BANKING AND
INSURANCE LAW
TOPIC : SOCIAL BANKING
NAME : GAURAV GEHLOT
ROLL NO. : 17RU11007
SEM. : 8TH
Objectives of Social Banking
Toprovide credit facilities to the small
farmers ,small traders, cottage industries
and self employed persons.
Togive priority to industries which produce
essential goods
To
provide financial resources for the
welfare objectives.
Major Social banking schemes
Lead Bank Scheme
Service Area Approach(SAA)
Village Adoption Scheme
Differential Rate of Interest Scheme(DIR Scheme)
Priority sector lending
Micro Finance via SHG-Bank Linkage Programme
LEAD BANK SCHEME
Introduced in
1969
What is Lead Bank?
A bank which co-ordinate the banking
institutions in the district
Acts as a ‘consortium leader’
A bank in each district is selected as a
key instrument
Activities of a lead bank
1. To survey the credit needs of the district
2. To evolve a credit action plan for the district
3. To work with the government in the development process
4. To make sure that small borrowers are served
effectively by the business
5. Assisting primary lending services
6. Survey the resources and potential for banking
development in the district
Activities of a lead bank
7. Helps in marketing the agricultural and industrial
products
8. Recruiting and training staff, for offering advice to
small borrowers and farmers, in the priority sectors.
9. Setting the district consultative Committee in co-
ordination with other banks and financial
institutions
Service Area Approach (SAA)
APRIL 1989
To bring about an orderly and planned
development of rural and semi-urban
areas of the country
Scheduled Banks
Banks Semi Urban Rural banks
Allocate Specific Villages
Service Area
STAGES OF :-
Identification of the service area for each bank
Survey for assessing the lending potential of villagers
Preparation of annual credit plans for each service area
Co-ordination of credit institution and various agencies
Continuous monitoring
Advantages of SAA
Improving economic status of people
Helping banks by focus on small areas
Making lending activity easily amenable to supervision and control
Development of each area through micro level planning
Ensuring co-ordination among financial banks and other development
agencies
Encouraging people participation and involvement in credit planning and
dispensation
VILLAGE ADOPTION SCEME
Development of selected
villages in an integrated
manner
MAIN ACTIVITIES
Meeting credit need of poor
Watershed development/livelihood based activities
In tribal dominant villages, development through
“wadi” approach
Assessment of credit needs/formulation of projects for
agriculture/rural development
Creation of infrastructure in co-ordination with the
government
Marketing related intervention
Environmental/ecological related interventions
Value chain management
Implementation of development programme as
envisaged under government plan
Introduced in March 1972
Provide concessional rate of interest to low income group
for productive purposes
FEATURES OF DRI SCHEME
Lending at lower rate.
Main objective is upliftment of backward strata in the
society.
Banks monitor the utilization of loans.
Short term ,medium term and long term loans are
provided under this scheme.
Introduced in 1967-68
To provide adequate and timely financial
support at reasonable rate to priority sectors
Agriculture
Small Scale
Industries
Small Road and
Water operators
Irrigation…
RBI stipulates banks to provide credit
under Priority sector as follows
BANK
DOMESTIC FOREGIN
BANK BANK
40% 32%
Weaker Sections – 10% Agriculture – 18%
Government give much importance
to Priority Sector Lending
Micro credit is the provision of thrift, credit
and other financial services and products of
very small amount to the poor.
Introduced by Nobel Laureate and founder of
Grameen Bank Muhammad Yunus
The poor are like “bonsai", which could have grown into
taller trees if given proper soil. Micro Credit can unleash the
hidden energy of the poor so that they can take care of
themselves
In India Micro Finance is linked to Self
Help Groups(SHG)
A SHG is a registered or unregistered group of micro entrepreneurs
having homogeneous social and economic backgrounds. They save
money, to contribute to a common fund and to meet their
emergency needs on the basis of mutual help
Functioning of SHG-bank linkage
program
1. NGOs and banks interact with the poor, especially women, to form small
homogenous groups.
2. They are taught simple accounting methods to maintain their accounts.
3. They meet frequently and collect small amount of savings from their members.
4. This pooled savings enable them to open a formal bank account in the name of
the group.
5. This is the first step in establishing link with the formal banking system
6. Out of the pooled savings they give small loans to members for meeting their
small emergent needs
Functioning of SHG-bank linkage
program
7. Empowerment is achieved through group
dynamics, decision-making, and funds management.
8. When the pooled thrift grows they can receive external funds in multiples
of their group savings.
9. Bank loans enable the group members to undertake income generating
activities
Thank You
