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    INSTITUTE OF FINANCE AND

    INTERNATIONAL MANAGEMENT

    Debendra sahoo

    Sandeep Panda

    RURAL BANKING

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    WHAT IS RURAL BANKING ?

    It is a form of services that provide solution

    to the financial needs of the consumers inRural areas.

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    OBJECTIVES OF BANKING

    SERVICES IN RURAL AREAS

    Poverty Alleviation Objectives:

    The objectives is to uplift the mass of population

    residing in the rural areas who are currently below thepoverty line by extending credit to the smallest-scale

    economic activity.

    Financial Intermediation Objectives:

    The approach involves increasing the

    accessibility of banking services to the poor in a

    commercially sustainable manner.

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    EVALUATION OF THE RURAL

    BANKING AFTER INDEPENDENCE

    Pre-Nationalisation period

    The presence of banking sector was very limited.

    In 1951 informal credit accounted 70% of rurallending and less than 1% of rural household debt

    came from commercial bank.

    Nationalisation of banks

    14 Largest Indian commercial banks werenationalized in 1969.

    The central aim was to provide the banking

    services to all sections of society.

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    RURAL BRANCH

    EXPANSION PROGRAM

    In 1977 the 1:4 licence rule was implemented.

    The contribution of this policy was:

    Increased the flow of bank credit & saving to ruralareas.

    A total of 30,000 rural branches were opened.

    Rural sector accounted for 12.5 lakhs saving A/Cs

    & 2.5 crores borrowing A/Cs. The share of bank credit & savings, for rural

    branches , rose from 1.5 % and 3% respectively to

    15% each.

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    EST L SHMENT OF NABARD

    National Bank for Agricultural and Rural

    Development was established in July 1982.

    The main aim was to provide credit facilities to thefarmers through co-operatives & regional rural

    banks.

    They were responsible for all matters concerning

    policy , planning & operations in the field of creditfor agricultural & other economic activities in the

    rural areas.

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    POST-L BERISATIONPERIOD

    The 1:4 rule & licence procedure was frozen in

    1990.

    There was a heavy toll on the balance of the

    commercial bank on account of this policy

    decision.

    In 2000 the Indian banking sector accounted for therupee equivalent of $26,768 million as deposit &

    $10,834 million as loan outstanding.

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    CHALLENGES IN MARKETING OF

    BANKING SERVICES IN RURAL MARKET

    Lack of adequate financial market.

    Low value of loans for poor sections.

    Lack of collateral.

    Low density of population.

    Underdevelopment of rural infrastructure.

    Lack of financial discipline.

    Rural interest subsidy.

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    OPPORT NITIES

    Sourcing of agricultural produce from India for global

    markets.

    Govt. thrust.

    Increasing corporate interest in agri-business.

    Strengthening loan recovery.

    Development of AEZs.

    Lower level of NPA in rural areas. Lower cost of labour , infrastructure & cost of living.

    Large untapped market.

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    MARKETINGSTRATEGIES

    Developmental marketing.

    Variable lending rate.

    New product lines & delivery models.

    Development of low priced customized

    ATMs.

    ATM enabled kisan credit card.

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    MARKETING STRATEGIES contd.

    Co-operative promotion.

    Developing franchise model.Partnership with NGOs for financing.

    Simple and accessible loan procedure.

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    CONCLUSION

    All the statistics indicates there is a huge

    market for financial services in the rural

    areas.

    The only thing that the banks have to do is to

    develop a rural specific marketing mix.

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