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

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From 50 Years Ago (11 March 2006)

responsibilities imposed on it of continuing matters. To begin with, there remains a FROM 50 YEARS AGO to act as a bankers

responsibilities imposed on it of continuing matters. To begin with, there remains a

FROM 50 YEARS AGO

to act as a bankers’ bank to a certain extent yawning gap in the structure of rural credit even after a couple of decades of central which is still to be filled by the Reserve Bank;banking, be transformed overnight into the that progress in filling this gap has beenprincipal agency for supplying the bulk of slow, is much to be regretted. The State agricultural credit in the country? Now the Governments seem to have assumed that a State Bank cannot do that; even a cursory ready-made organisation for providing ruralVol VIII, No 10, March 10, 1956 glance at the State Bank Act will give the credit should soon be in operation for they

answer why. It has to pursue the canons of have drastically curtailed their Tacavi loansThe Role of State Bank sound business and of commercial banking. this year. Leaving aside rural credit for (Editorial) What it can do is to open a number of branches which the initiative does not seem to rest

and extend banking facilities where none with the State Bank, developments in various

We all knew that the State Bank was going exist today. Its progress in that direction will other directions are suggested by Dr Matthai to be a potent instrument in the hands of the be watched with interest, and reviewed in a which merit careful consideration. The State Government for bringing about some of the subsequent paragraph.Bank, for instance, has already taken the changes vaguely described as inspired by the The State Bank actually has to do a lot more initiative in co-ordinating the supply of Avadi spirit. But since the transformation of than look after agricultural credit. It is good credit for small-scale industries. This should the Bank was carried out at the instance of that while speaking at the first Annual Meeting prove immensely fruitful. Several agencies the Committee of Direction of the All India of the Bank, the Chairman, Dr John Matthai, extend credit to small industries – commercial Rural Credit Survey – at least this was the allowed himself the freedom of surveying banks supply working capital to such of immediate occasion for it, though the entire field of its present and future them as are able to furnish acceptable nationalisation of the Imperial Bank had been operations. Not only did he present a com-security. State Finance Corporations are there in the air for years – lazy minds had the excuse prehensive survey of the existing field, but to supply long-term capital on fixed securiof associating this change primarily with the he also looked into the future. Many things ties. But since industries require both longtask of what may be conveniently called are brought out in the course of this survey term and working capital and as the essential “institutionalising rural credit”. They had also which had probably never appeared in first step for financing is proper assessment their doubts, naturally. How could a bank quite the same light before and had not of their creditworthiness, the task that the which was the largest institution financing been grasped adequately even by those who State Bank has taken upon itself is of the commercial credit in the country, with added are knowledgeable in banking and related highest importance.

Economic and Political Weekly March 11, 2006

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