Rural Banking: Translating Vision to Reality

  Rural Banking: Translating Vision to Reality

 Rural Banking refers to providing Banking services to the rural areas by deepening banking facilities. Rural banking in India has started since the establishment of the banking sector in India. Regional Rural Banks(RRB) which has started operation since 1975 and these banks are created solely for the purpose of deepening financial credit to Rural Indians. Cooperative banks are also playing crucial in providing banking services.

There are various reasons which resist banks to open branches in Rural areas. Rural households have irregular income and expenditure patterns which results in higher Non Performing Assets(NPA) for their loans. Loan wavier by various political parties further aggravates the problem. Due to small income, Rural households have little surplus funds to deposit in the banks so banks are not able to even cover their operational expenses.

Banks need to take various steps in order to promote Rural Banking. Banking correspondent(BC) should be fairly incentivised to provide banking services to rural households at doorsteps. Skill development program should be organised in order to train BCs to latest Technological advancements. Simplified credit disbursement facilities should be provided and all the Forms should be in vernacular languages. Various financial drives need to be organised by the banks to aware about the advances of a formal banking system.

The government has started various scheme for providing formal banking system in Rural areas like Pradhan Mantri Jan Dhan Yojana(PMJDY), Atal Pension Yojana(APY), and many more. But, the success of these scheme depends on the success of higher penetration of Rural banking.