Banking of India in 2000

Banking of India in 2000 Although some form of banking, mainly of the moneylending type, has been in existence in India since ancient times, it was only over a century ago that proper banking began. The earliest institutions which undertook banking business under the British regime were agency houses which carried on banking business, in addition to their trading activities. Most of these agency houses were closed down between 192932. Following serious financial troubles, three presidency banks were later amalgamated into Imperial Bank of India in 1919. The first bank of limited liability managed by Indians was Oudh Commercial Bank founded in 1881. Subsequently, the Punjab National Bank was established in 1894. Swadeshi movement which began in 1906 encouraged the formation of a number of commercial banks. Banking crisis during 1913 1917 and failure of 588 banks in various states during the decade ending in 1949 underlined the need for regulating and controlling commercial banks. The Banking Companies (Inspection Ordinance) was passed in January 1946 and the Banking Companies (Restriction of Branches) Act in February 1946. The Banking Companies Act was passed in February 1949 which was subsequently amended to read Banking Regulation Act. With a view to bring commercial banks into the mainstream of economic development with definite social obligations and objectives, the Government issued ordinance on 19 July 1969 acquiring ownership and control of 14 major banks in the country, with deposits exceeding Rs 50 crore each. Six more commercial banks were nationalised from 15 April 1980. The objectives of public sector banking system were outlined on 21 July 1969. The three decades after nationalisation saw a phenomenal expansion in the geographical coverage and financial spread of the banking system in the country. As certain rigidities and weaknesses were found to have developed in the system, during the late eighties the Government of India felt that these had to be addressed to enable the financial system to play its role in ushering in a more efficient and competitive economy. Accordingly, a highlevel committee was set up on 14 August 1991 to examine all aspects relating to the structure, organisation, functions and procedures of the financial system. Based on the recommendations of the Committee (Chairman : Shri M. Narasimham), a comprehensive reform of the banking system was introduced in 199293. The objective of the reform measures was to ensure that the balance sheets of banks reflected their actual financial health. One of the important measures related to income recognition, asset classification and provisioning by banks, on the basis of objective criteria was laid down by the Reserve Bank. The introduction of capital adequacy norms in line with international standards has been another important measure of the reforms process. TABLE 13.2 Budgetary Position

199293 199495 199596 199697 199798 199798 199899 19992000 (Actuals) (Actuals) (Actuals) (Actuals) (Actuals) (Actuals) (RE) (BE) 1. Revenue Receipts 2.Revenue Expenditure 74,128 92,702 18,574 75,453 1,08,169 32,716 91,083 1,22,112 31,029 1,10,131 1,39,860 29,731 1,26,279 1,58,933 32,654 1,33,901 1,80,350 46,449 1,57,665 2,18,139 60,474 1,82,840 2,36,987 54,147 3.Revenue 36,178 55,440 68,695 58,338 61,544 98,167 1,24,247 1,01,042 Deficit 8,317 6,143 11,952 7,902 7,995 9,230 20,510 21,087 4. Capital Receipts 5.Recoveries of 27,861 49,297 56,743 50,436 53,549 88,937 1,03,737 79,955 Loans and other Receipt 29,916 33,684 38,627 38,415 42,074 51,718 63,773 46,895 6.Borrowings 1,10,306 1,30,893 1,59,778 1,68,468 1,87,823 2,32,068 2,81,912 2,83,882 and other Liabilities 7.Capital Expenditure 1,22,618 12,312 1,41,853 10,960 1,60,739 961 1,78,275 9,807 2,01,007 13,184 2,32,068 2,81,912 2,83,882 8.Total Receipts 40,173 60,257 57,703 60,243 66,733 88,937 1,03,737 79.955 9. Total Expenditure 10. Budgetary Deficit' (98) 11. Fiscal DefiCit2 [(1+5)9=6+10] TABLE 13.1 Public debt and other Liabilitites of Government of India as at the end of March 2000

ITEM 1991 1992 1993 1994 1995 1996 199697 199798 19 (R 1. Internal Debt 1,54,004 1,72,750 1,99,100 2,45,712 2,66,467 3,07,868 3,44,476 3,88,998 4, (i to vii) 70,520 78,023 81,693 1,10,611 1,30,908 1,63,986 1,83,976 2,16,464 2, (i) Market Loans 2,863 5,425 10,078 10,095 10,821 5,275 12,373 50,969 53 ii. Others 6,953 8,840 20,614 32,595 32,327 43,790 56,519 1,601 1. include spl Bearer Bonds) 66,000 71,000 71,000 71,000 71,000 71,000 71,000 1,01,818 1 iii. (iii) 91 days Treasury 6,566 1 8,415 14,669 20,365 20,365 22,771 19,562 17,100 1, 19 Bills iv. Special Securities issued to therbi in conversio n of Treasury 1,102 1,047 1,046 1,046 1.046 1,046 1,046 1,046 1, Bills 31,525 36,948 42,269 47,345 50,928 51,249 54,239 55,332 55 (V) Special floating and other loans' vi. Other Special securities 1,85:529 2,09,698 2,41,369 2,93,057 3,17,395 3,59,117 3,98,714 4,44,330 5, issued to RBI vii. Securities against small

savings 1,29,029 1,44,964 1,60,554 1,84,911 2,21,215 2,47,115 2,76,962 3,33,964 3, 3,14,558 3,54,662 4,01,923 4,77,968 5,38,610 6,06,232 6,75,676 7,78,294 8, 2. External Debt Total Public Debt (1+2) 3. Other Liabilities' Total Public Debt and Other Liabilities 1 Comprises balance of expired loans, compensation and other bonds such as National Rural Development Bonds and Capital Investment Bonds. Annuity certificates are excluded. 2 These represent mainly non negotiable non interest bearing securities issued to International Financial Institutions like International Monetary Fund, International Bank for Reconstruction and Development and Asian Development Bank. 3 At book value. 4 Comprises accruals under Small Savings Scheme, Provident Funds, Special Deposits of Non Government Provident Funds and Other Reserve Funds and Deposits. RE : Revised Estimates BE : Budget Estimates In the postnationalisation era, no new private sector banks were allowed to be set up. However, in 1993, in recognition of the need to introduce greater competition which could lead to higher productivity and efficiency of the banking system, new private sector banks were allowed to be set up in the Indian banking system. These new banks had to satisfy among others, the following minimum requirements: (i) it should be registered as a public limited company; (ii) the

minimum paidup capital should be Rs 100 crore; (iii) the shares should be listed on the stock exchange; (iv) the headquarters of the bank should be preferably located in a centre which does not have the headquarters of any other bank; and (v) the bank will be subject to prudential norms in respect of banking operations, accounting and other policies as laid down by the RBI. It will have to achieve capital adequacy of eight per cent from the very beginning. A high level Committee, under the Chairmanship of Shri M. Narasimham, was constituted by the Government of India in December 1997 to review the record of implementation of financial system reforms recommended by the CFS in 1991 and chart the reforms necessary in the years ahead to make the banking system stronger and better equipped to compete effectively in international economic environment. The Committee has submitted its report to the Government in April 1998. Some of the recommendations of the Committee, on prudential accounting norms, particularly in the areas of Capital Adequacy Ratio, Classification of Government guaranteed advances, provisioning requirements on standard advances and more disclosures in the Balance Sheets of banks have been accepted and implemented. The other recommendations are under consideration. RESERVE BANK OF INDIA The Reserve Bank of India (RBI) was established under the Reserve Bank of India Act, 1934 on 1 April 1935 and nationalised on 1 January 1949. The Bank is the sole authority for issue of currency in India other than one rupee coins and subsidiary coins and notes. As the agent of the Central government, the Reserve Bank undertakes distribution of onerupee notes and coins, as well as small coins issued by the Government. The Bank acts as banker to the Central government, State governments, commercial banks, state cooperative banks and some of the financial institutions. It formulates and administers monetary policy with a view to ensuring stability in prices while promoting higher production in the real sector through proper deployment of credit. RBI plays an important role in maintaining the stability of exchange value of the rupee and acts as an agent of the Government in respect of India s membership of International Monetary Fund. The Reserve Bank also performs a variety of developmental and promotional functions. These apart, the Reserve Bank also handles the borrowing programme of the Government of India. COMPOSITION OF BANKING SYSTEM Commercial Banking System in India consisted of 302 scheduled banks (including foreign banks) and one nonscheduled bank at the end of March 1999. Over the period March 1998 to March 1999, the number of scheduled banks increased by three while that of nonscheduled banks remained unchanged at one. Of the scheduled banks, 223 are in public sector and these account for about 83 per cent of the deposits of all scheduled commercial banks. In the public sector banking system, there are 196 regional rural banks, specially set up to increase the flow of credit to small borrowers in the rural areas. These banks have specified areas of operations usually limited to two to three districts. They also undertake some other commercial banking business. The remaining 27 banks in the public sector are regular commercial banks and transact all types of commercial banking business. Some important indicators in regard to progress of commercial banking in India during the recent past are given in table 13.4.

Amongst the public sector banks, as on March 1999, the State Bank of India(SBI) group (SBI and its seven associates) is the biggest unit with 13,290 offices and deposits exceeding 1,39,000 crore aggregating Rs 1,71,782.48 crore and advances of Rs 1,14,430.37 crore. In the associate banks, SBI owns either the entire or the majority of share capital. The SBI and its associate banks as a group account for around 31.9 per cent of aggregate banking business (aggregate of deposits and advances) conducted by the public sector banks and around 26.2 per cent of the aggregate business of the entire banking system. The remaining 19 banks in the public sector are more nationalised in 1969 and 1980 respectively. DEPOSIT MOBILISATION AND DEPLOYMENT There has been a substantial increase in the deposits of scheduled commercial banks in the postnationalisation period. At the end of June 1969, deposits of these banks aggregated to only Rs 4,646 crore. In March 1999, this had increased to Rs 7,01,871 crore. Deposits with public sector banks were Rs 3,871 crore in June 1969. At the end of the March 1999, these stood at Rs 5,82,639 crore. Deposits mobilised by the banks are utilised for : (i) loans and advances; (ii) investments in government and other approved securities in fulfilment of the liquidity stipulations; and (iii) investment in commercial paper, shares, debentures, etc., up to a stipulated ceiling. There has been a significant increase in the investment of banks in government and other approved securities from Rs 1,361 crore in June 1969 to Rs 2,54,119 crore as at the end of March 1999. The advances of scheduled commercial banks have grown from Rs 3,599 crore in June 1969 to Rs 3,89,460 crore as at the end of March 1999. The share of priority sectors has shown significant improvement over the years. ADVANCES TO PRIORITY SECTORS Extension of credit to small borrowers in the hitherto neglected sectors of the economy has been one of the key tasks assigned to the public sector banks in the postnationalisation period. To achieve this objective, banks have drawn up schemes to extend credit to small borrowers in sectors such as agriculture, smallscale industry, road and water transport, retail trade and small business which traditionally had very little share in the credit extended by banks. Taking into account the need to provide financial resources through bank credit to weaker sections for specific needs, consumption credit (with certain limits) has been included in priority sectors. Housing loans (up to Rs 5 lakh per unit) are also classified as prioritysector advances. The amount outstanding under prioritysector lending, by public sector banks during June 1969 to March 1999 increased from Rs 441 crore to Rs 1,07,200 crore which accounted for 43.5 per cent of their net bank credit. CREDIT TO WEAKER SECTIONS With a view to augment credit flow to small and poor farmers, commercial banks were advised by the Reserve Bank of India to provide at least 10 per cent of their net bank credit or 25 per cent of their prioritysector advances to weaker sections comprising small and marginal farmers, landless labourers, tenant farmers and sharecroppers, artisans, village and cottage industries, beneficiaries of Scheme of Urban Micro Enterprises (SUME), the Integrated Rural

Development Programme, and Scheme for Liberation and Rehabilitation of Scavengers, scheduled castes and scheduled tribes and beneficiaries of Differential Rate of Interest (DRI) Scheme. At the end of March 1999, the amount of outstanding advances extended by public sector banks to the weaker sections under the priority sector amounted to Rs 18,799 crore and accounted for 7.6 per cent of their net bank credit (or 17.5 per cent of the aggregate priority sector advances). CREDIT FLOW TO AGRICULTURE Banks were initially given a target of extending 15 per cent of the total advances as direct finance to the agriculture sector to be achieved by March 1985. This target was subsequently raised to 18 per cent to be achieved by March 1990. In terms of the guidelines issued by the Reserve Bank of India in October 1993, both direct and indirect advances for agriculture are taken together for assessing the target of 18 per cent with the condition that lending for indirect agriculture does not exceed one fourth of the total agriculture lending target of 18 per cent of the net bank credit. As at the end of March 1999, public sector banks had extended Rs 40,078 crore constituting 16.3 per cent of the net bank credit to the agriculture sector. ADVANCES TO SC/ST BORROWERS People belonging to the scheduled castes and scheduled tribes are recognised as the most vulnerable sections of the society. Banks have been asked to make special efforts to assist them with adequate credit to enable them to undertake selfemployment ventures to acquire income generating capital assets so as to improve their standard of living. At the end of March 1999, the total outstanding loan extended to scheduled castes/ schedule tribes by public sector banks was Rs 7,410 crore in 87.58 lakh borrowal accounts. INTEGRATED RURAL DEVELOPMENT PROGRAMME Integrated Rural Development Programme envisages capital subsidy and credit assistance to identified poor families for acquiring income generating assets to improve their standard of living. The total advances disbursed by the banks during 199798 amounted to Rs 3,097 crore as against Rs 3,083 crore in 199697. The total number of beneficiaries assisted during 199798 was 16.97 lakh as against 18.89 lakh in 199697. The total advances during 199899 (provisional) are to the tune of Rs 2,516 crore to assist 12.68 lakh beneficiaries. IRDP and allied schemes, viz., Training of Rural Youth for Self Employment (TRYSEM), Development of Women and Children in Rural Areas (DWCRA), Supply of Improved Toolkits to Rural Artisans (SITRA), Ganga Kalyan Yojna (GKY) and Million Wells Scheme (MWS) have been replaced by Swarnjayanti Gram Swarojgar Yojana (SGSY) with effect from 1 April 1999. SWARNA JAYANTI SHAHARI ROJGAR YOJANA The Swarna Jayanti Shahari Rojgar Yojana (SJSRY) is in operation from 1 December 1997, replacing the Scheme of Urban Micro Enterprises (SUME) and the Prime Minister s Integrated Urban Poverty Eradication Programme (PMIUPEP), in all urban and semiurban towns of India. Among other components, the scheme has two subschemes where bank credit is involved,

namely, Urban Self Employment Programme (USEP) and Development of Women and Children in Urban Areas (DWCUA). The beneficiaries under the scheme are identified by the urban local bodies on the basis of house to house survey. Under the scheme, women are to be assisted to the extent of not less than 30 per cent, disabled at 3 per cent and SCs/STs at least to the extent of the proportion of their strength in the local population. The subsidy under the scheme is funded on a 75 : 25 basis between the Central and the State governments. Under USEP, unemployed and under employed urban youth (educated up to the ninth standard) whose annual family income is below poverty line and who have been included in the ULB list, are to be assisted with bank loans. Projects costing up to Rs 50,000 are to be financed by banks. Subsidy would be provided by the Government at 15 per cent of the project cost subject to a maximum of Rs 7,500. The borrower has to bring in 5 per cent of the project cost as margin money. Partnerships are also permitted. Under DWCUA, women beneficiaries may take up self employment ventures in groups. DWCUA groups should consist of at least 10 urban poor women. The group is entitled to a subsidy of Rs 1,25,000 or 50 per cent of the project cost whichever is less. In addition, the group may set itself up as a thrift and credit society. During 199798 banks sanctioned loans amounting to Rs 400.90 lakh in favour of 2,086 persons while disbursement amounted to Rs 211.69 lakh to 1,177 persons. During 199899 (provisional) loans amounting to Rs 13,534.21 lakh was sanctioned to 50,917 persons while the disbursement was Rs 6,861.04 lakh to 28,256 persons. DIFFERENTIAL RATE OF INTEREST SCHEME Under the Differential Rate of Interest (DRI) Scheme, introduced in 1972, public sector banks are required to fulfil the target of lending of at least one per cent of the total advances as at the end of the preceding year to the weakest of the weak sections of society at the interest rate of four per cent per annum. The scheme covers poor borrowers having an annual family income of not more than Rs 6,400 in rural areas and Rs 7,200 in other areas and not having more than 2.5 acres of unirrigated or one acre of irrigated land. They are given credit support of Rs 6,500 as term loan and working capital loan for productive ventures. The public sector banks had an outstanding of DRI credit of Rs 507.97 crore as at the end of March 1999. PRIME MINISTER S ROZGAR YOJANA Prime Minister s Rozgar Yojana (PMRY) for educated unemployed youth was launched on 2 October 1993. The objective of the scheme is to provide sustained employment to about 10 lakh educated unemployed urban youth in microenterprises during the Eighth Five Year Plan. These enterprises cover manufacturing service and business ventures. The scheme was implemented in urban areas during 199394 and from 1 April 1994, throughout the country. Selfemployment Scheme for Educated Unemployed Youth (SEEUY) has been subsumed with PMRY. During 199899, bank sanctioned loans amounting to Rs 1,561.89 crore in 2,61,940 lakh accounts while disbursements amounted to Rs 785.50 crore in 1,39,266 lakh accounts (data are provisional). REGIONAL RURAL BANKS Regional Rural Banks (RRBs) had been established to take the banking services to the doorsteps of rural masses especially in remote rural areas with no access to banking services.

These banks were originally intended to provide institutional credit to those weaker sections of the society at concessional rate of interest, who had perforce been depending on private moneylenders. The banks were also intended to mobilise and channelise rural savings for supporting productive activities in the rural areas. However, with effect from 22 March 1997, the RRBs were allowed to lend outside the target group by classifying their advances into Priority Sector and others. Similarly the interest rates on term deposits offered by RRBs have also been freed. Subsequently, it has been decided to permit RRBs at their discretion to offer differential rate of interest on their term deposits of maturity subject to certain conditions. The loans and advances of 196 RRBs with 14,475 branches stood at Rs 11,109 crore as at the end of March 1999. Rs 26,157 crore was mobilised as deposits by RRBs on that date. Consequent upon the permission of the Reserve Bank of India to determine their own lending rate with effect from 26 August 1996, most of the RRBs have been charging interest rates on loans varying between 14 to 18 per cent per annum. INDUSTRIAL DEVELOPMENT BANK OF INDIA Industrial Development Bank of India (IDBI), established under the Industrial Development Bank of India Act, 1964, is the principal financial institution for providing credit and other facilities for development of industry, coordinating working of institutions engaged in financing, promoting ordeveloping industries and assisting the development of such institutions. vvidbi has been providing direct financial assistance to large industrial concrns and also helping small and medium industrial concerns through banks and statelevel financial institutions. Aggregate assistance (provisional)sanctioned during 199899 amounted to Rs 25,555 crore registering a rise of 6.6 percent over the preceding year. Disbursements amounted to Rs 14,403 crore in 199899. EXPORTIMPORT BANK OF INDIA ExportImport Bank of India (Exim Bank) was established on 1 January 1982 for financing, facilitating and promoting foreign trade in India. During the year ended 31 March 1999, Exim Bank sanctioned loans of Rs 1,838 crore while disbursements amounted to Rs 1,271 crore. Net profit of the Bank for the period 199899 (AprilMarch) on account of General Fund amounted to Rs 240 crore. INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LIMITED Industrial Credit and Investment Corporation of India Limited (ICICI) was established in 1955 as public limited company to encourage and assist industrial units in the country. Its objectives, inter alia, include providing assistance in the creation, expansion. and modernisation of industrial enterprises, encouraging and promoting participation of private capital both internal and external, in such enterprises, encouraging and promoting industrial development and helping development of capital markets. It provides term loans in Indian and foreign currencies, underwrites issues of shares and debentures, makes direct subscriptions to these issues and guarantees payment of credit made by others. The assistance sanctioned and disbursed by ICICI

during 199899 aggregated Rs 34,220 crore and Rs 19,225 crore, respectively (provisional), registering a growth of 38.4 per cent and 21.6 per cent, respectively, over the previous year. NATIONAL HOUSING BANK National Housing Bank (NHB), the apex institution in housing finance in India, started its operation from July 1988. The authorised share capital of NHB is Rs 500 crore. As on 30 June 1998, the paidup capital of NHB stood at Rs 350 crore and the reserves and surplus were Rs 425.01 crore. A major activity of NHB includes extending financial assistance to eligible institutions in the housing sector by way of (a) refinance and (b) direct finance. (a) Refinance: NHB, extends refinance assistance to eligible primary lending institutions, viz., Scheduled Banks, Housing Finance Companies (HFCs) and Cooperative Sector Institutions. The refinance assistance is extended to the primary lending institutions in respect of housing loans provided by these institutions for individuals as also for public and private agencies towards land development and shelter projects. The total refinance assistance extended by NHB to all eligible primary lending institutions was Rs 746.99 crore in 199899 as against Rs 524.15 crore in 199798. The cumulative refinance assistance provided by NHB to the primary lending institutions stood at Rs 4,373.99 crore up to 30 June 1999. The total number of HFCs approved for availing refinance from NHB as on 30 June 1999 stood at 29. (b) Direct Finance: NHB provides direct finance for integrated land development and shelter projects of public agencies in respect of Land Development and Shelter Projects (LDSPs), Slum Redevelopment Projects (SRPs) and Housing Infrastructure Projects (HIPs) where the projects/ agencies are able to comply with the financial discipline norms laid down by NHB. Under the direct financing window, NHB sanctioned three LDSPs with project cost of Rs 18.94 crore and loan component of Rs 16.12 crore during 199899. With this, the total number of projects sanctioned under the scheme has gone up to nine with total project cost being Rs 78.56 crore and loan component being Rs 63.71 crore. During 199899 Rs 14.76 crore were disbursed under the scheme. Thirteen SRPs with total project cost of Rs 22.59 crore and loan component of Rs 17.01 crore were sanctioned during 199899. An amount of Rs 1.21 crore was disbursed for these projects during the year. The guidelines in respect of LDSPs, SRPs and HIPs pertaining to public agencies were revised during 199899. NHB also revised the interest rates on its refinance schemes. NHB issued Directions to the HFCs in matters relating to the acceptance of deposits. In order to ensure efficiency in the performance of the HFCs, NHB has also issued guidelines on prudential norms relating to income recognition, asset classification, provisions and credit concentration, etc. As part of its promotional and developmental role, NHB participated in the equity of Housing Finance Companies and Building Material Industries to the extent of Rs 11.30 crore till 30 June 1999. During the 50th year of India s independence, NHB launched the Golden Jubilee Rural Housing Finance Scheme to encourage the financial sector institutions to extend loans to individuals for housing in rural areas. During 199899, 1,25,731 dwelling units were financed by the various primary lending institutions against the target of one lakh units. The target for 19992000 has been fixed at 1,25,000 dwelling units. In order to ensure greater flow of resources

to the housing sector, NHB is in the process of initiating measures for the introduction of mortgage backed securitisation. HOUSING FINANCE The overall minimum target during 19992000 for housing finance provided by commercial banks has been raised to 3 per cent (from earlier 1.5 per cent) of their incremental deposits of the previous year or the amount of housing finance allocations fixed for the year 199899 whichever is higher. The individual amount of housing loans provided by commercial banks either directly or indirectly, to be eligible for priority sector advances, has been raised to Rs five lakh as against Rs three lakh earlier. To provide flexibility to the banks for deployment of their allocated funds for housing, the suballocations and the distinctions under direct and indirect finance including investment in bonds/debentures of NHB/HUDCO has been withdrawn. The investment by banks in the bonds/debentures of NHB, wherein the individual loans refinanced by NHB does not exceed Rs five lakh, has also been included under the priority sector advances. SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA Small Industries Development Bank of India (SIDBI) was established as a whollyowned subsidiary of the Industrial Development Bank of India (IDBI) under the Small Industries Development Bank of India Act, 1989 as the principal finance institution for promotion, financing and development of industries in the small scale sector. SIDBI started its operations from 2 April 1990 and is engaged in providing assistance to the smallscale industrial sector in the country through other institutions like state financial corporations, commercial banks and state industrial development corporations. Provisional cumulative sanctions and disbursements at the end of March 1999 were Rs 45,144 crore and Rs 32,987 crore respectively. NABARD National Bank for Agriculture and Rural Development (NABARD) came into existence on 12 July 1982. It took over the functions of the erstwhile Agriculture Credit Department, Rural Planning and Credit Cell of the Reserve Bank of India and Agriculture Refinance and Development Corporation. The proposal for amending relevant provision of NABARD Act, 1981 enhancing the capital from Rs 500 crore to Rs 2,000 crore is under consideration of the Central government. Pending this, the Reserve Bank has contributed Rs 1,200 crore and the Central government Rs 300 crore for raising the share capital from Rs 500 crore to Rs 2,000 crore. NABARD was established for providing credit for promotion of agriculture, smallscale industries, cottage and village industries, handicrafts and other allied economic activities in rural areas with a view to promoting integrated rural development and securing prosperity of rural areas. NABARD as the apex institutions, is concerned with all policy planning and operations in the field of credit for agriculture and other economic activities in the rural areas. Its functions are to : (i) serve as an apex refinancing agency for institutions providing investment and production credit for promoting various development activities in the rural areas; (ii) take measures towards institutionbuilding for improving absorptive capacity to credit delivery system including

monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, training of personnel, etc., (iii) coordinate rural financing activities of all institutions engaged in the developmental work at fieldlevel and maintain liaison with Central/ State governments, Reserve Bank of India and other national institutions concerned with policy formulation and also (iv) undertake monitoring and evaluation of projects refinanced by it. NABARD provides refinance to the state land development banks, state cooperative banks, scheduled commercial banks and regional rural banks, while the ultimate beneficiaries of investment of credit can be individuals, partnership concerns, companies, stateowned corporations, etc. The shortterm (ST) credit limits for 199899 sanctioned by NABARD to State Cooperative Banks for Seasonal Agricultural Operations (SAO) up to the end of March 1999 aggregated Rs 5,979 crore as against Rs 5,210 crore during the corresponding period of the previous year. Outstanding against these limits stood at Rs 4,055.85 crore and Rs 3,017.42 crore as at the end of March 1999 and March 1998 respectively. The credit limits sanctioned for 199899 included Rs 215.17 crore for Development of Tribal Population (DTP), Rs 859.50 crore for Oilseeds Production Programme (OPP) and Rs 44.45 crore for National Pulses Development Programme (NPDP). The outstanding thereunder amounted to Rs 106.86 crore, Rs 364.98 crore and Rs 20.95 crore respectively as on 31 March 1999. INDIAN BANKS ABROAD Ninetyfive branches, including offshore branches and mobile agencies of nine Indian commercial banks (which include eight public sector banks and one Indian private sector bank) were operating in foreign countries as on 31 March 1999. These branches are spread over 25 countries and located in major international centres like London, Singapore, Amsterdam, Bahrain, New York, Hong Kong, Tokyo, Frankfurt, Paris, etc. The largest concentration is in the United Kingdom (19) followed by Fiji Islands (9), USA (8), Singapore (6), Hong Kong and Mauritius (7 each), Sri Lanka (6), United Arab Emirates (6) and Japan (4). These branches specialise in various areas of international banking including financing of foreign trade. They cater to the needs of Indian exporters and importers and to that extent, they form an integral part of the domestic banking system. Besides these branches, Indian commercial banks are having 16 representative offices in USA, Brazil, Indonesia, Iran, Egypt, Russia, Italy, Zimbabwe, China, Uzbekistan, Philippines, Vietnam,, Kazakhstan and Australia. Indian commercial banks are also having whollyowned subsidiaries and joint ventures in USA, Canada, Zambia, Nigeria, Uganda, Bhutan, Mauritius, Kenya and Nepal. SI. Item March March March March No. 1996 1997 1998 1999

1. Number of 293 299 300 303 Commercial Banks 291 297 299 302 Scheduled Commercial Banks' 196 196 196 196 Regional Rural 2 2 1 1 Banks NonScheduled Commercial Banks' 2. Number of Offices in India 3. Population per office 63,026 63,550 64,218 65,118 15 15 15 15 (in thousand) 4. Aggregate Deposit of 4,33,819 5,05,599 6,05,410 7,01,871 Scheduled Commercial Banks (Rs in crore) 5. Aggregate Credit of Scheduled 2,54,015 2,79,401 3,24,079 3,99,460 Commercial Banks (Rs in crore) 6. Per Capita deposit of Scheduled 4,644 5,323 6,270 N.A. Commercial Banks (Rs) 7. Per Capita Credit of Scheduled 2,719 2,931 3,356 N.A.

Coimmercial banks (Rs) 8. Deposit as percentage of 44.5 44.3 47.9 N.A. National Income at current prices National Income at current prices Source: 1 Banking Satistical Return, Volume26, March 1997 Source :2 Banking Statistics, Quarterly Handout, March 1999 Source: www.tourindia.com