BANKING TRADE AND COMMERCE

INTRODUCTION

ALTHOUGH THE INSTITUTIONAL FRAME-WORK OF THE ECONOMIC SYSTEM is uniform all over the State, there prevails a wide range of diversity in the development of credit institutions amongst the districts. This uneven development of the institutions is the result of a large number of factors, such as, location, the system of communications, availability of resources and the economic condition of the masses. It is on account of these multifarious conditions that Bhandara district reveals the peculiarities of its own financial structure.

The present chapter is divided into two parts viz. (1) Banking and Finance and. (2) Trade and Commerce. The first part of the chapter attempts to describe the various economic institutions in the field of finance and commerce, such as money-lenders, cooperative banks, joint-stock companies, joint-stock banks, life insurance corporation and other Government agencies extending financial assistance to the people in the district. Among these institutions, the money-lender is the oldest institution which has survived through centuries with little of its pristine pattern. Even now he holds a paramount influence over the agricultural masses. The main reason for this is that he is the continuous source of credit supply to the people in the district, whether as an indigenous banker in the town or as a shop-keeper supplying credit to the village-folk or even as a petty pawn-broker. Another reason is the disinclination of the people to invest their funds for productive purposes or to deposit them in savings banks. Most of them prefer hoarding to savings as they would prefer savings to investment. This has proved a great obstacle in the economic progress of the district.

The excessive rates of interest charged by the money-lender and the mal-practices he adopted to exact money from the poor proved detrimental to the economic well-being of the people in the past. It was with a view to put a stop to this evil that the Central Provinces and Berar Money-lenders Act of 1934 was passed and applied to the whole of the district. This Act subsequently removed the mal-practices of money-lenders and sought to extend protection to the debtors. Another significant force that helped to restrain the money-lenders' influence was the growth of modern banking in the district after 1951. Especially after the establishment of the State Bank of India, the banking business received further stimulus.

The co-operative movement, too, has spread its wings all over the district and has given a new hope to the people for better production, better marketing and above all, better financial returns to its members. Side by side with the agricultural credit societies, which mostly influence the activities of the rural people, there is also a perceptible growth of many non-agricultural and production societies in this district. Much however, is still expected of the co-operative movement suffering, as it does, from drawbacks such as improper linking of credit with marketing, poor recovery of loans financed by the societies, and at some places a habitual preference for the money-lender by the agriculturists over their own organisations.

Besides purveying credit to the economy, these institutions also collect the savings of the people in the form of premia and invest them in the interest-yielding securities. The insurance and the joint-stock companies need in this context a specific mention. The post-war period found a remarkable progress in case of both these institutions.

The takeover of the insurance business by the State and the legislation enacted by it to reduce the profit margin of the companies thus details the role played by the State in this regard to secure economy, efficiency and excellence of its services. The State also floats loans and raises the funds required for financing its plans and other Governmental outlays. It further extends financial and other aid to industry and agriculture by advancing to them loans and subsidies. This active participation of the State in the economic activities is very well marked especially in the small savings movement. An account of these manifold activities on the part of the State has been discussed elaborately in this part of the chapter.

The financial set-up in the district has got significant bearings on the pattern of its trade and commercial activities. With the attainment of Independence, the old set-up of economic institutions underwent a remarkable change. The growth of banking and other financial institutions and increasing facilities made available to the public, help the movement of goods, and infuses briskness in trade. Price policies adopted from time to time by the State also affect the market trend and determine ultimately the composition of trade. The State similarly restricted the private interests and reduced their profit margins. It also competed successfully with private organisations in catering to the needs of the people in the district and cutting across the chain of middlemen. Especially in regard to commercial activity, it supplied a fresh incentive to producers through higher economic gains.

But that is not all. With the passing of the Central Provinces and Berar Agricultural Produce Market Act in 1935 (as amended by Act No. VII of 1937) and the Central Provinces and Berar Cotton Market Act, 1932 (as amended by Acts of 1936 and 1937), many of the agricultural commodities were regulated and conditions governing trade were controlled. With the establishment of a number of marketing committees, trade was further facilitated throughout the district. It was not, however, by a negative approach through rules and regulations as by its active participation in the various economic activities that the State's role is gaining importance. State Trading is an illustration in point. The establishment of fair price shops to check the rising trend of prices and relaxing the strain of higher cost of living needs special mention in this context. The growing participation of the State in the economic affairs of the district thus constitutes an important landmark in the history of the various economic and commercial organisations in the district.

Thus the second section of this chapter, viz., Trade and Commerce gives the historical background of trade and the trade routes, and also furnishes details about regulated markets, exports, imports and trade associations in the district.

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