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Kerala PSC Indian Economy Book Study Materials Page 336Book's First Page
12.12 ndian onom of India holds more than 50 per cent who previously depended on private stake in them) they are still known as the money lending, and nationalised banks. (ii) to mobilise rural savings and channelise (iii) In 1994 itself the government allowed the them for supporting productive activities opening of private banks in the country. in the rural areas. The first private bank of the reform era The GoI, the concerned state government and was the UTI Bank. Since then a few the sponsoring nationalised bank contribute the dozens Indian and foreign private banks share capital of the RRBs in the proportion of 50 have been opened in the country. per cent, 15 per cent and 35 per cent, respectively. Thus, since 1993–94 onwards, we see a The area of operation of the RRB is limited to reversal of the policies governing banks in the notified few districts in a state. country. As a general principle, the public sector Following the suggestions of the Kelkar and the nationalised banks are to be converted Committee, the government stopped opening into private sector entities. What would be the new RRBs in 1987—by that time their total minimum government holding in them is still a number stood at 196. Due to excessive leanings towards social banking and catering to the matter of debate and yet to be decided.19 The policy highly economically weaker sections, these banks of bank consolidation is still being followed by the started incurring huge losses by early 1980s. For government, so that these banks could broaden restructuring and strengthening of the banks, their capital base and emerge as significant players the governments set up two committees—the in the global banking competition.20 Every delay Bhandari Committee (1994–95) and the Basu in it will hamper their interests, as per the experts. Committee (1995–96). Out of the total, 171 were running in losses in 1998–99 when the regIonal rural Banks (rrBs) government took some serious decisions: The Regional Rural Banks (RRBs) were first set up (i) The obligation of concessional loans on 2 October, 1975 (only 5 in numbers) with the abolished and the RRBs started charging aim to take banking services to the doorsteps of commercial interest rates on its lendings. the rural masses specially in the remote areas with (ii) The target clientele (rural masses, weaker no access to banking services with twin duties to sections) was set free now to lend to any fulfill body. (i) to provide credit to the weaker sections of After the above-given policy changes, the the society at concessional rate of interest RRBs started coming out of the red/losses. The CFS has recommended to get them merged with 19. As per the Strategic Disinvestment Statement of 1999, their managing nationalised or public sector banks the government had decided to cut its holding in them and finally make them part of the would-be three- to 26 percent. The policy was put on hold once the UPA Government came to power. tier banking structure of India. At present there 20. Y.V. Reddy, Lectures on Economic and Financial are 40 RRBs (after amalgamation) functioning Sector Reforms in India (New Delhi: Oxford University in India even though the amalgamation and Press, 2002), pp. 137–57 recapitalisation processes are going on (India 2017).