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Journalism of Courage
United States
In 1791, the Congress chartered the first bank. Initially, only states were allowed to float banks. But in 1837, when the industry was opened to all, their numbers shot up from 24 to 712. About half of them failed, prompting the government to create a system of national banks, with more stringent norms. There were more instances of banking panics because of over-lending, inadequate reserves, which led to the creation of the Federal Reserve. In the 1930s, commercial banks were banned from the securities and the insurance business.
United Kingdom
The present industry structure was mostly in place by the 1930s, with the Bank of England, then privately owned, at the apex, and 11 London clearing banks below it. The Bank of England was nationalised in 1946; and in 1968 a merger among the largest five clearing banks left the industry in the hands of four banks: Barclays, Lloyds now Lloyds TSB Group, Midland now part of HSBC Holdings, and National Westminster taken over by the Royal Bank of Scotland in 2000. The larger clearing banks, with their national networks and subsidiaries, dominate British banking.
Brazil
The country8217;s oldest surviving bank is Banco do Brasil, founded in 1808. The bank was the monetary authority till 1967, when it passed on this function to the
Central Bank of Brazil. There were once about 340 commercial banks in Brazil, but subsequent reforms reduced their numbers significantly.
Restructuring took place in three stages, beginning 1994. The first phase was characterised by state intervention and liquidation. In the second phase, restructuring of private and state-owned banks took place, with the objective of strengthening the banking system and reducing the role of the state. The third phase marked the entry of foreign banks.
Reaching out to the unbanked
Sweet deal. ICICI offers DSCL8217;s supplier-farmers a line of credit, at 9-9.5 per cent, against their produce. DSCL knows how much cane a farmer supplies, based on which ICICI sets a credit limit for him. Of every Rs 100 spent by him, he has to use Rs 70 to shop in Haryali Kisaan Bazaar, a one-stop retail shop of DSCL Sugar. This partnership gives ICICI security to lend, DSCL captive business and farmers credit on easy terms.
Spreading his wings. For his second poultry farm, Vijay Kumar, 32, borrowed Rs 1.5 lakh from Allahabad Bank. He8217;s hatching plans for a third farm, spread over two acres in a village near Shahjahanpur, for which ICICI is lending him Rs 10 lakh. 8220;I8217;ve heard private banks are efficient, and I want to try them out,8221; he says.
Branching out. Delpanderwa is ICICI8217;s first rural branch, covering 800 villages spread over a radius of 80 km. Set up in June 2005, the branch has so far lent Rs 6.5 crore to 2,800 farmers, through a cash card the DSCL tie-up as well as individual loans. On the anvil: biometric cards that list personal information and credit history of the holder, life insurance and weather insurance.
Mutual benefit. One of ICICI8217;s rural lending partners is warehouse owner Saurabh Aggarwal. When farmers give him produce to store, he introduces them to a 13-13.5 per cent loan from the bank of up to 75 per cent of their produce value. 8220;It eases their cash position during the lean season,8221; he says.
Cash on hand. Pavitra K. Mishra, Amrik Singh and Bijendra Singh top to down have all taken the ICICI-DSCL Haryali cash card, which they mostly use to withdraw cash from the ATM or buy essentials like diesel and manure. 8220;We like it if we have money as and when we want,8221; says 62-year-old Bijendra Singh.
