BANKING SYSTEM IN INDIA AND LOAN SCHEMES OF GOVERNMENT

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We might be keeping our savings under the pillow or in the Gullak. But what happens? 

We would always be worried about its safety. Someone may steal it or we may be tempted to use the money or others may borrow money from us. 

Also money saved at home does not grow. 

The best way to save is to deposit the money in a bank account. While small amounts can be kept in a Gullak, it is wiser to keep our savings in a bank as money kept in a bank is safe. 

Apart from safety, banks pay us interest on our deposits, so our money grows in the bank.


Banks can be classified into various types such as 

Central Banks - Reserve Bank of India (RBI) 
Commercial Banks - Public Sector, Private Sector, Foreign Banks and Regional Rural Banks
Cooperative Banks

RBI being the central bank is responsible for printing currency and managing money supply in the country. RBI also acts as a banker to the government and all other banks. 

A commercial bank runs with the purpose of earning profits whereas cooperative banks are run by an elected managing committee and work on a no-profit no-loss basis. Commercial banks can be broadly divided into public sector, private sector, foreign banks and Regional Rural Banks.


A bank performs two main functions, namely

i. accepting deposits 

ii. giving loans


Banks open savings account, current account, recurring and fixed deposit accounts according to our needs and pay interest on our deposits. The deposits accepted from public are utilized by the banks to give loans to the businessmen and people to meet their uncertainties by providing facilities in the form of bank overdraft, cash credits and loans. Banks also provide other facilities like locker and remittance facilities, collect salary and similar periodic collections on behalf of the customers. Banks also issue credit and debit cards to help people transact without cash.


Banks provide loans for various purposes like 

housing, 
education, 
agriculture and related activities, 
starting a new business, 
consumption loans, etc. 

Thus, banks meet all types of loan requirements. 

Some of the most significant government loan schemes for small businesses in India are 

MUDRA Loan under Pradhan Mantri Mudra Yojana and 
MSME Loan in 59 Minutes. 

Shopkeepers, traders, artisans, fruit/ vegetable vendors, small industries are eligible to avail a MUDRA loan ranging from Rs. 50,000 to Rs. 10 lakh. 

Under the MSME Loan scheme, business loans ranging between Rs. 1 lakh to Rs. 5 crores, if eligible, would be approved within the time span of just 59 minutes.


Kisan Credit Card (KCC) Scheme provides instant and short term credit to farmers to meet their crop production as well as post-harvest expenses. Borrowers are issued an ATM-cum-Debit card to enable them withdraw money from KCC accounts through ATMs. Insurance coverage is also provided for protecting against the loss of crops due to any natural calamity, pest attacks. 

Under PM Kisan Samman Nidhi Scheme, all farmers are given Rs. 6,000 every year per family as their income support.


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