Commercial Banks Finance The Industrial Sector

New farmers’ chances for success will be greater if they can avoid going into debt to finance their farm operation, since the initial profits can be reinvested in the farm rather than paying the bank. Credit cards, with their extraordinarily high interest rates, are a particularly dangerous way to finance a farm. Thinking carefully about options, and resisting temptations to buy more and better equipment than is needed is important for all farmers to remember. Many operations have been sunk by overcapitalization. Some operations will benefit from a loan, especially if they have a solid business plan that exhibits a realistic strategy for paying it off.

Banking industry is currently operating in the maturity stage. There are many players as a result of which the competition is quite high. Competition is broadly based on the levels of fees charged, reputation, the range of services and products provided. As the industry consolidates and the range of services broadens, the size and geographic spread of industry players in increasing. Providing a high set of barriers is the capital and regulatory requirements within the banking sector. Entities that want to start up as a commercial bank and/or investment bank or securities dealer face significant establishment costs in order to gain acceptance and meet market reputation. Furthermore, start-ups require up-front expenses in order to establish proper distribution channels. Globalization is high and the trend is increasing. Cross-border sales and acquisitions of banking operations are also occurring, as assets are shuffled in the race to raise capital.

In the sphere of small business financing, two categories of individuals are pertinent in the overall scheme of financing, they are those that invest their monies, as well as, the individuals that lend monies (Hodgetts, 2007). These two modes of funding produce the same results, which is the provision of the necessary capital needed to begin the business adventure of the individual. However, funding can at times be difficult to procure as reiterated by Nicole Taylor (2015), in her article “14 Creative Financing Methods for Startups. She offered numerous ways to procure these funds, such traditional loans, renting one home to others, credit cards, equity, online lending institutions, family and friends, as well as others. However, the dilemma remains, which way offers the best choice for the individual.

Firstly, the quantity of trade of local enterprises has often been limited by farmers who are not being able to raise their manufacture size and quality of produces. Therefore, HSBC has to develop financial services which are suitable for reaping cycles and supply chain to sustain agricultural loan. Secondly, to stabilize the demands and supply relationship of farmers and local business, HSBC should help them to establish a long term and creditworthy supply chain. For example, HSBC could offer farmers revolving fund immediately and it would then enhance the output of farming production and stimulate the yielding supply to local enterprises.

In most of the less developed and developing countries the people involved in agriculture mostly belong to the lower strata of the society. They are looked down upon and so is their profession consequently agriculture is not seen as an attractive profession. This biasness takes various forms out of which the, one which holds utmost importance for the large and small rural cultivators is the inadequate provision of infrastructure and social overhead capital: crop storage facilities, health clinics and schools, farm extension services, agricultural research, irrigation canals and farm credit programs are deficient, if they exist at all. It means that for agricultural sector in general and small scale agriculture in particular to prosper, it is necessary the above mentioned large scale investment programs must be financed by the state itself to raise the productivity of agriculture. Given the series of problems in agricultural sector it may take decades for positive results to show their signs.

Rugman, A.M. & Cecilia, B. (2004). "The Regional Nature of the World's Banking Sector", Management International Review,12 (3): 5-22.

Financial institutions are the most important institution in the development and financing the countries regardless of the developing countries, the countries has developed or is still underdeveloped. A large role in the country cause financial institutions must be sensitive and transparent in governance. However, not all financial institutions are banks. Financial institutions are included bank, finance companies, merchant bank, credit and leasing companies, national savings banks, co-operative bank, discount houses, factoring companies and so on. In addition, financial institutions can be classified into two which are depository and non-depository institutions. The common function among all these institutions is they were assigned to mobilize the fund from those who had fund to those who short of fund. So, we know that they were also known as financial intermediaries.

A strong and resilient banking system is a foundation of sustainable economic growth. Banks are at the centre of the credit intermediation process between savers and investors. Moreover, banking institutions provide critical services to consumers, small and medium-sized enterprises, large corporate firms and governments, which rely on banks to conduct their daily business, both at a domestic and international level. However, the failure of a bank is unlike that of a non-bank firm, owing to their systemic risk. The failure of banks have the ability to impose large costs on society – externalities – which are not borne by bank shareholders; banks are materially different in their financing, business model and balance sheets

Sriram (2007) has stressed that the policy intervention in agriculture has been credit driven only, which becomes more pronounced in the recent interventions made by the government through the policy of doubling of agricultural credit, providing subvention and putting an upper cap on interest-rates for agricultural loans, revival of co-operative credit structure through the package recommendation by the Vaidyanathan Committee and policy responses to farmers suicides but argued that it is very difficult to establish a causal relationship to show that the increased supply and administered pricing of credit will help to increase agricultural productivity and the wellbeing’s of farmer. In his paper, he tried to examine the demand side issues of agricultural credit from a policy making perspective and conditions that makes credit more effective or productive in a real sense for which he suggested that there is a need to look at the rural financial services as a broader theme rather than limiting it to agricultural credit flows only, because mere increase in the supply of credit will not address the problem of productivity unless it will be not accompanied by investments in other supportive services.

Final chapter of the study represents the conclusion of the study based on the analysis done for the obtained data and the overall summary of the study. Other than that chapter contains the recommendations based on the obtained results and also develops ideas and suggestions for the future researches regarding the relationship between economic growth and commercial bank lending.

together both the borrowers and the savers in an economy. This is because the banking and non-banking financial institutions accepts deposits or savings from individuals and business and thus creates a pool of funds in the process called credit creation. These funds will be given to borrowers in form of loans at some interest over a give period of time. Rødseth, A. (2000) stated that the lending ability of commercial financial institutions is controlled by the central bank which is in charge of regulating the amount of money that is circulation in the economy. To increase money circulating in the economy so as to achieve some macroeconomic goals, the central bank may reduce their leading rate (bank rate) and thus encourage the commercial banks to borrow more loans from the central bank and thus expand their lending capacity to the borrowers in the money market.

Granting credit to peasant farmers for the cost they incurred on land preparation, weeding and harvesting operations and labour to increase the use of agricultural inputs will enable them most importantly to be able to adopt modern farming techniques, so as to increase their agricultural productivity. Farmer’s access to credit will enable them use tractors, which will lead to increased output of higher quality, thereby resulting in

Rural banking in India has been the subject of study Survey Committee Report in 1954, literally thousand of reports have examined and investigated the problems relating to the credit delivery for agriculture and rural area. Latest magnum opus on the subject is the National Agricultural Credit Review report 2000. The Expert Committee on Rural Credit (Chairman: Professor V.S.Vyas) submitted its report in 2002.One more High Power Committee headed by Professor Vyas set up by the Reserve Bank of India recently to review and advice on improving credit delivery to agriculture has also given its report.

Capital gathering which in turn is essential to economic growth and development the stages of accumulation are savings and investment among them saving is most crucial because it is basic constraint for investment and development so capital accumulation and economic growth is affected by the rate of savings in the economy mobilization of savings becomes all the more important in the economy when economic growth is set with in frame work of targets with maximum reliance on internal resources. In a study conducted by national institute of bank management (NIBM) it was observed that the savings and that about 75 per cent of the gross domestic savings (GDS) cane from the house hold sector and approximately 45 percent of the household sector savings were kept in the form of bank deposits. The banking sector has played an increasingly imperative role in the financial intermediation process by mobilizing savings in the form of deposits. Deposits are the main source of funds for banks the bank of the total liabilities of a banking company include deposits. Hence banks serve financial needs of various sections of societies, the larger volume of funds can attract, the better the position they are in to lend funds. Scheduled Commercial Banks are those banks which were included in the second schedule or 2E of RBI ACT, 1934.

In a stockholders’ meeting of the Rural Bank of Suares (RBS), Peter Arguelles, the bank general manager, proposed that the bank should open another branch in the capital city. However, the stockholders are reluctant with this motion, given that there are branches of the big banks of Manila and already two rural banks in the city. For more than 20 years, the Rural Bank of Suares struggled financially because of the government’s lending program.