What is indigenous banking system? Explain in detail in microeconomics?
Answers
Answer:
Explanation:
In economics life of India the indigenous bankers have been playing a significant role . When commercial banking had not developed, they were the main source of finance for agriculturists, traders, businessmen, small industrialists, etc.
The activities of indigenous bankers was getting low but their importantance not. After nationalisation of commercial banks and the spread of banking in urban and rural areas, because the borrowers still facing problems to getting loans from the bank.
Indigeneous bankers doesn't have fixed hours and paper formalities that's why the borrowers approach them directly and informally and get loans promptly and easily. They are very popular with traders, businessmen, agriculturists, and ordinary people.
Indigenous bankers provide finance and remittance facilities to traders and small industrialists by advancing loans; writing, buying and selling hundis; writing finance bills and trade bills. Thus they help not only in financing internal trade but also in expanding it.
indigenous bankers combine banking with trading and agriculture help the farmers to raise production of crops. paying them in cash with no waste of time, and also giving them loans.
The indigenous bankers act as commission agents when they purchase agricultural products on behalf of firms, mills, and trading houses. In this way, they again help in the development of internal trade.
They now provide long-term credit to companies by subscribing to their shares and debentures.
Answer:
The indigenous bankers accept deposits from the public which are of current account and for a fixed period. Higher interest rate is paid on fixed account than on current account. Entries relating to deposits received, amount withdrawn and interest paid are made in the pass-books issued to the clients. The indigenous bankers also get funds from the commercial banks, friends, relatives and even from each other.