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-Nationalisation 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.

Nationalisation of banks 14 Largest Indian commercial banks were nationalized in 1969 and 6 more banks in 1980. The central aim was to provide the banking services to all sections of society. 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 rural areas. 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.

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. 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. Development of AEZs. Lower level of NPA in rural areas. Lower cost of labour , infrastructure & cost of living. Large untapped market. MARKETING STRATEGIES Developmental marketing. Variable lending rate. New product lines & delivery models. Development of low priced customized ATMs. ATM enabled kisan credit card. Co-operative promotion. Developing franchise model. Partnership with NGOs for financing. Simple and accessible loan procedure.

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.