RURAL BANKING

PRESENTED BY ANUPAMA MUKHERJEE

ARCHISHA GARG

The future lies with those companies who see the poor as their customers” ~C.K.Prahalad

WHAT IS RURAL BANKING ?

It is a form of banking service that provide solution to the financial needs of the consumers in Rural areas

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 the poverty 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.

Business of a rural bank

The granting of loans and advances, particularly to small and marginal farmers and agricultural laborers, whether individual or in groups and to co-operatives societies

The granting of loans and advances, particularly to artisans, small entrepreneurs and persons of small means

Initiatives for rural banking development

Haryana State Cooperative Apex Bank Limited

NABARD United Bank of India Syndicate Bank  Co-operative bank 

Regional Rural Banks

The Narasimham committee on rural credit recommended the establishment of Regional Rural Banks (RRBs).

Government passed the Regional Rural Banks Act, 1976.

The main objective of RRBs is to provide credit and other facilities to the small and marginal farmers, agricultural labourers and small entrepreneurs and develop agriculture, trade, commerce, industry and other productive activities in the rural areas.

Objectives Of regional rural banks

Bridging the credit gap in rural areas. Check the outflow of rural deposits to

urban areas. Reduce regional imbalances and

increase rural employment generation

Establishment of nabard National Bank for Agricultural and Rural

Development was established in July 1982.

The main aim was to provide credit facilities to the farmers through co-operatives & regional rural banks.

They were responsible for all matters concerning policy , planning & operations in the field of credit for agricultural & other economic activities in the rural areas.

Rural Banking After Independence

Pre-Nationalization period The presence of banking sector was very limited. In 1951 informal credit accounted 70% of rural

lending and less than 1% of rural household debt came from commercial bank.

Nationalization of banks 14 Largest Indian commercial banks were

nationalized in 1969. The central aim was to provide the banking

services to all sections of society.

Role of rbi in rural credit

Micro–Finance Kisan Credit Card Agricultural Insurance Marketing of Mutual Fund Units

Mobile banking

Mobile banking is not only helping the government to take a step forward towards fulfilling its aim of having one bank account for every household, but also saving it crores of rupees by way of reduced transaction costs.

While the government incurs a transaction cost of Rs 12-13 for every Rs 100 it shells out, mobile banking helps it reduce the cost to a mere Rs 2.

Mobile banking

The mobile acts as a branch of the bank by storing a database of customers. It has a smartcard, which biometrically stores the identity of the customer such as name, address, photograph and relevant details of the savings or loan accounts held by the issuing bank.

Customers get a secure electronic identity via phone or smartcard, while agents take deposits and dispense cash.

System Design

Interface Server

Bank Server

Wap Request

Wap Response

HTTPrequest

HTTPresponse

update

search

DatabaseServer

DatabaseServer

search

update

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

Thank you