Historical Background of Rural Finance of Bangladesh

Topics: Bank, Bangladesh, Central bank Pages: 4 (1527 words) Published: March 27, 2013
Historical background of rural finance

The non-institutional or informal rural finance
Informal rural finance markets enable flow of funds and transfer of rural financial assets through relatively localised transactions in money, and real goods and services among friends, relatives, kin-members, landlords, neighbours, shopkeepers, farmers, artisans, itinerant traders, marketing intermediaries, village mahajans (moneylenders), and other local income groups. Informal financial markets do exist in urban areas, but are more prominent in rural areas where institutional sources of finance are either absent or insufficient to cater to the needs of funds of local professionals of different categories. The sources of informal rural finance in most developing countries include (a) professional moneylenders; (b) agricultural moneylenders; (c) commission agents; (d) relatives and friends, and different associations of rural professionals/self-help groups; (e) well-to-do rural people; and (f) shop-keepers, and marketing intermediaries and proprietors. Contrary to formal rural finance, the informal segment of rural financial markets is not subject to regulation. The institutional or formal rural finance

The sources of funds in the formal part of rural finance markets are mainly: (a) co-operatives that meet the needs of short, medium and long-term credit; (b) commercial, cooperative and specialised banks; (c) micro-finance institutions (MFIs) and NGOs conducting micro-finance operations; (d) agri-product marketing associations; and (e) land mortgage banks, and various government agencies including those established for agricultural development. The operations of financial institutions in formal rural financial markets are typically heavily regulated, and the nature and extent of formalities, as well as the interest rate structure, usually make access to credit from this market restricted to limited segments of the rural population. .

Before (1971)
Formal financing...
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