A commercial bank is a bank that offers services such as making business loans, offering basic investment products & accepting deposits.
1. Augmentation in bank credit to the rural areas after nationalization has produced strains in the structure owing to swift development & diversification. One of the tribulations of such quick development has been the decline in the worth of scheme preparation, mainly under the anti - poverty programmes.
2. Opening of huge number of branches in rural areas which do not have sufficient business potential, increase in establishment expenses and in non - performing advances exaggerated the profitability of the banks unfavorably.
3. The commercial banks have botched to fill the geographical gap in the accessibility of credit not roofed by the cooperatives.
4. The recovery position of the commercial banks is awful.
5. The rural credit - deposit ratio turned down from 1.58% in the year 1991 to 0.73% in year 2001 which shows that deposits mobilized from rural India were being utilized somewhere else.
6. The predicament of synchronization not only between one commercial bank & another but also between commercial banks & cooperative credit structure, on the one hand & between Government departments & banks, on the other, has assumed grave dimensions.
7. Loan disbursal to small & marginal farmers slowed down stridently in the 1990s. The alternative provided to commercial banks to meet priority sector lending targets by investing in Rural Infrastructure Development Fund & placing deposits with Small Industries Development Bank of India reduced the rate of enlargement of direct finance to small & marginal farmers.
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