ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Banking Development in Sixth Plan-Some Issues

The strategy of growth envisaged in the Sixth Plan and the emphasis placed on increasing the share of credit from the public sector financial system going to small farmers and small industrial enterprises necessarily set the tone for future development of banking. This note seeks to draw attention to some of the issues involved in moulding the development of banking in accordance with these two aspects of the Plan strategy, THERE are two aspects of the Sixth Plan which may be said to set the tone for future development of banking: these are the strategy of growth and the emphasis placed on increasing the share of credit from the public sector financial system of small fanners and small industrial enterprises. The priority accorded to sectors "which generate the maximum employment and which have a significant impact on the standard of living of the poorest, like agriculture and allied activities, village, cottage and small industries''1 necessarily implies a more dispersed pattern of growth. Secondly, the Sixth Plan makes repeated references to the need for correction of a major imbalance in the distribution of credit: "... the major beneficiaries especially of the banking system have been the wealthier part of the population both in the urban and rural areas, and the vast majority have barely been touched."3 As a correction of this feature, redeployment of credit in favour of small fanners, agricultural labourers, artisans and small producers is envisaged. These two aspects of the Plan have important implications for planning both the future structure of the banking system and the deployment of credit.

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