Social banking

It is about banking, mainly in India

1. SOCIAL BANKING Banking which caters specially to the development needs of poor

2. Objectives of S ocial B anking To provide credit facilities to the small farmers ,small traders, cottage industries and self employed persons. To give priority to industries which produce essential goods To provide financial resources for the welfare objectives.

3. 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

4. LEAD BANK SCHEME Introduced in 1969

5. 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

6. Activities of a lead bank To survey the credit needs of the district To evolve a credit action plan for the district To work with the government in the development process To make sure that small borrowers are served effectively by the business Assisting primary lending services Survey the resources and potential for banking development in the district

7. Helps in marketing the agricultural and industrial products Recruiting and training staff, for offering advice to small borrowers and farmers, in the priority sectors. Setting the district consultative Committee in co-ordination with other banks and financial institutions

8. Service Area Approach(SAA) To bring about an orderly and planned development of rural and semi-urban areas of the country April 1989

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

10. Stages of SAA

11. 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

12. Village Adoption Scheme Development of selected villages in an integrated manner

13. 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

14. Marketing related intervention Environmental/ecological related interventions Value chain management Implementation of development programme as envisaged under government plan

15. Differential Rate of interest scheme(DIR Scheme) Introduced in March 1972 Provide concessional rate of interest to low income group for productive purposes

16. 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.

17. Priority Sector Lending Introduced in 1967-68 To provide adequate and timely financial support at reasonable rate to priority sectors

18. Priority Sector includes: Agriculture Small Scale Industries Small Road and Water operators Irrigation……………

19. RBI stipulates banks to provide credit under Priority sector as follows Agriculture – 18% Weaker Sections – 10%

20. Government give much importance to Priority Sector Lending

21. Micro Finance via SHG-Bank Linkage Programme Micro credit is the provision of thrift, credit and other financial services and products of very small amount to the poor.

22. 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”

23. 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.

24. Functioning of SHG-bank linkage program NGOs and banks interact with the poor, especially women, to form small homogenous groups.\ They are taught simple accounting methods to maintain their accounts. They meet frequently and collect small amount of savings from their members. This pooled savings enable them to open a formal bank account in the name of the group. This is the first step in establishing link with the formal banking system Out of the pooled savings they give small loans to members for meeting their small emergent needs.

25. Empowerment is achieved through group dynamics, decision-making , and funds management . When the pooled thrift grows they can receive external funds in multiples of their group savings. Bank loans enable the group members to undertake income generating activities.

26. Thank You