Indian banking since independence

Banks are a vital instrument for directing the development of a country towards the chosen path. The Indian planners also envisaged it to be so and actions in that direction followed soon after Independence. This study examines at length the country's experience of using banks as a development instrument over the last four decades. The study addresses itself in particular to the following questions : Did the banking system exert itself fully to exploit the full potential in deposit mobilisation? Was there adequate control over use of bank credit by larger industries and did the weaker sections and backward areas received their due share of attention? What was the pattern of investment activities by banks and did they keep in full view the national priorities? How far the plan ning and control system changed over the years to bring the desired results? The focus of the study is on the operation of both the coopera tive credit structure and the commercial banks.

Among the salient findings to emerge from the study are that the changes in policy and operation system of banks came very slowly and that too not in adequate measure. The urban bias in deployment or resources and neglect of the weaker sections continued even in recent years. Behind the disappointing perform ance, absence of a proper system of account ability and deterring punishment for failures was a major factor.