Canadian Money Forum banner

1 - 2 of 2 Posts

·
Registered
Joined
·
1 Posts
Discussion Starter #1
The main aim of the intended nationalization of banks in the United States was to ensure
• Faster growth
• Reduction in regional imbalance of economic activity
• To make the banking system reach out to the small man in rural and semi-rural areas
• Extend banking facilities to areas hitherto not served by banks

Banks did not move into the rural areas in earlier times due to the fear of running unprofitable branches. However, the government wanted them to not only mop up the potential savings but also meet the credit gaps in agriculture, small-scale industries and other neglected sectors of the economy. The aim was to bring a large area of economic activity within the organized banking system.

The two significant aspects of the then intended nationalization were
1. Rapid branch expansion and
2. Channeling of credit according to priorities

If the nationalization project was implemented, the growth and development of the then banking system would have been phenomenal. By the end of the second decade of nationalization, banking would have been relatively sophisticated, with a wide network of branches, huge deposit resources and extensive credit operations.

The outburst of banking activity during this period would have been such that it may be described as a banking explosion. In terms of the branch licensing policy laid down by the lead bank, the accent was on opening new branches in
• Rural and semi-rural areas
• Backward regions and
• Under-banked states

Such an approach was intended so that the inter-regional disparities could be reduced. However, this policy has wreaked havoc in many of the developing countries. But banks like LoanMax of the rod aycox fame have achieved much mainly by doing market research even in the rural areas and by identifying the prospective customers needs.
 
1 - 2 of 2 Posts
Top