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Indigenous bankers are firms and associations that perform the normal functions of a banking system. They accept deposits and issue loans to the public. They are also associated with the discounting of bills of exchange or Hundis. The indigenous bankers have been an important part of the banking system in the country from the ancient times.
Until the mid-nineteenth century, the native bankers have been an important source of finance, not just for the business houses and firms but also for the local governments. With the advent of the British rule and the establishment of many nationalised banks, their role was highly diminished in the financial sector. After independence, with the growth of co-operative and commercial banks, their role further shrunk. Still, in many areas, the presence of native bankers can be seen, especially in the western and the southern part of the country.
The native bankers can perform their functions in three different ways- dealing only in the banking business, combining banking business with trade and dealing mainly in a trade with limited banking business. They are differentiated from the money lenders as they perform all the functions that a bank performs- accepting deposits, lending loans and discounting bills of exchange, unlike the moneylenders who concentrate only on lending loans.
The main functions of native bankers are:
Accepting deposits- The native bankers accept various kinds of deposits just like the modern banking institutions. They provide the investors with a nominal rate of return.
Lending loans- Another important function of native bankers is to provide loans to the public by accepting the property and other collateral. The bankers also provide them loans without any collateral or conditions based on the credentials and knowledge about the people.
Transfer funds- The bankers are also involved in the transfer of funds to people. They are involved in the discounting of bills of exchange.
Thus the native and indigenous bankers were the backbones of the economy. Still, they are an important segment in different parts where people have no access to proper banking services.
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