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    Assignment Roll - No 48

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    Vivek Kankipati
    Y.S.P Thorat stressed the importance of rural credit in improving living conditions for farmers in India, where 70% of the population depends on agriculture. After independence, the first five-year plan aimed to increase agricultural productivity by providing timely credit to small and marginal farmers. Various institutional structures like cooperatives, nationalized banks, Regional Rural Banks, and NABARD were established to deliver credit in rural areas. However, a focus on quantitative over qualitative lending hampered financial institutions and did not improve rural credit access. The SHG Bank Linkage model promoted by NABARD has effectively provided over 24 million poor households access to banking and helped reduce poverty, especially for women. While successful, the program faces challenges in

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    Assignment Roll - No 48

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    Vivek Kankipati
    33 views2 pages
    Y.S.P Thorat stressed the importance of rural credit in improving living conditions for farmers in India, where 70% of the population depends on agriculture. After independence, the first five-year plan aimed to increase agricultural productivity by providing timely credit to small and marginal farmers. Various institutional structures like cooperatives, nationalized banks, Regional Rural Banks, and NABARD were established to deliver credit in rural areas. However, a focus on quantitative over qualitative lending hampered financial institutions and did not improve rural credit access. The SHG Bank Linkage model promoted by NABARD has effectively provided over 24 million poor households access to banking and helped reduce poverty, especially for women. While successful, the program faces challenges in

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    Y.S.P Thorat stressed the importance of rural credit in improving living conditions for farmers in India, where 70% of the population depends on agriculture. After independence, the first five-year plan aimed to increase agricultural productivity by providing timely credit to small and marginal farmers. Various institutional structures like cooperatives, nationalized banks, Regional Rural Banks, and NABARD were established to deliver credit in rural areas. However, a focus on quantitative over qualitative lending hampered financial institutions and did not improve rural credit access. The SHG Bank Linkage model promoted by NABARD has effectively provided over 24 million poor households access to banking and helped reduce poverty, especially for women. While successful, the program faces challenges in

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    33 views2 pages

    Assignment Roll - No 48

    Uploaded by

    Vivek Kankipati
    Y.S.P Thorat stressed the importance of rural credit in improving living conditions for farmers in India, where 70% of the population depends on agriculture. After independence, the first five-year plan aimed to increase agricultural productivity by providing timely credit to small and marginal farmers. Various institutional structures like cooperatives, nationalized banks, Regional Rural Banks, and NABARD were established to deliver credit in rural areas. However, a focus on quantitative over qualitative lending hampered financial institutions and did not improve rural credit access. The SHG Bank Linkage model promoted by NABARD has effectively provided over 24 million poor households access to banking and helped reduce poverty, especially for women. While successful, the program faces challenges in

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    RC&MI ASSIGNMENT 6RDM48

    Shri Y.S.P Thorat as a banker in his speech he stressed the importance of rural credit and issues
    related to it. According to him In india even today about 70% of the population are depending on
    agriculture and the banks should play a vital role in improving their living conditions for this he
    spoken that after india got independence in the first five year plan the prime motto is to improve
    the productivity of agriculture hence in order to achieve it providing the credit to the rural
    farmers on time is most important because most of the Indian farmers are small and marginal
    holding an average land of 2acres.
    In order to provide the credit to the rural farmers and protect them from the clutches of
    the money lenders providing the loan at simple interest with institutionalization is important
    hence in this aspect the first form of institutionalized credit delivery mechanism has started in
    1904 by the cooperatives and similarly banking system entered after nationalization of banks
    establishment of the bank branches in rural areas had taken place to provide the seasonal loans
    on time to the farmers at lower interest rates, and a new institutional structures like RRBs in
    1970 and NABARD in 1980s and Local Area Banks in 1990s also established to aid this motto.
    Providing the loans to certain categories at either lower interest rates or providing the subsidies
    and refinancing the banks either through RBI and NABARD was considered as the good option
    to help the poor because the farm yields many a times may not even enough to meet their
    minimum consumption needs also and this policy existed for more than two decades and because
    of these reforms much greater proportion of rural households have access to credit from these
    multiple formal institutions compared to less than 10 per cent in the early 1950s. As the
    concentration on quantitative lending than qualitative lending has taken place it hampered the
    profitability and viability of all the financial institutions which didnt even improve the credit
    delivery facilities in rural areas and that the time for reforms and the banking reforms taken place
    in 1991 to improve the financial stability and working atmosphere of the banks The basic aim of
    the financial sector reforms was to improve the soundness, efficiency and productivity of all
    credit institutions, including rural credit institutions whose financial health was far from
    satisfactory. The reforms sought to enhance the areas of commercial freedom, increase their
    outreach to the poor and stimulate additional flows to the sector as a result of the reform process,
    the financial health of commercial banks has improved in terms of parameters such as capital
    adequacy, Non Performing Loans even though the commercial banks are not giving importance
    to the small and marginal farmers, even the cooperatives RRBs are also deviated from the path of
    serving the rural poor so in order to improve these conditions making the poor to get the credit
    facilities and banking sector to run with profitability entire revamping of the credit system
    needed hence vaidhyanadhan committee recommended the recapitalization preceded by legal
    legal and institutional reforms by State Governments aimed at making cooperatives
    democratic and vibrant institutions run according to sound business practices and it has accepted
    by the GOI.As the commercial banks are financing the farmers who can able to repay but
    excluded the poor and marginal farmers in this case merging of the RRBs is the best suitable
    process to improve the credit delivery facilities in rural areas which aimed at covering the
    excluded sections of population, he added GOI policy of doubling the credit is not fulfilled until
    RC&MI ASSIGNMENT 6RDM48
    bringing the 45.95 million rural households who are reported as not being indebted at all have to
    be brought within the indebted fold, and he stressed that credit delivery should not be simply the
    lending but it should be like a credit plus i.e., providing a grand based support and
    understanding what makes a small and marginal farmer to migrate by leaving his land will it be
    possible to bring him back and improve his livelihood he stressed banks and financial institutions
    should work on this then only there will be an improvement in the lives of the excluded
    population.
    In this speech he appreciated the SHG Bank linkage model of the NABARD which is
    primarily focused on including the excluded population for providing the credit facilities. He told
    that this programme was started as a pilot project with the partnership of SHGs Banks and
    NGOs where
    SHGs were to facilitate collective decision-making by the poor and provide 'doorstep
    banking';
    Banks as wholesalers of credit, were to provide the resources and
    NGOs were to act as agencies to organise the poor, build their capacities and facilitate the
    process of empowering them.

    The programme has come a long way from the pilot stage of financing 500 SHGs across
    the country. Of the total SHGs formed, more than 1.6 million have been linked with 35,294 bank
    branches of 560 banks in 563 districts across 30 States of the Indian Union. Cumulatively, they
    have so far accessed credit of Rs.6.86 billion. About 24 million poor households, translating into
    nearly 120 million poor, of which around a third belong to the SC/ ST category, have gained
    access to the formal banking system through the programme. Because of this incidence of
    poverty has decreased women the decision making power and even improved their health
    conditions and by improving the income of the women it helped women to contribute to their
    family income there by making them to come out of poverty. It even proved that the poor people
    are bankable and the loans given to them are safe and because of the institutionalization they
    even realized the power of SHGs and able to develop themselves.

    Even though SHG bank linkage programme has proved very effective in reducing the
    poverty and improving the status of women still it is also facing some challenges like skewed
    distribution like more than 60% of the formed SHGs are in South India and many of the
    Northern States till today didnt form the SHGs, and also SHGs are remained as the meeting
    the financial needs of the members if they would consider the non financial activities also it
    would be better for the all round development and even maintaining the quality of SHGs also
    becoming a big challenge along with that the formation of federations helped them in reducing
    the input costs by improving the bargaining power but maintenance costs have grown up in
    federations if they are addressed well the SHG bank linkage programme is the superior tool to
    provide the credit to the needy poor and improve their living standards.

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