Money and Banking (part – II)

The first Regional Rural Bank 'Prathama Grameen Bank' was set up at Moradabad (U.P.) on 2nd October, 1975. Out of five initial stage RRBs in the country, remaining four were set up at Malda (West Bangal), Gorakhpur (U.P.), Bhiwani (Haryana) and Jaipur (Rajasthan).

Taking over the function of Agricultural Refinance Corporation of India is not the function of the Regional Rural Banks, while rest are the functions of RRBs.

NABARD does not give direct credit assistance to rural households. It refinances the assistance given by other institutions. Regional Rural Banks (RRBs) also known as Grameen Banks provide banking and financial services in rural areas. The main purpose of RRBs is to mobilise financial resources in rural and semi-urban areas and grant loans and advances mostly to small and marginal farmers, agricultural labourers and rural artisans.

Land Development Banks have been established in India to provide long term loans to rural households for land development. Since other banks are not able to provide long term loans for buying agricultural machinery and making permanent changes in the land, LDBs were set up to fulfill this purpose.

Hence, the correct chronological order is given in option (a).

Self Help Groups (SHGs) - Bank Linkage Programme was started by the NABARD in 1992-93 with an aim to provide financial services to the unreached and underserved poor households by linking the SHGs of poor to the formal financial institutions. The programme is implemented by Commercial Banks, Regional Rural Banks (RRBs) and Cooperative Banks. NABARD does not implement this programme.

The Self-Help Group (SHG) programme was originally initiated in India by the NABARD. Based on the observations of various research studies and an action research project carried out by NABARD, the model of Self Help Group-Bank Linkage Programme (SHG-BLP) has evolved as a cost- effective mechanism for providing financial services to the unreached and underserved poor households. What started as a pilot to link around 500 SHGs of poor to the formal financial institutions during the year 1992-93 has now become the largest microfinance programme in the world, in terms of the client base and outreach. In an SHG, naturally all members become equally responsible for the loan amount sanctioned. If a member fails to repay the loan, all other remaining members should take the responsibility of repayment. Since the decisions are taken collectively, all members will take up the responsibility of recovering the loans. The Regional Rural Banks and Scheduled Commercial Banks are key financing institutions to support SHGs. Hence, statement 1 is incorrect, while other two statements are correct.

The Committee on Restructuring of Regional Rural Banks (RRBs), 1994 (Bhandari Committee) identified 49 RRBs for comprehensive restructuring. It recommended greater devolution of decision-making powers to the Boards of RRBs in the matters of business development and staff matters.

Two expert Committees were set up in 1990s under the Chairmanship of M. Narasimham (an ex-RBI Governor) which are widely credited for spearheading the financial sector reforms in India. The first Narasimham Committee (Committee on the Financial System - CFS) was constituted in 1991 and the second one (Committee on Banking Sector Reforms) was appointed in 1997. These two committees submitted their reports in 1991 and 1998 respectively. The Narasimham Committee I for Financial Sector Reforms had suggested reduction in Statutory Liquidity Ratio and Cash Reserve Ratio. The Committee was of the view that the reduction of the preempted, portion of

Two expert Committees were set up in 1990s under the Chairmanship of M. Narasimham (an ex-RBI Governor) which are widely credited for spearheading the financial sector reforms in India. The first Narasimham Committee (Committee on the Financial System - CFS) was constituted in 1991 and the second one (Committee on Banking Sector Reforms) was appointed in 1997. These two committees submitted their reports in 1991 and 1998 respectively. The Narasimham Committee I for Financial Sector Reforms had suggested reduction in Statutory Liquidity Ratio and Cash Reserve Ratio. The Committee was of the view that the reduction of the preempted, portion of

Two expert Committees were set up in 1990s under the Chairmanship of M. Narasimham (an ex-RBI Governor) which are widely credited for spearheading the financial sector reforms in India. The first Narasimham Committee (Committee on the Financial System - CFS) was constituted in 1991 and the second one (Committee on Banking Sector Reforms) was appointed in 1997. These two committees submitted their reports in 1991 and 1998 respectively. The Narasimham Committee I for Financial Sector Reforms had suggested reduction in Statutory Liquidity Ratio and Cash Reserve Ratio. The Committee was of the view that the reduction of the preempted, portion of