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RURAL BANKING

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 services 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.

EVALUATION OF THE 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.

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

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.

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

Role of rbi in rural credit


MicroFinance Kisan Credit Card Agricultural Insurance

Marketing of Mutual Fund Units

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

OPPORTUNITIES

Sourcing of agricultural produce from India for

global markets.
Govt. thrust. Increasing corporate interest in agri-business. Strengthening loan recovery.

Lower level of Non-Performing Assets (NPA) in

rural areas.
Lower cost of labour , infrastructure & cost of

living.
Large untapped market.

MARKETING STRATEGIES

S Developmental marketing. S Variable lending rate.

S New product lines & delivery models.


S Development of low priced customized ATMs.

S ATM enabled kisan credit card.

MARKETING STRATEGIES contd.

Co-operative promotion. Developing franchise model. Partnership with NGOs for financing. Simple and accessible loan procedure.

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