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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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