Indigenous Bankers Objective Type Questions (1 Mark)
The indigenous bankers are more financially:
(d) None of these
Sahukars and Mahajans do not accept deposits from:
(d) None of these
Indigenous bankers play a vital role in the ………….
(c) Urban areas
(d) Private Sector
The indigenous banker’s charge: (UP 2016)
(a) Lower rate of interest
(b) A reasonable rate of interest
(c) Higher rate of interest
(d) None of these
(c) Higher rate of interest
The indigenous bankers are the oldest institution providing:
(a) Insurance Facilities
(b) Loans Facilities
(c) Locker’s Facilities
(d) Banking Facilities
(d) Banking Facilities
Indigenous Bankers Definite Answer Type Questions (1 Mark)
What is called indigenous hankers in Chennai (Madras)?
Which bank does not accept small deposits?
Which committee defines an indigenous banker or banks as an individual or private firm receiving deposits and dealing in hundis of lending money.
The Indian Central Banking Enquiry Committee.
Indigenous Bankers Very Short Answer Type Questions (2 Marks)
Who is called a money-lender?
Money-lender is also called Sahukars or Mahajans. Sahukars or Mahajans only provide loans to the borrowers. They do not accept any deposits from the people. These people utilise their own capital in granting loans to people. Generally, Sahukars and Mahajans do other business along with this money lending business.
What is the meaning of indigenous bankers?
Indigenous bankers are persons or institutions which provides the loan, discount hundis and accept deposits from the people. Their area of function is mostly in towns or big villages. The indigenous bankers also provide functional assistance to Sahukars and Mahajans.
Give any main functions of indigenous bankers.
- The modern banks have not been able to extend their network in rural areas and the financial requirements of that area are met by indigenous bankers.
- Indigenous bankers issue and discount hundis. They also give a loan on the basis of hundis.
Write any four demerits of indigenous bankers. (UP 2019)
- A high rate of interest
- Inadequacy of funds
- Fraudulent Practice
- Not efficient.
Indigenous Bankers Short Answer Type Questions (4 Marks)
Why indigenous bankers are important in India?
The modern banks have their network mostly in the cities and the desired development of these banks in the rural areas has not been fulfilled. India, being a country of villages, its major population lives in villages. The main business of villagers is agriculture. The financial needs of the agriculturists are met by the indigenous bankers and moneylenders because we do not have modern banks in. every village. It is estimated that 90% of the agricultural needs are met by indigenous bankers.
The Indian farmer, being poor, needs money after very short intervals. Sometimes they need money for seeds and fertilisers to pay revenue (Lagan) and also for their personal needs etc. Only indigenous bankers can give a loan at short intervals and without much paperwork. When the farmers sell their crops their financial position is good but after sometimes they have to depend on moneylenders or indigenous bankers for their financial needs. Thus, we can say that indigenous bankers play a vital role in the agriculture of our country.
Distinguish between indigenous bankers and money-lenders.
Difference between indigenous bankers and money-lenders.
|1. They do accept deposits from the people.||1. They do not accept deposits from the people.|
|2. They do business from the deposits accepted.||2. They do their business with their own capital.|
|3. They discount hundis.||3. They do not discount hundis.|
|4. The banking business is their primary business.||4. The banking business is not their primary business. They do this business along with other business.|
|5. The rate of interest charged by them is comparatively lower than money-lenders.||5. The rate of interest charged by them is higher than indigenous bankers.|
|6. They give huge loans only on security.||6. They give huge loans even without any security.|
|7. They generally give loan for agriculture, business and for small industries.||7. They generally give loan for personal needs and rarely give loans for production needs.|
Distinguish between indigenous banks and commercial banks.
Difference between indigenous banks and commercial banks.
|Indigenous Banks||Commercial Banks|
|1. The deposits with these bankers are very nominal. They generally do business with their own capital.||1. Major portion of their capital is formed by means of deposits. The success of these banks depends upon their deposits.|
|2. They do not provide the facility to withdraw money by cheque.||2. They provide the facility for making payment by cheque.|
|3. They do some other business along with banking business.||3. They only perform banking business.|
|4. They even give a loan without any security.||4. These banks do not give loan without proper security.|
|5. The rate of interest charged by them is high and keeps on changing.||5. The rate of interest is fixed and is comparatively lower than indigenous bankers.|
Indigenous Bankers Long Answer Type Questions (4 Marks)
Discuss the functions of indigenous bankers and also discuss its demerits. (UP 2013)
Who are indigenous bankers? Briefly describe the demerits of indigenous bankers in India. (UP 2011)
What are indigenous bankers? Mention its two defects. (UP 2012)
Functions of Indigenous Bankers: Following are the main functions of indigenous bankers:
- Lending of Money: Lending of money is the foremost function of indigenous bankers. Money is lent without any security other than that of borrower’s own reliability. But in certain cases, security accepted by them is in the form of land, crops or ornaments.
- Acceptance of Deposits: Indigenous bankers accept both types of deposits-short-term and long-term deposits, which are repayable either on-demand or after some fixed period.
- Dealing in Hundis: Indigenous bankers issue hundis to the traders and others for accommodation and remittance purpose. The function of discounting Hundis is also performed by them.
- Other Functions: Some of the other functions performed by Indigenous bankers are as follows:
- They also perform the function of sending money from one place to another.
- They also assist in the trade of import and export.
- They also perform the trade of grains, gold, silver, clothes etc. They also invest money in speculation.
Demerits of Indigenous Bankers: Main drawbacks of these bankers are as below:
- The rate of interest charged by indigenous bankers is very high. Because of charging of high rate of interest, the poor farmers are always exploited and their financial position does not improve.
- Indigenous bankers accept only nominal deposits from the public. For the purpose of granting the loan, they utilise their own capital. This policy of indigenous bankers retards the saving habit of those living in that area.
- In certain cases, it has come to light that the indigenous bankers indulge in fraudulent practices. They take the thumb impression of the uneducated farmers on a plain paper and then fill in more amount than actually given to them.
- No banking principles are followed by them, nor any book of account is maintained.
- There may be the cases that the farmers are unable to repay the loan and the interest of indigenous bankers. In such a case, the bankers purchase the crops of the farmers at a very nominal rate.
- Indigenous bankers also satisfy the personal monetary needs of the villagers which develop the habit of extravagance and uneconomical expenditure.
- There is no control exercised by Reserve Bank of India upon indigenous bankers which develops inefficient management.
State the drawbacks of Indigenous Bankers.
Drawbacks of Indigenous Bankers: The following are drawbacks of indigenous bankers.
1. High Rate of Interest: The indigenous bankers charge a higher rate of interest. Thus, the poor farmers are exploited by them.
2. Inadequacy of Funds: The indigenous bankers accept only nominal deposits from the public. They utilize only their own capital for providing loans. Thus, the people of that area do not develop the habit of saving. The demand of the farmer is more and the capital available with the indigenous bankers is less, which leads to high rate interest. Another problem is that the needs of all the farmers are not fulfilled.
3. Fraudulent Practice: indigenous bankers adopt fraudulent practices. They take the thumb impression of the uneducated farmers on a plain paper and then they fill more amount in it than actually given to them.
4. Lack of Sound Banking Principles: They do not adopt banking principles and their books of accounts are not proper.
5. Nominal Payment for Crop: If the farmer is unable to repay the loan and the interest of indigenous bankers, then bankers purchase the crops of the farmers at a very nominal rate and sometimes they also take the land of the farmers at a very cheap rate.
6. Advances for Consumption Needs: The indigenous bankers also give loan for personal needs which develop the habit of extravagance and uneconomical expenditures made by people. As the loan is easily available, the villagers spend a lot on marriages and other social customs etc.
7. No Control of Reserve Bank of India: The Reserve Bank of India has no control over indigenous bankers because there is no such law by which Reserve Bank of India can exercise its control over them.
8. Legal Proceedings Against Farmers: When the loan is not repaid by the farmers, the indigenous bankers take legal action against them. The borrower has to spend a lot of money to defend himself against legal proceedings.