This document discusses rural banking in India. It outlines the objectives of rural banking as poverty alleviation and increasing access to banking services. It describes the evolution of rural banking after independence, including nationalization of banks in 1969 and a rural branch expansion program in 1977. It also discusses the establishment of NABARD in 1982 to provide credit to farmers. The document outlines challenges and opportunities in rural markets and proposes marketing strategies to expand rural banking.

1. RURAL BANKING
By NISHANTH H

2. WHAT IS RURAL BANKING ?
•It is a form of services that provide
solution to the financial needs of the
consumers in Rural areas.

3. 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.

4. EVOLUTION 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.
 The central aim was to provide the banking services to
all sections of society.

5. 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/C’s & 2.5
crores borrowing A/C’s.
The share of bank credit & savings, for rural branches ,
rose from 1.5 % and 3% respectively to 15% each.

6. 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.

7. POST-LIBERISATION PERIOD
The 1:4 rule & licence procedure was
frozen in 1990.
There was a heavy toll on the balance of
the commercial bank on account of this
policy decision.
In 2000 the Indian banking sector
accounted for the rupee equivalent of
$26,768 million as deposit & $10,834
million as loan outstanding.

8. 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.

9. 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.

10. 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.

11. 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.