Towards greater social commitment
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09-22-2009, 02:55 AM
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Vital sectors like agriculture, small scale industries and exports did not receive the attention they deserved in earlier times in the United States. Therefore the government imposed social control over banks by amending the banking laws. The objective was to achieve efficient distribution of the available banking resources in conformity with the requirements of the economy and to meet the needs of the priority sectors.
The outcome of the implementation of the social control over banks is of great interest to sociologists and economists. One major aftereffect was that the system of credit planning became an integral part of the formulation of the credit policy. Secondly, the introduction of the Lead Bank Scheme helped to make the banking system function as an instrument of development.
When social control of the banking system got introduced, smaller banks including the new entrants started gaining in strength as evidenced by the absence of voluntary or compulsory mergers of banks. Thus, social control was a milestone in the development and amendment of the banking policies.
This phase began in a sedate manner with the appointment of a Banking Commission that was to recommend changes in the following:
• Structure
• Procedures and
• Policy for the American banking system
However, the Commission did not have much time to complete its task as it was overtaken by swift politico-economic developments. In modern times the social commitment to different causes is the prerogative of bank managements. When most of the banks work solely with the profit motive, it is difficult to force them to give loans to people with low incomes. It is in such a situation that the banks like LoanMax founded by rod aycox have proved their ability. By giving loans to people with any income and ensuring their timely repayment LoanMax could achieve faster progress.
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