any
scheme or arrangement, by whatever name called, in one lump sum or in installments by
the way of contribution or subscription or by sale of units or certificates or instruments or
in any other manner is said to be residuary non banking company.

33. • Objectives of NBFCs:
1. To provide necessary capital to new industrial units.
2. To enhance the use of modern technology and development of promotions in
agriculture, industry, health and energy.
3. To lend money for importing technology and technical appliances in the industry.
4. To lend money for enhancing technological development in the country.
5. To provide loans and services to NRI for investing in businesses and industries
based on modern technology for earning more profits.
• Characteristics of Non banking Financial Companies:
1. Helpful in the economic development of the country
2. Collection of surplus amount and scattered savings
3. Diverting the savings to Investment Purpose
4. Bringing Stability in the capital market
5. Their main motto is of earning profits
6. Reducing the risks of the creditors
7. Helping to the state and local governments.

34. • Types of Non banking Financial compaies:
1. Hire purchase companies: the principal business is hire purchase transactions or
financing of hire purchase transactions.
2. Leasing Companies: the principal business is leasing of equipments or financing of
such activities.
3. Investment Companies: which carry the business of acquisition of securities.
4. Housing Finance Companies: Finance acquisition or construction of houses or
development of land for housing purposes.
• Role of Non banking financial Institutions:
1. Role of intermediaries between the creditors and the debtors for mobilizing savings
into investments for economic advantage.
2. They play the role of money merchants.
3. They help industry people by lending them cash credit and in purchasing shares
and bonds by providing financial help.
4. They exchange various assets into financial form immediately.
5. They also provide necessary financial help to central government, state
government and local bodies.

35. • Limitations of Non banking Financial Comapnes:
1. There is no control of RBI on most of the non banking financial companies. Their
functions are framed according to their own interests and their set of rules. Due to
this economic development can not be achieved as per the social justice and
equality.
2. The non banking financial companies do not provide loans on the whole overall
production process. NBFCs do not lend for all the departments of the business
units.
3. Priority lending is not given to the important sections. The distribution of money by
these non banking financial companies is not scientific but it is given as per their
own whims.
4. These companies have not proved collaborative I establishing equilibrium at the
regional level. These companies have concentrated themselves to provide financial
lending only to the developed industrial areas and hence the industries in other
new regions have been left out by them for lending purpose. It has created a wide
gap between the developed and underdeveloped regions.

36. 5. These companies have not given prior attention to industrial
entrepreneurship. They have diverted their flow of money towards the big
industrial units and also have given the priority to the very big technical
units and hence the new talented entrepreneurship is not given due
weightage for development of the unit. So it is expected that due
weightage should be given to small business entrepreneurs too.
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