Rural Banking
RURAL BANKING IN INDIA
Introduction
Rural banking in India has been the subject of study Survey Committee Report in 1954, literally thousand of reports have examined and investigated the problems relating to the credit delivery for agriculture and rural area. Latest magnum opus on the subject is the National Agricultural Credit Review report 2000. The Expert Committee on Rural Credit (Chairman: Professor V.S.Vyas) submitted its report in 2002.One more High Power Committee headed by Professor Vyas set up by the Reserve Bank of India recently to review and advice on improving credit delivery to agriculture has also given its report.
As the majority of the Indian population lives in rural areas, there is an urgent need to deliver citizen services to them in a cost effective way with assured quality. This involves mainly the following:
−> Enabling the ready access at the place of the villagers.
−> Reducing transaction cost to make the services affordable.
−> Reduction in delays.
−> Improving the quality of services available.
The criticality of this need may be seen from the fact that even with concerted and extensive attempts to meet the credit needs of the farmers for agricultural operations etc., informal agencies including money lenders are currently providing substantial portion of the total credit to this sector. Besides, the agricultural credit flows themselves are inadequate and the gross capital formation can be improved only if substantial amount of investment funds flow to the rural areas in the form of credit. Likewise, there is also a need to provide market information, extension services, marketing support and government and other public services to the people in a cost-effective manner. For achieving financial inclusion and economic growth, the
Introduction
Rural banking in India has been the subject of study Survey Committee Report in 1954, literally thousand of reports have examined and investigated the problems relating to the credit delivery for agriculture and rural area. Latest magnum opus on the subject is the National Agricultural Credit Review report 2000. The Expert Committee on Rural Credit (Chairman: Professor V.S.Vyas) submitted its report in 2002.One more High Power Committee headed by Professor Vyas set up by the Reserve Bank of India recently to review and advice on improving credit delivery to agriculture has also given its report.
As the majority of the Indian population lives in rural areas, there is an urgent need to deliver citizen services to them in a cost effective way with assured quality. This involves mainly the following:
−> Enabling the ready access at the place of the villagers.
−> Reducing transaction cost to make the services affordable.
−> Reduction in delays.
−> Improving the quality of services available.
The criticality of this need may be seen from the fact that even with concerted and extensive attempts to meet the credit needs of the farmers for agricultural operations etc., informal agencies including money lenders are currently providing substantial portion of the total credit to this sector. Besides, the agricultural credit flows themselves are inadequate and the gross capital formation can be improved only if substantial amount of investment funds flow to the rural areas in the form of credit. Likewise, there is also a need to provide market information, extension services, marketing support and government and other public services to the people in a cost-effective manner. For achieving financial inclusion and economic growth, the