Rural Banking
Rural Retail Banking in India: 2020
Faculty Contributor : Jayadev M., Associate Professor and Roger Moser, Visiting Faculty
Student Contributors : Madhulika Kaul and Charvi Tandon
Financial inclusion is seen as one of the means for overall economic development of a country. The growth of the rural retail banking industry fosters financial inclusion by providing financial products and services to people in the farthest reaches of the country. In India, even now the rural areas lack access to basic financial services. However, the recent emergence of microfinance institutions (MFIs) and non-banking financial corporations (NBFCs) in this sector has led to a commendable growth in the industry. This study aims to identify the most probable scenarios for the industry in the year 2020 using the Delphi study approach.
The issue of rural retail banking is extremely topical. Over the past few decades, while urban retail banking has seen a lot of growth, rural areas have continued to suffer from insufficient access to financial services. This is mainly due to the requirement of asset deeds, identity and income proofs among other documents by banks and FIs and absence of enough branches in these areas. The high cost of conventional banking is an additional impediment to the realisation of financial inclusion.
Our study has tried to understand how the Indian rural retail banking industry (industry) will develop over the next decade. We aimed to identify the institutional environment of this industry in the coming decade as well as the activities that banks and other financial institutions (FIs) in India will need to invest in to realize the full potential of this market.
Rural Retail Banking
The Reserve Bank of India (RBI) had a mandate to promote rural credit and banking by virtue of the provisions of Section 54 of the RBI Act. Through the State Bank of India (SBI) Act in 1955, the SBI was made an important organisation for extending rural credit to supplement the
Faculty Contributor : Jayadev M., Associate Professor and Roger Moser, Visiting Faculty
Student Contributors : Madhulika Kaul and Charvi Tandon
Financial inclusion is seen as one of the means for overall economic development of a country. The growth of the rural retail banking industry fosters financial inclusion by providing financial products and services to people in the farthest reaches of the country. In India, even now the rural areas lack access to basic financial services. However, the recent emergence of microfinance institutions (MFIs) and non-banking financial corporations (NBFCs) in this sector has led to a commendable growth in the industry. This study aims to identify the most probable scenarios for the industry in the year 2020 using the Delphi study approach.
The issue of rural retail banking is extremely topical. Over the past few decades, while urban retail banking has seen a lot of growth, rural areas have continued to suffer from insufficient access to financial services. This is mainly due to the requirement of asset deeds, identity and income proofs among other documents by banks and FIs and absence of enough branches in these areas. The high cost of conventional banking is an additional impediment to the realisation of financial inclusion.
Our study has tried to understand how the Indian rural retail banking industry (industry) will develop over the next decade. We aimed to identify the institutional environment of this industry in the coming decade as well as the activities that banks and other financial institutions (FIs) in India will need to invest in to realize the full potential of this market.
Rural Retail Banking
The Reserve Bank of India (RBI) had a mandate to promote rural credit and banking by virtue of the provisions of Section 54 of the RBI Act. Through the State Bank of India (SBI) Act in 1955, the SBI was made an important organisation for extending rural credit to supplement the
References: 1 Key note Address by Dr K. C. Chakrabarty, RBI Deputy Governor, at the Review Meet on Implementation of Revival Package for Short Term Rural Cooperative Credit Structure organised by National Federation of State Cooperative Banks (NAFSCOB), New Delhi, 2008 2 Prof. G. Ram Reddy Third Endowment Lecture by Dr. Y. V. Reddy, Deputy Governor, Reserve Bank of India, December 4, 1999 3 “Pushing Financial Inclusion – Issues, Challenges and Way Forward”, Dr. K. C. Chakrabarty, RBI Deputy Governor, SKOCH Summit 2009 4 Report of the Internal Group to Examine Issues Relating to Rural Credit and Microfinance, RBI, July 2005 5 Delbecq, Gustafson and Van de Van, “Group Techniques for Program Planning: A Guide to Nominal Group and Delphi Processes”, 1975, p 10. http://tejas-iimb.org/articles/74.php