In the aggregate, banking should be essentially a profitable and commercial proposition and it would not be appropriate to expect banking activity to subsidise any other activities in the economy. At the same time, a certain degree of flexibility in banking operations is necessary. Even traditionally, banks do show greater accommodation to the bigger parties with substantial investments. With the nationalisation of banks, it would now be essential to consider if some flexibility can be shown in respect of lending activities to the so far neglected and poor sections of society. Thus the people who deserve financial assistance for productive endeavour but cannot easily negotiate with bankers can be usefully offered a relatively low rate of interest and a flexi­ble system of repayment. In other words, can we not consider introducing a differential interest rate structure? Can we not think of a scheme whereby lower rates are charged from care­fully selected low-income groups and progressively stiffer ones from the affluent sections? I like to hear, your views on this proposal.

While on this topic, I would like to share my anxiety with you on a related matter. There are disconcerting reports of abuses and corruption in lending to small borrowers. Such abuses have to be checked at the inception, otherwise all our efforts to widen access to bank credit will be frustrated and the ordinary man will turn hostile to the banking system. Exhortation alone will not help. We will have to provide deterrent punishment for all those who exploit in one way or another, people who approach banks. I understand that you are considering steps to set up vigilance cells in your organisation. But I shall be glad to learn of the detailed steps you have taken to put down corruption. Government on its part would be happy to extend any reasonable help which you might require to fight this evil.

One hears often about clash of interest between commercial and cooperative banks. Each sector has its own role to fulfil and their roles should be complementary to each other. But as the tempo of advances to agriculture and small-scale sector ex­pands there may be a certain criss-crossing of jurisdiction between the two. Although there are guidelines for demarcation of areas of operation for the two sets of institutions, an overlapping of jurisdiction may occur in a period of rapid growth. I would like to hear from you about the overlapping occurring at present or which is apprehended and what would be the most workable means of coordination between commercial and cooperative banks that would bring about a unified approach to the problems of deposit mobilisation and credit disbursement. The precise manner in which coordination between various banks and State agencies, cooperative bodies and the long-term financial institutions can be effected at the district level will have to be given urgent attention.