Problem of low C D ratio in Bihar and its impact on economic development with special reference to working of SBI (1991-2007)

Abstract

Alexander Gerschenkron has put forward a concept which justify that banks plays an important role in giving a pace to industrialization. But, banking system is not only the element of his explanation as he considers that it does play a key role at certain stage of industrialization; there are other factors also. He points out that more backward an economy is, greater is the part played by special institutional factors which are designed to increase the supply of capital. In this view, banking is catalytic intermediary that transfer saving into capital. In other words, transfer of monetized surplus net savers to deficit spenders, helps in utilization of real sector output by creating employment- out- income and finally resulting into economic growth. Historically, banking intermediation is unchallenged in the mobilization of financial resources. But, in bank dominated financial system as India is, unchallenged role of banks have attracted the attention of academics, development agencies, and policy makers to examine the role of commercial banks in resources mobilization, when it has failed to produce the desire and balanced effect for all. In a bank led financial system like India, commercial banks have to play vital role in managing regional balance and sectoral development by energizing the rate of credit deployment.