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Group I
First Prize
Pooja A. Ikhar, Class VII

BANKING AND A COMMAN MAN

‘Banking’ is one of the most essential and important factor in one’s life as it deals with cash and cash transactions. Financial needs are equally important in life for enjoying a comfortable economic status and hence banking sector plays a vital role for all of us.

In order days, people were not well aware of the banking facilities and used to stay away out of ignorance and fear. However, with the advancement of banking industry, common man began to develop interest and started using these facilities. He began to realise the benefits of banking as it minimized his botheration of safety and security of his valuables and money,.

Class banking to Mass Banking

Few decades earlier, banking was available to classes only i.e. the elite section of the society was getting banking facilities as banks were limited in numbers and mostly accumulated in urban areas and metro sectors.

With view of taking up the banking facilities, the government nationalized the banks for the first time on 19th July 1969 and making thereby easier to implement government policies on common man. Thus the nationalization of banks played a key role in the needy lower strata’s life. Thus class banking was changed into mass banking.

Innovation of various services

Due to Introduction and adoption of computers in the banking sectors, the nature of the traditional banking substantially changed. The issues of ATM facilities, credit cards, debit cards etc. were the banking services from which we could take money from our account without even approaching the bank. Money can now be transferred in a much faster and easier way. The core banking facility allows us to operate our account by any branch of the same bank. With the help of credit cards, we can purchase anything without carrying money in our pockets. Without computation, this Telebanking facility could not be available.

Services of Banks

The bank provides us with many services viz:-

1. Safe custody to our money and valuables.
2. Financial help by the way of loans like’ Personal Loans, housing loans, vehicle loans etc.
3. Insurance – Life and Non-life etc.

Customer Services

The introduction to foreign banks, private banks have a huge competition between them as they provide similar facilities. Hence, in this background, the only differentiating factor is the customer service. Hence, all banks are service conscious for attracting more customers towards them.

Conclusion

Though much has been done, vast has to be done. The development of rural sectors is still awaiting for their upliftment. Fortunately, some banks are developing huge projects for a total change in this area. Banking plays very important role in everyone’s life. We can not think of our world without banks. We realise this when banks are closed consecutively of a few days.

Thus banking has acquired a prominent place in our life.


Group I
Second Prize
Minal Sanjay Sonune, Class VIII

"BANKING AND THE COMMON MAN"

There are three basic needs of a man. They are food, shelter and clothing. Banking can be considered as the fourth one. So, one can easily understand the importance of banking in common man’s life. Nowadays only educated and literate people can understand the importance of banking in our lives.

So, the Deputy Governor of the Reserve Bank of India (RBI) Shyamal Gopinath urged the bankers to re-orient and re-engineer their work processes and strategic orientation to their sophisticated clients while endeavouring do expand the reach of banking to the common man.

Nowadays, due to various loan facilities like home loan, vehicle loan, personal loan, business loan etc. common man is able to fulfil his dreams. In ancient days, banks were there but their influence was not so much because people did not have much knowledge and were illiterate.

Apart from this, nowadays most of our things are done through banks like depositing and saving money, using cheques instead of cash, withdrawing pension, ATM facilities (Automated Teller Machine), credit card facilities etc. So, due to these facilities people do not have to carry cash everywhere.

Let us take an example. With the use of credit cards people can buy anything, anywhere in their own countries, as well as in foreign countries even if they do not have a single rupee with them or in their account.

Many banks provide home loan with higher interest rates. So they should provide customer services. When we talk about customer services we mean basically three things.

Firstly, providing minimum banking facilities of receipt and payment of cash through cheques at the bank’s counter.

Secondly, acting fairly and reasonably in all their dealings with the customers.

And last but not the least, ensuring that all their dealings with the customer should rest on ethical principles of integrity and transparency.

Financial sector reform has generally been far removed from the common man and his concerns. This is a big mistake, witness the current spate of interest rate hikes and the sufferings they have bestowed upon the common man, who, has a common dream of owning a house, has taken a floating rate in home loan.

Every year the Reserve Bank of India (RBI) brandishes the monetary policy sword at the inflation monster, common man quinces in pain. When the Central Bank raises its repo rate by quarter of a percentage point, banks hike their home loan rates to one percentage point. Now, the repo rate is very short term rate for the overnight loans.

When it goes up, is there any compelling reason that the interest rates of the housing loans are going up proportionately or more? Housing loans, are, after all very long maturity periods and are virtually risk free. The loan amount of a value is lower than that of the house when the loan is sanctioned and, in most of the cases, the value of the mortgaged property increases over time.

So, from the above discussion we conclude that banks are very useful to a common man and they also have some drawbacks. But, leaving this point, it is not wrong to say that nationalization of banks has given a common man his position in the society and now this common man is not dominated by the rich people of the society.

I personally would like to thank the banks for this noble purpose and also hope that in this 21st century's computerised world everybody will know the banking strategies, its importance, facilities, repayment of loans, interest rates and lot more things.


Group I
Third Prize
Shomira Sanyal, Class VIII

BANKING AND THE COMMON MAN"

My Grandfather was always proud of the house he had built. Saving painstakingly for several years to finally erect a house of his dreams. It took him well over two decades of savings. He then aspired for the luxury of a Car. All of this took him a few more years. By then, he had grown-up children ready to go out into the professional world.

That was an era of different products and services offered by banks. Today, the concept of banking has metamorphosed into something easily accessible, necessary and friendly. Gone are the days when conventional "Safe " fixed deposit and regular recurring deposits were the only means to generate wealth and interest to attain objects of desire and need. "Borrowing" was an undesirable word. To-day, a house or a Car loan are perhaps just a phone call away.

For our generation, banking provides a bouquet of services and products like never before. It is an exciting experience. The common man now has the freedom to spend and to save. Credit and Debit cards are a boon to him. Travels tickets, airline fares, holidays, family dinners, petrol pumps and medical care are all within his reach. Though, use it with discretion.

The once long winding queues and token system at teller counters can now be by-passed. Using the ATM counters of various banks at every nook and corner has now brought banking closer home. No longer does one have to wait to withdraw within working hours. Even an emergency can be dealt with easily from an ATM counter 24 x 7.

My mother recently explained to me about ECS and e-banking facilities. Wow, everything just a click away – made easier, faster and trouble-free, saving time and energy. We now have banks offering its customers something more and better products, superior service and high value. Thus enriching their lives. Convenience of the customer is the buzzword, and what better way to improve service than introduce core banking? Anywhere, anytime at your service, it seems to say.

The bank today is a partner in every person’s life on the road to ensuring a good lifestyle and a good future I was told by my parents that many years before, studying in reputed universities, despite grade requirement, was not so simple as it is today, it remained an unfulfilled dream for many because of high costs of education. Middle class families can now procure loans from banks to help their children realise their dreams. It is now not beyond us to Dream Big. At every milestone in our life, there is an element of banking which is making it better and better. Without us realizing that we are banking on it for support.


Group I
Consolation Prize
Siddhi Kishore Wath, Class VII

"BANKING AND THE COMMON MAN"

In today’s man’s life the money security is an important aspect as he earns the money by his hard work, and banking is known for this. We all know that the maximum banks were nationalized in the era 1970s under the directions of the Reserve Bank. Now a days banking is important with a common as he does not keep all his money in his house.

In India and even outside India near about 70% people are using daily transaction through the bank. The daily transactions through the banks are convenient as well as safer to a common man. Moreover banking is not only safer and convenient but it also helps to keep a record of your earnings and credits you that you are a responsible citizen.

As most of the population in India is living in the Rural area, the Reserve Bank has directed to open the branches of maximum Nationalised banks in the rural areas which can provide the banking services to the people of the rural society.

Probably most of the government as well as private sectors are paid through the banks. Nowadays the common man can us the banking services while his travels i.e. domestic travel as well as worldwide travel through the services such as All Time Money (ATM) services.

If a common man wants to get an air or railway ticket, he can use the service provided by the bank like e-banking service. One of the other services is through the internet known as online service. You can also utilise the global services through the master card.

Presently, the common man can get access to his account by just through the 24 hours open services by connecting it to the banking system. The most comprehensive banking services available on the internet.

This is nothing but the revolution in the banking system of the 21st century. Every 3 persons out of 5 are accessing the banking services for running their smooth, convenient and safer life. Therefore I want to make the phrase as the importance of the money has increased more than anything in our life:-

"Health Lost, Something is lost,
Money lost, everything is lost"


Group I
Consolation Prize
Aditi Soni, Class VIII

BANKING AND COMMON MAN

Bank is what we call a boon for common people. There are various kinds of banks. Banks on small and large scale, private, co-operative and nationalized are there. Banks are helpful in ways related to money. On listening this, I started wondering whether these banks are really useful to common man or not.? This led me to think of all the points of bank.

‘A friend in need, is a friend indeed’ this proverb is correct for the banks as banks are our friends in times we need money. This particular banking system was there since ages of Hindu Puranas so as to referred as ‘ The Miracle Age’. During that time the rich merchants used to lend certain amount to the needy, poor people and the overseas merchants. But this practice led to nothing else but exploitation of those miserable people . These stories are still mentioned in the ‘Kathas’ and some mythological tales of that age.

When our country, India became independent, we adopted the western style of banking. Here, the bank used to give a certain amount of loan to the common with some interest. But the bank now, other than loans gives different options and different schemes.. It also does help us in investing money at correct places rather than investing it in a wrong manner.

The banks now have different options of loan for different purposes. Their banking style has changed and improved a lot. The banks now offer loans for housing, buying vehicles and even for study matters.

They also have different systems of loans for different categories of people. They keep in mind the property matters of upper class. They have even established some kinds of loans which the middle class and poor people can pursuit and can handle the interest matters. The bank now a days also offers loans loans related to the further education of the children and the upcoming generation. It can also be declared by one way ‘stepping stones to success’ as these children are the future generation of India.

As there is a head of family, that controls the family matters and keeps them united, in the same cases, Reserve Bank of India tries to make the banks united so that work is conducted out by full co-operation. This banking system is now no more till just a few people but all the citizens of India have full faith on the nationalized banks and have understood their money and properties are safest in these banks.

The bank system has now also established ATM System in which people can put and withdraw money whenever required. It is a 24 x 7 working place where even at the time of midnight, people can borrow money to their own convenience. Even the credit card and debit cards established by them are very useful. This ‘plastic card’ which equalizes many packs of money is extremely useful during travelling. Now, while travelling the chances of robbery are less as there are no such visible big notes which can be robbed.

Dr. Yusuf (Noble Prize Winner) and even Mrs,. Ila Bhatt have given a lion’s share – helping the common man in banking. Dr. Yusuf has established a system called microcredit system in which small amount of money is land to common people as loan teaching them things related to finance. On the other hand in cities and town they have established the e-banking in which the accounts can be handled through Internet.

But on the other hand, some disadvantages are there. As the banks have become competent, they have started disturbing the common man in odd hours in order to get insurance and all other matter. This is the only matter to be taken care of otherwise the different systems such the machines for counting notes and such developments in banking. So please do carry on this method of banking for the upcoming generation.


Group II
IInd Prize
Rup Kumar V., Class X

BANKING AND COMMON MAN

A BANK is a financial institution which provides us financial services like issuing money, saving deposits, issuing checks, giving credit card, debit cards, etc. A commercial bank is one which provides financial assistance by issuing checks, and depositing money. Some banks even provide some other benefits like providing their customers with safety lockers to store their valuables.

A Bank works in a very systematic way. The customers of the bank deposit their money in their specific accounts and then bank utilizes this money for providing money as loan to business and individuals. But the bank can not use or spend all the money by giving loans, they have to keep a specific amount as reserve in the customers account so as to repay them when they want. This is called fractional reserve. It is controlled by the central bank of the country.

A bank plays a lot of functions in itself:-

(i) A bank has to look after the customer by issuing checks or checking their account.

(ii) It has to provide loans to individuals and business.

(iii) It has to repay the money deposited by individuals and business.

(iv) It has to provide ATM Cards, Debit Cards, Credit Cards etc.

(v) It provides customers, safety lockers on rental basis to store their valuables.

(vi) Cashing cheques to the customers in order to maintain the flow of money.

(vii) Transferring cheques and cash through wire transfer or cable transfer.

A bank has various ways of performing its functions.

(i) A Main Office or a branch is a place where the bank or the financial institution provides its customers with a wide array of face to face financial services.

(ii) An ATM Machine is a machine which accepts cheques and deposits the money in the account or provides money to the customers when they need it without any human clerk.

(iii) A Mail a system in which money or other matter is sent through packages all around the world.

(iv) Telebanking is a system in which some banks or financial institutions provide their customers the facility of performing transaction through telephones.

(v) E-Banking or E-mail banking is a system in which some banks or financial institutions provide their customers the facility of performing transaction through Internet or when connected to Internet.

Banks are classified into two types. Private Banks and Government Banks. The private banks are mostly profit motive. Commercial banks, Investment Banks, Capital Banks, Business Banks, Financial Banks etc. come under private.

A Central Bank is usually a government banks. It is neither profit non loss motive. It provides money to the banks and also sees that the banks are not earning profits by utilising this money by giving loans. It also keeps a check on fractional cash reserve ratio.

The word "BANK" is derived from the Italian word "banco" a desk used in the period of Renassave by Florentine banks which was covered by green table cloth.

A commercial bank is one which not only provides loans but also accepts deposits. These are some financial institutions which work without working under the definition of a bank. The main purpose of a bank is to provide loan to business so that they can buy the inventory and later repay the loan in time with interest. Due to the increasing industrialization the role of banks in the economy has increased. A bank has to control inflation by decreasing the purchasing power of man by providing less loans or increasing the rate of interest so as to discourage people from taking loans. It also has to provide money back to the investors who invest in their banks. It also has to provide safety to the valuables of the customers which are stored in the safety lockers. In such, banks play a vital role in the economy’s development.

There are various types of banks which do various function.

(i) Commercial Bank – A commercial bank not only provides loans but also accepts deposits from the customers.

(ii) Investment Banks:- Investment banks are those that which allow customers to invest on their banks.

(iii) Business Banks – Business Banks are those banks which not only provide loans from business but also provide them with assistance of their business.

iv) Capital Banks - Capitals banks provide money or capital for building of new industries.

There are many banks such as retail banks, off shore banks, mutual funds banks, Islamic Banks etc. In an Islamic Bank the bank has to follow the Islamic Principles in every aspect.

Banks also face various risks like liquidation, money crisis, short of deposits etc. Banks overcome all this risks to provide men with what he wants – money.

In this in today’s world, I strongly believe that banking has helped the common man in every aspect. Today we find a ATM in every nook and corner of the counter. Today every individual has his own bank account in one or the other bank. Every person has his own credit card or a debit card which has increased the purchasing power of the man. Banks have given man a source of income as they employ a lot of people. So I strongly recommend the importance of bank in today’s world.


Group II
III Prize
Simran Jain, Class IX

BANKING AND COMMON MAN

Right from "But remember that if you are not able to pay your debts, you will have to work on my farmland till you have paid me fully." To the latest, "Taking loans from our bank is like borrowing money from a friend." The profession of banking has indeed come a long way. Over the years, the society has seen several phases of banking and each phase proved to be better than the previous one. Be it the Zamindars of the promising modern banks, the profession has contributed significantly to our economy.

The nationalization of banks proved to be a boon for the common man. The money lenders could no longer drag in personal differences and alter the rates of interest depending upon the person whom they are lending. People now had an option to go to the nationalized banks where the organisation was uniform for everyone. It is also fair and appropriate for its customers.

With the rise of co-operative banks, the farmers, in particular have been benefited. They could now practice co-operative farming which has helped them to a great extent. These banks finance the farming activities and have raised the economy of our rural society.

The basic idea of a bank is usually that of a place were the security of our money becomes the responsibility of the bank owner. May be this is because the basic characteristic of all banks is deposition. People prefer depositing money in banks so that they can have a good night’s sleep. They are also happy to have heavier pockets when they withdraw their money from the banks. The various investment policies, specialized for different economic sectors, enable people in any field of jobs to take optimum benefits of these. The facilities of simple interest, compound interest, fixed deposits and so on, attract customers to deposit money in banks.

Another interesting characteristic of banks is that of providing various types of loans. This facility has encouraged especially the youth to begin an individual enterprise. It has helped arouse the entrepreneur that many of the youngsters lose due to lack of monetary health. Now, with the introduction of home loans, even an average, middle-class person can dream of his own home, and even the other luxuries. Talking of the latest developments, calls for a mention of education loans. These loans have helped many young individuals by financing their higher education. This has helped many to explore their potential in their field of interest.

Banks have also facilitated the shift from paper money to plastic money. It is true that today a person’s financial health is recognised by the number of credit cards he possesses. Credit Cards have reduced the risk of robbery significantly . People can travel without cash if they have any credit cards. Even the ATM Cards and ATM centres found in every locality, have facilitated instant access to money.

Banking has been a great success at the International level, too. The World Bank and the International Monetary Fund, both of which are organs of the United Nations, lend money to the countries in need. These organisations have improved the economy of several countries by directing their economic policies.

Banks have also made transfer of money possible, within the country and even overseas. Without the transfer of Demand Drafts, a person can now transfer money from his account to someone else’s account, easily, within hours.

In our country, the Reserve Bank of India supervises the working and organisation of all other banks. This idea, ensures tighter security and that the banks will follow basic rules and regulations. The Reserve Bank of India is among the oldest banks, established in 1935 and was nationalized in 1949. Ever since, it has ensured the proper functioning of the banking world in India.

The profession of banking has supported the economy of our country and will surely continue, with better ideas. It is continuously progressing, branching out newer facilities and is laden with fruits of success. The profession of banking is a vital step in the ladder that will take this developing country to the heights of glory and will probably convert India into a developed nation.


Group II
Consolation Prize
Amey Ravindra Deshkar, Class X

BANKING AND COMMON MAN

The role of Banking in India is very significant. It has thoroughly changed the situation in modern Indian. The word banking nowadays, is used in a wider concept.

Once there was a time, when the people, save their money and deposit it, in the bank, and whenever necessary according to their demands they take it out. It was just use for this purpose only. Nowadays there are many banks. But, Reserve Bank of India (RBI) is the Central Bank of India. According to the act of Government of India, the Reserve Bank was established on April 01, 1935 and was nationalized on January 1, 1949. So, at that time there was only one nationalized bank of India. But then a dynamite lady politician Indira Gandhi, encourage the nationalism. Hence more and more banks become nationalized and this led to the development of India.

Banking has become a primary and important source for the development of India i.e. for the welfare of the common man. In modern times, banks provide loans to the common man, for various purposes. Household loans for enabling the individuals for building houses. Educational loans for the education of the children. There are many types of occupational loans also. Banks give this loans to the entrepreneurs. They also give financial assistance to the businessmen. This encourages more and more investment in the banks. The common man is also now investing at a large scale in the banks.

The SBI is the largest bank of India. It has 9000 branches all over India. 30% of the total business shares of the country is invested in these banks. The RBI is a Central Bank of India. It is one and only one supreme authority for the minting and establishment of the currency notes. The RBI naturally deals with the foreign trade. To implement the developing schemes all over India, there are many banks working under the Reserve Bank of India These banks try to provide the fruits of the developing economy, to the common man of India. It encourages many business activities and this leads to the betterment and progressing of India.

The National Agriculture and Rural Development Bank (NABARD) has been set in 1982, with a view to provide agriculture loans to the farmers. This has been done to increase the production of agriculture, and also to make the formers, self sufficient and self reliant. It has increase the tune of agriculture loans to Rs. 26,571 crores. Its main objectives are to increase the food production and to encourage the agriculture amongst this new generation.

The Industrial development of banking in India (IDBI) works for the betterment of industries in rural and urban areas. It gives loans to the entrepreneurs with less interest. It encourages trade in the rural areas,. It also encourages the common man to make investments so that they can make useful schemes for the development of the nation.

The Import – Export bank in India has also helped the country to progress. It has make the country more powerful by bringing latest and hi-tech technologies to India. That is why the production of various commodities in India is now started in India. India is now becoming self-sufficient in basic commodities of the common man.

There are also many specially orientated banks, for senior citizens which gives pensions to them, so that they can start a small scale industry for facilitating their life to live peaceful. Many banks are providing loans for education, free of cost for the children who are unable to bear the education because they come from a poor family, or may be some of them are without their parents. These banks take up the responsibility of educating the child until he became a full fledged or an able person, to continue his study and education by himself.

The industries and factories in India are now beginning to encourage and to promote the foreign style of trade. Some years ago the Indian Traders mostly observe profits, rather than investments. Whereas the foreign traders do not think of profit straightway, they only think of a good investment.

Banking is thus very essential, for the development of a nation. But banking cannot attain this objective until the common man is fearless about the investment in the bank. He needs to be assured that his money is going to, benefit both his country and himself. For this, it needs more and more exposure to investment. Thus banks are trying to attract, common man to them by announcing some schemes which is enough to attract the people. Developments of a country need banking – banking needs investment and investment needs the active participation of the common man. The common man is also assured that he can take money any times with the help of ATMs in case of any emergency.

This conveys the idea that common man is indeed a crucial factor, for the development of his country. For an economic development it needs good investment, realistic ideas and proper implementation. Thus, banking and common man both should work in a systematic way for our country to become a developed economy.


Group II
Consolation Prize
Shobhan Roy, Class IX

"BANKING AND COMMON MAN"

India has been in the process of rapid change since economic liberalization started in July 1991. There is a great step in its development as the country has discovered a new confidence in itself and become more outward looking. An effect of all these can be visualized in the banking sector. Banking is a facility provided to the masses. Banking depends entirely on public confidence in the system’s soundness; no bank could pay all its depositors should they simultaneously demand cash. I have hereby tried to display the experience of using the several facilities of banking, from the perspective of common man.

Banks were first nationalized in India in 1969 by Indira Gandhi. Currently, there are a total of 31 nationalized banks at present in India. Nationalised banks are undoubtedly more dependable and trustworthy as far as common citizens are concerned. Private Banks, unlike those nationalized, are often found to be economically unstable and resultantly, their depositors and investors may suffer great losses. Hence the benefit of common man lies in the nationalization of all the banks. The country will prosper in its economy only through the stabilization of banks and allied sectors.

We are all aware of the basis uses and benefits of banking. We deposit our money in banks because we may not provide optimum security to our money at home. Banks not only secure our money but they also hold themselves responsible for our money in case of theft, burglary, etc. Another benefit of the same is that we get interest on the money we deposit. Apart from these, banks also offer the facility to secure our ornaments and other valuables in their lockers

Besides these facilities, modern banks are diversifying their activities and extending their facilities towards the common man.

People can approach banks and transact their business. Earlier it was not possible for businessmen to afford to support their entire enterprise from their own capital. Now, banks provide them with loans to meet their requirement of capital. This has ultimately resulted in the development of the country’s economic status.

Not many years ago, transaction of money had become quite troublesome until credit cards were introduced in 2000. This has proved to be a landmark in banking facility. No wonder credit cards are so prevalent among the masses, considering their ease of use. Through these credit cards, banks have actually provided freedom to their customers to enjoy life to the fullest at any time.

Yet another facility provided recently in Automated Teller Machine, commonly known as ATM. These ATMs save us the trouble of carrying cash money along with us with much risk of theft or other mishap. Nowadays, not only do banks provide their own ATMs at every nook and corner of city but they also provide the facility of accessing our accounts in some other bank through an ATM of a different bank, in exchange of some service charge. As if these were not enough that on when ATMs have also been started.

The not so young citizens of the country, who have retired from their jobs, are especially grateful to banks since they receive their pension safely through these banks.

Terms like "Anywhere Banking" and "Internet Banking" have added to the comforts of accessing our accounts. Connectivity among banks is exactly what the common man has always looked forward to. From the comforts of our homes, we can book railway and flight tickets, access our bank accounts and shop on the net - thanks to internet banking and credit and debit cards.

Banks also provide loans – Loans such as home loan, car loan etc. provide money at times of need. This facility is particularly for middle and lower class people who can not afford to pay large sums at a time. Education Loan is a more significant feature for it allows parent of especially poor families to give full education to their children so that they can get a foothold in the much changing world of today.

Banks have immensely contributed in rural development. Loan products like Artisan Card, Kisan Card, Kisan Bike Scheme, Yuva Kisan Vidhya Nidhi Yojna, etc. are available to meet diverse credit needs of farmers. Banks have set up their branches in remote for flung villages, much to the joy of the people there. Rural people are allowed to open accounts and deposit money on daily basis. Upliftment of the poor and downtrodden is done through government sponsored schemes. With such facilities, the rural sector can rightfully owe its development to the various schemes provided by the banks.

Banking is of immense use to public but we can not exactly say that it does not have any drawbacks.

One such drawback is obviously, corruption. I would like to share some personal experiences, to support the above context. My neighbour has been using internet banking ever since the facility came into use. But strangely, one day he himself warned us of using the same. He reported that somehow, while using the facility, his account number and other details were registered by someone who later started drawing money from his account. He had to freeze his account immediately when it came to his notice.

Some other acquaintance also reported of a similar situation. One evening when using an ATM, his ATM card got stuck in the machine, somehow. The guard, who was told about it, promised to retrieve the card and hand it over to him the next day. But the person had to make a complaint and freeze his account when the guard denied to recall anything about the ATM Card.

Hence, to provide maximum benefit of the facilities, banks should see that people don’t experience such cases. Moreover, ATM machines should be checked regularly so that they function properly. Recently a bank cashier was there is the news for being found of illegally drawing bank money into his own account. Such corruption is being reduced but has not totally ended.

A newspaper article dated 23rd August stated that several banks had been getting away by only sanctioning loans but did not provide a copy of the loan agreement to the borrower. The RBI had made a norm regarding this but the banks had been flouting the norm and giving the loan agreement only on request. Such facts compel the common people to divert their views on such issues towards a more negative view.

Another aspect in which common man would like banks to morphise is the interest provided on the deposited money. The interest is so low that majority of people are opting for investing money in the share market, they often have to suffer great losses too. The other people who are either not much literate or abstain from taking risk, entirely depend on banks for investing their money. Banks should thus increase their rate of interest.

Despite these drawbacks, banking is a boon to the common man. While majority enjoy the facilities of banking, those people on whom such tragedies befall, are the ones who long for an improved system of banking. Nevertheless, we can not claim that we can spend our life without banking facilities. All these aspects have embedded themselves in our life and are part of our everyday life.


Group III
First Prize
Vineeta Soni, Class IX

Banking and Common Man

'BANK' as per the Oxford Dictionary means 'a public place' where money can be deposited, withdrawn or borrowed. Truly, bank is a place where a person can keep his savings and live peacefully and withdraw it as and when required. Banks to facilitate the needs of people have different types of facilities like depositing money in the bank, borrowing money in the form of loan, overdraft facilities etc.

2. Banking originated in the 18th Century in India with the opening of 'General Bank of India' in 1708. The oldest bank in existence is the 'State Bank of India' which was established as 'Bank of Bengal' in Calcutta. The first Indian owned bank was the 'Allahabad Bank'. The Reserve Bank of India' came into existence in 1935. After the Independence, the Reserve Bank of India was nationalized and it was owned by the Government of India. In 1949 an act was passed which enabled the Reserve Bank of India to look into the services provided by other banks.

3. In todays era, bank has become as important as the other basic necessities of life. As Bernar said "Those who are rich, they think love is most important but a common man knows its money". Truly, money has become necessary in todays world. So a common man to save his money, deposits into the bank and lives a relaxed life. Bank provides different types of facilities. Not only money, one can keep even precious articles, such as gold Jewellery etc. safe in banks. Banks provides lockers for such articles. To save money, one can open a saving account or a fixed deposits. Bank provides interest on the money which encourages people to keep their life savings safe in banks. Looking at the increasing and changing needs of the people, banks have also started providing additional facilities like loans - educational loans, home loans, agriculture loans, vehicle loans, business loans etc., overdraft facilities, Mutual funds etc. Every now and then schemes and plans are introduced to encourage people to invest in their banks. It also provides pension for old people.

4. Gone are those days when people had to wait in queues for 20-30 minutes to withdraw cash, 2-4 days to get their cheques cleared, 1- 2 days for demand drafts to be made to wait for long hours for their pass books to be taken by reluctant bankers. With fast needs of people, their growing demands, and provate banks like ICICI, HDFC etc. are coming up. The Government banks have also started providing better facilities to their people. Now the services rendered by them are comparatively faster than before. With changes in technology, advanced facilities are also provided to its customers. Now at a flick of card you can withdraw your cash from ATM. Internet banking that is e-banking and mobile banking have also come up. If your bank provides Mobile / phone banking you can even get your cheques delivered at your door step. Debit cards and Credit cards have also made out lives quite easy. Now we don't have tension of carrying too much Money with us. Just a small card serves the purposes. E-banking can help you to deposit or withdraw your money in which ever part of the world you are. ATM provides you cash at any day or any hour of the year. With the use of computers and electronic gadgets any problem regarding money can be solved for a common man by banks easily.

"Every Coin has two sides"

Similarly, some services provided by the bank should also be improved, Even today, in some banks the customers are not being properly attended and they are treated as if they are being obliged. Even today, there are delayed payment of cheques, late demand drafts, inconvenience in withdrawing cash etc. Every now and then, customers are disturbed by the banks by calling them and informing about the new schemes and plans which annoy the customers. If a person from other city, gets settled in another city, while opening a saving account needs to give a verification address of the previous city. Thus for clearing of verification, bank takes over a month which causes a lot of inconvenience. Even for old people, getting pension requires a long procedure and the inconvenience caused to them is often troublesome.

"Money is the sixth sense without which the other five cannot be used"

The increased need of money and poverty prevailing in India and the increased 'Man's greed' also forces a man to commit crimes such as theft. Thefts in bank have become a very common aspect. Hacking has become very popular. A person good at hacking (that is- a hacker) often hacks the account of other people and transfer all the money into his account. This has now-a-days become a very serious problems, threatened by which a person sometimes hesitate to deposit his money into the bank.

5. To end up with, in a nutshell, banking is a service rendered with an object to help common man. It has become a basic necessity in the life of common man. Banks previously were concerned with withdrawing, borrowing or depositing money but as per the needs of people it has altered itself and no wit provides every help related in terms of money. The common parlance followed by bank is 'service with a smile'. Common man has now learned to link itself to the bank and bank to the needs of common man. Banks are really good service providers for people who want to save their life savings. There is a bit of lenience in services provided by the banks but after all nothing in this universe is perfect. In short, one can conclude that 'banks are the real service provider as per the needs of people in this country."


Group III
Third Prize
Tejasi Satish Atre, Class XII

Banking and Common Man

I SEE A BANK EVERYDAY AND GO ON WONDERING IN MY WAY;
LARGE NUMBER OF PEOPLE, WAITING PATIENTLY IN A QUEUE;
ITSELF DEFINING THAT IT ADD'S TO PEOPLE'S LIFE, BEAUTIFUL HUE ;
IT GIVES LOANS TO FARMERS, AND FOR EDUCATION;
RELIEVING PEOPLE FROM THEIR, WORRIES AND TENSION
BANK IS A BLESSING FOR MANKIND, AND BY ITS RULES WE MUST ABIDE

As a corporate social responsible citizen, banks, under the Government of India undertaking, have been serving common man since their inception and as part of their core founding principles. Banks today, epitomize a fine blend of socially and economically responsive banking. It is evident from a slew of initiatives, banks have undertaken such as providing self-employment training to rural-youth, address poor drinking water facilities and providing Medical facilities in the countryside.

1) RURAL DEVELOPMENT

Various Banks have sponsored a number of self employment training institutes under schemes like "Indian Rural Development Planning (i.e. IRDP)" which provide training to rural youth as well as women. Under schemes like 'Jalayoga' the banks have started a number of projects in order to provide pure and safe drinking water facilities to the people living in rural areas. Banks also extend their support to organizations like "Society for Educational and Economical development" (SEED), working for the welfare of socially marginalized children.

Banks also sponsor various social service activities like organization of blood donation camps, assisting physically and mentally challenged persons, helping poor students, honouring teachers and the best Government Schools.

2) Enterpreneurship for Woman -

Banks provide self-employment training to women. Various banks have started 'Mahila Banking branches as well as 'Mahila Banking divisions' which are benefiting lots of women across the country. These banks provide training to the women for their jobs thus making them skilled and confident in their work.

Banks develop a sense of using money cautiously among people so that people save their excess money by depositing it in the banks and plan to use this saved money for their future.

Some banks have also started some scheme for students through which the students can also have their own account in a bank and develop the habit of saving money instead of wasting it. Students also realize the importance of money with the help of banking.

3) Commitment towards Customers -

Banks have brought up a booklet on 'Code of commitment to customers', for the customers as well as the staff for understanding the fair code used as a standard benchmark for customers.

4) BANKING FACILITIES -

Banks provide a lot of Facilities to common man. These facilities include, housing loans, loans for vehicles, personal loans, educational loans etc. All these loans prove greatly beneficial to common man for fulfilling his basic as well as other necessary requirements. Educational loans given by the banks are a boon to students who wish to study abroad as well as in India for the courses which require much more money than the students have.

Banks also provide loans to farmers for buying land or any other agricultural equipment.
Apart from these, Banks provide services and credits to SC/STs.

5) Security Services -

For security in banks people have been provided with saving accounts, recurring accounts and fixed deposits. Modern security equipments have been introduced in the banks.

Now-a-days, several banks have also started 'Internet Banking Services' and 'Anywhere Banking' services with the help of which people can get the whole information about their accounts via internet even when sitting at home.

6) Right to Information -

Under the 'Right to Information Act, 2005' Banks have started a new 'Right to information' outfit by which people can get the desired information and there is transparency in the banking process.

7) BANKING PROCEDURES -

After taking a survey of all the banking processes, simplification has been made in several procedural norms such as documentation of housing finance.

Banks also keep a strict vigil to avoid any unfair practice in the bank and strictly prevent fraud.

Banks are in real sense greatly benefiting and helping common man in every aspect of his life.

But apart from all these facilities, Banks must also take a step forward in fulfilling their commitment of providing rural areas with the needed infrastructure and providing funds to the Government schools to have modern infrastructure and new study equipments.

Banks should also assist doctors in opening new clinics in rural areas through schemes like 'Rural Clinical Services', as the people in rural areas face a difficulty of inadequate Medical Facilities as the hospitals from the villages are also at far-away distances, which creates problems during an emergency.

Although banks have started a large number of ATMs, but they must enhance the strength of their ATMs and open them at off-sites and general places like railway stations for customer convenience.

Banks must also reduce the rate of interest as sometimes it becomes very difficult for a common man to cope up with the loan he has taken for fulfilling his requirements and on the top of that, to tackle with the rate of interest he has to pay.

*8. Again, the facilities like 'Life Insurance Policies' are very beneficial for common people. And the 'Pension' provided to the retired people is a boon for them as with this pension as their own income they can spend life more comfortably and peacefully.

Thus, Banks are in real sense

SERVING TO GROW

AND

GROWING TO SERVE


Group III
Special Consolation Prize
Nupur Khare, Class XII

Banking and Common Man


Scene 1 ( An year ago)

I witness a poor illiterate farmer of Rudauli village, a remote village of U.P. at the bank. He is here to send money to his son Ram who is studying at G.K. Raisoni, Nagpur.

Farmer Bholu : Saab, Mujhe apne bete ko 10,000 rupaiyya bhejna hai, ek draft banva dijiye. Kitne din lag jayenge ?
(Sir, I have to sent money to my son Rs.10,000.00. Please get a draft for me. How much time will it take?)

Bank Manager : Bholu bhai ! Bees din to lag jayenge (Bholu, it will take at least 20 days)

Scene 2 ( After 4 months)

I saw Bholu farmer with his friend. In his hands were few brochures of a computer company. His friend works in a bank (computerized branch)

Bholu Farmer : Hamare bete ne kaha hai ki ek computer khared lo ! Ab net se hi paisa bhej dena. (My son has advised me to purchase a computer. He says that I can send money through the internet)
                                          
Bholu and friend walks away after purchasing a computer. The computer is installed, but Bholu does not even know how to press a button.

Scene 3 ( After 10 months)

I met Bholu beaming. So I asked him compassionately.

Me : Bholu bhai ! Ab to tumhe computer chalan aa gaya hoga?
        (Bholu, now you must be able to operate the computer?)

Bholu : Arrey, memsahib, ab to ye hal hai, ki agar aap keyboard bhi hata do, to hum mouse se chala lenge. Hum to  internet bhi lagwa rahe hain.

(Now, Madam, it is the situation that even if you take away the keyboard I can operate the computer with                   the mouse. I am getting an internet connection too.)

This is Banking and Common Man

Banking is the backbone of any economy. No business, trade, commerce can flourish for a long time without the aid of the banking. Banking in some or the other form has existed even in ancient times. When Jesus was against the money-changers in the temple of Jerusalem, he was protesting against the evil practices of banking at that time. When Prophet Mohammed forbade the use of usuary, he was condemning the evil practices of the then existing bankers who sucked the last drop of blood from their helpless victims through exorbitant interest.

The commercial banks are a very important institutions of finance in Indian Economy. A banking Industry is the one that accepts the deposits of money for the purpose of lending, repayable on notice and withdrawals through cheque, draft etc. Commercial Banks deal in money there by regulating the economic activities. Banks also earn margin of profit by lending these money. Banking service especially are of great importance and usage to the trading persons.

The banks can be mainly classified as - Commercial Banks, Central Banks, Co-operative Banks and Specialized Banks. Commercial Banks are those which carry the banking business of accepting the deposits of money for the purpose of lending. Commercial Banks are mainly governed by the Indian Banking Regulation Act of 1949. Commercial Banks are further classified as Public Sector banks in which the govt. has the major stake and the emphasis is more on the social objectives than that of profitability. Examples of leading public sector banks include Punjab National Bank, State Bank of India. Private Sector Banks are owned, controlled and managed by private individuals and they are free to operate as per the market forces. Examples of private sector banks include - ICICI bank, HDFC bank etc.

Central Bank is the main bank of any country. It controls and regulates the working of other banks. It is also the government bank and is responsible for the credit policies of nation. The Reserve Bank of India is the Central bank in our country. Specialised bank include Exports and Imports bank, foreign exchange bank catering to the need of these specialized services. Co-operative banks are governed by the state co-operative Act. The main aim of such banks is to incultake the habit of saving among the rural people. They are the main source of rural credit and agricultural financing in our country.

Functions of bank include a variety of services. Banks facilitates the remittances of funds. i.e. a person can transfer any amount of money from one place to another through the interconnectivity of the various branches of bank. It not only saves time but is also cheaper method of funds transfer. Banks also accept the deposits of money as they are both the borrowers and lenders of money. As borrowers they borrow money and as lenders lend money to the needy. Money in the banks can be deposited through saving account which restricts the number of savings as well the amount, current a/c. from which money can be withdrawn without any prior notice. Banks pay the specified rate of Interest which is decided by RBI. Public deposits are of higher interest with fixed and long period. Another function of the bank is facilitating the cheque transactions. Banks ease a lot to their customers by collecting the cheque that has been drawn on other banks. Cheque is the most common and frequently used instrument in banking. It is inexpensive medium of exchanging money. Cheques are usually of two types i) bearer cheques - which can be encashed at the bank counters immediately and ii) crossed cheques which are to be deposited in the payees account only. In addition to all these services banks also offer various allied services to the customers. For example payment of insurance premium is done by the banks on the instructions of customer which saves customer to stand in a ques and wait for hours. For nominal charges Commission, Interest etc. are all taken care by the banks.

This is the situation after the nationalization of banks. Earlier the banks were simply an institution of depositing money and credit facilities serving to only a particular section of society (rich intellectuals). But with the nationalization banks have transformed their roles far from profitability to social objectives. They are helping in strengthening the economy and have become from Section Bank to Mass Bank.

At the time of Independence of our country our farmers were in a pathetic situation. As the time gestation between the sowing of a crop to the realization of money is quiet long, farmers borrow money from different resources to meet their initial needs of fertilizers, seeds and other family expenses of marriage, death and other ceremonies.

Before the nationalization the sahukars and money lenders used to charge a very high rate of interest on the borrowing. Not only that they manipulated the accounts. To keep the farmers in debt trap but the situation changed after the nationalization. The NABARD was set up on an apex body to control and regulate the activities of agricultural financing. The Green Revolution was the major harbinger of such drastic changes. As a result many co-operative banks, SHGs etc. have been set up to provide the funds to the people especially to the poor people at low interest rates. Self Help Groups have emerged to fill in the gap between the earlier and present credit system. Initially there will 5000 SHGs and today it has crossed the tally of 400,000. They are a part of mini credit programmes. In SHGs the small amount is taken from each member and from the pooled money the funds are given to the needy at low rates of interest and with repayment in easy instalments. It has also empowered the women. There is a poor women bank in Tamilnadu with the name of Kutumbshree. All this financial aid has helped a lot to the farmers (common person) which in turn have resulted in the growth and prosperity of nation. Government has taken various steps to eradicate the poverty and unemployment and banks are acting as the strong pillars for the successful implementation of these.

Kissan Credit Cards, PMRY etc. are only few to add this list. RRBs, DIR are some of the milestones in the path of the rural banking.

At the time of independence, the contribution to GDP by banking sector was only 15 - 20 % and today this section is contributing to 57.6% to GDP according to the latest information.

Banks are now serving to the common man with their full capacity. Meeting the various diverse needs of the customers through different methods, banks today seem to be such an important part of the economy without which our economy is sure to be paralysed.

Today it is the era of modernization. In seconds an equipment becomes outdated. With the growth and advancement of IT Sector, the drastic changes have come in the Banking system also and the latest wave in the technologies is E-banking.

E-banking or internet banking is the latest services offered by banks. E-banking means only person with a computer and internet connection can get connected to the websites of different banks and can perform the transactions. There is no human operator to respond to the needs of the customer. They have to choose the type of services and the list of options is displayed.

E-banking has probably revolutionized nearly the whole banking industry. Common public feels more safe and secure as they know that in direct contact with the banks and availability or transfer of funds to other person is available at any hour of the day. Various examples of E-banking services include ATM, EMT, ETF, POS etc.

E-banking not only is helpful to the customers but also the banks. For customers it is a boon, since they are allowed to do the permitted cash transactions while travelling in plane or from the office or from the home. It also ensures the safety of funds and the customers are saved from the risk of taking cash with them. Now it is the era of plastic money. From the traditional 'Chandi' coins to plastic money itself describes about the advancement of technology.

From all the above discussion one thing is for very sure that banks are for the common man and will be for the common man.

What is a common man most interest in banks? His funds should be safe and secure. He should be able to transfer and remit it easily, speedier and with low transaction cost. He should be able to operate from any place and any hour of the day. So this is what the banks today are doing. Banking services are diverse in the nature as they are serving the multifaceted needs of the customers, from a simple deposit of money to the transfer of money across the world.

So this is the banking today and not only this for helping the customers banks have come up with very nice policies. Take the customer charter policy for example. It estimates the time in which the particular function of the bank can be performed, however, it does not ensure the quality of the services.

In case of any grievances of the customer due to the deficiency in the services rendered by bank, the person can contact Bank Ombudsman within the period of two months and he shall get redressed for them. Mainly deficiencies of the banking services include late payment of cheques, drafts or their non-payment etc.

A committee at the Reserve Bank has also advocated the Clean Note Policy of RBI by it. RBI ensures to maintain the good quality of notes to the common public. There are exchange counters in nearly every bank from where soiled and torn notes can be exchanged for new ones.

So banks has move from profitability to social objectives, section bank to people bank and from the rip to the backbone of the economy.

By the time, I am writing this, Bholu farmer may be in conversation with his son on mobile phone at his farm house.

Scene 1 ( today)

Bholu Farmer : Beta, maine bank phone karke 20,000 rupiya tumhare khate mein bhijva diya hai. Jara pata kar ke batao ki pahunche ki nahin ?                               

(Son, I have made a call at my bank and had transferred Rs.20,000 to you’re account.  Please check and  inform me.)
                             
(Ten minutes later Ram calls from Nagpur -)                            

Ram : Pitajee, paise pahunch gaya hai. Aap nischint rahiyega. (Father, I have received the money. You please be relaxed)

Banking Transactions have today become speedier, safer, low cost (cheaper) and facilitates the common man to access to banking from Any Where and at any Time.


Group III
Consolation Prize
Akshay Rathi, Class XI

Common Man and Bank

A Bank is a commercial or a state owned institution which provides financial services such as issuing various forms of money, keeping money as deposits, rendering money as loan to enterprises and individuals and processing financial transactions. Banking service is unique in sense that the diverse human needs is multi facet and thus benchmarking purpose cannot be done.

The banking sector started in the first decade of the 18th century when the General Bank of India came into existence in 1786. The State Bank of India is the oldest bank in the country. The Reserve Bank of India was formed in 1935 for regulating Indian banking sector. The RBI was formed by recommendations of the Hilton Young Commission which gave its report in 1926. In 1948, RBI was nationalized. By 1960, India's banking sector had grown to an extent that it became a tool for facilitating the development of Indian economy. The Government of India under leadership of then Prime Minister Mrs. Indira Gandhi took the decision and nationalized 14 largest commercial banks with effect from July 19, 1969. In 1980, 6 more commercial banks were nationalized. In 1990's Narismha Rao govt. embarked on policy of liberalization and gave licenses to start new banks and new banks developed which were called "New Tech Savey Banks". Some banks such as HDFC, ICICI bank developed due to thus. Thus this along with rapid economic growth kickoffed development of banking sector in India which led to a retail boom.

Presently India has 88 commercial banks, 29 private banks, 31 foreign banks and 28 state owned banks. There are different types of banking such as retail banking, business banking, corporate banking and investment banking. A bank raises funds through attracting depositors, borrowing money from inter bank market and raising money instruments.

We recognize those days when we had to wait for 20-30 minutes to get cash withdraw, 2 days to get cheque book, 4 hours to get bank overdraft, 1 week for local clearing, 4-6 week for outstation clearing, face the bank staff who was reluctant to update pass books. But today situation has changed drastically. With a flick of ATM card we get cash, if bank has phone service, we can get cheque books delivered and cheques collection at doorstep. It now takes 3 days to get local clearing and 5 days for outstation clearing.

Since 1969, when banks were nationalized, banks have contributed immensely towards development. It is now easier to get educational loans, so children can pursue higher education even in abroad, banks provide loans for education at low interest rate, now children's education is not a burden on parents. Similarly banks provide loan at low interest rate for home loans, car loans, personal loans, consumer loans, business loans, writing capital loans. Few years back building house was a matter of dream for everybody but now one can get a loan easily and fulfill his dream. Bank also provides loans for business activities, for starting new business, so that continued expansion of business can be ensured. Bank also provides loan against export contract. For import contracts, too if there is not sufficient capital, banks provides loan.

The 2nd sector of banking is the money it accepts as deposits, on which it pay interest. There are different types of deposits like fixed term deposits, recurring deposits. In recurring deposits you are required to pay fixed money for certain period and after certain period you get a lumbersome money back. Current Account deposit is also another type wherein you deposit whole amount in bank and make payment to people as and when required. Bank also provides credit cards, using this we can purchase things, do shopping there is no need to carry money first we have to deposit some money in bank for which it gives credit cards. Nowadays pension account deposit is also there where in bank collects pensions and gives to us as and when required. It also provides locker system wherein we can keep all our jewellery, gold and silver items safely. There is a protection from bank, all we have to do is to pay some money for this purpose. Banks also have their ATM wherein we can get cash readily as we flick our credit card.

Bank is nowadays acting as a role of Insurance agent. We can make payment by cheques from one city to another city once the local clearing is done and we need not pay the commission to bank. This facility is called multiple cheque facility. Bank also provides loan to unemployed to help them start a new business or get a service. Bank provides loan to senior citizens at low interests rate and to deposit of senior citizens it gives them high interest rates.

RBI formed in 1935 has about 22 regional offices in India It is the main banking authority in India which regulates banking sector. It's functions and objectives as a) Monetary policy - It prepares, controls, regulate monetary policy, b) It controls price-rise c) It regulates and supervises financial system, d) It ensures that adequate credit flow is there to the productive sector, e) it provides loans to government, f) It decides the money control and money fllow g) After every 6 months RBI decides new credit policy in which it decides the interests on loans and deposits, h) It ensures development of all through it's policies. It frames all policies for banking sector.

Through Prime Minister Rojgar Yojna & Prime Minister Shahari Vikas Yojna and other schemes bank provides a loan of Rs. 100,000 to employed people. If a company's current account deposit is there in bank, all salaries and wages can be paid through it. All tax payments can be done through bank. Some bank also collects payment of electricity bill etc.

A bank generates profit as difference between that of the level of interest paid by bank on deposits and other sources funds and the interest it collects as interests allowed on loan and other rendering of services. This is referred to as the spread between cost.

Government owned banks or state owned banks have 75% of total assets of all banks, commercial and private banks have 18% of assets and foreign banks have 7% of total assets of all banking sector in India.

The banks also provides loans to government for carrying out various welfare programmes. Banks nowadays can collect payments from customer on our behalf. Due to globalization there is a stiff competition between banks as to who can have maximum customers.

The Reserve Bank of India has set up a committee called "Committee for Procedures and Performance Audit of Banking Services" under Shri S.S. Tarapore former governor of RBI to see on how banks can provide better services to consumer and common man.

Bank is an indispensable tool for the growth of our country. Banking sector which accounts for most of the tertiary sector together contributes 48% of national income. No person can neglect and deny the importance of bank in developing the country and achieving high rate of economic growth. The RBI is still trying to achieve high efficiency and better infrastructure of banking sector so as to enhance it's utility to different consumers. In era of 21st century Bank have to play an important and central role in shaping the future of the country.


Group III
Consolation Prize
Pawan Sarda, Class XII

Banking and The Common Man

In today's modern business environment, it is difficult for the entrepreneurs to generate funds by themselves. There is a need for some institutional framework which provides money to the business house for investment. Banks are the institutions which cater to this need. In addition to providing money, banks also ensure safety of people's fund in the form of deposits, maintaining their liquidity and providing it back whenever desired. The common man, today, relies on the banks to fulfill a variety of his needs.

History of Banking

Banking has its origin right back to the Vedic periods. The system and working of the banks has evolved over the years. Lending money and financing was perhaps replaced by banking in the times of Manu, the Hindu writer, when he mentioned about the various rates of interest in his works. In the Mughal period indigenous financing houses worked well in the matter of financing, foreign trade and commerce and mobilizing of funds. The East India Company in India set up three banks in the first half of the nineteenth century, namely, Bank of Bengal, Bank of Bombay and Bank of Madras which were also called as Presidency Banks. These three banks were merged in the year 1921 to form The Imperial Bank of India. The Reserve Bank of India came into existence after the RBI Act 1935 was passed. The State bank of India took over the Imperial Bank after the passing of the SBI Act 1955. In the Swadeshi Movement, many banks with Indian Management emerged like Punjab National Bank, Bank of Baroda, etc. In 1969, 14 banks were nationalized to serve various purposes. In April 1980, the government took over 6 private sector banks, to make it to a tally of 19 nationalised banks (two of them merged later)

Types of Banks

Banks in India belong to the following sectors

i) Public Sector Banks - Banks like the State Bank of India, Regional Rural Banks and 19 Nationalised Banks constitute public sector banks.

ii) Private Sector Banks - Private owned banks or foreign banks belong to private sector e.g., Axis Bank

iii) Some banks are co-operative banks, catering mainly to the needs of villages and specific sectors

iv) Development Banks - Many developmental banks like NABARD, ICICI, IDBI (Industrial Development Bank of India) etc. have been set up for promoting development in various fields.

Functions of the Bank

A) Primary Functions

1) Accepting deposits - The primary functions of the bank is to accept the money from the people and deposit it in their account. It can be done in the form of fixed deposits, savings deposit, recurring deposit or current deposit. banks provide interest on the deposits according to the length of the duration. This ensures safety of the public's funds as they need not bear the risk of keeping their earnings with themselves. They keep getting interest on heir savings. So banks mobilize the savings of the people. The depositors can withdraw money as per his / her requirement.

2. Lending Money - Banks perform this second important function of lending funds to the interested users / borrowers in the form of cash credit, discounting of bills of exchange, overdrafts, demand payments etc. They charge interest on the money borrowed by the people according to the purpose of its use. Thus banks serve as bridge between sowers and investors and lend the money when it is put to the right use.

B) Secondary Functions

1) Agency Function

i) Payments - Banks perform various agency functions on behalf of the customers like payment of insurance premium and other bills directly to the creditors.

ii) Receipts - Banks on order of customers, directly collects cheques, bills and money from debtors and deposits it into the account of the customers.

iii) Underwriting - banks sometimes undertakes underwriting of shares.

iv) Sale and Purchase of Securities - Banks enters into various transactions for the customers because of its vast expertise in the field of finance.

v) Remittance of money - Banks easily remit the money of the customers to other places as per their requirements.

vi) Foreign transactions - In other parts of the world too, banks provide the funds to the customers, if they require, thus ensuring the safety aspects.

2. General Utility Services

i) Safety Lockers - Bank provides safety lockers where valuable can be stored by the customers in the safety vaults.

ii) Transportation - Businessmen when they send consignments, ask the consignee to pay at the bank, get the receipt and then the delivery of goods.

iii) Financial Project Reports and information on financial developments

iv) Economic Surveys - Banks conduct economic surveys and publish statistics to know the level of economic activities in operation.

v) Issuing traveller's cheque, letters of reference for the consumers.

ROLE OF BANKS IN ECONOMIC DEVELOPMENT AND THEIR SOCIAL CONTRIBUTION

As we have seen banks provide a large array of functions and are responsible for a number of monetary and non-monetary transactions. We will now have a look into their social side and influence on the life of the common men.

1. Capital Formation

Since banks do not let the earnings of the savers rest idle, they act as a link between owners and the investors and provide adequate funds to the investors, to assist in capital formation. Thus they promote production, supply and boost the overall economy.

2. Innovations

Since they provide required capital to the producers, producers tend to make new innovations and thus the common men is benefited.

3. Increase the demand

By providing credit facilities banks increase the aggregate demand in the economy, which leads to fuller employment of resources and more productivity.

4. Monetary Policy

Banks are a tool to the monetary policy of the government. They change their policies in accordance with the policy of the government.

5. Investment - Friendly Interest rate

Banks charge quite low rate of interest on amount borrowed for investment purposes.

6. New class of entrepreneurs

Banks encourage the common men to borrow money and start entrepreneurship, thus leading to more economic activity.

7. Rural development

By providing loans and making investments in the rural areas, banks help in overall balanced development of the nation. All kinds of people are at an advantage.

8. Priority sectors

Banks charge minimal rate of interest on loans for agriculture, small scale industries thus ensuring balanced economic growth and availability of money to the poor.

9. Employment Generation

Banks provide special schemes and loans for self employment and encourage the unemployed people.

Thus, we can observe that banks are not merely the institutions for depositing or borrowing money but also serve as the life-blood of economic activities. They are essential to the development of society and for every common man as well.

The number of branches of banks is today more that 68,500 throughout the nation. In 2005, there was on bank per a population of 16,000 as compared to the ratio of the bank per 55,000 people in 1969. The percentage of bank credit to the priority sector has gone upto 40% in 2005 of the total credit given. Thus banks are playing a major role in bringing sectoral balance in the economy. Unlike the low percentage of banks in rural India in 1969, it is almost 50% in the year 2005. Banking thus bring regional balance as 75% of population lives in the villages. Amount of depositing has increased from somewhere about Rs.4,50,000 crore in 1969 to Rs.17,50,000 crores in 2005. Also the amount of lending by the banks has increased from around Rs.3,50,000 crores in 1969 to Rs.11,00,000 crores in 2005. Hence, it is evident that banking in India is growing at a rapid rate and providing lot of facilities to the common man.

MODERNISATION

In this new era, banks have become modernized in various aspects. They continue to improve significantly.

1. Personalised services

Banks have started providing personalized services according to the exact queries and requirements of the consumers. Consumers are paid special attention by the banks.

2. Computerisation of works

i) e-banking - Online banking or electronic banking is a new option available to consumers who can access their accounts via internet and make transfers or payments electronically. This concept of anywhere banking has made life very easy for the consumers who can make payments and deposits at a click of the mouse.

ii) ATM - Automated Teller Machines have become common in many parts of the nation. People can draw cash from their accounts in the bank from the 24 hours working ATMs spread across the length and breadth of the nation.

iii) Debit and Credit Cards - Debit and credit cards have again added to the convenience of the customers, who can make payments using these at a reasonable rate of interest. This has reduced the element of risk involved in carrying cash to all places.

3. Diversification

Banks have diversified their field of activity into newer arenas.

i) Mutual Fund Investments - As the banks have expertise in financials matters, they make mutual fund investments on behalf of customers, if ordered to do so.

ii) Housing - Banks also provide housing loans to the needy.

iii) Education - Special schemes for education related loans are provided by the banks. These loans are at a reasonable interest rate.

SCOPE FOR IMPROVEMENT

Banks in India still need to improve a lot. Their absolute number is not enough. There is a need for increasing the profitability of these banks. There are problems of bad debts etc. services quality requires to be improved. Many states need more banks ( e.g. North-East Indian States) Banking can improve a long way if dealt with properly.

CONCLUSION

The RBI and the commercial banks of India play a very significant role in economic growth and development of the nation. They implement monetary policies of the government, curb price rise, increase productivity by higher capital formation increase the aggregate demand and help in social development as well.

Banking has become a way of life for the common man. It depends upon the bank to perform multitude of tasks on his behalf. Its economic life is governed by the banks. On the other hand the banks are also dependent on the common man because it is for him only that they function and derive profits from. The inter relationship between the bank and the common man is inevitable. It would not be wrong to say that the success of the common man depends upon the bank and that of the bank depends upon the common man to a large extent. Banks have raised the standard of living of the common man. In short, life has become much more easy than it would have been in the absence of banks

 

 
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