Friends, inwards our previous post, nosotros convey discussed virtually the introduction in addition to characteristics of Indigenous Bankers. Today nosotros shall come across the defects inwards Indigenous Banking. Happy Reading.
- Indigenous bankers combine banking in addition to non-banking activities. Non-banking activities may quest committee way in addition to speculative activities. This results inwards their inability to concentrate on banking activities.
- Interest rates charged past times them are really high, ranging betwixt 18-36 per cent p.a. At the fourth dimension of disbursing loan they too deduct involvement inwards advance. They may accuse brokerage inwards add-on to interest. All these are additional costs to the borrower.
- Indigenous bankers keep accounts inwards the traditional system. In the vernacular language, Accounts are neither audited nor published.
- There is really lilliputian command in addition to rule over the operations in addition to activities of the indigenous bankers.
- Different indigenous bankers locomote independently in addition to separately without whatever coordination alongside them. Their activities produce non come upwards nether the purview of the Reserve Bank of India.
- The operations of the indigenous bankers are non based on audio principles of banking. Although they are expected to bargain inwards hundies, they genuinely bargain to a greater extent than inwards cash.
- Contribution of indigenous bankers to the farming shape is negotiable. They convey concentrated their activities to a greater extent than inwards cities in addition to towns.
In spite of these drawbacks indigenous bankers, are making their presence inwards the fiscal arrangement of our country.
Suggestions for reforms : Following are suggestions offered for improving their business office in addition to making their operations to a greater extent than effective.
- A arrangement of licensing of indigenous bankers must last introduce.
- Indigenous bankers must last brought nether the command of Reserve Bank of India.
- Their operations should last to a greater extent than regulated in addition to made to a greater extent than transparent past times the RBI.
- RBI must inspect the records, books of indigenous bankers, periodically.
- They should recognize their banking line organization on modern lines in addition to divide their banking in addition to non-banking activities.
- They should keep accounts inwards a systematic in addition to scientific mode in addition to larn them audited regularly.